In re Goodrich, Case # 17-10500

• Citation: 591 B.R. 538
• Decision Date: 24 September 2018
• Docket Number: Case # 17-10500
• Parties: IN RE: Robert GOODRICH, Debtor.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court —District of Vermont

591 B.R. 538

IN RE: Robert GOODRICH, Debtor.

Case # 17-10500

United States Bankruptcy Court, D. Vermont.

Signed September 24, 2018

Rebecca Rice, Esq., Cohen & Rice, Rutland, Vermont, For the Debtor

Jan M. Sensenich, Esq., Office of the Chapter 13 Trustee, Norwich, Vermont, As the Standing Trustee

Heather Z. Cooper, Esq., Facey Goss & McPhee, P.C., Rutland, Vermont, For Jennifer Soutar

MEMORANDUM OF DECISION

OVERRULING THE CREDITOR'S OBJECTION AND GRANTING DEBTOR'S MOTION TO CONTINUE THE AUTOMATIC STAY, WITH CONDITIONS

Colleen A. Brown, United States Bankruptcy Judge

Within one week of this Court entering a memorandum of decision and order determining the scope of the automatic stay applicable in a repeat filer's bankruptcy case, Robert Goodrich filed a motion to continue the automatic stay in this case (doc. # 40, the "Motion"), under § 362(c)(3)(B) of the Bankruptcy Code.¹ Mr. Goodrich (the "Debtor") had filed this chapter 13 bankruptcy case on November 20, 2017, within one year of the date this Court dismissed his prior chapter 13 case. Since this is his second chapter 13 case pending within one year, he is subject to the restrictions set out in § 362(c)(3)(A), under which the automatic stay in this case would, absent the instant motion, terminate 30 days after the Debtor filed this case. The primary creditor in this case, Jennifer Soutar, filed an objection to the Motion (doc. # 42, the "Objection"). The Court held a hearing on August 17, 2018, and took the matter under advisement.

This is one of three motions a debtor has filed to extend the automatic stay, in this District, since the Court changed its position regarding the scope of stay termination in repeat filer cases, under § 362(c)(3)(A). See In re Goodrich, 587 B.R. 829 (Bankr. D. Vt. 2018). Unlike the other two occasions, where the facts and circumstances weighed decisively for or against the debtor,² the Motion and proof in this case present a close call.

Based upon the record in this case, the arguments and testimony presented at the hearing on the Motion, and for the reasons set forth below, the Court overrules Ms. Soutar's Objection, grants the Debtor's Motion for an extension of the stay, and imposes conditions on the extension of the stay, as it applies to creditor Soutar.

I. JURISDICTION

The Court has jurisdiction over this contested matter pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Order of Reference entered on June 22, 2012. The Court declares the Debtor's Motion, seeking an extension of the automatic stay, constitutes a core proceeding for purposes of 28 U.S.C. § 157(b)(2)(A) and (G), over which this Court has constitutional authority to enter a final judgment.

II. LEGAL QUESTIONS PRESENTED

This Motion presents five legal issues under the repeat filing statute:

(1) Does § 362(c)(3)(A) apply in this case and trigger a possible termination of the automatic stay, as to all creditors, on the 30th day after the case was filed?

(2) Did the Debtor timely move to extend the stay, and timely present evidence at a hearing, as required by § 362(c)(3)(B) ?

(3) Does a presumption arise that the Debtor filed this case not in good faith, under § 362(c)(3)(C) ?

(4) If so, has the Debtor rebutted the "not filed in good faith presumption," by clear and convincing evidence, in satisfaction of § 362(c)(3)(C) ?

(5) If the Debtor has met that burden of proof and established he filed this case in good faith, what, if any, conditions on the extension of the stay are warranted, under § 362(c)(3)(B) ?

III. FACTUAL BACKGROUND

On August 25, 2000, Jennifer Soutar (the "Creditor") made a loan to the Debtor, secured by a mortgage on the Debtor's real property in Groton, Vermont. On the date he filed the instant bankruptcy case, the Debtor was in default on his payment obligations to the Creditor. See claim # 6-2. The Debtor filed three chapter 13 bankruptcy cases over the past three years and the Creditor has been an active participant in all three cases. The Debtor first filed a petition for relief under chapter 13 of the Bankruptcy Code in June of 2015 (case # 15-10287); the Court dismissed that case, on the Creditor's motion, on September 22, 2015. The Debtor filed his second chapter 13 bankruptcy petition on November 6, 2015 (case # 15-11033); the Court dismissed that case on August 25, 2017, after the Debtor failed to comply with the terms of a conditional order of dismissal, entered after the Creditor filed a motion to dismiss (case # 15-11033, doc. # 31). Following dismissal of the second case, the Creditor commenced a foreclosure action (doc. # 17).³ On November 23, 2017, approximately three months after the Court dismissed the Debtor's prior case, the Debtor filed the instant chapter 13 case (case # 17-10500).

On December 21, 2017, thirty-one days after the Debtor filed the instant bankruptcy case, the Creditor filed a motion requesting an order confirming the automatic stay had expired (doc. # 13). On January 5, 2018, the Debtor filed a response, acknowledging he had a chapter 13 case pending within the last year and that the automatic stay terminated by operation of law after 30 days, but only to the extent set forth in In re McFeeley, 362 B.R. 121 (Bankr. D. Vt. 2007), i.e. the stay terminated only as to acts against the Debtor or his property (doc. # 16). On January 11, 2018, the Creditor filed a reply, asking the Court to declare the automatic stay in this case does not apply to her claim, to change its interpretation of § 362(c)(3), and to adopt the rationale of In re Bender, 562 B.R. 578 (Bankr. E.D.N.Y. 2016) in construing that statute (doc # 18).

After the parties filed memoranda of law addressing whether there was cause for this Court to reconsider the position it took in McFeeley, and if so, the scope of the automatic stay in this case, the Court took the matter under advisement. On July 20, 2018, the Court entered a memorandum of decision and order, see doc. ## 35, 36, in which it (i) reconsidered the position it took in In re McFeeley; (ii) adopted what is generally referred to as the "minority approach" to interpreting the repeat filer provisions of § 362(c)(3) ; (iii) determined that under § 362(c)(3)(A), the stay terminates entirely, i.e., against both the debtor's property and property of the estate, and for all creditors, unless the debtor or other party in interest makes the requisite showing, pursuant to § 362(c)(3)(B), and the Court orders otherwise, within 30 days of the date the debtor filed the second case; and (iv) granted the Debtor 30 days, from the date of entry of that order, to file a motion to extend the stay and present his proof, to rebut the presumption this case was not filed in good faith, as described in § 362(c)(3). In re Goodrich, 587 B.R. 829, 849 (Bankr. D. Vt. 2018).

Thereafter, the Debtor timely filed the Motion, the Creditor timely filed her Objection, and the Court held an evidentiary hearing at which only the Debtor testified.⁴

IV. DISCUSSION

Congress added § 362(c)(3) (the "Controlling Statute") to the Bankruptcy Code, to limit the extent of the automatic stay in repeat filer cases, as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8 § 302 ("BAPCA"). It reads as follows:

(c) ...

(3) if a single or joint case is filed by or against a debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b) –

(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case;

(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose ) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed....

(C) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such presumption may be rebutted by clear and convincing evidence to the contrary ) -

(i) as to all creditors, if -

(I) more than 1 previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was pending within the preceding 1-year period;

(II) a previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was dismissed within such 1-year period, after the debtor failed to-

(aa) file or amend the petition or other documents as required by this title or the court without substantial excuse (but mere inadvertence or negligence shall not be a substantial excuse unless the dismissal was caused by the negligence of the debtor's attorney);

(bb) provide adequate protection as ordered by the court; or

(cc) perform the terms of a plan confirmed by the court; or

(III) there has not been a substantial change in the financial or personal affairs of the debtor since the dismissal of the next most previous case under chapter 7, 11, or 13 or any other reason to conclude that the later case will be concluded -

(aa) if a case under chapter 7, with a discharge; or

(bb) if a case under chapter 11 or 13, with a confirmed plan that will be fully performed; and

(ii) as to any creditor that commenced an action under subsection (d) in a previous case in which the individual was a debtor if, as of the date of dismissal of such case, that action was still pending or had been resolved by terminating, conditioning, or limiting the stay as to actions of such creditor; and

11 U.S.C. § 362(c)(3) (2018) (emphasis added).

Though awkwardly drafted, this...