In re Lewis, Bankruptcy No. 97-5-1033-JS. Adversary No. 97-5258-JS.
| Decision Date | 05 January 2001 |
| Docket Number | Bankruptcy No. 97-5-1033-JS. Adversary No. 97-5258-JS. |
| Citation | 257 BR 431 |
| Parties | In re Artie LEWIS, Elizabeth Lewis, a/k/a Elizabeth A. Lewis, a/k/a Elizabeth Robinson, Debtors. Allfirst Bank, f/k/a First National Bank of Maryland, Plaintiff, v. Artie Lewis, Elizabeth Lewis, Defendants. |
| Court | U.S. Bankruptcy Court — District of Maryland |
COPYRIGHT MATERIAL OMITTED
Martin B. Brown, Baltimore, MD, for debtors.
Jay V. Strong, Jr., Baltimore, MD, for plaintiff.
Charles R. Goldstein, Chapter 7 Trustee, Baltimore, MD.
This matter came before the Court upon the defendants' motion for stay of proceedings pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940. For the stated reasons, the motion will be denied.
FINDINGS OF FACT On January 27, 1997, the debtors filed a voluntary, joint petition under Chapter 7 of the Bankruptcy Code. On April 29, 1997, First National Bank of Maryland, now known as Allfirst Bank, filed the instant complaint to determine the dischargeability of debts. Several scheduling conferences were continued either as a result of the requests of defense counsel or the failure of the defendants to appear. On September 4, 1997, a pre-trial scheduling conference was conducted at which time this Court established deadlines for the filing of a status report and the completion of discovery.
By status letter dated December 9, 1997, the debtors requested that the proceedings be stayed as a result of the active military service of Mr. Lewis who was then on active duty stationed in Korea. Mrs. Lewis was also in Korea with her husband. By status letter dated January 12, 1998, debtors' counsel again requested a stay of the proceedings pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940. 50 U.S.C.App. § 501 et seq.
On July 22, 1998, the debtors filed a motion pursuant to the Soldiers' and Sailors' Civil Relief Act, in which a stay of proceedings was formally requested, "pending the completion of Sgt. Lewis's overseas active duty assignment." The motion requested that the stay be imposed as to Mrs. Lewis as well.
On August 17, 1998, this Court entered an order P. 30 staying proceedings pursuant to the Soldiers' and Sailors' Civil Relief Act, until such time as the debtors were no longer subject to the provisions of the Act. Thereafter, this Court requested periodic status reports in an effort to determine Mr. Lewis's military status and location.
According to a status letter submitted by debtors' counsel on June 30, 1999, the debtors have resided in the United States since at least March, 1999. Upon learning of his clients' return to the United States, debtors' counsel did not so advise the Court despite his knowledge that the proceedings were stayed until Mr. Lewis's overseas assignment was complete. The letter informed the Court that Mr. Lewis was stationed at Fort Bliss in El Paso, Texas, and that Mrs. Lewis had returned to her home in Nashville, Tennessee. Another pre-trial scheduling conference was scheduled for September 9, 1999, then postponed to September 21, 1999, at which time debtors' counsel failed to appear. The hearing was rescheduled for December 1, 1999, upon this Court's order to show cause why debtors' counsel failed to appear. After that hearing, the parties filed opposing briefs.
CONCLUSIONS OF LAW Under the Soldiers' and Sailors' Civil Relief Act of 1940 (the "Act")1, 50 U.S.C.A. app. § 501 et seq., a stay of civil proceedings against persons on active duty in the American military may be granted in the sound discretion of a court upon a showing that the applicants' military status inhibits or prevents them from preparing, maintaining or presenting an adequate defense to the pending action. The stay in question is governed by the provisions contained in Section 521 of the Act.2 Such a stay is not automatic by reason of one's military personnel status, but must be justified by a sufficient showing of prejudice if the civil action is allowed to proceed. Royster v. Lederle, 128 F.2d 197 199 (6th Cir.1942). In Boone v. Lightner, 319 U.S. 561, 575, 63 S.Ct. 1223, 1231, 87 L.Ed. 1587 (1943), the Supreme Court held that a continuance should not be granted upon the mere showing that a party is on active duty in the military. Boone, 319 U.S. at 565, 63 S.Ct. at 1226, 87 L.Ed. 1587. See also, Deacon v. Witham, 131 Misc.2d 217, 218, 499 N.Y.S.2d 317, 319 (1985). Rather, the trial court must determine whether, in its discretion, the party's defense will be materially affected as a result of military service. Boone, 319 U.S. at 565, 63 S.Ct. at 1226, 87 L.Ed. 1587. See also Robin Farms, Inc. v. Bartholome, 989 S.W.2d 238 (Mo.App.1999) (); Hackman v. Postel, 675 F.Supp. 1132 (N.D.Ill.1988) (); Tabor v. Miller, 389 F.2d 645 (3d Cir.1968) ().
The Soldiers' and Sailors' Civil Relief Act is applicable to bankruptcy proceedings. Toyota Motor Credit Corp. v. Montano (In re Montano), 192 B.R. 843, 844 (Bankr.D.Md.1996); Duggan v. Franklin Square Nat. Bank, 170 F.2d 922 (2d Cir.1948). In re Burrell, 230 B.R. 309, 312 (Bankr.E.D.Tex. 1999). See Bruce White and William L. Medford, "The Soldiers' and Sailors' Relief Act — Are You Stayed From Obtaining Relief From the Automatic Stay?", 18-MAR AM. BANKR. INST. J. 23 (March, 1999). It is proper to apply the Act to bankruptcy because a bankruptcy case is a civil proceeding conducted under the supervision of the district court and it includes as bankruptcy proceedings any events that occur in the bankruptcy case. In re Symington, 209 B.R. 678, 684 n. 4 (Bankr.D.Md.1997); The Baltimore Sun Co. v. Astri Investment Management & Securities Corp. ( ), 88 B.R. 730, 736 (D.Md. 1988). The Act is therefore applicable to the instant adversary proceeding brought by the plaintiff in the debtors' bankruptcy case to determine the dischargeability of a debt owed by the debtors.
Wright v. Asbury (In re Asbury), 250 B.R. 59, 65-6 (Bankr.D.Md.2000). Therefore, the filing of the instant complaint to determine the dischargeability of a single debt is not affected by the granting to the debtors of a discharge in the meantime. The issue of the debt's dischargeability, until resolved, will prevent the debtors from obtaining a discharge as to the one outstanding debt that is the subject of the instant complaint. If the complaint is stayed by reason of the Soldiers' and Sailors' Civil Relief Act, the debt remains undischarged unless and until the complaint reaches a resolution in the debtors' favor. In this sense, it is in the debtors' own interest to have the complaint decided, also assuming that the debtors are able to mount a valid defense to it.
The Soldiers' and Sailors' Civil Relief Act provides no guidance on the issue of which party bears the burden of proof. See, Boone, 319 U.S. at 569-570, 63 S.Ct. at 1228-1229. The Supreme Court has yet to address the issue.3 However, on a case by case basis, courts should impose the burden of proof upon whichever party is in the best position to show either that the applicant for the stay will be prejudiced by proceeding with the action or whether the applicant has improperly used the Act to prolong the controversy. In the instant case, it is the defendant-debtor who is in possession of the information needed to show that his defense will be materially affected by his military service. This he has failed to do.
This Court was correct in staying the instant proceeding while the debtor was on active military duty outside the United...
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