Samuels v. Soc'y, BAP NO. MB 18-014

GIFTY R. SAMUELS, Debtor.

GIFTY R. SAMUELS, Appellant, v. WILMINGTON SAVINGS FUND SOCIETY, FSB,d/b/a Christiana Trust as Owner Trust of the Residential Credit Opportunities Trust V, Appellee.

BAP NO. MB 18-014

Bankruptcy Case No. 18-10543-FJB

UNITED STATES BANKRUPTCY APPELLATE PANEL FOR THE FIRST CIRCUIT

February 28, 2019

NOT FOR PUBLICATION

Appeal from the United States Bankruptcy Court for the District of Massachusetts

(Hon. Frank J. Bailey, U.S. Bankruptcy Judge)

Before Lamoutte, Tester, and Cary, United States Bankruptcy Appellate Panel Judges.

David G. Baker, Esq., on brief for Appellant.

Per curiam.

Gifty Samuels (the "Debtor") appeals from the bankruptcy court's order (the "Order") granting the Motion for Order Confirming the Absence of a Stay filed by Wilmington Savings Fund Society, FSB (the "Appellee"). In the Order, the bankruptcy court concluded that, because it had previously denied the Debtor's request to extend the automatic stay pursuant to § 362(c)(3)(B), the automatic stay had terminated pursuant to § 362(c)(3)(A) as to the Debtor, her property, and the property of the bankruptcy estate.¹ In this appeal, the Debtor raises a single issue: "[W]hether the automatic stay expires in toto when the bankruptcy court denies a motion to extend the stay in a second case filed within one year, or whether it expires only as to the debtor and the debtor's property, but not to property of the estate." ² The Debtor argues that, in the absence of "binding case law in the First Circuit on the question presented," the Panel should reverse the bankruptcy court's decision in light of the Panel's prior holdings in Jumpp v. Chase Home Fin., LLC (In re Jumpp), 356 B.R. 789 (B.A.P. 1st Cir. 2006), and Witkowski v. Knight (In re Witkowski), 523 B.R. 291 (B.A.P. 1st Cir. 2014), in which a prior panel ruled that the automatic stay terminates only with respect to the debtor and the debtor's property, and not property of the estate.

During the pendency of this appeal, on December 12, 2018, the U.S. Court of Appeals for the First Circuit (the "Court of Appeals") issued an opinion in which it decided this precise issue and ruled that "§ 362(c)(3)(A) terminates the entire automatic stay—as to actions against the debtor, the debtor's property, and property of the bankruptcy estate—after thirty days forsecond-time filers." Smith v. Me. Bureau of Revenue Servs. (In re Smith), 910 F.3d 576, 591 (1st Cir. 2018). Thus, the bankruptcy court's decision in this case is consistent with the Court of Appeals' ruling in Smith, which is binding on this Panel. As a result, and for the reasons set forth below, the Order is AFFIRMED.

BACKGROUND³

I. The Bankruptcy Proceedings

The Debtor filed a chapter 11 petition in February 2018. On her Schedule A/B: Property, the Debtor listed, among other things, real property located at 316 Essex Street, Lynn, Massachusetts (the "Property"), which she valued at $389,500.00. The Appellee, who holds a first mortgage on the Property, filed a proof of claim, asserting a claim in the amount of $780,077.59, secured by a lien on the Property, with pre-petition arrears in the amount of $301,278.26.

A. Motion to Extend Automatic Stay

In February 2018, the Debtor filed a Motion for Extension of Automatic Stay ("Motion to Extend Automatic Stay") pursuant to § 362(c)(3)(B) because she had previously filed a bankruptcy petition and the resulting case, which was ultimately dismissed, had been pending within the prescribed one-year period prior to the petition date. See 11 U.S.C. § 362(c)(3).⁴The Debtor argued that there had been a "substantial change in her circumstances within the meaning of § 362(c)(3) that justifie[d] extending the stay as to all creditors." After a hearing on March 12, 2018, the bankruptcy court denied the Motion to Extend Automatic Stay. The Debtor did not appeal that decision.

B. Motion for Comfort Order

On April 9, 2018, the Appellee filed a motion ("Motion for Comfort Order") seeking a "comfort order" pursuant to § 362(j) confirming that the automatic stay had terminated in its entirety pursuant to § 362(c)(3)(A).⁵ The Debtor opposed the Motion for Comfort Order on the grounds that the bankruptcy court had not ruled on the extent to which the automatic stay had expired under § 362(c)(3)(A). She further asserted that a number of courts, including the Panel in In re Jumpp, supra, have ruled that the stay expires only as to the debtor and the debtor's property, and not property of the estate.

C. Order Granting Motion for Comfort Order

The bankruptcy court held a hearing on April 24, 2018, and, two days later, entered the Order granting the Motion for Comfort Order.⁶ In the Order, the bankruptcy court confirmed that its denial of the Motion to Extend Automatic Stay "result[ed] in the termination of the automatic stay on or about March 12, 2018." The court then considered the extent to which the automatic stay had terminated under § 362(c)(3)(A).

The bankruptcy court recognized that there is a split of authority regarding the extent to which the automatic stay terminates under § 362(c)(3)(A), arising from different interpretations of the phrase "with respect to the debtor." The majority view, expressed by the Panel in In re Jumpp, supra, is that the stay terminates only with respect to actions against the debtor personally and the debtor's non-estate property, but not as to property of the bankruptcy estate. See Jumpp, 356 B.R. at 793-97. The minority view, the court noted, interprets § 362(c)(3)(A), and specifically the phrase "with respect to the debtor," as terminating the stay as to the debtor, the debtor's property, and property of the debtor's estate. The bankruptcy court agreed with the minority view, stating:

[O]ther courts have ruled that "with respect to the debtor" may well be meant to distinguish between the debtor and the debtor's spouse who did not file prior cases, rather than distinguishing between estate and non-estate assets. SeeSt. Anne's Credit Union v. Ackell, 490 B.R. 141, 145 (D. Mass. 2013). Where there is ambiguity in statutory language, it is appropriate to look at the legislative history of the statute. Here, plainly Congress intended to address the problem of serial bankruptcy filings. Such as the one we have here. In re[ ] Smith, 573 B.R. 298, 303 (Bankr. D. Me. 2017). Under the reading of the Jumpp decision, [§] 362(c) loses much of its vitality. Stated differently, the statute would simply not serve as a barrier to serial filings where secured creditors are seeking to exercise their state law rights, which is precisely what Congress intended. Indeed, in this case the Debtor did not merely "miss" filing its request to extend the stay. Rather, the appropriate motion was filed and this court determined after a full hearing that the Debtor could not carry her burden of producing clear and convincing evidence that her personal or financial circumstances had changed sufficiently to rebut the presumption that this case was filed in bad faith. In short, I agree with the Smith and St. Anne's Credit Union cases that termination of the stay under [§] 362(c) removes the prohibition against actions against the debtor, the assets of the debtor, and the assets of the estate. Hence, the [Motion for Comfort Order] is allowed.

II. The Appeal and Subsequent Events

A. Notice of Appeal, Motion for Certification of Direct Appeal, and Motion for Stay Pending Appeal

The Debtor filed a notice of appeal with respect to the Order. She also filed: (1) a motion requesting certification for a direct appeal to the Court of Appeals; and (2) a motion for a stay pending appeal (the "Bankruptcy Court Stay Motion"). After a hearing on May 1, 2018, the bankruptcy court entered: (1) a formal "Order on Motion for Order Confirming Absence of Automatic Stay," in which the bankruptcy court, "[f]or the reasons set forth in the [Order]," granted the Motion for Comfort Order and confirmed that the automatic stay "has terminated as to the Debtor and accordingly does not stay efforts by the [Appellee] to foreclose its mortgage on the Debtor's real property and otherwise enforce its rights against the Debtor and her property"; (2) an order certifying the appeal to the Court of Appeals;⁷ and (3) an order denying the Bankruptcy Court Stay Motion "[f]or the reasons and findings as stated on the record."

B. Petition for Direct Appeal to Court of Appeals

Thereafter, the Debtor filed with the Court of Appeals a petition for permission to take a direct appeal to that court ("Petition for Direct Appeal") and a motion for stay pending appeal (the "COA Stay Motion"). In a judgment dated June 18, 2018, the Court of Appeals denied the Petition for Direct Appeal, stating that it was "not clear . . . that granting direct review will facilitate a rapid resolution of the underlying case." The Court of Appeals also denied the COA Stay Motion as moot, expressing "no view on its merits in the event that the petitioner chooses to renew it in the appeal before the Bankruptcy Appellate Panel."

C. Motion for Stay Pending Appeal to Panel

The Debtor then filed a motion for stay pending appeal with the Panel, which the Appellee opposed. On June 22, 2018, the Panel entered an order granting the motion for stay pending appeal, determining that the Debtor had established the four factors required to obtain a stay pending appeal articulated in Sindicato Puertorriqueño de Trabajadores v. Fortuño, 699 F.3d 1, 10 (1st Cir. 2012). Thereafter, the Debtor filed a brief, but the Appellee did not, indicating that it had decided not to incur further expense in defending the appeal.

D. Order to Show Cause and Joint Motion to Dismiss

About a month later, on November 20, 2018, the bankruptcy court issued an order (the "Order to Show Cause") directing the Debtor to show cause why the bankruptcy case should not be dismissed due to her failure to confirm a plan within a reasonable time and her inability to propose a confirmable plan. Shortly thereafter, the...