639 B.R. 761
Bankr. E.D. Cal.2022Background
- Debtors Nelson A. Madsen and Sharon L. Burns filed a bankruptcy case on January 24, 2022; they had a prior case (No. 21-22819) dismissed within the previous year.
- Tri Counties Bank (Movant) moved for a determination under 11 U.S.C. § 362(c)(3)(A) that the automatic stay terminated "with respect to the debtor" and, as Movant urged, that the stay was therefore terminated as to all property of the bankruptcy estate so it could foreclose.
- Movant relied principally on In re Reswick (B.A.P. 9th Cir.) to argue the phrase "with respect to the debtor" should be read to terminate the stay in its entirety.
- The court analyzed the statutory text, statutory definitions (11 U.S.C. §§ 101, 541, 541(b), 541(d)), and related provisions (e.g., § 362(a), § 362(c)(4), § 554 abandonment) and concluded Congress distinguishes the debtor from the bankruptcy estate.
- The court found § 362(c)(3)(A)'s language unambiguous: the stay terminates only "with respect to the debtor" after 30 days (absent a court order extending it), and does not terminate the stay protecting property of the bankruptcy estate.
- The court denied Movant’s requested relief (including an oral request to bifurcate and obtain an order saying the stay terminated as to the debtor only) and declined to issue any order that could be misconstrued to strip estate protections.
Issues
| Issue | Movant's Argument | Debtor/Respondent's Argument | Held |
|---|---|---|---|
| Scope of § 362(c)(3)(A) termination: does "with respect to the debtor" end stay as to estate property? | Phrase should be read to terminate the entire automatic stay in the case (including estate property). | "With respect to the debtor" is plain and limited; estate property remains protected by § 362(a). | Held: termination applies only to the debtor, not to property of the bankruptcy estate. |
| Ambiguity / surplusage: is the phrase ambiguous or surplusage if limited to debtor? | The opening clause referencing debts/property would be surplusage if limited to debtor. | Statutory structure, definitions, and separate § 362(a) provisions show distinct protections; phrase is not surplusage. | Held: statute is unambiguous; phrase has independent legal effect and is not surplusage. |
| Whether court should enter an order formally stating stay terminated as to debtor only (bifurcation) | Requested bifurcated order to state stay terminated as to debtor. | No legitimate purpose shown; such an order risks misinterpretation and harm to estate. | Held: Court denied bifurcation and declined to issue an order terminating stay as to the debtor alone. |
| Effect of repeated filings (relation to § 362(c)(4)) | Movant sought immediate clearance to act on estate property. | § 362(c)(4) addresses multiple prior dismissals and can eliminate stay entirely; § 362(c)(3) is narrower. | Held: § 362(c)(4) is the proper mechanism for no-stay cases after multiple dismissals; § 362(c)(3) does not reach estate property. |
Key Cases Cited
- In re Reswick, 446 B.R. 362 (B.A.P. 9th Cir. 2011) (authority holding § 362(c)(3)(A) terminates stay in entire case)
- U.S. v. Ron Pair Enterprises, 489 U.S. 235 (statutory interpretation begins and often ends with text)
- Duncan v. Walker, 533 U.S. 167 (courts begin with plain statutory language)
- Bostock v. Clayton County, 140 S. Ct. 1731 (legislative history cannot defeat unambiguous statutory text)
- Rose v. Select Portfolio Servicing, Inc., 945 F.3d 226 (supporting view that § 362(c)(3) terminates stay only as to debtor)
- Smith v. Maine Bureau of Revenue Servs. (In re Smith), 910 F.3d 576 (contrasting authority on scope of § 362(c)(3))