In Re Williams

371 B.R. 102, 2007 Bankr. LEXIS 2339, 2007 WL 2007953
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedJuly 5, 2007
Docket19-11258
StatusPublished
Cited by8 cases

This text of 371 B.R. 102 (In Re Williams) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Williams, 371 B.R. 102, 2007 Bankr. LEXIS 2339, 2007 WL 2007953 (Pa. 2007).

Opinion

Opinion

DIANE WEISS SIGMUND, Chief Judge.

Before the Court is the Motion for Relief from Stay (the “Motion”) of AGLF Investments, LLC (“AGLF”), seeking to recover possession of real property leased to the Debtors for their residence (the “Residence”). The Motion brings into play new provisions of the Bankruptcy Code added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. No. S 256, 109-8, 119 Stat. 23 (2005) (“BAPCPA”). Specifically, the Court must address §§ 362(b)(22) and 362(Z), which provide an exception to the automatic stay of § 362(a)(3) under certain circumstances. As the contested matter presents an issue of first impression under BAPCPA, the parties were asked and have briefed their respective positions. Having reviewed same and conducted independent research, the Motion is ripe for decision.

FACTUAL BACKGROUND

The relevant facts are not disputed. Debtors rent their Residence from AGLF pursuant to a lease dated January 15, 2007 (the “Lease”). Exhibit C-2. On March 2, 2007, AGLF filed a Landlord and Tenant Complaint 1 against Debtors for past-due rent in the Magisterial District Court (the “MDC”), District 38-1-07, for Montgomery County, and on March 14, obtained a *104 judgment (the “Judgment”) against Debtors in the amount of $8,464 and granting possession of the Residence. Exhibit C-5.

Debtors filed this Chapter 7 case pro se on March 22, 2007. Using the new form of petition adopted to implement BAPCPA, Debtors indicated that its landlord has a judgment for possession and identified and provided the address of Rudolf Celli Jr. (“Celli”) 2 as landlord. They also checked the box preceding the statement “Debtor claims that under applicable nonbankrupt-cy law, there are circumstances which the debtor would be permitted to cure the entire monetary default that gave rise to the judgment for possession, after the judgment for possession was entered,” and did not check the box preceding the statement “Debtor has included with the petition the deposit with the court of any rent that would become due during the 30-day period after the filing of the petition.” Doc. No. I. 3 Upon review of the foregoing, the Clerk of Court on March 22, 2007 forwarded a notice and certified copy of the docket to Celli and Debtors as required by 11 U.S.C. § S62(0(4)(B). See p. 106 infra.

Debtors’ attorney entered his appearance in this case on March 30, 2007 and filed the requisite Schedules and Statement of Affairs on April 6, 2007. No further filings were made with respect to the Judgment nor was a deposit ever posted.

On April 27, 2007, AGLF filed with the MDC a request for Order of Possession, which was granted that same day (the “Possession Order”) and provided for eviction to take place on May 8, 2007. Exhibit C-l. AGLF did not seek relief from the automatic stay prior to obtaining the Possession Order based on its view that the BAPCPA provisions of § 362(b)(22) were self executing when Debtors had failed to certify that they had deposited with the clerk any rent due during the 30-day period following the filing. 4 On May 2 AGLF filed the Motion which was prompted by the position of Debtors’ counsel that certain provisions of § 362(a) still protect them from eviction. 5 While contending that stay relief is not required under these circumstances, the Motion asks for relief to the extent it may be necessary. 6

*105 DISCUSSION

The automatic stay provided by 11 U.S.C. § 362(a) is one of the fundamental debtor protections provided by the bankruptcy laws. Its breadth as reflected in its broadly worded subsections (a)(1) through (a)(8) has provided opportunities for abuse not intended by Congress to achieve its prophylactic statutory objective, ie., providing debtors a breathing spell from collection efforts, harassment and foreclosure actions while they seek financial rehabilitation consistent with the requirements of the Bankruptcy Code. H.R.Rep. No. 595, 95th Cong., 1st Sess 174-75 (1977); S.Rep. No. 989, 95th Cong.2d Sess. 49-50 (1978), U.S.Code Cong.Admin. & News 1978, pp. 5963, 5787. One such area of abuse was identified by the commission charged by Congress in 1994 with a review of the extant bankruptcy law. Through testimony and written submissions, the National Bankruptcy Review Commission (the “Commission”) was advised of “persistent, systematic abuse of the automatic stay by residential tenants who have successfully forestalled eviction for months by filing a bankruptcy petition.” Nat’l Bankruptcy Review Commission, Final Report, Bankruptcy: the Next Twenty Years, Chapter 3: Individual Commissioner Views 65-66 (1997), available at http://govinfo.library. untedy/ubrc/. While it would be another ten years before legislation was enacted, among the provisions of BAPCPA are additional exceptions to the sweep of § 362(a), including two that directly pertain to residential leases.

Prior to BAPCPA, § 362(a)(3) had absolutely protected the estate’s interest in a residential lease as the petition operated as a stay against “[a]ny act to obtain possession of property of the estate or of property from the estate.... ” 11 U.S.C. § 362(a)(3). Absent the amendment discussed below, AGLF’s post-petition pursuit of Debtors’ eviction would run afoul of this protection, notwithstanding the pre-petition entry of judgment for possession. Cuffee v. Atlantic Business and Community Corp. (In re Atlantic Business and Community Corp.), 901 F.2d 325, 328 (3d Cir.1990) (a debtor’s bare possessory interest in real property is property of the estate under 11 U.S.C. § 541 and is thus protected from being taken under 362(a)(3)). BAPCPA, however, sought in part to address “a problem faced by thousands of large and small residential landlords across the nation whose tenants file for bankruptcy relief solely for the purpose of staying pending evictions so they can live ‘rent free.’ ” H.R.Rep. No. 1009-31(I), *17 as reprinted in, 2005 U.S.C.C.A.N. 88, *103 (2005). It did so through two new exceptions to the automatic stay. Section 362(b) now states that the filing of a petition will not operate as a stay:

(22) subject to subsection (l), under subsection (a)(3), of the continuation of any eviction, unlawful detainer action, or similar proceeding by a lessor against a debtor involving residential property in which the debtor resides as a tenant under a lease or rental agreement and with respect to which the lessor has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of such property against the debtor;

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Cite This Page — Counsel Stack

Bluebook (online)
371 B.R. 102, 2007 Bankr. LEXIS 2339, 2007 WL 2007953, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-williams-paeb-2007.