MEMORANDUM AND ORDER
This case is now before us upon appeal of the Delta Funding Corp. from the February 6, 2004 Order of Bankruptcy Judge Diane Weiss Sigmund denying its Motion for Relief from the Automatic Stay entered pursuant to the filing of a voluntary petition under Chapter 13 by the debtor, Sandra B. Brown on June 4, 2003. For the reasons set forth below, the Order shall be reversed.
Statement of Relevant Facts
This bankruptcy appeal arises out of a mortgage which the debtor and her then-husband, Charles E. Brown, Jr., gave to the Appellant on December 4, 2000 securing real property located at 1832 South 54th Street in Philadelphia, PA. For some unknown reason, the original of the mortgage was lost-and was never rеcorded in the Office of the Department of Records for the City and County of Philadelphia. At some point, that mortgage was assigned to Saxon Mortgage Co. but, as Delta was the party to the original mortgage, in September, 2003 it commenced an action in state court to quiet title and to have a cоpy of the mortgage recorded as the original with lien priority dating back to the date of the original mortgage’s execution, to wit, December 4, 2000. This action was immediately stayed by virtue of Sandra Brown’s having filed for bankruptcy protection some three months earlier.
On December 12, 2003, Delta filed its Motion for Reliеf from the Automatic Stay Pursuant to 11 U.S.C. § 362(d) to allow it
Standard of Review
This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a), which states:
The district courts of the United States shall have jurisdiction to hear apрeals
(1) from final judgments, orders, and decrees;
(2) from interlocutory orders and decrees issued under section 1121(d) of title 11 increasing or reducing the time periods referred to in section 1121 of such title; and
(3) with leave of the court, from other interlocutory orders and decrees;
and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title. An appeal under this subsection shall be taken only to the district court for the judicial district in which the bankruptcy judge is serving.
Under Fed.R.Bankr.P. 8013,
On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside, unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.
In considering such appeals from bankruptcy court decisions, the district courts are thus required to review the bankruptcy court’s findings of fact for clear error and its legal conclusions
de novo. IRS v. Pransky,
Discussion
As noted, the issue in this case was whether or not the Bankruptcy Court erred in denying thе motion for relief from the automatic stay to enable Delta to continue its efforts in the state court to obtain permission to record a copy of the original of the lost mortgage and thus perfect the security interest in the subject real estate nunc pro tunc. 1 Specifically, relief was sought under 11 U.S.C. § 362(d) which provides:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay-
(1) for cause, including the lack of adequate protection of an interest in property of such party in intеrest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if-
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization; or
(3) with respect to a stay of an act against single asset real estate under subsection (a), by a creditor whose claim is secured by an interest in such real estate, unless, not later than the date that is 90 days after the entry of the order for relief, (or such later date as the court may determine for cause by order entered within that 90-day period) — ■
(A) the debtor has filed a plan of reorganization that has a reasonable possibility of being confirmed within a reasonable time; or-
(B) the debtor has commenced monthly payments to each creditor whose claim is secured by such real estate (other than a claim secured by a judgment lien or by an unmatured statutory lien), which payments are in an amount equal to interest at a current fair market rate on the value of the creditor’s interest in the real es-'tsi/e.
As a general rule,' the decision whether to modify, condition or annul the bankruptcy stay under section 362(d) is committed to bankruptcy court discretion and is to be determined by examining thе totality of the circumstances; a denial of a motion to lift the automatic stay may be reversed only upon a showing of an abuse of that discretion.
In re Colonial Center,
The- burden of proof on a motion to lift or modify an automatic stay is a shifting one.
Burger Boys, Inc. v. South Street Seaport Ltd. Partnership,
“Cause” is an intentionally broad and flexible concept which must be determined on a case-by-case basis.
In re Merchant,
In this case, the Bankruptcy Court considered and summarized many of the factors used by other courts in ascertaining whether or not the “cause” requirement had been satisfiеd by the movant here. 2 Noting that “[i]n all of the cases the overriding consideration is whether the debt- or’s estate or the debtor will be prejudiced if the pending litigation is permitted to continue in another forum,” the Court “concluded that there would be significant prejudice to this estate were Delta permitted to proceed in the state court to continue the quiet title litigation.” (Memorandum Opinion, at p. 4). Continuing on, the Court further found that as Appellant had failed to “provide any reason why I should permit it to proceed in state court without regard to the rights of creditors in this bankruptcy rather than requiring it to commence аn appropriate proceeding in this court where all interested parties can participate, it had failed to establish ‘cause’ to grant it relief from the stay.”
At the outset, we can find no error with the Bankruptcy Court’s conclusion that the preferred method for adjudicating the validity and/or priority оf a lien is through commencement of an adversary proceeding. Indeed, it appears that the weight of authority supports adjudicating
Although the Bankruptcy Court did find that Delta had given appropriate notice of its motion to lift the stay to the Trustee and all of the debtor’s other creditors and that neither the Trustee nor any of the creditors had filed any objection to the motion or appeared at the hearing thereon, the Court nevertheless concluded that the Trustee “was not fully apprised of what was at issue,” and that the “creditors who received the Relief Motion would not have understood how their rights could be affected by the granting of the relief sought.” These conclusions were, we believe, clearly erroneous.
For one, as is evidenced by the certificate of service attached to Delta’s Motion for Relief From Automatic Stay, copies of the motion were sent to each of the debt- or’s creditors. The Motion itself clearly states that the original of the mortgage was lost and therefore never recorded, that state court proceedings had been instituted in the Philadelphia County Court of Common Pleas for leave to file a copy of the original mortgage and thereby perfеct the mortgage lien
nunc pro tunc.
All of the debtor’s creditors are sophisticated corporate entities,
to wit,
credit card and lending companies, banks, and utilities who either knew or should have known that what the movant was proposing to do was perfect a mistakenly unperfected lien and thereby improve its own position in the pending bankruptcy. At the very minimum, these creditors would have known to consult with their legal counsel about the ramifications of this motion. The Trustee had a fiduciary obligation to inquire into the nature of what was at issue by virtue of the motion for relief if he did not already have such an understanding, as the Bankruptсy Court feared. The record here reflects that he did not make any effort to so inquire and that absolutely no one had any objection to the motion to lift the stay.
3
We simply cannot find any evi
An order follows.
ORDER
AND NOW, this 30th day of June, 2004, upon consideration of the Appeal of Delta Funding Corp. from the Order of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania dated February 5, 2004 denying its Motion for Relief from Automatic Stay, it is hereby ORDERED that the Order of February 5, 2004 is REVERSED and Appellant is granted relief from the automatic stay imposed in this matter pursuant to 11 U.S.C. § 362 to prosecute the quiet title action which it has instituted in the Court of Common Pleas of Philadelphia County to final judgment.
Notes
. The Bankruptcy Code states that a bankruptcy petition operates as a stay of all enforcement proceedings against the debtor.
In re Siciliano,
. As discussed in footnote 5 of her March 11, 2004 Memorandum Opinion, Judge Sigmund considered the test put forth in
In re Pro Football Weekly,
Finally, the Court further looked to
Robbins v. Robbins,
. Likewise, the appellant filed a copy of its notice of appeal and brief in support of appeal to this Court from the February 5, 2004 Order on the debtor, her counsel and the Chapter 13 Trustee and that nothing has been filed in response to this appeal either.