In re Smith, Bankruptcy No. LA 89-16152-VZ.
| Decision Date | 30 August 1989 |
| Docket Number | Bankruptcy No. LA 89-16152-VZ. |
| Citation | 105 BR 50 |
| Parties | In re Sanya SMITH, aka Sanya Williamson, Debtor. Mike MARQUAND, dba San Marcos Apartments, Movant, v. Sanya SMITH, aka Sanya Williamson, Respondent. |
| Court | U.S. Bankruptcy Court — Central District of California |
Kevin L. Mello, Santa Ana, Cal., for movant.
Debtor, Sanya Smith, did not appear and was not represented by counsel.
I
INTRODUCTION
Mike Marquand, dba San Marcos Apartments, ("Movant") filed and served a motion (the "Motion") pursuant to 11 U.S.C. § 362(d) for relief from the automatic stay provided by 11 U.S.C. § 362(a) (the "Stay"). In the Motion, Movant seeks an order relieving him of the Stay so he may enforce a "Judgment for Unlawful Detainer" (the "Judgment") obtained by Movant in the Municipal Court of the State of California, County of Los Angeles (the "State Court"). Movant obtained the Judgment in the State Court to regain possession of residential real property commonly known as 15238 Orange Avenue, No. 111, Paramount, California (the "Apartment"), from Sanya Smith ("Debtor"), the debtor in this Chapter 7 bankruptcy case.
The Motion is not unique or rare; I have heard over one hundred such motions in each month since April 1988 when I assumed the bench. With few and insignificant variations, these hundreds of motions involve facts identical to those I find below.
On June 30, 1988, Debtor entered into an Apartment Rental Agreement (the "Rental Agreement") with Movant. Under the terms of the Rental Agreement, Debtor agreed to pay Movant $695.00 per month beginning on July 1, 1988. On or about June 1, 1989, Debtor failed to pay the agreed upon monthly rent to Movant. Thereafter, on June 10, 1989, Movant, served a Notice to Pay Rent or Surrender Possession of Premises pursuant to Cal. Code of Civ.Proc. § 1161. Debtor did not pay the overdue rent. Movant then filed a complaint for unlawful detainer in the State Court (the "Complaint") on June 30, 1989. Debtor did not appear or otherwise respond to the Complaint.
On July 17, 1989, the Judgment was awarded to Movant. Before Movant could enforce the Judgement to regain possession of the Apartment, Debtor filed her Voluntary Petition Under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court, Central District of California on July 28, 1989. Movant was the only creditor listed on Debtor's Bankruptcy Schedules.
On August 1, 1989 Movant filed the Motion. On August 3, 1989 Movant served notice of the Motion and the Motion on Debtor by United States Mail. The Motion was heard on August 30, 1989. Debtor did not appear at the hearing or file any type of opposition to the Motion.
More than 39,000 Chapter 7 bankruptcy cases are filed in the Central District of California annually.1 A significant portion of these cases are apparently filed solely for the purpose of staying a residential landlord from dispossessing a debtor/tenant from a rented apartment or house. There is no exact count of these "unlawful detainer" cases pending in this district, but over the past several months, eighty percent of the motions for relief from Stay filed in Chapter 7 cases that I have heard involve residential unlawful detainer actions.
That these cases are filed solely for the purpose of staying enforcement of unlawful detainer judgments can be inferred from several facts: the commencement of the case by the filing of a "bare bones" petition without any schedules or statement of affairs ever being filed; the listing of no, few, or false creditors, if schedules are indeed filed; the failure of the debtor to appear at the mandatory section 341(a) meeting of creditors; and the refusal of debtors in these cases to comply with the requirements of the Bankruptcy Code, the Bankruptcy Rules, or this court's Local Rules and thereby failing to obtain a discharge.
The debtor/tenant almost never appears at the hearing on the landlord/movant's motion for relief from the Stay. When a debtor/tenant does appear, I always inquire as to the purpose of the bankruptcy case filing. Invariably the debtor tells me that he or she filed in order to stay his or her eviction from residential real property.
THE ROLE OF THE "BANKRUPTCY MILLS"
A principal, and perhaps the primary, reason for the proliferation of these unlawful detainer bankruptcy cases is the advice given to these debtor/tenants by some lawyers and many paralegals who are in business to advise low-income and legally unsophisticated individuals regarding the filing of bankruptcy cases.
Some of these lawyers and paralegals provide valuable services for reasonable compensation to those who are in financial distress and who seek the "fresh start" a Chapter 7 or Chapter 13 discharge provides. Unfortunately there are many others who mislead debtor/tenants into believing that filing a bankruptcy case will stay unlawful detainer evictions for an extended period of time and that no detrimental consequences will occur. These "bankruptcy mills" often take several hundreds of dollars in fees from debtor/tenants who cannot afford to pay rent in the first place.
Often these debtor/tenants are not advised that the filing of a bankruptcy case will have a deleterious effect on their credit records. In fact, many debtor/tenants who have appeared in my court have told me that these "bankruptcy mills" do not even disclose to these debtor/tenants that they were filing bankruptcy—rather, they are led to believe they are obtaining some appropriate form of legal relief in our legal system, which is all too often complex and intimidating to the lay-person.
Of course, not all of these debtor/tenants are innocent victims. Many have learned to manipulate the bankruptcy court system on their own, without the help of any of the "bankruptcy mills." These pro se debtor/tenants will often file not one, but two or more bankruptcies in order to delay improperly the enforcement of an unlawful detainer judgment. Landlords who have sought relief from the Stay before me have testified that some of these manipulative debtor/tenants have boasted that they can use (or misuse) the bankruptcy court system to delay the landlord's efforts to evict them for several months while paying no rent.
As discussed in section III above, the bankruptcy courts in the Central District of California are flooded with Chapter 7 and Chapter 13 cases filed solely for the purpose of delaying unlawful detainer evictions. Inevitably and swiftly following the filing of these cases is the filing of motions for relief of the Stay by landlords who are temporarily thwarted by this abuse of the bankruptcy court system. Nearly every bankruptcy judge in the Central District of California allows residential landlords to seek relief from the Stay in these unlawful detainer bankruptcy cases on shortened notice.2 Thus, contrary to the false representations made by the "bankruptcy mills," the debtor/tenants generally obtain only a brief respite from the consummation of the unlawful detainer evictions, after having paid hundreds of dollars to these mills.
The United States Trustee for the Central District of California has joined forces with the United States Attorney in an attempt to put these "bankruptcy mills" out of business.3 These laudable efforts have met with little success. This is due to the ease with which operators of these bankruptcy mills can shuck one business identity, assume another, change location, and continue to defraud an unending supply of debtor/tenants and abuse the protection afforded by the Stay.
The Bankruptcy Court for the Central District of California is the busiest bankruptcy court in the nation, with over 50,000 bankruptcy case filings a year.4 The mountain of paper work that accompanies the thousands of abusive "unlawful detainer" case filings places an unnecessary burden on our already overworked and undercompensated clerk's office. Of course this mountain of paperwork flows from our Clerk's Office to the chambers of our judges when landlords file their relief from Stay motions. Because of the increased workload caused by these blatantly abusive unlawful detainer case filings, our court has had to establish special procedures dismissing these cases as quickly as possible so that the court's dockets and the clerk's files will not become more choked with paperwork than they already are.
These relief from Stay motions are rarely contested and are never lost, as long as the moving party provides adequate notice of the motion and competent evidence to establish a prima facie case. Thus, bankruptcy courts in our district hear dozens of these Stay motions weekly, none of which involves any justiciable controversies of fact or law.
Section 362(a) provides in pertinent part:
The term "property of the estate," as used in section 362(a), is defined in section 541(a)(1) to include:
All legal or equitable interests of the debtor in property as of the commencement of the case.
A bankruptcy court...
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