In re Duran, 03-10624 ABC.

• Decision Date: 08 April 2003
• Docket Number: No. 03-10624 ABC.,03-10624 ABC.
• Parties: In re Sally Ann DURAN, Debtor.
• Court: U.S. Bankruptcy Court — District of Colorado

291 B.R. 542

In re Sally Ann DURAN, Debtor.

No. 03-10624 ABC.

United States Bankruptcy Court, D. Colorado.

April 8, 2003.

James E. Brown, Denver, CO, Cynthia J. Olson, Denver, CO, Deanne R. Stodden, Denver, CO, Alice Whitten, Arlington, TX, for creditors.

ORDER DENYING EMERGENCY MOTION FOR STAY PENDING APPEAL

BRUCE A. CAMPBELL, Bankruptcy Judge.

On February 18, 2003, Debtor filed her Emergency Motion for Stay Pending Appeal (" Motion"). Debtor seeks a stay of an order granting relief from the section 362 automatic stay to Olympus Servicing LP for the Benefit of the Owner, DLJ Mortgage Capital, Inc. ("Olympus"). Olympus filed its motion seeking stay relief on January 17, 2003. The order granting relief from stay entered on February 13, 2003 ("Order"). The Order contains language which purports to "waive" the ten-day stay provisions of Bankruptcy Rule 4001(a)(3), and consequently, it was effective immediately on being entered. Debtor now asks this Court to stay the Order to prevent Olympus from proceeding with a state court eviction proceeding, pending appeal.

Debtor makes a number of allegations with respect to the merits of the state court proceeding, none of which are relevant to the stay relief proceeding here. This Court granted Olympus relief from stay because the uncontested proffers of evidence presented at the hearing held pursuant to Local Bankruptcy Rule 401(c)¹ demonstrated that the Debtor's redemption period had expired, and title to the property had vested in Olympus, as a matter of state law, prior to the filing of Debtor's case. The Court did not, and could not make any findings under section 362(e) that the Debtor was reasonably likely to prevail at the conclusion of a final hearing, and thus did not, and could not, order the stay continued pending a final hearing on the Motion. 11 U.S.C. section 362(e).

The Debtor now seeks a stay of the order granting relief from stay while she appeals. This Court, however, cannot grant the relief requested. Because of the operation of section 362(e), the stay imposed by section 362(a) automatically expires thirty days after a request under section 362(d)² for relief from stay,

unless the court, after notice and a hearing, orders such stay continued in effect pending the conclusion of, or as a result of, a final hearing and determination made under subsection (d) of this section ....

The Court did not continue the stay in effect pending the conclusion of, or as a result of, a final hearing and determination made under subsection (d) of this section. Instead, the Court granted Olympus relief from stay, having determined, on the basis of what was presented at the Local Bankruptcy Rule 401 initial, non-evidentiary hearing, that under section 362(e), there was no "reasonable likelihood that [Debtor] will prevail at the conclusion of such final hearing." Only where the court finds such "reasonable likelihood" can relief from stay be denied at the initial hearing and the stay continued in effect and carried over to a final evidentiary hearing on material disputed facts.³

Because of the operation of section 362(e), the relief that the Debtor seeks on the instant Motion, i.e. a stay or tolling of the Court's order granting relief from stay, is impossible to grant. Subsection (e) of section 362 states that the section 362(a) stay automatically expires thirty days from filing of a section 362(d) stay relief application unless one of two prescribed events occurs: (a) the court orders the stay continued in effect pending an evidentiary hearing; or (b) the court orders the stay continued in effect following a final hearing — whether the "final" hearing is an initial or continued evidentiary hearing. For event (a) to occur, the party opposing stay relief at a preliminary, non-evidentiary hearing must demonstrate "reasonable likelihood" of prevailing if the matter is set over to a final evidentiary hearing. For event (b) to occur, the party opposing stay relief must prevail in getting the stay relief application denied, either at an initial or subsequent evidentiary hearing. Barring the occurrence of one of these two events, there is no stay thirty days after an application for stay relief is filed. It simply expires — "is terminated" — by Congress's mandate contained in section 362(e).

Thus at the initial Local Bankruptcy Rule 401(c) non-evidentiary hearing on Olympus's stay relief application, the Court having entered no order continuing the stay and thereby meeting one of the two "unless" conditions of section 362(e), the stay, as to Olympus, expired and no longer existed after February 16, 2003 (thirty days after Olympus filed its application for stay relief). Staying the operation of the Court's February 13, 2003 order does not change this. At most, the Court's February 13th ruling could, on timely application or by operation of Bankruptcy Rule 4001(a)(3), have been stayed a maximum of three days, from the date it entered on February 13th to February 16th, thirty days after the subject stay relief application was filed by Olympus on January 17th. In short, after February 16th, it is not only this Court's order that relieved Olympus from the stay, but, more importantly, the thirty-day time limit on the stay that Congress mandated in section 362(e). This Court cannot stay the operation of Congress's mandate in section 362(e).⁴ Unless one of the above-described conditions of section 362(e) is met — and in this case it was not — the stay is simply gone thirty days after a section 362(d) application is filed.

Accordingly, the Debtor's Motion is DENIED without prejudice to her right to seek relief from the district court or to seek relief in the state court proceedings.

1. L.B.R. 401(c) provides the applicable procedures for an initial hearing on a motion for relief from automatic stay. The rule provides, in part, that no witnesses are examined and no testimony is taken. A party intending or desiring to present evidence does so by way of an oral declaration of facts and offers of proof with respect to the evidence which the party would submit in...