In re James

359 B.R. 602, 2006 Bankr. LEXIS 3700, 2006 WL 3870389
CourtUnited States Bankruptcy Court, W.D. Louisiana
DecidedOctober 31, 2006
DocketNo. 04-81845
StatusPublished

This text of 359 B.R. 602 (In re James) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re James, 359 B.R. 602, 2006 Bankr. LEXIS 3700, 2006 WL 3870389 (La. 2006).

Opinion

REASONS FOR DECISION

HENLEY A. HUNTER, Bankruptcy Judge.

This matter comes before the Court on Cottonport Bank’s Motion for Relief from Stay and Abandonment for the Limited Purpose of Obtaining Right of Way and the debtors’ Opposition. This is Core Proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (G), (M) and (O). This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and by virtue of the reference by the District Court pursuant to Local District Court Rule 83.4.1 incorporated into Local Bankruptcy Rule 9029.3. No party at interest has sought to withdraw the reference and the district court has not done so on its own motion. This Court makes the following findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. Pursuant to these reasons, the Motion will be denied.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Debtors filed a voluntary petition under Chapter 13 on September 21, 2004, listing two parcels of real estate on Schedule A. One tract consisted of eight acres and the other was a contiguous 36 acre tract. Debtors’ plan proposed to keep the eight acre tract which comprised debtors’ residence subject to a homestead exemption. The Cottonport Bank (hereinafter, “the bank”) filed a claim in the amount of $2,006,062.12, plus interest at 18% and attorney fees of up to 25%. The claim lists a “Summary of Collateral” consisting of a judgment, being a Summary Judgment in various amounts rendered March 11, 2003, and a number of notes, commercial guaranty and pledge agreements. The debtors proposed to surrender the 36 acre tract to the bank, and it objected to confirmation.

[604]*604The bank also sought relief from they stay based on its judicial mortgage affecting both tracts. On October 28, 2004, the Court held a hearing on the bank’s Motion for Relief from Stay, at which time it was determined that the bank, being only a judgment creditor rather than a consensual lien holder, could not prevent the dismemberment of the two tracts of land, and the stay was lifted as to the non-residential property, but the motion was denied as to the residential tract. Once the stay was lifted as to the non-residential tract, the bank obtained the property by foreclosure. Two years later, the bank comes before the Court in the instant motion, alleging the tract is enclosed property, and seeks the lifting of the stay as to the residential tract for the purpose of obtaining a servitude of passage in the state court, pursuant to La.Civ.Code art. 694.

On December 9, 2004, this Court entered the Order submitted by counsel to the bank and counsel to the debtors, wherein the stay was lifted as to the 36.50 acre tract and abandoning the same from the estate. That order further provided that the stay shall remain in effect as to the debtors’ eight acre tract, and contained provisions that would permit the lifting of the stay in the event of a default in maintaining insurance coverage or plan payments. The debtors’ plan was confirmed on January 13, 2005.

On August 21, 2006, Cottonport Bank filed the instant motion to lift the automatic stay for the limited purpose of pursuing a right of way, to which debtors opposed. The thrust of the bank’s motion is that as foreclosure proceedings on the 36 acre tract occurred, it was determined that there was no access or right of way to that tract except through the eight acre tract comprising the debtors family home. The bank alleges that the 36 acre tract became an “enclosed estate,” without access to the nearest road, thus preventing a successful sale.

The bank asserts, notwithstanding its request for relief from the stay, that the stay does not actually apply in this instance under § 362(a)(1) because the cause of action to obtain a right of way arose post-petition. Debtors oppose the bank’s request for relief, asserting, inter alia, that the stay applies as the bank is seeking to “exercise control” over the property of the estate under § 326(a)(3), and further, that the bank failed to meet its burden of establishing a prima facie case. Debtors argue that the bank has failed to establish the necessary standing to bring an action for such a right of way under the applicable state statute, asserting that the remedy is not available to the bank since its acquisition of the property was by a sheriffs sale, and thus involuntary. Louisiana Civil Code 693 provides that if a tract becomes enclosed as a result of a voluntary act or omission of its owner, the neighbors are not obliged to furnish a passage to him; and Civil Code article 694 provides that access may be sought if lost as a result of a voluntary alienation or partition, the neighbor shall be furnished by the neighbor gratuitously, even if the act of alienation or partition does not mention a servitude of passage.

The first issue to be determined is whether the automatic stay applies to the bank’s cause of action to obtain the servitude of passage against the debtors’ residential property. In Louisiana, a servitude is a real right and may follow the real estate to which it pertains, continuing as a charge on the “servient estate” when ownership changes. La.Civ.Code art. 650. This Court concludes that the relief requested here is in fact the first of the historical components of ownership in Louisiana, which consists of usus, fructus, and abusus. Thus, by its terms, § 362 prohib[605]*605iting action to use or otherwise exercise control over of property of the estate applies. This court finds that the grant of a servitude constitutes a use of property and is thus barred by the automatic stay. Moreover, the Court points to the Order submitted by the parties dated December 9, 2004, since these parties have expressly stipulated that the automatic stay remains in effect as to the residential tract, that agreement is binding on the bank.

Having established that the stay applies, this Court turns to whether the Motion to Lift the Stay for the limited purpose of obtaining the servitude of passage should be granted. At the outset, the Court finds the bank’s assertion that its knowledge of the access problem arose post-petition is disingenuous. The 36 acre tract and the eight acre home tract were purchased at different times for different purposes; the former being a failed commercial development, which was also evident from the commercial nature of the original loan agreements. (See “Summary of Collateral” attached to the bank’s proof of claim, including numerous commercial guaranties, security agreements, and the legal description for the 36.50 tract expressly describing same as “[bjeing the same property acquired from the Cottonport Bank by Cash Deed Dated October 17, 1997, recorded in COB A-_, entry no. 97-_, records of Avoyelles Parish.”) In short, the bank’s own documentary support for its claim suggests that it was an ancestor in title. Further, the vice-president of the bank, Mr. Ben Luke, testifying in support of the instant motion, made a vague reference to another possible means of access to a public highway.

Bankruptcy courts have had the occasion to address requests for similar relief. In Hudson Valley Cablevision Corp.

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Related

Spotsville v. Herbert & Murrell, Inc.
698 So. 2d 31 (Louisiana Court of Appeal, 1997)
Petrovich v. Trabeau
780 So. 2d 1258 (Louisiana Court of Appeal, 2001)
Bevelle v. Jefferson County (In Re Bevelle)
348 B.R. 812 (N.D. Alabama, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
359 B.R. 602, 2006 Bankr. LEXIS 3700, 2006 WL 3870389, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-james-lawb-2006.