In Re Murray
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- Before:
- Waldron
DECISION REGARDING MOTION FOR ORDER CONFIRMING INAPPLICABILITY OF THE AUTOMATIC STAY
BACKGROUND AND ESTABLISHED EVENTS
Pending before the court are the Creditor’s motion seeking an order that the automatic stay is not in effect in this case and the Debtor’s response that creditor action involving the property in question must occur exclusively in the bankruptcy court during the pendency of this case. As a result of the competing, applicable bankruptcy provisions, the position of each party is correct.
The Court’s record in this case establishes the following events. (
On June 23, 2006, counsel for Christian H. Murray and Helen S. Murray, the Debtors, filed a chapter 13 petition (Doc. 1) and a chapter 13 plan (Doc. 6) (the “Plan”) together with other required documents (Docs. 2, 3, 4, 5, 7, 8 and 9). The Plan proposed payments of $1,587 per month for sixty months and provided,
inter alia,
to cure a mortgage arrearage and maintain regular monthly payments on a first mortgage registered with Mortgage Electronic Registration Systems, Inc. (MERS) in connection with the Debtors’
On June 30, 2006, a complete copy of the Plan and a separate notice listing various dates, including the 341 meeting (July 25, 2006) and the last day to object to confirmation (August 4, 2006), were sent to all creditors and parties in interest. (Docs. 12,13,14).
On July 7, 2006, MERS, acting solely as nominee for Mortgage Investors Corporation and its servicing agent, GMAC Mortgage Corporation, filed a Notice of Appearance (Doc. 15); however, MERS did not attend the 341 meeting and did not file an objection to the Plan.
On August 14, 2006, an Order confirming the Plan was entered. (Doc. 28)
DETERMINATIONS UNDER
The Court has jurisdiction pursuant to
ISSUES AND ARGUMENTS PRESENTED FOR DETERMINATION
On August 1, 2006, MERS filed a
Motion For Order Confirming Inapplicability Of The Automatic Stay Pursuant To
On August 21, 2006, the Debtors filed the
Debtors’ Response To Motion For Order Confirming Inapplicability Of The Automatic Stay Pursuant To
DETERMINATION OF ISSUES PRESENTED
The Court will enter an order confirming that the automatic stay is not in effect in this case and determining that all actions involving property of the estate must be commenced in this bankruptcy court during the pendency of this case.
When Congress enacted the Bankruptcy Reform Act of 1978, Pub.L. No. 95-598, 92 Stat. 2549 (the Code), it repealed and completely replaced the prior bankruptcy legislation (the Bankruptcy Act of 1898, Pub.L. No. 55-171, amended by the Chandler Act of 1938, Pub.L. No. 75-696, 52 Stat. 840). When Congress enacted the 2005 Act, Pub.L. No. 109-8, 119 Stat. 23, it did not repeal or replace the prior bankruptcy legislation (the Code). Instead, Congress merely attached a sidecar (the 2005 Act) to the existing bankruptcy vehicle (the Code). The operation of this oddly constructed vehicle is frequently difficult, depending on whether it is controlled solely by the provisions of the Code, solely by the provisions of the 2005 Act, or, as in this case, by some provisions of the 2005 Act and some provisions of the Code. 3
PRELIMINARY ISSUE— “PROMPTLY”
As detailed later, the provisions of
In the absence of a definition supplied in existing bankruptcy legislation, the Supreme Court has turned to familiar dictionaries. See
In re Cleaver,
The Court notes the Motion (Doc. 25) does not request that the Court enter the order by any specific date and is accompanied by a Notice (Doc. 26) which provides the Debtors have twenty days in which to file a response. See Local Bankruptcy Rule 9013-1 (“Except as otherwise provided by Rules 2002 and 9006(f), such notice shall fix the response and service of response for twenty (20) days from the date of service as set forth on the certificate of service”) The Debtor’s response does not address the issue of a specific date for any order. The Court is not aided by any suggestions of the parties in this case.
The use of the amorphous word “promptly” in
It seems appropriate to conclude that, in the absence of language in the text of
There are, nevertheless, factors a court may consider in a determination of promptly under
Upon a consideration of these factors in the circumstances of this case, the Court determines that the order confirming the stay is not in effect in this case, which will be entered on September 11, 2006, which is 41 days from the filing of the
Motion For Order Confirming Inapplicability Of The Automatic Stay Pursuant To
STATUTORY PROVISIONS ALTERED BY THE 2005 ACT
The Text of
Prior to the enactment of the 2005 Act, the Code contained various provisions listing circumstances in which the stay did not go into effect [
(i) if a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor where pending within the previous year but were dismissed, other than a case refiled under section 707(b), the stay under subsection (a) shall not go into effect upon the filing of the later case; and (ii) on request of a party in interest, the court shall promptly enter an order confirming that no stay is in effeet[.]
The parties do not dispute that all necessary factual predicates have been established in this case 4 ; rather, the parties’ dispute centers on the proper legal interpretation of the provision’s text.
It must be recognized that the plain meaning of the text “the stay under subsection (a) shall not go into effect upon the filing of the later case” results in a determination that the automatic stay is not in effect in this case.
As the United States Supreme Court has instructed courts in examining the provisions of the Bankruptcy Code, “[w]e have stated time and time again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” Connecticut Nat’l Bank v. Germain,503 U.S. 249 , 253-254,112 S.Ct. 1146 , 1149,117 L.Ed.2d 391 (1992) (citation omitted). That statement is consistent with the United States Supreme Court’s principles that statutory interpretation is a holistic endeavor which must begin with the language of the statute itself. Resort to an examination of legislative history is appropriate only to resolve statutory ambiguity, and in the final analysis, such examination must not produce a result demonstratively at odds with the purpose of the legislation. See Taylor v. Freeland & Kronz,503 U.S. 638 ,112 S.Ct. 1644 ,118 L.Ed.2d 280 (1992); Pennsylvania Dept. of Public Welfare v. Davenport,495 U.S. 552 ,110 S.Ct. 2126 ,109 L.Ed.2d 588 (1990); Kelly v. Robinson,479 U.S. 36 ,107 S.Ct. 353 ,93 L.Ed.2d 216 (1986). The Sixth Circuit has likewise noted that statutes “must be read in a ‘straightforward’ and ‘commonsense’ manner,” and that “[wjhen we can discern an unambiguous and plain meaning from the language of a [statute], our task is at an end.” Rogers v. Laurain (In re Laurain),113 F.3d 595 (6th Cir.1997) (citations omitted); see also Bartlik v. United States Dep’t of Labor,62 F.3d 163 (6th Cir.1995).
Andersson v. Sec. Fed. Sav. & Loan of Cleveland (In re Andersson),
As a noted jurist observed:
The prevailing trend is to begin with the text of the statute and to interrogate its meaning in light of related provisions and the broader context of the statutory scheme as a whole. Only then do courts proceed to other sources such as legislative history and policy, (footnotes omitted)
Hon. Marjorie O. Rendell, 2003 —A Year of Discovery: Cybergenics and Plain Meaning in Bankruptcy Cases, 49 Vill. L.Rev. 887, 887-89 (2004).
There is no ambiguity in the relevant text of this provision and the plain mean
The Text of
Additionally, a review of authority construing the related provisions of
To summarize, the court holds that§ 362(c)(3)(A) terminates the stay with respect to actions taken against the debtor and against property of the debt- or, but does not terminate the stay with respect to property of the estate. See In re Johnson,335 B.R. 805 , 806 (Bankr.W.D.Tenn.2006)(“[w]hen read in conjunction with subsection (1), ... the plain language of§ 362(c)(3)(A) dictates that the 30-day time limit only applies to ‘debts’ or ‘property of the debtor’ and not to ‘property of the estate.’ ”) (335 B.R. at 806 ).
In re Jones,
If Congress wanted to terminate the stay of all the protections of the automatic stay in§ 362(c)(3)(A) , it could easily have used language similar to that in§ 362(c)(4)(A)(i) (“the stay under subsection (a) shall not go into effect upon the filing of the later case”). Congress instead chose to describe the termination of stay quite differently.
The Court of Appeals for the Fourth Circuit recently observed that the use of a particular phrase in one statute but not in another “merely highlights the fact that Congress knew how to include such a limitation when it wanted to.” [In re] Coleman, 426 F.3d [719] at 725 [(4th Cir.2005)]. The Coleman court also quoted the Supreme Court’s clear directive on this topic: “Where Congress includes particular language in one section of a statute but omits it in another, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Keene Corp. v. United States,508 U.S. 200 , 208,113 S.Ct. 2035 , 2040,124 L.Ed.2d 118 (1993) (internal quotation marks and alterations omitted), quoted in Coleman,426 F.3d at 725-6 . Since Congress, in terminating aspects of the automatic stay in§ 362(c)(3)(A) , chose language that is so vastly different than the straightforward language it used when it terminated all protections of the stay in§ 362(c)(4)(A) ®, the court concludes that§ 362(c)(3)(A) is not as broad as§ 362(c)(4)(A) ® and that all of the protections of the automatic stay are not eliminated by§ 362(c)(3)(A) . (footnotes omitted)
In re Paschal,
The Text of Other Provisions of
It is noteworthy that, even in other provisions of
Accordingly, as a result of provisions of the 2005 Act, the Court determines that
STATUTORY PROVISIONS NOT ALTERED BY THE 2005 ACT
As noted earlier, there are significant provisions of the Code which were not altered by the 2005 Act. Although the 2005 Act made changes in some alphanumeric designations or other text in certain sections of these relevant Code provisions, the 2005 Act made no changes in the following relevant, statutory provisions which impact the issues in this case:
Statutory Provisions of Title 28
Essential to an appropriate determination of the issues in this case are the following statutory provisions in Title 28 governing jurisdiction in this case:
The district court in which a ease under title 11 is commenced or is pending shall have exclusive jurisdiction—
(1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate[.]
Core proceedings include, but are not limited to—
(A) matters concerning the administration of the estate;
(B)allowanee or disallowance of claims against the estate ...;
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(G) motions to terminate, annul, or modify the automatic stay;
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(L) confirmation of plans;
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(O) other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims[.]
As previously established in connection with changes resulting from the enactment of the Code:
The court notes that recently the Sixth Circuit abrogated its prior rule announced in In re Washington,623 F.2d 1169 (6th Cir.1980), cert. denied,449 U.S. 1101 ,101 S.Ct. 896 ,66 L.Ed.2d 826 (1981), and recognized the bankruptcy court’s superior jurisdiction over a debt- or’s property even though a state court had already exercised in rem jurisdiction over the property. The Sixth Circuit in In re White,851 F.2d 170 , 172-173 (6th Cir.1988) noted,
Our decision to award superior jurisdiction to the state court was based on “traditional notions of comity, which require that, as between state and federal courts, jurisdiction must be yielded to the court that first acquires jurisdiction over the property.”623 F.2d at 1172 . We traced this holding to a broader doctrine which advocates granting exclusive jurisdiction to the first court asserting in rem jurisdiction, when both courts base jurisdiction on control of the same property.See, e.g. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456 , 466,59 S.Ct. 275 , 280,83 L.Ed. 285 (1939). Despite the federalism interests served by such a rule, we agree with debtor’s argument that the 1978 and 1984 changes to the Bankruptcy Code were primarily aimed at getting away from the kind of in rem jurisdiction set out in Princess Lida and In re Washington. The jurisdiction granted in28 U.S.C. § 1334(d) indicates a conscious effort by Congress to grant the bankruptcy court special jurisdiction and to preclude the type of jurisdictional disputes evidenced in those cases. See ELR.Rep. No. 95-595, 95th Cong., 1st Sess., 445, reprinted in 1978 U.S.Code Cong. & Admin. News 5787, 5963, 6400; 1 L. King, Collier on Bankruptcy § 3.01 p. 3-30 (15th ed.1983).
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The rule in In re Washington should therefore no longer apply to give the state court jurisdiction over property simply because it may have been the first court to exercise control over the property.
Air Enters., Inc. v. Ohio Farmers Ins. Co. (In re Hughes-Bechtol, Inc.),
The Sixth Circuit recently stated:
28 U.S.C. § 1334(b) provides exclusive district court jurisdiction over “all cases under title 11,” and concurrent jurisdiction over “civil proceedings arising under title 11, or arising in or related to cases under title 11.” In turn,28 U.S.C. § 157(a) permits district courts to refer bankruptcy cases brought under their original jurisdiction to bankruptcy courts.Section 157(b) of the same chapter defines “core proceedings arising under title 11, or arising in a case under title 11” to include “matters concerning the administration of the estate,” “motions to terminate, annul, or modify the automatic stay,” and “other proceedings affecting the liquidation of assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship .... ”28 U.S.C. § 157(b)(2)(A) , (G), (O).
Amedisys, Inc. v. Nat’l Century Fin. Enters, Inc. (In re Nat’l Century Fin. Enters., Inc.,)
Additionally, recent Supreme Court cases have reaffirmed the jurisdiction conferred in
The combined effect of these statutory provisions is to place exclusive jurisdiction in the bankruptcy court for all actions involving property of the Debtors’ estate.
Statutory Provisions of Title 11
The 2005 Act made no changes impacting the substance of the applicability of the following statutory provisions in Title 11 in this case:
11 U.S.C. § 541 . Property of the estate
(a)The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
(1) Except as provided in subsections (b)and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.
11 U.S.C. § 554 . Abandonment of property of the estate
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.
(a) Property of the estate includes, in addition to the property specified insection 541 of this title—
(1) all property of the kind specified in such section that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first; and
(2) earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first.
(b) Except as provided in a confirmed plan or order confirming a plan, the debtor shall remain in possession of all property of the estate.
11 U.S.C. § 1327 . Effect of confirmation
(a) The provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as otherwise provided in the plan or in the order confirming the plan, the property vesting in the debtor under subsection (b) of this section is free and clear of any claim or interest of any creditor provided for by the plan.
As further discussed in this decision, the combined effect of these statutory provisions, in connection with the Plan in this case, is to vest the Property as property of
Plan Provisions
A central element in the determination of the issues in the case is an understanding of the Plan’s provision concerning the vesting of property of the estate. The confirmed Plan provides, in relevant part, “9. Vesting of Property in Debtor — All property of the estate
shall not vest back to the Debtor after confirmation, but shall remain property of the estate until the case is dismissed, discharged or converted.”
(emphasis added) This provision is consistent with chapter 13 plans considered in other bankruptcy courts. (“Pursuant to orders confirming chapter 13 plans in the Western District of Tennessee, all property which is defined by
Property of the Estate
The absence or termination of the automatic stay does not remove property from the Debtors’ estate. See
In this case, the entry of an order confirming that the automatic stay is not in effect does not, during the pendency of this case, authorize any action against the Property, except in this court. As noted:
The filing of a bankruptcy petition creates a bankruptcy estate comprised of the debtor’s legal or equitable interests in property wherever located and by whomever held.11 U.S.C. § 541(a) ; Hong Kong & Shanghai Banking Corp., Ltd. v. Simon (In re Simon),153 F.3d 991 , 996 (9th Cir.1998). As a result, “[t]he district court in which the bankruptcy case is commenced obtains exclusive in rem jurisdiction over all of the property in the estate.” Id.
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Thus, an order lifting the automatic stay by itself does not release the estate’s interest in the property and “the act of lifting the automatic stay is not analogous to an abandonment of the property.” Id. at 311 (citing In re Ridgemont Apartment Assocs.,105 B.R. 738 , 741 (Bankr.N.D.Ga.1989)).
Catalano v. Comm’r,
Effect of Confirmation
As noted earlier, the Plan provisions providing the Property remains property of the estate has been confirmed. See Doc. 28 — Order Confirming Plan. The Bankruptcy Appellate Panel of the Sixth Circuit has explained the effect of a confirmed plan, noting:
Section 1327 of the Bankruptcy Code states that the “provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.”11 U.S.C. § 1327(a) . This binding effect of confirmation has led courts to conclude that proceedings inconsistent or incompatible with the confirmed plan are improper.
Section 1327 is clear. The provisions of a confirmed plan bind each creditor whether or not such creditor has objected to, has accepted, or has rejected the plan. The plans in the present cases provided for the curing of defaults and for the maintenance of payments to the appellants throughout the life of the plan. An order confirming a Chapter 13 plan is res judi-cata as to all justifiable issues which were or could have been decided at the confirmation hearing. See, In re Lewis, 8 B.R. 132 , 137 (Bankr.D.Idaho 1981).Section 1327 precludes a creditor from asserting, after confirmation, any other interest than that provided for it in the confirmed plan. The issues of adequate protection, lack of equity, and necessity for a successful rehabilitation of the Chapter 13 debt- or were all res judicata as of the confirmation of the plan.
Anaheim Sav. & Loan Ass’n v. Evans (In re Evans),30 B.R. 530 , 531 (9th Cir. BAP 1983). Once a plan is confirmed, it is treated as the exclusive and transcendent relationship between the debtor and the creditor. It follows that
a creditor cannot thereafter assert any other interest than that provided for him in the confirmed plan and that all of the issues of adequate protection, lack of equity, the fact that the property is not necessary for effective reorganization of the debtor’s affairs, etc., could and should have been raised in objections to confirmation.
Ford Motor Credit Co. v. Lewis (In re Lewis),8 B.R. 132 , 137 (Bankr.D.Idaho 1981); accord, Citicorp Homeowners, Inc. v. Willey (In re Willey),24 B.R. 369 , 375 (Bankr.E.D.Mich.1982) (quoting In re Lewis with approval). Even where, as here, the motion for relief from stay is filed before confirmation, bankruptcy courts hold that, unless it pertains to a post-confirmation failure to make payments, the motion is untimely in view of the transcendence of the confirmed plan. In re Minzler,158 B.R. 720 , 721 (Bankr.S.D.Ohio 1993); Society Bank v. Botteri (In re Botteri),108 B.R. 164 , 166 (Bankr.S.D.Ohio 1989).
In re Wellman,
The Text of Other Provisions of
It is also noteworthy that in the 2005 Act’s changes to
(h)(1) In a case in which the debtor is an individual, the stay provided by subsection (a) is terminated with respect to personal property of the estate or of the debtor securing in whole or in part a claim, or subject to an unexpired lease, and such personal property shall no longer be property of the estate .... (emphasis added)
As previously noted in this decision, the appropriate rule of statutory construction provides that the specific inclusion of text terminating the stay and removing the
CONCLUSION
Although the Court will enter an order confirming the automatic stay is not in effect in this case, the court determines that all actions involving the Property must be commenced exclusively in this bankruptcy court during the pendency of this case.
The Court is cognizant that this decision raises a number of questions, not the least of which may be what, if any postpetition actions, are, or will be, available in this court during the pendency of a case in connection with this Property; however, as has been noted in connection with issues presented by the 2005 Act — “That is an interesting question that need not be decided in this case.”
Paschal,
An order in accordance with this decision has been simultaneously entered.
Notes
. A "910 car claim” arises as a result of new text, which lacks any alphanumeric designation, added to § 1325(a). The commentary and case law have often referred to this new text as a "hanging paragraph” in § 1325(a). The court expresses no view on the meaning of this "hanging paragraph” in § 1325(a).
. Despite the citation in the caption, the Creditor’s argument concerns
. As noted by one court: “The [2005 Act] did not replace the entire Code, but merely supplemented the provisions. Accordingly, the Court may find congressional intent by looking not only at the provisions of the Code which were changed by the [2005 Act], but also to the provisions which were left untouched.” (citation omitted)
In re Fuger,
. The Debtors had two prior, joint chapter 13 cases dismissed within a year of the petition date of the present case. Case No. 05-36219 was dismissed on November 10, 2005 and Case No. 050-46603 was dismissed on June 12, 2006. The court notes that