ARTS DES PROVINCES DE FRANCE, INC. v. KARTZMAN
2:12-cv-06574
D.N.J.Jun 12, 2013Background
- FDS funded a reserve (~$400,000) under Merchant Agreements with the Debtor to cover potential fees, costs, or chargebacks.
- Debtor filed a voluntary Chapter 7 petition on June 23, 2011; Steven Kartzman was appointed as Chapter 7 Trustee.
- Trustee moved for turnover of the reserve; FDS opposed via a Motion to Lift Stay to assert contractual rights.
- A series of adjournments led to a March 27, 2012 hearing; final hearing repeatedly rescheduled, with status reports due.
- On August 20, 2012, the Bankruptcy Court entered an order continuing the automatic stay pending the final hearing, which FDS appealed.
- FDS argued that the stay should have ended under 11 U.S.C. § 362(e)(1); the court found an implicit waiver based on FDS’s conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 362(e)(1) time limits were effectively waived | FDS argues no waiver; stay should end within 30 days absent compelling circumstances. | Bankruptcy Court correctly found implicit waiver due to FDS’s actions. | Yes, implied waiver exists; stay continued. |
| Whether FDS’s cross-motion and discovery conduct constituted waiver | FDS cross-moved for stay relief and administrative expense; discovery beyond 30 days. | Such actions demonstrate inconsistency with § 362(e)(1), constituting waiver. | Yes, cross-motion and discovery actions support waiver. |
| Whether participation in discovery and failure to oppose adjournment supports waiver | FDS participated in discovery and did not oppose adjournment; rights preserved. | Participation and failure to object show inconsistency with § 362(e)(1). | Yes, these actions support waiver. |
Key Cases Cited
- In re Wedgewood Realty Group, 878 F.2d 693 (3d Cir. 1989) (implicit waiver when creditor acts inconsistently with § 362(e)(1) rights)
- Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306 (11th Cir. 1982) (waiver when creditor fails to object and participates beyond time limits)
- In re Small, 38 B.R. 143 (Bankr. D. Md. 1984) (implicit waiver where administrative expense relief delays time constraints)
- In re McNeely, 51 B.R. 816 (Bankr. D. Utah 1985) (implicit waiver when creditor fails to enforce statutory rights)
- In re Cohn, 54 F.3d 1108 (3d Cir. 1995) (standard of review for bankruptcy court decisions)