In re Keeler

561 B.R. 804, 2016 Bankr. LEXIS 4045, 2016 WL 6892464
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedNovember 22, 2016
DocketCASE No.: 16-59261-JRS
StatusPublished
Cited by3 cases

This text of 561 B.R. 804 (In re Keeler) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Keeler, 561 B.R. 804, 2016 Bankr. LEXIS 4045, 2016 WL 6892464 (Ga. 2016).

Opinion

SUPPLEMENTAL ORDER ON REQUEST FOR ORDER CONFIRM[806]*806ING NO STAY EXISTS1

James R. Sacca, U.S. Bankruptcy Court Judge

This matter is before the Court on the request of Powder Springs Apartment Partners, LLC d/b/a 1250 West Apartments for the entry of an Order confirming no stay exists [Doc. 42] regarding a lease for an apartment located at 1250 Powder Springs Road, Apartment 1805, Marietta, Georgia 30064 (the “Lease”)- The Debtors filed a response in opposition to the request. [Doc. 43], The matter came on for hearing on November 8, 2016 at which the Court heard and considered the arguments of the parties.

I. Background

This bankruptcy case is the Debtors’ second filed in less than on year. On January 14, 2016, Debtors filed a Chapter 13 case, No. 16-50807-JRS. About five months later, this Court denied confirmation and dismissed that case because Debtors failed to fund their plan. Three days later, on May 27, 2016, Debtors filed the instant case, again seeking protection under Chapter 13. [Doc. 1]. Debtors never moved or obtained an order to extend the automatic stay within the 30 days required by 11 U.S.C. § 362(c)(3). On July 15, 2016, after that 30 day period expired, Debtors signed a lease (the “Lease”) with Movant. [Doc. 42 Ex. I].2 On September 22, 2016, Movant filed its request that this Court enter an order confirming that no stay is in effect so it could dispossess the Debtors because they failed to pay any rent that had come due. Debtors contend the stay protects the Lease because it is property of the estate despite not obtaining an order extending the stay as required by 11 U.S.C. § 362(c)(3).

II. Discussion

Section 362(c)(3) of the Bankruptcy Code provides that when an individual debtor in a Chapter 7,11, or 13 case had a previous case dismissed3 within one year prior to filing, “the stay [under section 362(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.’ ” 11 U.S.C. § 362(c)(3) (emphasis added). The phrase “with respect to the debtor” (emphasized above) has led to conflicting interpretations among the courts. Many courts have held that this phrase limits the termination of the automatic stay after 30 days to the debtor and non-estate property of the debtor, but that it does not terminate the stay with respect to property of the estate. See, e.g., In re Rinard, 451 B.R. 12, 19-20 (Bankr. C.D. Cal. 2011); In re Thornton, 07-70002-MHM, 2007 WL 7140155, at *1 (Bankr. N.D. Ga. Aug. 30, 2007) (Section 362(c)(3) “applies to the debtor and property of the debtor but not to property of the estate”); In re Brandon, 349 B.R. 130, 132 (Bankr. M.D.N.C. 2006) (finding the penalty for one previous filing under 362(c)(3) should be interpreted to be less severe than multiple previous filings under 362(c)(4)).

Other courts have determined that Congress could not have intended an exception that would swallow the rule. See, e.g., In re [807]*807Reswick, 446 B.R. 362, 368, 372 (9th Cir. BAP 2011) (noting that Congress enacted Section 362(c)(3)(A) in 2005 for the purpose of discouraging bad faith repeat filings, and that terminating the stay as to the debtor but not the estate would render this provision “devoid of any practical effect”); St. Anne’s Credit Union v. Ackell, 490 B.R. 141, 145 (D. Mass. 2013) (finding the purpose of the statute is not well served by “excluding from the deterrent penalty actions against the bankruptcy estate and including only actions against the debtor personally and his other property outside the estate”); In re Whitescom, No. 13-60159-fra13, 2013 WL 1121393, at *2 (Bankr. D. Or. Mar. 14, 2013) (citing Reswick as authority that the stay is terminated in its entirety); In re Curry, 362 B.R. 394, 400-01 (Bankr. N.D. Ill. 2007) (finding the language susceptible to multiple interpretations, requiring the adoption of an interpretation consistent with the overall statutory scheme). These courts have held that the more appropriate interpretation provides for termination of the stay with respect to the debtor and his or her estate, but not with respect to a spouse or other co-debtor that did not have a case dismissed within the prior year. See, e.g., In re McKeal, No. 14-62113, 2014 WL 6390712, at *2 (Bankr. N.D. Ohio Nov. 14, 2014) (adopting the interpretation that “with respect to the debtor” refers to the co-debtor only if the co-debtor had a prior case that year, which best serves the purpose of BAPCPA); In re Daniel, 404 B.R. 318, 326 (Bankr. N.D. Ill. 2009) (holding that the spousal-exclusion interpretation is the “best reading” of the “with respect to the debtor” limitation in- the context of § 362 and the Bankruptcy Code as a whole); In re Curry, 362 B.R. at 401 (“[I]n a joint case ‘a debtor’ may not necessarily mean both debtors if one debtor did not have a case dismissed within the year prior to the current petition date.” (quoting In re Jupiter, 344 B.R. 754, 760 (Bankr. D.S.C. 2006)).

Thornton and similar cases generally base their holdings on what they consider to be the plain reading of the statute, but this Court does not find the statute to be so clear. Therefore, reading the statute in light of Congressional intent and the statutory scheme produces a sensible result that is not inconsistent with the language of the statute.

As previously discussed in this Court’s decisions in In re Stubbs, Case No. 12-55003-JRS (Sept. 5, 2012), this Court disagrees with Thornton and the former line of cases and generally agrees with the latter line of cases.4 First, the statute pro[808]*808vides that it is the stay with respect to a debt and property that secures a debt or with respect to any lease that is terminated. The lease or property that secures a debt would almost always include property of the estate. Based on that language, it makes no sense to this Court that Congress intended the stay to only terminate as to either a non-estate lease or non-estate property that secures a debt because that result has little practical significance. Furthermore, with respect to a lease, which is the fact situation before this Court, the stay cannot terminate as to the debtor but not the property of the estate, except perhaps to obtain a monetary judgment against the debtor that could not be enforced outside of bankruptcy. For all practical purposes, what the debtor has is a possessory interest for the term of the lease. That possessory interest is the property of the estate. In Georgia, the debtor cannot be dispossessed while the bankruptcy estate still maintains an interest in the lease. The only practical way to proceed against the Debtors here that also affords Movant any relief under the statute is to proceed against the property of the estate. Therefore, under Thornton and similar cases, it seems that their interpretation of the statute renders the statute completely ineffective. Courts are not supposed to interpret a statute in a way to render it ineffective.

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Cite This Page — Counsel Stack

Bluebook (online)
561 B.R. 804, 2016 Bankr. LEXIS 4045, 2016 WL 6892464, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-keeler-ganb-2016.