In re Reswick
Decision Date | 04 February 2011 |
Docket Number | Bankruptcy No. 09–32489.,BAP No. NC–10–1154–SaHKi. |
Citation | 446 B.R. 362,11 Cal. Daily Op. Serv. 3464,2011 Daily Journal D.A.R. 4117 |
Parties | In re James Bigelow RESWICK, Jr., aka Jim Reswick, Debtor.James Bigelow Reswick, Jr., Appellantv.Natalia U. Reswick; Stephen Benda; Vikaterina Tran; Law Offices of Stephen Benda, Appellees. |
Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
OPINION TEXT STARTS HERE
Cheryl Christine Rouse, Law Offices of Rouse & Bahlert, San Francisco, CA, for Appellant.Stephen Benda, Law Offices of Stephen Benda, for Appellee.
Before: SALTZMAN 1, HOLLOWELL and KIRSCHER, Bankruptcy Judges.
OPINION
This appeal arises from the bankruptcy court's order denying the debtor's motion for damages for violation of the automatic stay under 11 U.S.C. § 362(k)(1).2 The debtor contended that his ex-wife's postpetition garnishment of his wages violated the stay. His ex-wife argued—and the bankruptcy court agreed—that because the case was the debtor's second case within a year, the stay fully expired 30 days after the second case was filed pursuant to section 362(c)(3)(A), and accordingly the wage garnishment did not violate the stay. For the reasons discussed below, we AFFIRM the bankruptcy court's order denying the debtor's motion for damages.
Appellant James Bigelow Reswick, Jr. (the “Debtor”) initially filed a voluntary chapter 13 petition on March 23, 2009. The case was dismissed for non-payment on June 29, 2009. The Debtor filed a second voluntary chapter 13 petition (the “Second Case”) on August 25, 2009 (the “Second Petition Date”). The parties agree that because the Second Case was filed within a year of the earlier case's dismissal, section 362(c)(3) applied, terminating the automatic stay unless the bankruptcy court extended the stay on motion of a party in interest after a hearing held within the first 30 days following the Second Petition Date. No motion was filed, and as a result, the automatic stay terminated on September 24, 2009.
On October 2, 2009, Natalia Reswick (“Reswick”), the Debtor's ex-wife, initiated wage garnishment proceedings against the Debtor's post-petition earnings to collect a February 2008 Superior Court judgment.
On March 15, 2010, the Debtor filed a motion for damages for violation of the automatic stay under section 362(k)(1), seeking reimbursement of the $4,444.32 already garnished by Reswick plus attorneys' fees, emotional distress and punitive damages in the amount of $54,750.00. His motion was based on his contention that the automatic stay terminated only as to him and not as to the estate.
The bankruptcy court held a hearing on the motion on April 2, 2010 and took the matter under advisement to consider whether the automatic stay terminated in its entirety on the 30th day after the Second Petition Date, or whether the stay remained in place to prohibit acts against property of the estate. On April 15, 2010, the bankruptcy court denied the Debtor's motion on the grounds that the automatic stay terminated in its entirety on September 24, 2009, and accordingly, the wage garnishment commenced on October 2, 2009 did not violate the stay. The Debtor filed this timely appeal on April 29, 2010.
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (G). We have jurisdiction over this appeal pursuant to 28 U.S.C. § 158.
Whether the bankruptcy court erred in ruling that the automatic stay terminated in its entirety (i.e., as to the Debtor, the Debtor's property and property of the estate) under section 362(c)(3)(A) on the 30th day after the Second Petition Date.
A bankruptcy court's interpretation of the bankruptcy code is reviewed de novo. Bankr. Receivables Mgmt. v. Lopez (In re Lopez), 345 F.3d 701, 705 (9th Cir.2003).
This appeal centers around a narrow issue. The parties agree that when the Debtor filed his chapter 13 petition on August 25, 2009, he had one bankruptcy case pending within the previous year. They also agree that because no motion was filed to continue the automatic stay within the first 30 days after the Second Petition Date, the stay terminated pursuant to section 362(c)(3)(A) on September 24, 2009. The only issue in dispute is the extent of the termination. If, as the Debtor argues, section 362(c)(3)(A) operates to terminate the stay only as to the debtor, Reswick's wage garnishment proceedings initiated on October 2, 2009 violated the stay by collecting estate property.3 However, if, as Reswick argues, section 362(c)(3)(A) terminates the stay in its entirety (i.e., as to the debtor, the debtor's property and property of the estate), Reswick did not violate the stay by initiating wage garnishment proceedings on October 2, 2009.
The bankruptcy court agreed with Reswick. The court's order noted that there are two lines of cases addressing the scope of termination of the stay under section 362(c)(3)(A) and concluded: “[h]aving considered the opposing lines of authority, the court agrees with the persuasive reasoning set forth in In re Daniel, 404 B.R. 318 (Bankr.N.D.Ill.2009), and holds that the automatic stay terminated in its entirety on the 30th day after the petition date.” (Emphasis added.)
The bankruptcy court adopted the minority—but better-reasoned—interpretation.
The relevant bankruptcy code provision, section 362(c)(3)(A), provides:
(3) [I]f 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 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).
This appeal centers around how the phrase “with respect to the debtor” limits the termination of the automatic stay “with respect to any action taken with respect to a debt or property securing debt or with respect to any lease” for a repeat filer. Two distinct interpretations of section 362(c)(3)(A) have developed since the provision was added to the bankruptcy code as part of BAPCPA in 2005.
The majority interpretation finds the phrase “with respect to the debtor” to be both critical and unambiguous, and concludes that on the 30th day after the petition date, the automatic stay terminates only with respect to the debtor and the debtor's property, but not as to property of the estate. See, e.g., Holcomb v. Hardeman (In re Holcomb), 380 B.R. 813 (10th Cir. BAP 2008); Jumpp v. Chase Home Finance, LLC (In re Jumpp), 356 B.R. 789 (1st Cir. BAP 2006); In re Pope, 351 B.R. 14 (Bankr.D.R.I.2006); In re Murray, 350 B.R. 408 (Bankr.S.D.Ohio 2006); In re Brandon, 349 B.R. 130 (Bankr.M.D.N.C.2006); Bankers Trust Co. of Cal. v. Gillcrese (In re Gillcrese), 346 B.R. 373 (Bankr.W.D.Pa.2006); In re Williams, 346 B.R. 361 (Bankr.E.D.Pa.2006); In re Harris, 342 B.R. 274 (Bankr.N.D.Ohio 2006); In re Jones, 339 B.R. 360 (Bankr.E.D.N.C.2006); In re Moon, 339 B.R. 668 (Bankr.N.D.Ohio 2006); In re Johnson, 335 B.R. 805 (Bankr.W.D.Tenn.2006). Although these decisions state that the court need not read beyond the phrase “with respect to the debtor” to discern its meaning, see, e.g., Jones, 339 B.R. at 363 () , these decisions arguably do read beyond the phrase because they find that the stay terminates with respect to the debtor and to any property of the debtor that is not property of the estate. Id. at 362; see also Holcomb, 380 B.R. at 816 (); Jumpp, 356 B.R. at 797 ().
The minority interpretation urges that the phrase “with respect to the debtor” must be analyzed in the context of section 362(c)(3) as a whole. See In re Jupiter, 344 B.R. 754 (Bankr.D.S.C.2006), expanded upon in In re Daniel, 404 B.R. 318 (Bankr.N.D.Ill.2009), and adopted in two subsequent decisions including the order on appeal here. Using this analysis, these courts conclude that section 362(c)(3)(A) terminates the automatic stay in its entirety (i.e., with respect to the debtor, the debtor's property and property of the estate). Id. at 329; Jupiter, 344 B.R. at 759; In re Furlong, 426 B.R. 303, 307 (Bankr.C.D.Ill.2010). They construe “the remaining language of ‘with respect to the debtor’ to define which debtor is effected by this provision, with reference to section 362(c)(3).” Jupiter, 344 B.R. at 759. Because section 362(c)(3) begins by referencing either a “single or joint case,” the language “with respect to the debtor” in section 362(c)(3)(A) simply distinguishes between the debtor and the debtor's spouse. Id.; Daniel, 404 B.R. at 326. The courts found further support in the legislative history of section 362(c)(3)(A), noting its intent to address the perceived abuse of successive filings. Id. at 327; Jupiter, 344 B.R. at 761. See also In re Curry, 362 B.R. 394 (Bankr.N.D.Ill.2007) ( ).
The two interpretations are fundamentally different. Under the majority approach, it is unnecessary to do more than consider the language of the phrase “with respect to the debtor.” “Viewed in isolation, the language itself is unambiguous.” Jumpp, 356 B.R. at 793. The...
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