In re Jupiter, C/A No. 06-00963-JW.

• Decision Date: 21 June 2006
• Docket Number: C/A No. 06-00963-JW.
• Parties: In re Cherette Lenora JUPITER, Debtor.
• Court: United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina

344 B.R. 754

In re Cherette Lenora JUPITER, Debtor.

C/A No. 06-00963-JW.

United States Bankruptcy Court, D. South Carolina.

June 21, 2006.

D. Nathan Davis, Charleston, SC, for Debtor.

Janet B. Haigler, Finkel Law Firm, LLC, Columbia, SC, for National City.

ORDER CONFIRMING TERMINATION OF THE AUTOMATIC STAY

JOHN E. WAITES, Bankruptcy Judge.

This matter comes before the Court upon a Request for an Order Confirming Termination of the Automatic Stay ("Request") filed by National City Home Loan Services, Inc. ("National City"). The Request was served on all creditors and parties in interest. National City seeks an order confirming termination of the automatic stay pursuant to 11 U.S.C. § 362(j)¹ and SC LBR 4001-1(d). Cherette Lenora Jupiter ("Debtor") filed an objection to the Request. Based upon the facts of the case and applicable law, this Court makes the following Findings of Facts and Conclusions of Law.²

FINDINGS OF FACTS

1. On February 25, 2005, Debtor filed for relief under Chapter 13, Case No. 05-02247-W. This case was dismissed on .January 18, 2006 for failure to make timely payments to the Chapter 13 Trustee.

2. On March 9, 2006, Debtor filed this case under Chapter 13 of the Bankruptcy Code, as revised by the Bankruptcy Abuse and Consumer Protection Act of 2005 ("BAPCPA"). See Pub L. No. 109-8 (2005) (codified in scattered sections of 11 U.S.C.).

3. BAPCPA amended the Bankruptcy Code to add § 362(c)(3)(A), which provides that the automatic stay of § 362(a) terminates thirty days after the petition date if a debtor had a case pending within the year prior to the debtor's current petition date and that previous case was dismissed. Debtor falls within the category of debtors covered by § 362(c)(3)(A).

4. Debtor filed a Motion to Extend the Automatic Stay ("Motion") as to all creditors pursuant to § 362(c)(3)(B). Objections to the Motion were filed by James M. Wyman, the Chapter 13 Trustee ("Trustee") and National City.

5. After a hearing on Debtor's Motion, the Court entered an order on March 31, 2006 denying the Motion because Debtor failed to meet her burden of proof under § 362(c)(3)(B) by failing to demonstrate that this case was filed in good faith by clear and convincing evidence.³

6. National City holds a first mortgage on Debtor's residence described as 5090 Westview Street, Charleston, South Carolina ("Property").

7. The Property is property of Debtor's bankruptcy estate pursuant to §§ 541(a)(1) and 1306.

8. Prior to the petition date in Debtor's first case, National City filed an action to foreclose its lien on the Property. This action was stayed by Debtor's bankruptcies.

9. On April 25, 2006, National filed the Request for an order confirming the termination of automatic stay, pursuant to 11 U.S.C. § 362(j) and SC LBR 4001-1(d).

10. Debtor objected to the Request and contends that the termination of the automatic stay, pursuant to § 362(c)(3)(A), does not terminate the automatic stay of § 362(a) as to property of Debtor's estate.⁴

11. The Court entered an order on May 9, 2006, allowing Debtor, National City, and the Trustee to brief their positions in this matter. Each party submitted a proposed order.

CONCLUSIONS OF LAW

At issue is the interpretation of § 362(c)(3)(A) and whether that section provides for a termination of the automatic stay or whether it only terminates the automatic stay as to particular property. Section 362(c)(3)(A) provides:

(3) if a single or joint case is filed by or against 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....

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

Courts have struggled to discern the meaning of this new subsection of § 362. See In re Paschal, 337. B.R. 274, 277 (Bankr.E .D.N.C.2006) (stating that § 362(c)(3) is subject to multiple interpretations); In re Baldassaro, 338 B.R. 178, 182 (Bankr.D.N.H.2006) (stating that § 362(c)(3) is "poorly written"); In re Charles, 332 B.R. 538, 541 (Bankr.S.D.Tex. 2005) (stating that these provisions "are, at best, particularly difficult to parse and, at worst, virtually incoherent").

National City contends that, because the automatic stay was not extended, it is entitled to complete its foreclosure of the Property because the stay terminated with respect to the Property pursuant to § 362(c)(3)(A). National City seeks an order pursuant to § 362(j)⁵ to confirm that the automatic stay has in fact terminated with respect to the Property.⁶

Debtor and Trustee argue that the Property is protected by the automatic stay because § 362(c)(3)(A) does not terminate the automatic stay with respect to property of Debtor's estate but only terminates with respect to property of the Debtor. Because § 1306 broadly incorporates Debtor's pre-petition and post-petition property into Debtor's estate, presumably the only property that would be property of Debtor and not property of the estate is that property which has been abandoned or which is exempt or which is otherwise excluded from the definition of "property of the estate" pursuant to § 541(b) and (c)(2). See H.R.Rep. No. 595 (1977), U.S.Code Cong. & Admin.News 1978, p. 5963 (noting in the legislative history for § 362(a)(5) that property of the debtor is property acquired after the commencement of the case, property that is exempted, and property that does not pass to the estate). The Property falls into none of these categories but is rather property of the estate pursuant to §§ 541(a)(1) and 1306(a). Debtor and Trustee assert that the plain language of § 362(c)(3)(A) only provides that the stay of § 362(a) terminates with respect to debtor for an "action taken"⁷ with respect to a debt or property securing a debt, but does not terminate as to the Property because § 362(c)(3)(A) does not clearly reference termination with respect to property of Debtor's estate.⁸

The issue in this case has been discussed by other courts in published opinions. Each of these courts have concluded that the termination of the stay under § 362(c)(3)(A) does not terminate the stay with respect to property of the estate. See In re Jones, 339 B.R. 360 (Bankr.E.D.N.C. 2006) (concluding that the termination of the stay under § 362(c)(3)(A) causes the stay to terminate with respect to the debtor and property of the debtor but that the stay does not terminate with respect to property of the estate); In re Moon, 339 B.R. 668 (Bankr.N.D.Ohio 2006) (holding that the stay remains in place as to property of the estate if the stay terminates under § 362(c)(3)(A)); In re Johnson, 335 B.R. 805, 807 (Bankr.W.D.Tenn.2006) (holding that the stay remains in effect as to property of the estate until a debtor's case is dismissed or debtor receives a discharge or the court orders otherwise); In re Bell, C/A No. 06-11115, 2006 WL 1132907 *2 (Bankr.D.Colo.2006) (holding the stay remains in effect as to property of the estate after a termination of the stay under § 362(c)(3)(A)); but see, 3 COLLIER ON BANKRUPTCY at ¶ 362.06[3], at p. 362-84.11 (Lawrence P. King et al. eds., 15th ed. Revised 2005) (implying that the automatic stay terminates with respect to property of the estate if the property secures a debt of the debtor).

The analysis in these cases centers around the disparity of language in § 362(c)(3)(A) compared to § 362(a), § 362(c)(1), and § 362(c)(4)(A). Section 362(c)(4)(A)(i), applicable when a debtor has had two or more cases dismissed in the year prior to the petition date, is worded more concisely than § 362(c)(3)(A) and it plainly provides that the automatic stay of § 362(a) does not come into effect upon the filing of a debtor's third bankruptcy case within a one year period.⁹ Courts have noted that if Congress intended for § 362(c)(3)(A) to terminate all of the protections of the automatic stay that it could have included language similar to that used in § 362(c)(4)(A)(i) rather than using the language set forth in § 362(c)(3)(A). See Moon, 339 B.R. at 672 (citing Paschal, 337 B.R. at 278-279) (noting the contrast in language between the two sections and that § 362(c)(4)(A)(i) is broader than § 362(c)(3)(A)). One court asserts that in drafting different language for § 362(c)(3)(A) and § 362(c)(4)(A)(i), Congress intended to impose stiffer penalties on debtors who had multiple cases dismissed within the previous year. See In re Harris, 342 B.R. 274, 278-80 (Bankr. N.D.Ohio 2006).

In finding that § 362(c)(3)(A) terminates the stay only with respect to debtor and property of the debtor, the court in Jones noted that this interpretation is consistent with the characterization of prohibited acts under § 362(a), which, in multiple sections, seems to distinguish between acts against debtor and the property of the debtor, and acts against property of the estate. See Jones, 339 B.R. at 363-364 (discussing the different language used by Congress in § 362(a)); compare, 11 U.S.C. § 362(a)(4) (prohibiting an act to create, perfect, or enforce a lien against property of the estate) with 11 U.S.C. § 362(a)(5) (prohibiting an act to create, perfect, or enforce a lien against property of the debtor to the extent that it secures a prepetition claim). This distinction also appears in § 362(c)(1), which specifically addresses when the stay terminates with respect to property of the estate and when the stay terminates with respect to "any other act under subsection (a)."

Debtor's and Trustee's interpretation of § 362(c)(3)(A) has appeal because, as discussed in Moon, courts should presume that Congress acts intentionally and...