In re Morrow
| Citation | 495 B.R. 378 |
| Decision Date | 27 June 2013 |
| Docket Number | No. 12bk26246.,12bk26246. |
| Parties | In re Debra A. MORROW, Debtor. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
OPINION TEXT STARTS HERE
Vytas Jurjonas, Attorney at Law, Chicago, IL, Counsel for Movant.
Daniel M. Moulton, Law Offices of Daniel Moulton, Chicago, IL, Counsel for Debtor.
This matter comes before the court on the Movant's Motion To Reconsider the Court's Order of January 14, 2013 Denying Motion for Relief from Stay (the “ Motion”) [Docket No. 44] of movant Parkside Place Condominium Association (the “ Movant ”) wherein the Movant seeks reconsideration of this court's Order Denying Without Prejudice Motion for Relief from Stay (the “ Order ”) [Docket No. 43] which denied the Movant relief from the automatic stay. 1
The federal district courts have “original and exclusive jurisdiction” of all cases under title 11 of the United States Code (the “ Bankruptcy Code ”). 28 U.S.C. § 1334(a). The federal district courts also have “original but not exclusive jurisdiction” of all civil proceedings arising under title 11 of the United States Code, or arising in or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).
A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under title 11. 28 U.S.C. § 157(b)(1). A motion for relief from stay arises in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(G). In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 976–77 (N.D.Ill.1992); In re Quade, 482 B.R. 217, 221 (Bankr.N.D.Ill.2012) (Barnes, J.). It follows that a motion to reconsider an order regarding such a motion for relief from stay also arises in a case under title 11. SeeFed.R.Civ.P. 60 (); Elscint, Inc. v. First Wisc. Fin. Corp. (In re Xonics), 813 F.2d 127, 130 (7th Cir.1987) ().
Accordingly, final judgment is within the scope of the court's authority.
In considering the Motion, the court has considered the arguments of the parties at the February 4, 2013 hearing on the Motion and the January 14, 2013 hearing on the underlying motion for relief from stay (the “ Hearings ”), and has reviewed and considered the Motion itself, the Order, as well as:
(1) The Motion for Relief from Stay [Docket No. 31];
(2) Debtor's Response to Parkside Place Condominium Association's Motion for Relief from the Automatic Stay [Docket No. 38]; and
(3) The Movant's Reply to Debtor's Response to Parkside Place Condominium Association's Motion for Relief from the Automatic Stay [Docket No. 40].
The court has also taken into consideration any and all exhibits submitted in conjunction with the foregoing. Though these items together do not constitute an exhaustive list of the filings in the above-captioned bankruptcy case, the court has taken judicial notice of the contents of the docket in this matter. See Levine v. Egidi, No. 93C188, 1993 WL 69146, at *2 (N.D.Ill. March 8, 1993); Inskeep v. Grosso ( In re Fin. Partners ), 116 B.R. 629, 635 (Bankr.N.D.Ill.1989) (Sonderby, J.) ().
In this matter, the facts are essentially undisputed. For the purposes of determining the Motion, the court therefore finds as follows:
(1) Debra A. Morrow (the “ Debtor ”) is the owner and resident of a condo in Illinois.
(2) Some time prior to the commencement of the Debtor's chapter 13 bankruptcy case on June 29, 2012, the Debtor fell into arrears on her condo association dues to the Movant.
(3.) On June 6, 2011, the Movant brought an action in Illinois state court with respect to those arrearages.
(4) On March 21, 2012, after the resolution of various procedural aspects of the state court action, the Movant obtained a money judgment in the amount of $7,288.00 (the “ Judgment ”) and an order for possession per 735 ILCS 5/9–111 (the “ Order for Possession ”).
(5) Though the Order for Possession was automatically stayed for 60 days by operation of 735 ILCS 5/9–111, the state court judge exercised discretion and stayed the Order for Possession for an additional 30 days (for a total of 90 days).
(6) On or about June 19, 2012, the 90–day stay of the Order for Possession expired.
(7) Prior to that time, however, on April 20, 2012 and again on June 8, 2012, the Debtor's husband moved pro se for reconsideration of the Order for Possession. The Debtor's husband was apparently moving on the Debtor's behalf.
(8) The motions for reconsideration were together scheduled for hearing on July 6, 2012.
(9) Prior to the July 6, 2012 hearing on reconsideration, the Debtor, on June 29, 2012 (the “ Petition Date ”), commenced her chapter 13 bankruptcy case (the “ Case ”). On the Petition Date and at all times since that time, the Debtor was in retention of and has retained possession of the condo.
(10) On July 6, 2012 (after the Petition Date), the state court denied the motion for reconsideration for lack of standing of the Debtor's husband to move on behalf of the Debtor.
(11) On August 3, 2012 (also after the Petition Date), the Debtor appealed. The Movant has not disputed the validity of the appeal, but noted that no bond was secured by the Debtor.
(12) On November 19, 2012, the court confirmed the Debtor's chapter 13 plan (the “ Plan ”). The Plan provided for payment to the Movant as a secured creditor of an amount less than that of the Judgment ($1,000 at 2% interest in monthly payments of $18 until paid in full).
(13) The Movant did not object to its treatment under the Plan. The Movant also does not dispute that it accepted plan payments under the Plan, both pre-and postconfirmation. Nor does it dispute that it received notice of the Case and the Plan, and had an opportunity to object.
(14) On November 27, 2012, the Movant sought relief from the automatic stay extant in the Case, alleging as its grounds the prepetition defaults underlying the Judgment and the existence of the Order for Possession.
(15) On January 7, 2013, the Debtor moved to amend the Plan to increase the amount owed to the Movant to the Judgment amount, with payments also being increased accordingly. The Movant did not object to the motion to amend.
(16) On January 14, 2013, the court entered the Order denying the motion for relief from stay because the Movant had failed to allege grounds arising after the confirmation of the Plan.
(17) On January 28, 2013, the Movant filed the Motion, seeking reconsideration of the January 14, 2013 Order.
(18) On February 4, 2013, the court ruled orally from the bench, denying the Motion and granting the motion to amend. At that time, the court stated that its reasons for denying the Motion would be more fully set forth in writing in a memorandum decision to follow.
The matter before the court consists of two independent, but related issues. The first is the question of whether a party provided for under a confirmed chapter 13 plan may nonetheless seek postconfirmation relief from stay predicated solely on preconfirmation grounds.2 The second question is an issue of first impression in this court: Whether the existence of a prepetition “order for possession” arising out of 735 ILCS 5/9–111 in any way changes the answer to the first question.
The court will consider each question in turn.
The nature of relief from stay litigation is not, in many instances, what it appears to be. To the uninitiated (and perhaps to some well versed in. bankruptcy practice), it may appear that stay litigation is about the debtor's performance of its non-bankruptcy legal obligations. For example, it is not uncommon for parties to discuss how many months of default a debtor may have incurred regarding its mortgage payments when the court is asked to grant relief from stay to the applicable lender.
This is, however, a mostly mistaken appearance.
As one court within the Seventh Circuit has made clear, the litigation is instead about the relationship between the movant, the movant's collateral and the bankruptcy estate. In re Moore, 450 B.R. 849, 852 (Bankr.N.D.Ind.2011). “It is not an adjudication as to whether the debtor is or is not in default, or whether the creditor is or is not entitled to repossess its collateral.” 3Id. Merely having defaulted on a payment obligation is not enough, especially a prepetition one, given that in chapter 13, at least, a debtor is authorized to cure certain defaults through its plan. 11 U.S.C. § 1322(b)(5).
What Moore makes clear is something that should be tautological: Any analysis of grounds for relief from stay must begin with the statute itself. Section 362 of the Bankruptcy Code governs such requests, and states, in pertinent part, as follows:
On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay—
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if—
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization....
11 U.S.C. § 362(d)(1) & (2). As set forth in section 362(d), should a movant establish...
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