In Re Sole

233 B.R. 347, 1998 Bankr. LEXIS 801, 1998 WL 1029218
CourtUnited States Bankruptcy Court, E.D. Virginia
DecidedMay 4, 1998
Docket19-10116
StatusPublished
Cited by8 cases

This text of 233 B.R. 347 (In Re Sole) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Sole, 233 B.R. 347, 1998 Bankr. LEXIS 801, 1998 WL 1029218 (Va. 1998).

Opinion

MEMORANDUM OPINION AND ORDER

DAVID H. ADAMS, Bankruptcy Judge.

This matter comes before the Court on the Standing Chapter 13 Trustee’s Motion for Dismissal pursuant to Section 109(g)(2) of the Bankruptcy Code. 1 Having reviewed the pleadings and the competing legal interpretations of Section 109(g)(2), we reach the following factual findings and conclusions of law. This is a core proceeding and jurisdiction is proper. 28 U.S.C. §§ 157(b)(1), 1334.

Findings of Fact

The debtors, Wayne E. and Cynthia L. Sole, filed a Chapter 13 petition, case number 95-21014, on February 28, 1995. In that case, a Motion for Relief from the automatic stay was filed by Chemical Residential Mortgage Corporation in October 1995. That Motion was later resolved by consent with an Amended Order Granting Modification of the Stay entered on the Court’s docket on March 21, 1996. On November 17, 1997, approximately 20 months after the filing of the motion for relief, this first Chapter 13 petition was dismissed pursuant to the debtors’ request for dismissal. On November 20, 1997, three days following the voluntary dismiss *348 al of their earlier Chapter 18, the debtors filed their current Chapter 13 petition.

Conclusions of Law

The protections afforded by the Bankruptcy Code are generally available, .with few exceptions, to all residents of the United States. 2 One exception carved out by the Code is found in Section 109(g)(2), providing in part

[N]o individual ... may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if—
(2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.

11 U.S.C. § 109(g)(2).

Despite its apparent simplicity, Section 109(g)(2) has generated several competing interpretations and has not been addressed by the Fourth Circuit, nor has the matter been clarified by the District or Bankruptcy Courts for the Eastern District of Virginia. Generally, courts interpret Section 109(g)(2) in one of three manners. The first approach considers the equities of the situation, avoiding results that would lead to absurd, inequitable, or unfair results. The second approach is a strict application of Section 109(g)(2) using the plain meaning of the words of the statute. This line of cases asserts that Section 109(g)(2) is triggered anytime a voluntary dismissal follows the filing of a motion for relief. The last approach also applies the plain meaning of the statute, but conditions its application upon a causal connection between a motion for relief from the automatic stay and a debtor’s voluntary dismissal of his case. 3

1. Equitable Approach

We turn our attention first to the § 109(g)(2) approach that balances the equities of each situation. Courts using this approach tend to fall in one of two camps. The first, as evidenced in In re Luna, defers to the equities of each situation because a strict application of the statute would lead to an “absurd, inequitable, or unfair result.” 122 B.R. 575, 577 (9th Cir. BAP 1992). Other courts relying on concepts of equity cite Congressional intent and apply the statute in only a limited number of cases rather than effectuate the statute across the board. See, e.g., In re Santana, 110 B.R. 819 (Bankr.W.D.Mich.1990).

In Luna, a creditor in her first case, Home Savings, requested and obtained relief from the automatic stay in order to sell previously foreclosed property. The debt- or then filed a voluntary motion for dismissal and the judge granted her motion. Within 180 days of her voluntary dismissal, the debtor filed a second bankruptcy that should have prevented Home Savings from proceeding with the sale of the previously foreclosed property. Despite its knowledge of the second petition, however, Home Savings sold Luna’s property three weeks after the second filing date. The court held that it would adopt a discretionary approach to § 109(g)(2) because to do otherwise “would reward Home Savings for acting in bad faith [by wilfully violating the automatic stay in the second case] and punish Luna for acting in good faith [by seeking to have the bankruptcy court resolve a dispute over possible redemption of the mortgaged property].” Luna, 122 B.R. at 577.

In Santana, on similar facts, the court concluded that the language of § 109(g)(2) was unambiguous, and that, if applied as written, the statute dictated dismissal. However, the court went on to state that *349 “to apply it literally to the facts now before me would produce, if not an absurd result, then certainly one which goes far beyond the scope of the abuse which it appears Congress was attempting to cure.” Santana, 110 B.R. at 821. Consequently, the court declined to apply the statute as written, and denied the creditor’s motion to dismiss.

Clearly bad facts make for bad law. In both instances, the Luna and Santana courts reached beyond their judicial roles to achieve a desired result. Neither Section 109(g)(2), while subject to various legitimate interpretations, nor the Bankruptcy Code provide for such extraordinary judicial discretion and interpretation. The Luna and Santana courts had other means with which to punish creditors for willful violations of the automatic stay. Both courts utilized Section 109(g)(2) to remedy a perceived wrong.

2. Strict Approach

The second approach is a strict application of Section 109(g)(2). Courts utilizing this approach hold that the meaning of Section 109(g)(2) is plain and unambiguous, and that the language of the statute dictates a broad rule of dismissal. See, e.g., In re Andersson, 209 B.R. 76 (6th Cir. BAP 1997); In re Keziah, 46 B.R. 551 (Bankr.W.D.N.C.1985).

The rationale behind a strict interpretation is explained in the Keziah decision. There, the court held that even though one could interpret “the words ‘following the filing’ [to] mean[ ] ‘in consequence of the filing’ or ‘as a result of the filing,’” the proper interpretation is that Section 109(g)(2) is activated any time a motion for relief from stay is filed earlier in time than the granting of a voluntary dismissal. Keziah, 46 B.R. at 555. The court added that Congress might have intended bankruptcy courts to look into debtor motivations when moving for a voluntary dismissal had the Section been placed in another part of the Code, such as sections 1112 or 1825. According to Keziah,

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Cite This Page — Counsel Stack

Bluebook (online)
233 B.R. 347, 1998 Bankr. LEXIS 801, 1998 WL 1029218, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-sole-vaeb-1998.