632 B.R. 506
Bankr. M.D. Tenn.2021Background:
- Debtor David S. Connor owned a residence secured by two deeds of trust; the second deed was foreclosed (sale Nov. 5, 2020) and title to Property Fund 629, LLC recorded Nov. 20, 2020.
- 1 Public Homes, LLC filed a detainer (unlawful detainer/eviction) action on Nov. 23, 2020; a default judgment for possession was entered Jan. 4, 2021; eviction set for Feb. 3, 2021.
- Connor filed Chapter 13 on Jan. 28, 2021; Connor alleges he informed Edward Russell of the bankruptcy and that Russell nonetheless instructed county officials to proceed with eviction.
- The state court later held the Jan. 4, 2021 possession judgment void ab initio (March 2021). Connor sued Russell for willful violation of the automatic stay under 11 U.S.C. § 362(k).
- Russell moved to dismiss, invoking the narrow § 362(b)(22) exception for prepetition unlawful detainer judgments (arguing the deed’s "tenancy at sufferance" clause creates a lease and 1 Public Homes was a lessor); the bankruptcy court denied the motion.
Issues:
| Issue | Plaintiff's Argument (Connor) | Defendant's Argument (Russell) | Held |
|---|---|---|---|
| Applicability of 11 U.S.C. § 362(b)(22) to this eviction | Stay covers post-petition enforcement; exception does not apply here | Exception applies because a prepetition judgment for possession existed and the deed creates a tenancy | Court: Exception narrowly construed; does not apply on these facts; dismissal denied |
| Whether the deed’s "tenancy at sufferance" clause is a "lease or rental agreement" | Clause merely restates common law sufferance; grants no present right of possession; not a lease | Clause converts mortgagor into tenant and suffices as a lease for § 362(b)(22) | Court: Clause creates only a tenancy at sufferance (no present right of possession); not a lease under state law |
| Whether 1 Public Homes was a "lessor" entitled to rely on the deed/purchaser rights | 1 Public Homes lacked title/recorded ownership when it filed detainer; not the lessor/purchaser | 1 Public Homes acted as purchaser/lessor for purposes of detention | Court: Stipulation showed 1 Public Homes did not own title when filing; disconnect fatal to invoking § 362(b)(22) on motion to dismiss |
| Effect of the prepetition possession judgment later declared void ab initio | Void judgment undercuts § 362(b)(22) reliance | Judgment existed prepetition; timing supports exception | Court: Voiding raises further questions; unnecessary to resolve fully because other defects defeat dismissal |
Key Cases Cited
- City of Chicago v. Fulton, 141 S. Ct. 585 (2021) (automatic stay is an automatic consequence of filing)
- Midlantic Nat. Bank v. New Jersey Dep't of Env't Prot., 474 U.S. 494 (1986) (automatic stay is a fundamental debtor protection)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
- Easley v. Pettibone Mich. Corp., 990 F.2d 905 (6th Cir. 1993) (automatic stay stops foreclosure actions)
- In re Javens, 107 F.3d 359 (6th Cir. 1997) (broad scope of the stay)
- Cain Partnership Ltd. v. Pioneer Inv. Servs. Co., 914 S.W.2d 452 (Tenn. 1996) (definition/requirements of a lease under Tennessee law)
- Griffith v. Brackman, 37 S.W. 273 (Tenn. 1896) (deed language can create landlord/tenant relation for detainer purposes)