593 B.R. 435
Bankr. E.D.N.C.2018Background
- Debtor (Sunita Dev) and ex-husband Prakash Dev executed a 2008 mortgage note to Coastal Federal Credit Union (CFCU) on marital home in Cary, NC; CFCU holds a perfected deed of trust.
- Debtor has filed three Chapter 13 cases since 2015; the 2016 case was dismissed within a year of the 2018 petition, triggering 11 U.S.C. § 362(c)(3)(A).
- CFCU sought in rem relief from the automatic stay to complete foreclosure and, orally, relief from the co-debtor stay to pursue any deficiency against Mr. Dev.
- Mr. Dev sought stay relief to continue state equitable-distribution proceedings and sanctions against the Debtor.
- The central legal question: whether § 362(c)(3)(A) terminates the automatic stay as to actions against property of the estate (foreclosure) or only as to actions against the debtor personally.
- Court found the stay terminated as to both CFCU’s foreclosure and Mr. Dev’s equitable-distribution action under § 362(c)(3)(A), but granted CFCU relief from the co-debtor stay under § 1301(c).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 362(c)(3)(A) terminate the automatic stay as to (a) prepetition actions against the debtor and (b) actions against property of the estate (foreclosure)? | CFCU / Mr. Dev: § 362(c)(3)(A) terminates the stay for prepetition actions including foreclosure and equitable-distribution, so stays ended 30 days after filing. | Debtor: District precedent (Paschal, Jones) supports that § 362(c)(3)(A) does not terminate stay as to property of the estate; stay remains for estate property. | Court adopts minority/Bender approach: § 362(c)(3)(A) terminates the stay as to prepetition "actions taken" (including foreclosure and equitable-distribution) 30 days after filing. |
| If the automatic stay terminated under § 362(c)(3)(A), does the co-debtor stay under § 1301(a) also terminate? | CFCU: co-debtor stay should be terminated or, alternatively, relief should be granted to pursue in personam collection against Mr. Dev. | Debtor: § 1301 remains separate and continues to protect co-debtor unless grounds for relief under § 1301(c) exist. | Court: § 362(c)(3)(A) does not automatically terminate § 1301, but CFCU is granted relief from the co-debtor stay under § 1301(c)(2) and (3). |
| Were Mr. Dev's requests for sanctions and stay relief as to his equitable-distribution claim viable? | Mr. Dev: seeks sanctions and continuation of state equitable-distribution proceedings to force sale and recover damages. | Debtor: equitable-distribution action cannot force a sale absent agreement; sanctions unsupported. | Court: Dev's stay relief as to equitable-distribution is moot because stay terminated; sanctions denied for failure to state a viable claim. |
| Is there cause to grant relief from stay under § 362(d)(1) even if stay had not terminated? | CFCU: debtor in substantial arrears, no meaningful nonexempt equity, cause exists to lift stay to foreclose. | Debtor: sought to condition stay on plan payments; proposed to cure arrearage via Chapter 13. | Court: even if automatic stay had continued, cause exists under § 362(d)(1); in any event stay termination rendered automatic-stay motions moot. |
Key Cases Cited
- In re Paschal, 337 B.R. 274 (Bankr. E.D.N.C.) (interprets "action taken" narrowly; stay termination limited to prior formal actions)
- In re Jones, 339 B.R. 360 (Bankr. E.D.N.C.) (majority view: § 362(c)(3)(A) terminates stay "with respect to the debtor," not property of the estate)
- In re Jupiter, 344 B.R. 754 (Bankr. D.S.C.) (minority view: § 362(c)(3)(A) intended to deter repeat filings and applies to actions respecting estate property)
- In re Bender, 562 B.R. 578 (Bankr. E.D.N.Y.) (hybrid approach: § 362(c)(3)(A) lifts stay as to prepetition "actions taken" affecting property securing debts; shifts burden to debtor to seek extension)
- In re Johnson, 335 B.R. 805 (Bankr. W.D. Tenn.) (supports view that stay continues to protect property of the estate absent exception)
- In re Goodrich, 587 B.R. 829 (Bankr. D. Vt.) (reconsideration adopting minority view that § 362(c)(3)(A) terminates automatic-stay protections after 30 days)