583 B.R. 911
Bankr. W.D. Mich.2018Background
- Debtor Chris Markoch filed a second Chapter 13 case within a year (petition date Feb. 27, 2018) and filed a corrected motion to continue the automatic stay under 11 U.S.C. § 362(c)(3)(B) using the local "negative notice" procedure (LBR 4001-5, 9013(c)).
- Mortgage creditor U.S. Bank timely objected and requested a hearing; the court set the matter for the next available regular motion day. A hearing occurred April 17, 2018.
- Section 362(c)(3) provides the automatic stay terminates as to the debtor 30 days after filing a second case within a year, unless a party in interest obtains an extension after notice and a hearing completed before the 30-day period expires.
- More than 30 days had elapsed before the scheduled hearing; the court concluded the hearing could not be "completed" within 30 days as to U.S. Bank (the objecting creditor), though the court treated the negative-notice process as a completed hearing within 30 days for nonobjecting creditors.
- Debtor argued the local negative-notice rule effectively extends the § 362(c)(3)(B) deadline if the motion is filed within seven days of the petition; the court rejected this because a local rule cannot override a federal statute or national rules.
- The court denied the stay-relief motion as to U.S. Bank (stay terminated by operation of law after 30 days) and granted it as to all other creditors; the court clarified that the creditor may still seek relief from stay under § 362(d).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether use of LBR 4001-5/9013(c) negative-notice procedure can satisfy § 362(c)(3)(B)’s requirement that the hearing be "completed" within 30 days | Markoch: Filing the motion within 7 days and using negative notice should count as completing the "notice and a hearing" within 30 days, allowing extension | U.S. Bank: § 362(c)(3)(B) requires completion of the hearing as to objecting creditors within 30 days; local rule cannot alter statutory deadline | Court: Rejected Debtor; local rule cannot modify statute; hearing was not completed within 30 days as to objecting creditor, so stay terminated as to U.S. Bank |
| Effect of § 362(c)(3) termination—does it terminate stay as to estate property as well as debtor/property? | Debtor: sought continuation as to creditors generally | U.S. Bank: argued stay terminated as to debtor and related interests after 30 days | Court: Adopts the majority view that termination occurs as to the debtor (and actions against debtor/property) but not necessarily as to property of the estate; stay terminated as to U.S. Bank but remains insofar as property remains part of the estate unless relief from stay is granted |
| Whether the court should accommodate scheduling to permit completion of hearing within 30 days | Debtor: scheduling via negative notice is acceptable; counsel urged consideration of local rule practice | U.S. Bank: timely objection and request for hearing required court to schedule per normal operations | Court: Movant’s counsel must request expedited scheduling if needed; court will allow ex parte requests to meet 30-day deadline when Clerk cannot schedule timely |
| Remedies available to creditor after § 362(c)(3) termination | Debtor: N/A | U.S. Bank: may proceed after stay termination | Court: Termination does not permit immediate foreclosure while property remains estate property; creditor may still seek relief under § 362(d) or other relief |
Key Cases Cited
- In re Robinson, 427 B.R. 412 (Bankr. W.D. Mich. 2010) (holds § 362(c)(3) terminates stay as to debtor after 30 days but not necessarily as to estate property)
- In re Riedy, 517 B.R. 88 (Bankr. W.D. Mich. 2014) (predicts and follows Robinson analysis)
- In re Johnson, 335 B.R. 805 (Bankr. W.D. Tenn. 2006) (supports majority view on § 362(c)(3) effect)
- In re Moon, 339 B.R. 668 (Bankr. N.D. Ohio 2006) (same)
- In re Bender, 562 B.R. 578 (Bankr. E.D.N.Y. 2016) (rejects Robinson analysis but acknowledges it as the majority position)