945 F.3d 226
5th Cir.2019Background
- Rose bought the property in 2005; the mortgage was assigned to U.S. Bank with Select Portfolio Servicing (SPS) as servicer. Payments ceased on March 1, 2011.
- Defendants sent a Notice of Default (Oct. 1, 2013) and a Notice of Acceleration (Mar. 26, 2014) setting a May 6, 2014 foreclosure; Rose obtained a TRO by suing May 5, 2014 and the parties later dismissed that case by stipulation.
- Defendants issued additional acceleration notices (including June 2, 2015); Rose filed four bankruptcy petitions over the next three years, each filed days before scheduled sales, producing at least 269 days of bankruptcy stays.
- Rose later sued to quiet title, arguing the 4‑year Texas statute of limitations on foreclosure had expired; Defendants removed and counterclaimed for judicial foreclosure; the district court granted Defendants summary judgment and entered foreclosure.
- The central legal question on appeal: whether 11 U.S.C. § 362(c)(3)(A) terminates the automatic stay as to the bankruptcy estate/property (thereby ending tolling) or only as to the debtor (preserving tolling during the bankruptcy proceedings).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether successive bankruptcy filings under 11 U.S.C. § 362(c)(3)(A) cut off the automatic stay as to the property and thus prevent tolling of Texas's 4‑year foreclosure statute | Rose: as a repeat filer the stay is curtailed (to 135 days under her calc.), so tolling was insufficient and the statute expired | Defendants: § 362(c)(3)(A) terminates the stay only "with respect to the debtor," not the bankruptcy estate/property; thus the stays tolled limitations during the full bankruptcy periods (≈269 days) | The court adopted the majority/plain‑text view: § 362(c)(3)(A) terminates the stay only as to the debtor; the stay as to estate/property continued during the bankruptcy proceedings, tolling the limitations period and making the foreclosure counterclaim timely |
Key Cases Cited
- Shepherd ex rel. Estate of Shepherd v. City of Shreveport, 920 F.3d 278 (5th Cir. 2019) (standard of review for summary judgment)
- Germain v. US Bank Nat'l Ass'n as Tr. for Morgan Stanley Mortgage Loan Tr. 2006-7, 920 F.3d 269 (5th Cir. 2019) (viewing evidence and inferences on summary judgment)
- HSBC Bank USA, N.A. v. Crum, 907 F.3d 199 (5th Cir. 2018) (Texas common‑law tolling of limitations during bankruptcy stays)
- In re Smith, 910 F.3d 576 (1st Cir. 2018) (discussing the split and the minority view that § 362(c)(3)(A) terminates the entire stay)
- In re Condor Ins. Ltd., 601 F.3d 319 (5th Cir. 2010) (principle that statutory construction begins with plain language)