In re Williams, CASE NO: 15–70612

• Decision Date: 18 February 2016
• Docket Number: CASE NO: 15–70612
• Parties: In re: Hugo Manuel Williams, Debtor
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

545 B.R. 917

In re: Hugo Manuel Williams, Debtor

CASE NO: 15–70612

United States Bankruptcy Court, S.D. Texas, McAllen Division.

Signed February 18, 2016

Raul E. Mora, Attorney at Law, McAllen, TX, for Debtor.

MEMORANDUM OPINION GRANTING MAGIC VALLEY SERVICES, INC. & RAMIRO GONZALEZS' MOTIONS REQUESTING ORDER CONFIRMING TERMINATION OF THE AUTOMATIC STAY & CO–DEBTOR STAY

[Resolving ECF No. 17 & 18 ]

Eduardo V. Rodriguez

, United States Bankruptcy Judge

I. INTRODUCTION

The instant case presents a question that is a matter of first impression for this Court. Magic Valley Services, Inc. ("Magic Valley "), a secured creditor in this case, has brought its Motion Requesting Order Confirming Termination of the Automatic Stay and Co–Debtor Stay, [ECF No. 17], and contemporaneous to Magic Valley's motion, secured creditor Ramiro Gonzalez ("Gonzalez, " collectively "Creditors ") filed his Motion Requesting Order Confirming Termination of the Automatic Stay and Co–Debtor Stay (collectively, the "Motions "). [ECF No. 18]. The question is as follows: should the Court confirm that the Automatic Stay is not in effect or has been terminated in the Debtor's bankruptcy case? This Court considers the Motions, the arguments presented in a hearings on this matter held February 12, 2016 and February 17, 2016, all other evidence in the record, and relevant case law and determines that the answer is yes and that the Motions should be GRANTED.

II. PROCEDURAL BACKGROUND

Hugo Manuel Williams ("Debtor") is on his third bankruptcy,¹ two, including the instant case, having been filed within the prior year. Debtor filed the instant bankruptcy on November 30, 2015. [Case No. 15–70612, ECF No. 1]. Pursuant to

11 U.S.C. § 362

(the "Automatic Stay "), Debtor was required to file a motion and obtain an order extending or imposing the automatic stay, as applicable, within the first 30 days after filing his bankruptcy petition. Therefore, the issues for this memorandum opinion are: (1) whether Debtor filed such a motion and obtained such an order; and (2) if not, what the current status of the Automatic Stay is.

III. FINDINGS OF FACT

This Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rules of Bankruptcy Procedure 7052

, which incorporates Fed.R.Civ.P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.

1. Debtor's prior bankruptcy case, Case No. 15–70336, was filed on July 6, 2015, [Case No. 15–70336, ECF No. 1], and dismissed on October 20, 2015, [ECF No. 47], for failure to timely file schedules or a plan. [ECF No. 28]. Furthermore, according to the Motions, Debtor was in arrears on his payments to the chapter 13 trustee. [Case No. 15–70612, ECF No. 17 at ¶ 2; 18 at ¶ 2].

2. In the instant bankruptcy, Debtor filed his petition for relief under chapter 13 of title 11 of the United States Code (the "Bankruptcy Code " or "Code ")² on November 30, 2015, thereby initiating Case No. 15–70612. [ECF No. 1].

3. On Schedule A, filed on November 30, 2015, Debtor listed "Primarose Estates UT 2 Lot 67" as his homestead (the "Homestead Property "). Id. at 9. Debtor also claimed the Homestead Property as exempt under Texas law. Id. at 14.

4. On December 30, 2015, the time to file a motion to extend or impose the Automatic Stay expired.

5. On January 4, 2016, Magic Valley filed its Motion Requesting Order Confirming Termination of the Automatic Stay and Co–Debtor Stay. [ECF No. 17]. Magic Valley's motion asserts a lien on Lot 67 Primarosa Estates Subdivision No. 2, an addition to the City of Edinburg as shown by the map or plat thereof recorded in Volume 47, Pg. 68–69 Map Records, Hidalgo County Texas and the improvements thereon. [ECF No. 1 at 9, 14; 17 at ¶ 3]. Magic Valley states that Debtor is ten months in arrears for payments on the Homestead Property. Additionally, Magic Valley asserts that it has paid the 2015 ad valorem taxes on the Homestead Property. [ECF No. 17 at 3]. Magic Valley's motion requests that this Court hold a hearing to confirm the expiration of the automatic stay, noting that the Debtor has not filed a motion to extend the automatic stay within the statutory 30–day limit. Id. at ¶ 4.

6. Also on January 4, 2016, Gonzalez filed his Motion Requesting Order Confirming Termination of the Automatic Stay and Co–Debtor Stay, [ECF No. 18], and it is substantially the same as Magic Valley's motion. Compare [ECF No. 17] with [ECF No. 18]. Gonzalez asserts a Mechanic's & Materialman's Lien against the Homestead Property and states that the Debtor was 13 months in arrears. Id. at ¶ 3. Gonzalez also requests that this Court hold a hearing to confirm that the Automatic Stay has been terminated in the instant case.

7. The Motions included negative notice language, as required by BLR 9013–1(b), and thus require a party opposing the motion to file a response within 21 days thereof. The 21 days for a response to be filed expired on January 25, 2016 without a response being filed by Debtor.

8. On February 12, 2016, this Court conducted an evidentiary hearing (the "Hearing I "). At the Hearing I, Debtor, without the aid of his attorney, Mr. Raul E. Mora ("Mr. Mora "), who failed to appear, testified and Counsel for both Creditors offered exhibits to be admitted.

9. Exhibits offered at the Hearing:

a. Counsel for Creditors offered and moved to admit two exhibits. Both exhibits were admitted at the Hearing I:

i. Exhibit A: Case No. 15–70036–M–13 Docket Sheet

ii. Exhibit B: Case No. 15–70612–M–13 Docket Sheet

10. Debtor testified to the following:

a. Debtor stated that he had spoken with his Mr. Mora during a meeting at Mr. Mora's office, but was unsure why Mr. Mora failed to appear.

b. This Court questioned Debtor as to his understanding of the nature of the proceeding and Debtor confirmed that he did understand.

c. Debtor stated that he was confused, but proceeded to discuss the merits and progress of the present bankruptcy case. This Court redirected Debtor, as the proceeding was not on the feasibility of the present bankruptcy case.

d. Debtor responded to this Court's redirect by stating that he did not understand why Mr. Mora had not filed a motion to extend the Automatic Stay.

11. As a result of the foregoing, this Court reset the instant matter to February 17, 2016 at 9:00 A.M., [ECF Nos. 33, 34], at which time this Court intended to take up the matter and question Mr. Mora about his failure to attend the initial Hearing.

12. On February 17, 2016, this Court conducted its second evidentiary hearing (the "Hearing II "). At Hearing II, Debtor, again without the aid of Mr. Mora, who again no-showed, was sworn in and testified. Counsel for Creditors appeared and, again, was ready to present arguments on behalf of Creditors. This Court proceeded to hear the matter, as it had already been continued a first time. No additional evidence was presented or admitted.

a. Debtor stated that he met with Mr. Mora at his office the prior day, presumably February 16, 2016, to review paperwork for filing. At that meeting, according to Debtor, Debtor and Mr. Mora specifically discussed the pending Hearing II. Debtor was unclear as to why Mr. Mora again failed to appear.

b. Counsel for Creditors presented his argument, which, in essence, was presenting the two exhibits as evidence of Debtor having had two pending bankruptcy cases within the prior year and that the docket revealed no motion to extend having been filed within the first 30 days of the pending bankruptcy case. Counsel also stated that the chapter 13 trustee's report indicated that Debtor was $1,800.00 behind in payments to the trustee in the instant case.

c. Debtor testified to the following:

i. Debtor testified about his arrearages for the present bankruptcy and steps taken to cure.ii. In response to this Court's questioning, Debtor stated that he understood what Creditors were seeking: the confirmation of the termination of the Automatic Stay due to the lack of a motion filed to extend the Automatic Stay in the instant case, since it was Debtor's second bankruptcy pending in the prior year.

iii. Debtor further stated that he did not know what the motion to extend was and that he did not know what was going on. Debtor postulated that perhaps if he had another attorney a motion to extend might have been filed.

IV. Legal Standard

Section 362

provides that a stay, which is applicable to all entities, is automatically applied whenever a debtor files a petition for bankruptcy, whether voluntary or involuntary. 11 U.S.C. § 362(a) (the "Automatic Stay "). The Automatic Stay prohibits a variety of actions against the debtor and the debtor's property. § 362(a)(1)–(8). The Automatic Stay persists through the pendency of the case or the time of discharge in a chapter 7 for individuals and for all debtors in chapters 9, 11, 12, or 13. § 362(c)(2)(A–C). However, the Automatic Stay is subject to certain restrictions when the debtor has had one or more cases pending within a year prior to filing the current petition. § 362(c)(3)(a) & (4)(A). When a debtor has two or more cases pending within a year prior to filing the current petition, the Automatic Stay is not ever in automatic effect. § 362(c)(4)(A)(i).

However, § 362(c)(3)(A)

, which is applicable in the instant case, provides a different limitation on the Automatic Stay. Section 362(c)(3) & (3)(A), when read in pari materia, states that:

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) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such 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;

§ 362(c)(3) & (3)(A)

. However, within the...