In re Tubman, 06-15054-RAG.

• Decision Date: 26 March 2007
• Docket Number: No. 06-15054-RAG.,06-15054-RAG.
• Citation: 364 B.R. 574
• Parties: In re Michelle D. TUBMAN, Debtor.
• Court: U.S. Bankruptcy Court — District of Maryland

364 B.R. 574

In re Michelle D. TUBMAN, Debtor.

No. 06-15054-RAG.

United States Bankruptcy Court, D. Maryland, at Baltimore.

March 26, 2007.

Heather S. Buerger, Towson, MD, Brett Weiss, Co-Counsel, Brett Weiss P.C., Olney, MD, for Debtor.

Richard J. Rogers, Cohn, Goldberg & Deutsch, LLC, Towson, MD, for Litton Loan Servicing, L.P.

Ellen W. Cosby, Baltimore, MD, Chapter 13 Trustee.

REVISED MEMORANDUM OPINION¹

ROBERT A. GORDON, Bankruptcy Judge.

In this case, the Court is presented with two questions for decision. First, can a motion to extend the automatic stay under 11 U.S.C. § 362(c)(3)(B)² filed after the close of the 30-day post-petition window be considered by the Court? And second, if not, to what extent does Section 362(c)(3)(A) operate to terminate the automatic stay provided by Section 362(a)?

The Parties agree that Debtor filed an untimely motion for continuation of the automatic stay under Section 362(c)(3)(B). Pursuant to the new regimen brought about by the Bankruptcy Abuse Prevention and Consumer Protection Amendments ("BAPCPA"), it is plain that the absence of a timely motion triggers some effect on the automatic stay under Section 362(c)(3)(A). The Parties disagree, however, as to the nature and scope of that effect. And with an eye towards her potentially risky position, Debtor also offers a possible alternative avenue for relief that envisions the creation of an injunctive stay against creditor action under Section 105(a).

Debtor principally argues that Section 362(c)(3)(A)'s termination of the automatic stay is of limited impact. Debtor contends that while the specific language of 362(c)(3) terminates the automatic stay as to actions against the debtor and property of the debtor, the selfsame language leaves the stay in effect as to property of the estate. Alternatively, Debtor argues that assuming Section 362(a)'s automatic stay is gone for good and cannot now be extended, the Court can still use the equitable powers granted under Section 105(a) to construct a new injunctive stay.

On the opposite side of the debate, Respondent Litton Loan Servicing ("Litton") contends that when Section 362(c)(3) is activated the automatic stay is terminated in toto, with no protection remaining for either the debtor, her property, or property of the estate. Respondent also contends that triage relief, under Section 105(a) is not appropriate because BAPCPA's new statutory scheme is the sole refuge from creditor action in this context and, moreover, Debtor has not satisfied the legal standards for the imposition of an injunction.

For the reasons stated below, the Court holds that while an untimely filed motion cannot serve to reimpose the automatic stay pursuant to Section 362(c)(3)(B), nevertheless the automatic stay is not terminated as to property of the estate, under the controlling statutory language.

Factual Background

On November 3, 2003, Debtor filed her most recent prior Chapter 13 case (03-65647-JFS). The City of Baltimore filed a $1,762.27 priority tax claim and Cavalry Portfolio Services, LLC filed a general unsecured claim in the amount of $761.33. Litton, holder of a Note secured by a Deed of Trust (the "Security Documents") on Debtor's residence located at 1718 Hartsdale Road, Baltimore, MD 21239 (the "Residence"), filed a claim in the amount of $70,556, that included pre-petition arrears of $23,254.82. Debtor's plan, as amended by line filed on December 9, 2003 and confirmed on March 2, 2004, called for 60 monthly payments of $512 to her Chapter 13 Trustee. Hence, the majority of plan proceeds, totaling $30,720, were to be distributed to Litton to pay in full the outstanding arrears.

On May 6, 2004, JP Morgan Chase Bank ("Morgan") as Trustee, c/o Residential Funding Corporation, filed a motion for relief from stay as to the Residence³ On June 18, 2004, the parties' consent order modifying automatic stay was entered and Morgan's motion was thereby resolved. Per the consent order, Debtor was required, among other things, to cure a post-petition default in the amount of 83,312. Morgan filed an affidavit of default under the consent order on October 21, 2005 and Debtor cured the same as confirmed by line filed on November 15, 2005.

On April 19, 2006, the Trustee filed a motion to dismiss for material default in plan payments, alleging that Debtor was in default for 11 months or approximately $5,500. Although Debtor initially objected, she later withdrew her response and the case was dismissed on July 5, 2006. At the October 25, 2006 hearing in the current case, Debtor's counsel proffered that before dismissal Debtor's total plan payments in the prior case, amounted to approximately $9,300. Likewise through proffer, Debtor attributes the dismissal of the prior case to both her loss of employment and her spouse's incarceration, resulting in her inability to make plan payments.

Debtor filed this case on August 23, 2006, 49 days after the dismissal of the prior case. Debtor's amended plan, filed on November 3, 2006 and confirmed on December 1, 2006, calls for payments of $570 for 3 months and then payments of $630 for the remaining 57 months. Of the $37,620 in anticipated plan proceeds, the majority will be distributed to Litton on account of pre-petition arrears in the amount of $23,250⁴.

Since Ms. Tubman was a Debtor in a case dismissed within the preceding year, BAPCPA's recently minted Section 362(c)(3) applies to this case. Accordingly, on September 18, 2006, Debtor filed a motion to extend automatic stay under Section 362(c)(3)(B). By a hair, that motion would have been made within the initial 30 day period except that Counsel erroneously filed it in the dismissed 2003 case. An order denying the motion, which noted that the 2003 case was dismissed on July 5, 2006, was therefore entered on September 25, 2006⁵. On the same day, Debtor filed the pending Motion to Extend Automatic Stay (the "Motion to Extend Stay") in this case. The end result is that the Motion to Extend Stay before the Court for consideration was filed on the 33rd day post-petition⁶.

To establish her good faith, Debtor avers in her Motion to Extend Stay that although the 2003 case was dismissed in part because of her loss of income⁷, she has now obtained a new, higher paying job⁸. Debtor also notes that this case was filed to save her home and its valuable equity⁹.

Litton, as servicing agent for the holder of the Deed of Trust, immediately objected to the Motion to Extend Stay by a response filed on September 26, 2006. Litton alleged Debtor was a serial filer¹⁰ and, as such, did not have the requisite degree of good faith necessary to justify an extension of the stay. Litton also noted that Debtor's two prior cases were filed on the eve of scheduled foreclosure sales and that neither case proved to be successful in the long run.

Debtor's Motion to Extend Stay was scheduled for the first available hearing date of September 29, 2006. Debtor and her Counsel appeared as did Counsel for Respondent. Before hearing from Counsel the Court noted that it appeared the Motion to Extend Stay had been filed out of time. Neither Debtor nor Respondent had addressed this issue in their papers and neither was prepared to present meaningful argument. In light of the substantial and disparate case law that has grown under BAPCPA with respect to the underlying issues and in order to make a fully informed decision, the automatic stay was continued on an emergency basis to allow the Parties to fully brief the questions presented. Debtor submitted her Brief in Support of the Motion to Extend Stay as to Debtor and Motion for Declaratory Judgment¹¹ as to Continuation of the Stay as to Property of the Estate (the "Motion for. Declaratory Judgment") on October 6, 2006. Respondent filed its memorandum in opposition on October 20, 2006.

The Court reconvened for the presentation of evidence and argument on October 25, 2006¹² With no objection, Debtor's testimony was presented by proffer. The relevant facts are set forth above. It was also noted that since the filing of this case, Debtor had made two mortgage payments and the one plan payment that had come due¹³.

Analysis

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, 157, and Local Rule 402 of the United States District Court for the District of Maryland. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(G).

Section 362(c) generally identifies the ways by which the automatic stay of Section 362(a) can terminate independent of a judicial determination made under Section 362(d). Sections 362(c)(3) and (4) are relatively new, having been added to Title 11 by BAPCPA and made effective on October 17, 2005. Section 362(c)(3) is applicable to one-time repeat bankruptcy filers-debtors who have had only one bankruptcy case dismissed within the previous year. For one-time repeat filers, the automatic stay terminates on the 30th day post-petition unless a party in interest files a motion to extend automatic stay that is noticed and heard by the Court before the expiration of the 30-day period. This Court has previously announced the standards governing adjudication of a timely filed motion to extend automatic stay by a one-time repeat filer under Sections 362(c)(3)(B) and (C). In re Mark, 336 B.R. 260 (Bankr.D.Md.2006).

By contrast, Section 362(c)(4) applies to multiple repeat filers, meaning debtors who have had two or more bankruptcy cases dismissed within the previous year. For multiple repeat filers, the automatic stay does not even go into effect upon the filing of the later case. Instead, a party in interest can seek to have the court impose the automatic stay by filing a motion within 30 days after the filing of the later case.

In this case, the Court must decide the effect of an untimely filed motion to, extend automatic stay under Section 362(c)(3).

Section 362(c)(3) provides:

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