910 F.3d 576
1st Cir.2018Background
- Debtor Leland S. Smith, Jr. filed multiple Chapter 13 cases; two prior cases were dismissed within one year of his December 2016 petition, bringing 11 U.S.C. § 362(c)(3)(A) into play.
- Maine Bureau of Revenue Services (MRS) held a priority tax claim of about $51,600; Smith listed substantial unsecured debt and a 60-month Chapter 13 plan was eventually confirmed.
- Section 362(a) creates an automatic stay that bars actions against the debtor, the debtor’s property, and property of the bankruptcy estate upon filing.
- BAPCPA added § 362(c)(3)(A), which provides that for a debtor with a dismissed case in the preceding year, “the stay under subsection (a) ... shall terminate with respect to the debtor on the 30th day after the filing of the later case,” unless the stay is extended after a good-faith showing under § 362(c)(3)(B).
- Dispute: whether § 362(c)(3)(A) ends the entire automatic stay (debtor, debtor’s property, and estate property) after 30 days, or only ends the stay as to the debtor and debtor’s property while preserving the stay as to property of the estate.
- Bankruptcy and district courts below held the entire stay terminates after 30 days; Smith appealed to the First Circuit.
Issues
| Issue | Smith's Argument | MRS's Argument | Held |
|---|---|---|---|
| Whether § 362(c)(3)(A) terminates the automatic stay as to property of the bankruptcy estate after 30 days when a prior case was dismissed within one year | The phrase “with respect to the debtor” limits termination to actions against the debtor and the debtor’s property; the stay as to estate property survives | The operative language terminates the stay in full after 30 days; the phrase is likely superfluous or clarifying (e.g., for joint filers) | The court held § 362(c)(3)(A) terminates the entire automatic stay after 30 days for second-time filers unless the extension procedure in § 362(c)(3)(B) is invoked successfully |
Key Cases Cited
- Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Prot., 474 U.S. 494 (1986) (automatic stay is a fundamental bankruptcy protection)
- Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969 (1st Cir. 1997) (stay provides debtor breathing room)
- King v. Burwell, 135 S. Ct. 2480 (2015) (caution against rigid application of interpretive canons to inartful drafting)
- Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752 (2018) (interpretation of “respecting”/“with respect to” in bankruptcy statutes)
- Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (use of legislative purpose in statutory interpretation in bankruptcy context)
- Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010) (BAPCPA interpreted in light of its purpose to curb abuse)
- Tidewater Fin. Co. v. Williams, 498 F.3d 249 (4th Cir. 2007) (noting the automatic stay generally dissolves after 30 days under § 362(c)(3)(A))
- Irving Tanning Co. v. Kaplan, 876 F.3d 384 (1st Cir. 2017) (standard of review for bankruptcy court decisions)