In re Hale
AMENDED MEMORANDUM DECISION AND ORDER
The matter before the Court arises out of the Motion [dkt. no. 15] (the “Motion”) filed on May 1, 2015 by John R. Hale (the “Debtor”) seeking to re-impose the automatic stay under 11 U.S.C. § 362(a) which terminated, by operation of law, on April 15, 2015. 11 U.S.C. § 362(c)(3)(A). Consideration of the Motion raises two questions. First, whether the automatic stay may be extended or re-imposed after the statutory termination date. Second, whether termination of the automatic stay applies to property of thе estate as well as to the debtor. The second question, termination of the automatic stay under section 362(c)(3)(A), puts squarely at issue the conflicting interpretations of the language contained in section 362(c)(3)(A) as to the scope of termination, i.e., does the stay only terminate with respect to the debtor, and property of the debtor or does termination also extend to property of the estate.
JURISDICTION
The Court has jurisdiction over this matter under 28 U.S.C. § 1334 and the Standing Order of Reference entered by the United States District Court for the Eastern District of New York pursuant to 28 U.S.C. § 157(a), dated August 28, 1986, as amended by Order dated December 5, 2012, effective nunc pro tunc as of June 23, 2011. Consideration of the Motion is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (G) in which final orders or judgment may be entered by this Court pursuant to 28 U.S.C. § 157(b)(1).
BACKGROUND AND PROCEDURAL HISTORY
On March 16, 2015, the Debtor filed his present Chapter 13 case. The Debtor previously filed for Chapter 13 relief on August 14, 2014 (case no. 14-73605).
On June 2, 2015, the Court held a hearing on the Motion. The Motion was unopposed but, as acknowledged by the Debtor in the Motion, a motion to extend the automatic stay was not filed by the Debtor nor heard by the Court prior to the expiration of the 30-day period under 11 U.S.C. § 362(c)(3)(A). Failure to file a motion to keep the stay in place within the prescribed time period was the only basis given by the Debtor for the Court to disregard the specific statutory requirements of section 362(c)(3)(A) and enter an order reimposing the stay. No other factual or legal authority to re-impose the stay under these circumstances was offered by the Debtor.
After review of the Motion and consideration of the arguments of counsel at the June 2 hearing, the Court denied the Motion because it was not filed nor heard within the 30-day period required under section 362(c)(3)(B).
On June 30, 2015, the Court held a further hearing in this matter on the limited issue of the scope of termination of the stay under section 362(c)(3)(A). Having considered thе Motion, the Supplemental Brief, the arguments of Counsel, and for the reasons stated on the record at the June 30 hearing, the Court finds that the automatic stay under section 362(c)(3)(A) only terminated with respect to the Debtor and his property, but not property of the estate. This Memorandum Decision and Order memorializes and is consistent with
DISCUSSION
Pursuant to section 362(a) of the Bankruptcy Code, the filing of a bankruptcy petition “operates as a stay, applicable to all entities, of’ most actions against the debtor, the debtor’s property and any property of the estate. 11 U.S.C. § 362(a). See S.E.C. v. Wyly,
Since the Debtor only had one case pending in the previous year, subsection (3) is the operative section. 11 U.S.C. section 362(c)(3) provides, in pertinent part:
(3) if a single or joint case is filed by or against a debtor who is an.individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chаpter 7 after dismissal under section 707(b)—
A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day_ after the filing of the later case;
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed....
The majority of courts that have addressed the issue of the scope of the. termination of the stay under section 362(c)(3)(A) hаve determined that the stay only terminates with respect to the debtor and his property, but not property of the
Some courts, however, have concluded that the automatic stay is terminated under 362(c)(3)(A) in its entirety, i.e., the stay is terminated with respect to the debtor, debtor’s property and property of the estate. See In re Reswick,
Although the Second Circuit has yet to address the issue, courts within this Circuit have adopted the majority view, concluding that the stay that terminates “with respect to the debtor” under section 362(c)(3)(A) applies only against the debtor and the debtor’s property, while the stay against estate property remains in effect. See Weil,
The Majority View
The majority view finds that the language “with respect to the debtor” could
The Jones court recognized that the Bankruptcy Code elsewhere “differentiates bеtween acts against the debtor, against property of the debtor and against property of the estate.”
Section 362(a)(1) stays actions or ..proceedings “against the debtor;” § 362(a)(2) stays enforcement of a judgment “against the debtor or against property of the estate;” § 362(a)(3) stays “any act to obtain possession of property of the estate or of property from the estate;” § 362(a)(4) stays “any act to create, perfect, or enforce any lien against property of the estate;” § 362(a)(5) stays “any act to create, perfect, or enforce against property of the debtor any lien” to the extent it secures a prepetition claim; and § 362(a)(6) stays “any act to collect, assess, or recover a claim against the debtor. Section 362(b)(2)(B) permits collection of domestic support obligations from “property that is not property of the estate.” Section 362(c) also distinguishes between the stay of acts against property of the estate and the stay of any other acts. Section 362(c)(1) provides that “the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate,” and § 362(c)(2) provides for the termination of the stay of “any other act” prohibited by § 362(a).
This distinction is likewise noted by the majority as it compares the language of section 362(c)(3)(A) with that of section 362(c)(4)(A)(i). In the 2005 Amendments, Congress added subsections (3) and (4) to provide for automatic termination of the stay in serial filing cases. Subsection (3) applies to a debtor who has filed one prior bankruptcy case in the year before the filing of his or her current case, whereas subsection (4) deals with a debtor who has filed two or more bankruptcy cases in the year before the filing of his or her current case. In the latter scenario, i.e., a subsequent case filed after two or more dismissals within the previous year, there is no 30-day stay in place as under subsection (3), rather, “the stay shall not go into effect upon the filing of the later case.” 11 U.S.C. § 362(c)(4)(A)®. The majority finds this difference in language critical when considering the consequences suffered by a serial filer. The debtor’s past bankruptcy history is important as the consequences suffered by the debtor under subsections (3) and (4) are markedly different. See Jumpp,
Courts adhering to the minority approach conclude that the phrase “with respect to the debtor” must be analyzed in the context of section 362(c)(3) as a whole. Reswick,
Rather than reading “with respect to the debtor” as a distinction between property, the minority approach reads the phrase as a distinction regarding persons in the context of a single debtor as opposed to a joint case filed by a married couple. Keeping the introduction of section 362(c)(3) in mind (i.e. “if a single or joint case is filed by or against debtor ... ”), the minority view reasons that the phrase “with respect to the debtor” in section 362(c)(3)(A) could be interpreted to mean that the automatic stay will terminate as to a repeat-filing debtor, but not as to the debtor’s spouse who is not a repeat filer. See Reswick,
Furthermore, the Reswick court found that by interpreting “with respect to the debtor” as distinguishing among property (i.e., the stay terminates with respect to the debtor pеrsonally and to non-estate property, but not as to estate property) renders section 362(c)(3)(A) internally inconsistent. The conflict stems from the language of section 362(c)(3)(A) which immediately precedes the phrase “with respect to the debtor.” That language reads as follows: “the stay under subsection (a) with respect to any action taken with respect to a debt or property securing debt or with respect to any lease shall tеrminate with respect to the debtor ...” Reading section 362(a)(3)(A) as whole, the minority view concludes that if the phrase “with respect to the debtor” meant that the automatic stay only terminated as to the debt- or personally and non-estate property, the opening clause of section 362(c)(3)(A) would be surplusage.
Noting that automatic termination of the stay under subsection (3) was added by the 2005 Amendments to deter abusive serial filings
Application to the Present Case
The Court recognizes that the exercise of statutory interpretation presents a close question and, at first blush, the minority view has some appeal given the objective of the 2005 Amendments to combat abusive serial filings under sections 362(c)(3) and (4). However, this Court finds the majority view persuasive and the better reasoned approach to reading the statute as written and determining the scope of termination of the automatic stay under section 362(c)(3)(A). The majority reading of section 362(c)(3)(A) applies the plain meaning of the statutory language. If Congress intended that the stay under section 362(c)(3)(A) terminate on the 30th day after commencement of the bankruptcy case with respect to property of the estate, it would have said so. It did not. The “first step in interpreting a statute is to determine whether the language at issue had a plаin and unambiguous meaning with regard to the particular dispute in the case.” Robinson v. Shell Oil Co.,
In this case, the Court believes the inquiry is complete. Termination of the automatic stay under section 362(c)(3) does not extend to actions against property of the estate. To find otherwise would require the Court to ignore the plain text of the statute. Accordingly, this Court joins the majority of courts in holding that termination of the automatic stay under section 362(c)(3) does not extend to actions against property of the bankruptcy estate—rather, the stay remains in effect with respect to estate property. Thus, the stay in this case terminated by operation of law on Apiil 15, 2015 with respect to the Debtor and his property, but did not terminate as to property of the estate.
For the foregoing reasons, the Motion is denied. The automatic stay in this case terminated on April 15, 2015 under section 362(c)(3)(A) with respect to the Debtor and his property, and will not be re-imposed, continued or extended. However, the Court finds that the automatic stay did not terminate as to property of the estate. Accordingly, the Court holds that any actions against property of the estate remain subject to the automatic stay under section 362(a).
Notes
This Amended Memorandum Decision and Order clаrifies and supersedes the Court's prior Memorandum Decision and Order dated July 30, 2015.
. The Debtor previously filed for relief under
. See In re Tubman,
. The Weil court noted that the Bankruptcy Court in In re Rinard,
. H.R.Rep. No. 109-31 (pt.l), 109th Cong., 1st Sess., at 69 (2005).