In re Cook

• Decision Date: 11 May 2020
• Docket Number: CASE NO. 20-63764-JWC
• Citation: 614 B.R. 635
• Parties: IN RE: James Franklin COOK, Jr., Debtor
• Court: U.S. Bankruptcy Court — Northern District of Georgia

614 B.R. 635

IN RE: James Franklin COOK, Jr., Debtor,

CASE NO. 20-63764-JWC

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed May 11, 2020

Ian M. Falcone, The Falcone Law Firm, P.C., Marietta, GA, for Debtor.

MEMORANDUM OPINION AND ORDER

Jeffery W. Cavender, U.S. Bankruptcy Court Judge

THIS MATTER is before the Court on the Motion for Order Under§ 362(c)(4)(a)(ii) Confirming that No Automatic Stay is in Effect (the "Motion to Confirm")(Doc. No. 6) filed by Select Portfolio Servicing, Inc. as Servicer for Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series2006-QS17("SPS") and the Emergency Motion to Impose Stay (Doc. No. 11)(the "Motion to Impose," together with the Motion to Confirm, the "Motions") filed by Debtor James Franklin Cook, Jr.(the "Debtor").SPS seeks an order confirming that no automatic stay is in effect in this case by virtue of Debtor's two previously dismissed bankruptcy cases pending within a year of the filing of the current case.Debtor's Motion to Impose seeks imposition of the automatic stay as to all creditors in his current bankruptcy case.For the reasons set forth below, the Motion to Confirm will be granted and the Motion to Impose will be granted in part and denied in part.

JURISDICTION

The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1334.The issues raised in the Motions are core matters pursuant to 28 U.S.C. § 157(b)(2)(A), (G) and (O).Venue in this Court is proper pursuant to 28 U.S.C. § 1409.

BACKGROUND INFORMATION

SPS filed its Motion to Confirm on March 3, 2020 seeking confirmation that no automatic stay was in place in this case by virtue of Debtor's two previous dismissed cases pending within the last year.The next day Debtor filed his Motion to Impose, a motion for expedited hearing on the same (Doc. No. 12), and a response in opposition to the Motion to Confirm(Doc. No. 13).SPS filed a response in opposition to the Motion to Impose on March 16, 2020(Doc. No. 25).

The Court conducted a telephonic status conference on Debtor's motion for expedited hearing on March 4, 2020.During the status conference counsel for SPS confirmed that it conducted a foreclosure sale with respect to Debtor's residence on March 3, 2020, and that the property was sold to the lender pursuant to a credit bid.SPS confirmed that no deed under power had been recorded with respect to the foreclosure sale and agreed that no deed would be recorded with respect to the sale until the Court ruled on the pending Motions.

The Court conducted a telephonic hearing on the Motions on March 26, 2020(the "Hearing") at which counsel for SPS, counsel for Debtor, and Debtor appeared.¹At the Hearing, SPS asserted that, although the foreclosure sale occurred after the filing of the current bankruptcy case, no stay was in effect pursuant to 11 U.S.C. § 362(c)(4)(A)(i).²Because Debtor had two prior cases pending within the year preceding the instant case, SPS argued that § 362(c)(4)(A)(i) applies and that no stay was in effect as to Debtor or Debtor's interest in any property at the time of the foreclosure.SPS further argued that even if a stay were imposed, as requested by Debtor, the stay would be effective as of the date of the order imposing the stay pursuant to 11 U.S.C. § 362(c)(4)(C) and would not alter the transfer of title effectuated by the concluded foreclosure sale.

In opposition to the Motion to Confirm, Debtor countered that § 362(c)(4)(A)(i) does not apply in this case, that Debtor's interest in the property is property of the bankruptcy estate, and that this Court may impose the stay retroactively to the commencement of the case pursuant to 11 U.S.C. § 105(a).Debtor argued that § 362(c)(4)(A)(i) should not apply in the current case for two reasons.First, Debtor argued that § 362(c)(4)(A)(i) does not apply because the case was filed in good faith.Second, Debtor argued that § 362(c)(4)(A)(i) should not apply because the current case was filed more than a year after his first case.Debtor claimed that 11 U.S.C. § 362(c)(3) is the applicable statute instead, because only Debtor's second case was filed in the preceding year.

Relying on § 362(c)(3), Debtor contends that his interest in his property became property of his bankruptcy estate as of the commencement of this case.Debtor argued that the stay under § 362(c)(3) expires after thirty days as to property of the debtor, but not as to property of the bankruptcy estate.Accordingly, Debtor asked the Court to find that Debtor's interest in the property is and was held by the bankruptcy estate and subject to the stay as of the filing of the petition.

Finally, Debtor contended that even if § 362(c)(4)(A)(i) is the applicable statute, this Court may impose the stay retroactively to the filing date of the petition.Under the circumstances of this case, Debtor argued that this Court may impose the stay under its equitable powers under § 105(a) and declare the foreclosure void.When pressed by the Court, counsel for Debtor could not cite to any authority or articulate any instance of a court adopting that approach but maintained that § 105(a) grants this Court wide authority to exercise such discretion.At the conclusion of the Hearing, the Court took the matter under advisement.The following constitutes the Court's findings of fact and conclusions of law in resolution of both Motions pursuant to Fed. R. Bankr. P. 9014(c) and 7052.

FINDINGS OF FACT³

Debtor filed for relief under chapter 11 of the Bankruptcy Code on March 2, 2020(the "Petition Date").This case represents Debtor's third case pending within the last year (the "Third Case").Debtor initially filed a petition for relief under chapter 13 of the Bankruptcy Code on February 4, 2019, case number 19-51886-jwc(the "First Case").Debtor failed to attend the 341 Meeting of Creditors in the First Case, and the chapter 13Trustee raised objections that the amount of Debtor's secured indebtedness rendered him ineligible for relief under chapter 13 pursuant to 11 U.S.C. § 109(e).The First Case was subsequently dismissed by order entered on May 16, 2019 when Debtor failed to convert the case to one under chapter 11.On August 5, 2019, Debtor filed a second petition for relief under chapter 13 of the Bankruptcy Code, case number 19-62166-jwc (the "Second Case").Debtor failed to file the required schedules and statement of financial affairs in the Second Case even after the Court granted an additional two weeks to comply, and the Second Case was subsequently dismissed on September 10, 2019 for Debtor's failure to timely correct filing deficiencies.Debtor commenced this Third Case on the eve of a foreclosure sale being conducted with respect to Debtor's personal residence located at 260 Cameron Ridge Drive, Sandy Springs, Georgia 30328 (the "Property").

SPS is the servicer of a loan originally made by SunTrust Mortgage, Inc. on August 3, 2006 in the original principal amount of $601,200.00.The loan was secured by a Security Deed of the same date executed by Debtor and Deborah L. Cook and recorded in the real property records of Fulton County, Georgia at Deed Book 4333, Page 589(the "Security Deed").The loan and Security Deed were subsequently assigned to Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates Series2006-QS17("Lender").Lender by virtue of the Security Deed held a valid and perfected first-priority security deed on the Property as of the filing of the Third Case.

On March 3, 2020, the day after the Third Case was filed, Lender conducted a foreclosure sale with respect to the Property pursuant to the power of sale contained in the Security Deed.Lender purchased the Property at the foreclosure sale pursuant to a credit bid in the amount of $700,955.78.A Memorandum of Foreclosure Sale evidencing the credit bid and sale was executed at the foreclosure sale.SeeDoc. No. 25, Ex. A.

Prior to the commencement of his Third Case, Debtor experienced a series of significant changes in his financial circumstances including, but not limited to, changes in employment, significant decreases in compensation, soaring health insurance costs, and significant medical expenditures, primarily related to his wife's ongoing medical condition.Unlike the previous two cases, this Third Case was filed under chapter 11 and Debtor timely completed all schedules and information disclosures required under the Bankruptcy Code.With his health insurance costs now under control, Debtor employed a real estate agent in the case to sell unencumbered property to repay his creditors.Debtor anticipates filing a plan of reorganization within forty-five days.On these factsthe Court is tasked with determining: (i) whether any stay went into effect upon the commencement of the Third Case; (ii) whether the foreclosure sale conducted the day after the commencement of the Third Case terminated any rights of Debtor and/or the bankruptcy estate in the Property; (iii) whether imposition of a stay is appropriate in this case; and (iv) if imposition of a stay is appropriate, whether such imposition would in any way alter the results of the foreclosure sale.

CONCLUSIONS OF LAW

(A) No Stay Went Into Effect Upon Commencement of the Third Case

SPS's Motion to Confirm seeks confirmation pursuant to § 362(c)(4)(A)(ii) that no automatic stay was in place at the time it conducted the foreclosure sale on March 3, 2020, the day after Debtor commenced his Third Case.Section 362(c)(4)(A) provides:

(i) if a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b), the stay under

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