Billings v. Portnoff Law Associates, Ltd.
687 F. App'x 163
3rd Cir.2017Background
- Michael and Kathleen Billings owed ~$4,500 in municipal sewer/trash/hydrant fees; West Bradford Township obtained a lien and scheduled a sheriff’s sale.
- The Billingses filed Chapter 13 bankruptcy on April 11, 2014, which triggered the automatic stay under 11 U.S.C. § 362(a)(1).
- At the scheduled sale time the Township orally announced a postponement and thereafter filed five written motions in state court to continue the sheriff’s sale; each was granted and the sale was pushed to November 19, 2015.
- The Township never sought relief from the Bankruptcy Court’s automatic stay; it filed a proof of claim in the bankruptcy and the confirmed plan allowed the Billingses to repay the debt.
- The Billingses sued Portnoff Law Associates (Township’s counsel), alleging the repeated continuance motions violated the automatic stay and seeking damages and class certification; lower courts dismissed the complaint and the district court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing written continuance motions for a sheriff’s sale after a bankruptcy petition violates the automatic stay | Billings: repeated court-filed continuance motions impermissibly continue foreclosure and alter the pre-petition status quo (and may cause debtor-fee liability) | Portnoff/Township: continuances preserve the status quo and fall within Taylor permitting postponement under state law; motions do not continue foreclosure | The court held such continuance motions are permissible and do not violate § 362(a)(1) under Taylor |
| Whether alleged attorneys’ fees incurred from continuance motions defeat Taylor’s rule | Billings: fees incurred to obtain/postpone sales alter the status quo and could be charged to debtor, making motions violative | Portnoff: any incidental fees to preserve the pre-petition status quo are permissible; plaintiffs failed to plead concrete fee liability | The court held plaintiffs failed to plausibly allege they incurred or will incur such fees; even if fees exist, they are compatible with preserving status quo |
| Whether the complaint warranted discovery or amendment to allege fee-related injury | Billings: discovery should be allowed to show fee impact and class-wide injury | Portnoff: allegations were speculative and conclusory, not enough to survive Rule 12(b)(6) | The court held the complaint was insufficient under Iqbal/Twombly and denied leave to amend; no discovery required |
| Whether plaintiffs have standing for class claims given failure to state a claim | Billings: sought class certification to enjoin similar conduct in other cases | Portnoff: failure to state an individual claim defeats class standing | The court held lack of viable individual claim defeats Article III standing for class claims (citing McNair) |
Key Cases Cited
- Taylor v. Slick, 178 F.3d 698 (3d Cir. 1999) (continuation/postponement of a sheriff’s sale under state procedure does not violate § 362(a)(1))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaints must plead factual matter sufficient to state a plausible claim)
- McNair v. Synapse Grp., 672 F.3d 213 (3d Cir. 2012) (named plaintiffs’ failure to state a claim defeats class standing)
- Mayer v. Belichick, 605 F.3d 223 (3d Cir. 2010) (standard of review for dismissal under Rule 12(b)(6))
- SEC v. Bocchino (In re Bocchino), 794 F.3d 376 (3d Cir. 2015) (appellate review of bankruptcy court orders by district court is plenary)