565 B.R. 435
Bankr. M.D. Ala.2017Background
- Debtors Ezee Holloway and Tracy Towles filed a joint Chapter 13 petition on July 11, 2014.
- Chapter 13 Trustee moved to dismiss for payment default; the case was dismissed by default on September 6, 2016.
- Debtors filed a motion to reconsider (construed as a Rule 9023 motion); the court granted it and vacated the dismissal on September 28, 2016.
- Between dismissal and vacatur, Defendants repossessed the Debtors’ automobile and later refused to return it after reinstatement.
- Plaintiff sued for a willful violation of the automatic stay; the complaint did not request retroactive reinstatement of the stay in its pleadings.
- At the hearing plaintiff orally claimed the car was sold after reinstatement; court declined to consider that unpleaded theory but allowed 14 days to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether vacatur of dismissal retroactively reinstates the automatic stay | Vacatur reimposes the stay as if dismissal never occurred (so repossession/sale violated stay) | Stay was terminated at dismissal; repossession occurred during gap so no stay violation | Vacatur reimposes the stay only prospectively on entry date; court lacks authority to make reinstatement retroactive |
| Whether repossession before vacatur but after dismissal violates the stay | Continued possession or sale after vacatur constitutes a stay violation | Title passed on repossession before vacatur; subsequent actions did not violate stay | No stay violation for acts occurring during the dismissal gap; repossession before vacatur did not breach § 362 |
| Whether the complaint states a plausible claim under Rule 12(b)(6) | Complaint alleges willful stay violation based on vacatur | Defendants moved to dismiss for failure to state a claim | Complaint dismissed for failure to state a claim; plaintiff given 14 days leave to amend |
| Whether the court will consider the plaintiff's oral amendment at hearing | Plaintiff asserted sale after vacatur at hearing | Defendants opposed consideration as unpleaded | Court refused to consider the oral amendment but allowed amendment within 14 days |
Key Cases Cited
- Lashley v. First Nat'l Bank of Live Oak, 825 F.2d 362 (11th Cir. 1987) (bankruptcy court cannot retroactively reimpose the automatic stay)
- Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998) (title may transfer on repossession prior to reinstatement)
- Singleton v. Countrywide Home Loans, Inc. (In re Singleton), 358 B.R. 253 (D.S.C. 2006) (vacatur does not retroactively reimpose automatic stay)
- Gargani v. Wells Fargo Bank, N.A. (In re Gargani), 398 B.R. 839 (Bankr. W.D. Pa. 2009) (reinstatement of Chapter 13 does not retroactively reinstate stay)