In re Fisher

In re: Mark Kevin Fisher, Debtor.

Case # 18-10343

UNITED STATES BANKRUPTCY COURT DISTRICT OF VERMONT

November 20, 2018

Formatted for Electronic Distribution

for Publication

Chapter 7

Appearances:

Erik Valdes, Esq.

Fitts, Olson & Giddings

Brattleboro, Vermont

For the Debtor

Elana Baron, Esq.

Bragdon & Kossayda, P.C.

Keene, New Hampshire

For Brattleboro Savings & Loan

MEMORANDUM OF DECISION SUSTAINING THE CREDITOR'S OBJECTION AND DENYING DEBTOR'S MOTION TO EXTEND THE AUTOMATIC STAY UNDER 11 U.S.C. § 362(C)(3)

On August 21, 2018, the Debtor filed a petition to commence this chapter 7 case and, on August 23, 2018, he filed a motion to extend the automatic stay in this case, pursuant to 11 U.S.C. § 363(c)(3) (doc # 8, hereafter, "the Motion").¹ The Debtor filed the Motion because he filed this bankruptcy case within one year of having an earlier bankruptcy case dismissed, and therefore the stay might have otherwise terminated on the 30^th day this case was pending, by operation of law. Creditor Brattleboro Savings and Loan Association ("BSL") filed an objection to the Motion, as well as an amended objection and a supplemental memorandum of law in opposition to the relief the Debtor seeks (doc. ## 15, 19, 20, collectively, "the BSL Opposition"). The Debtor filed a reply to the BSL Opposition (doc. # 18, the "Reply"). Beginning with the initial hearing scheduled for September 14, 2018, the Debtor either failed to appear, or failed to follow proper noticing requirements so the hearing could proceed, at three separate hearings the Court scheduled so the Debtor could introduce testimony in support of the Motion.

Based on the arguments presented at the September 14^th hearing, the parties' papers relating to the Motion, the record in the Debtor's current and prior bankruptcy cases, and for the reasons set forth below, the Court denies the Debtor's Motion to extend the automatic stay in this repeat filer case.

I. JURISDICTION

The Court has jurisdiction over this contested matter under 28 U.S.C. §§ 157 and 1334, and the Amended Order of Reference the District Court entered June 22, 2012. The Court declares the Motion, seeking an extension of the automatic stay, is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (G), and one over which this Court has constitutional authority to enter a final judgment.

II. LEGAL QUESTIONS PRESENTED

This Motion presents five legal issues under the repeat filer statute, 11 U.S.C. § 362(c):

(1) Does § 362(c)(3)(A) apply in this case and trigger a possible termination of the automatic stay, as to all creditors, on the 30th day after the case was filed?

(2) Did the Debtor timely move to extend the stay, and timely conclude the hearing on that motion, as required by § 362(c)(3)(B)?

(3) Does a presumption arise that the Debtor filed this case not in good faith, under § 362(c)(3)(C)?

(4) If so, has the Debtor rebutted the "not filed in good faith presumption," by clear and convincing evidence, in satisfaction of § 362(c)(3)(C)?

(5) If the Debtor has met that burden of proof and established he filed this case in good faith, what, if any, conditions on the extension of the stay are warranted, under § 362(c)(3)(B)?

III. FACTUAL AND PROCEDURAL BACKGROUND

The relationship between the Debtor and BSL, the procedural chronology of this case, as well as the procedural history of the Debtor's most recently filed previous case (case # 16-11462), are critical for purposes of § 363(c)(3) and adjudication of the Debtor's Motion.

On October 9, 2015, BSL commenced a foreclosure against the Debtor's residential real property that secures the Debtor's debt to BSL, located at 800 Hubbard Hill Rd., Halifax, VT (the "Property"). On May 5, 2016, the Vermont state court entered a judgment of foreclosure in favor of BSL, and against the Debtor and his then spouse, for approximately $169,000 (the "Judgment"). The Judgment set a redemption period expiration date of November 7, 2016. See doc. # 19. On November 1, 2016, less than a week before the redemption period was to expire, the Debtor and his then spouse filed a chapter 13 case (# 16-11462, "the 2016 Case"). On April 26, 2017, on the oral motion of the Debtor's spouse, the cases were severed, and her case was converted to chapter 7. She obtained a chapter 7 discharge. The Debtor's case remained in chapter 13.

Despite several continuances and multiple amendments of schedules, the Debtor never filed all the required documents, or disclosed all of his debts and assets in his schedules, in the 2016 Case. On March 6, 2017, the chapter 13 trustee filed a motion to convert the Debtor's chapter 13 case to a caseunder chapter 7 (case # 16-11462, doc. # 40). In support of that motion, the chapter 13 trustee alleged (1) the Debtor had failed to disclose an inheritance from his aunt, his role as executor of her estate, and certain stock transactions, on his Statement of Financial Affairs; (2) the Debtor had failed to account for a substantial sum of money (approximately $80,000) he received from his aunt's estate; (3) the Debtor had failed to list Douglas Wolinsky, Esq. (in his capacity as chapter 7 case trustee) as a creditor in the case, even though Attorney Wolinsky had obtained a judgment against the Debtor in a related corporate chapter 7 case (Turner & Cook, ch. 7 # 10-11344);² and (4) there could be "significant issues of the dischargeability of claims against [the Debtor]" which would be more properly and effectively addressed by a chapter 7 trustee. See doc. # 40 in case # 16-11462.

After the Debtor's attorney filed a notice of withdrawal (case # 16-11462, doc. # 42) and the Debtor filed additional amendments to his schedules (case # 16-11462, doc. # 46), the Debtor filed an objection (case # 16-11462, doc. # 56) to the chapter 13 trustee's motion to convert, in which the Debtor disputed the trustee's factual allegations. The Debtor insisted all of the issues the trustee had raised were due entirely to the withdrawal of the Debtor's attorney, but did not present any proof to support his view of the facts. The trustee filed a reply (case # 16-11462, doc. # 63) pointing to specific attorney representations and docket entries in the record that supported the factual allegations in his motion to convert. On May 19, 2017, the Court held a continued hearing on the trustee's motion to convert the 2016 Case and, after hearing from both parties, as well as an attorney representing twelve other heirs of the Debtor's aunt's estate, the Court granted the trustee's motion. The Court entered a conversion order on May 31, 2017 (case # 16-11462, doc. # 69). That concluded the chapter 13 phase of the 2016 Case.

In the subsequent, chapter 7, phase of the 2016 Case, the Debtor again sought and obtained several extensions of time to file amended schedules. Consequently, the Court granted several motions the chapter 7 trustee filed for an extension of the deadline to file an objection to the Debtor's discharge, based on the lack of complete schedules (case # 16-11462, doc. ## 92, 95, 105). Despite the numerous extensions the Court granted to the Debtor, he never filed a Statement of Intention following conversion of the case, nor did he amend the schedules to reflect the claims of the other heirs to his aunt's estate.

On January 26, 2018, the chapter 7 trustee filed a motion to dismiss the 2016 Case based on theDebtor's failure to appear for examination at meetings of creditors in the chapter 7 phase of the case (case # 16-11462, doc. # 102). The Debtor consented to that motion and, on April 3, 2018, the Court entered an order dismissing the 2016 Case, specifically based on the Debtor's failure to appear at meetings of creditors (case # 16-11462, doc. # 107). The Debtor did not receive a discharge in the 2016 Case. On May 22, 2018, the chapter 7 trustee filed a report of no distribution (via docket entry) in the 2016 Case, and the Clerk closed that case shortly thereafter.

On August 21, 2018, less than five months after the Court dismissed the Debtor's 2016 Case, and one day before the scheduled sale of the Debtor's Property in the BSL foreclosure action, the Debtor filed the instant chapter 7 case. See doc. # 19. In the Debtor's Statement of Intention in the instant case, he indicated his intention with respect to the Property was "to Surrender the Property" (doc. # 17). As in the 2016 Case, the Court also granted the chapter 7 trustee an extension of the deadline to file an objection to the Debtor's discharge (doc. # 50).

In the Debtor's Motion asking the Court to extend the automatic stay in this case, the Debtor asserts (a) his failure to meet his obligations in the 2016 Case was due, in large part, to significant medical circumstances, and (b) he is now in better health (doc. # 8, p. 2). The Debtor explains, "multiple severe concussions [ ] prevented him from preparing for, attending or competently participating in any 341 meeting" (doc. ## 8, 33). He emphasizes he is now well enough to perform all duties he has in this case, under the Bankruptcy Code. The gravamen of the Debtor's argument for an extension of the stay is that it is in the best interest of all creditors that he be allowed to sell the Property, at arm's length, rather than allow BSL to sell it through a foreclosure proceeding (doc. # 8, p. 3).

The Debtor set the original hearing on his Motion to Extend Stay for September 14, 2018, however, he did not file any writing or notify any party he intended to introduce testimony at that hearing, as required by this Court's Local Rules. See Vt. LBR 4001-3(a), 9014-1(b) and LBF Form V. When the Debtor sought to introduce testimony in support of his Motion, the Court pointed out the Debtor had not scheduled this matter for an evidentiary hearing, and it did not have sufficient time available that day to entertain the presentation of testimonial evidence. Moreover, BSL's attorney indicated she did not have authority to waive that requirement and objected to the introduction of evidence at that time....