Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnb-2_06-bk-00002/USCOURTS-alnb-2_06-bk-00002-0/pdf.json

Parties Involved:
Alfreda B. Paige
Debtor
D. Sims Crawford
Trustee
WILHELMINA PROPERTIES LLP
Attorney

Document Text:

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

In re: )

)

Alfreda B. Paige, ) Case No.: 06-00002-BGC-13

)

Debtor. )

ORDER

The matters before the Court are a Motion for Continuation of the Automatic Stay

and for Expedited Hearing filed on January 2, 2006, by the debtor; and an Opposition to

Debtor’s Motion to Extend Automatic Stay filed on January 12, 2006, by Wilhemina

Properties LLP. After notice, a hearing was held on January 24, 2006. Appearing

were: the debtor; her attorney Greg Biddle; Gary Olshan for Wilhemina Properties; and

Sims Crawford, the Chapter 13 Trustee.

I. Findings of Fact

The debtor filed a previous case, Case No. 04-07719-BGC-13 on September 2,

2004. On May 6, 2005, Wilhelmina Properties filed a Motion for Relief from Stay. After

notice and a hearing, the Court entered an order on June 8, 2005, that conditionally

denied the motion. That order read:

Based on the arguments of counsel and the pleadings, the motion for relief from

stay is conditionally denied. The debtor is allowed to include the post-petition

arrearage through May 2005 in this case, and the movant shall file a proof of

claim for the arrearage. The debtor is to resume the direct mortgage payments

(according to the parties’ mortgage contract) beginning with the mortgage

payment due for June 2005. In the event of a future default, the movant shall

notify the Court and the debtor’s attorney in writing and a hearing will be

rescheduled by a subsequent notice.

Order, June 8, 2005, Proceeding No. 58.

In accordance with the Court’s June 8, 2005, Order, on July 5, 2005, Wilhelmina

Properties filed a Motion for Hearing on Default of Order of June 8, 2005, representing

to the Court that the debtor failed to make her June 2005 payment. At the hearing on

July 26, the parties represented to the Court that the matter was settled. The Court

entered the parties’ Consent Agreement on Wilhelmina Properties LLP Motion for Relief

of Stay on July 29, 2005, conditionally denying the motion for relief from stay. That

order read:

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In open Court present were Gary Olshan, attorney for Wilhelmina Properties

LLP, Greg Biddle, attorney for the Debtor, and Alfreida [sic] Paige, debtor and

announced the consent agreement on the Motion for Hearing on Default of Order

of June 8, 2005 filed by Wilhelmina Properties LLP as follows:

1) Debtor shall pay to Gary Olshan as attorney for Wilhelmina

Properties LLP $572.06 representing $374.60 June 2005

mortgage payment plus $37.46 late charge plus $150.00

attorney’s fee on or before August 10, 2005; and

2) Debtor shall pay al [sic] monthly mortgage payments direct to

Wilhelmina Properties LLP by the end of each month beginning

with the August 2005 payment and if received after the 10 of th

each month a 10% late charge shall be included with the payment

as provided in the mortgage documents.

In the event a default occurs on a) direct monthly mortgage payments; or b) the

payment of the June 2005 mortgage payment, Wilhelmina Properties LLP may

foreclose on the property commonly known as 2514 34 Ave. N., Birmingham, th

Alabama.

Consent Agreement on Wilhelmina Properties LLP Motion for Relief of Stay, July 29,

2005, Proceeding No. 64.

Case No. 04-07719-BGC-13 was dismissed on December 14, 2005, on the

Chapter 13 Trustee’s Motion to Dismiss.

The current case was filed on January 2, 2006. As the above demonstrates,

within the year preceding the filing of the current case, the debtor had a prior case

which was both pending and dismissed. Pursuant to section 362(c)(3) of the

Bankruptcy Code, because of the dates and dispositions of the prior case, the

automatic stay that arose in the current case is limited to 30 days unless that time is

extended by order of this Court. The debtor filed her Motion for Continuation of the

Automatic Stay and for Expedited Hearing pursuant to section 362(c)(3)(B) which

allows an interested party to request that the stay be extended beyond the initial 30-day

period. The remainder of section 362(c)(3) explains how and under what

circumstances such a request may be granted.

Wilhemina Properties LLP filed its Opposition to Debtor’s Motion to Extend

Automatic Stay filed on January 12, 2006.

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On cross examination the debtor testified that she had surgery and was taking 1

medication. She admitted that her memory was not, “what it used to be.” Her credibility was

challenged. Based on her testimony and her demeanor, the Court finds that her testimony was

credible and that the Court can rely on the debtor’s testimony to find the specific facts

discussed below.

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The matters were submitted on the debtor’s testimony, the pleadings, the Court’s

records and the records of the Chapter 13 trustee.1

The debtor testified that while she receives social security income, she also

relies on her husband to make her Chapter 13 plan payments. She testified that during

her last case her husband could not work for about three to four months. When he

could not work, she could not make her plan payments or her mortgage payments. Her

case was dismissed because those payments were not made.

The debtor’s husband is a plumber. He has worked for the same company since

the 1980s. His company is regularly employed by a separate contractor. The debtor is

then employed to perform jobs for that contractor.

In contrast to the situation during the debtor’s last case, the debtor’s husband’s

current employment is better than it has been in the past. The debtor testified that her

husband has more work now than he has ever had, and that he is frequently out of

town on various jobs around Alabama and Georgia and that those jobs should continue.

II. Conclusions of Law

A. Section 362(c)(3)

Section 362(c)(3) provides:

(3) if a single or joint case is filed by or against debtor who is an individual

in a case under chapter 7, 11, or 13, and if a single or joint case of the

debtor was pending within the preceding 1-year period but was dismissed,

other than a case refiled under a chapter other than chapter 7 after

dismissal under section 707(b)--

(A) the stay under subsection (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;

(B) on the motion of a party in interest for continuation of the automatic

stay and upon notice and a hearing, the court may extend the stay in

particular cases as to any or all creditors (subject to such conditions or

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limitations as the court may then impose) after notice and a hearing

completed before the expiration of the 30-day period only if the party in

interest demonstrates that the filing of the later case is in good faith as to

the creditors to be stayed; and

(C) for purposes of subparagraph (B), a case is presumptively filed not in

good faith (but such presumption may be rebutted by clear and convincing

evidence to the contrary)--

(I) as to all creditors, if--

(I) more than 1 previous case under any of chapters 7, 11, and 13 in

which the individual was a debtor was pending within the preceding 1-year

period;

(II) a previous case under any of chapters 7, 11, and 13 in which the

individual was a debtor was dismissed within such 1-year period, after the

debtor failed to--

(aa) file or amend the petition or other documents as required by this title

or the court without substantial excuse (but mere inadvertence or

negligence shall not be a substantial excuse unless the dismissal was

caused by the negligence of the debtor's attorney);

(bb) provide adequate protection as ordered by the court; or

(cc) perform the terms of a plan confirmed by the court; or

(III) there has not been a substantial change in the financial or personal

affairs of the debtor since the dismissal of the next most previous case

under chapter 7, 11, or 13 or any other reason to conclude that the later

case will be concluded--

(aa) if a case under chapter 7, with a discharge; or

(bb) if a case under chapter 11 or 13, with a confirmed plan that will be

fully performed; and

(ii) as to any creditor that commenced an action under subsection (d) in a

previous case in which the individual was a debtor if, as of the date of

dismissal of such case, that action was still pending or had been resolved

by terminating, conditioning, or limiting the stay as to actions of such

creditor;

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B. Subsections of Section 362(c)(3)

Section 362(c)(3) has four operative parts.

1. Subsection 362(c)(3)(A)

One, subsection 362(c)(3)(A) specifically provides that the automatic stay shall

terminate on the 30 day after a current case was filed if the debtor in the current case th

had a prior bankruptcy case pending and dismissed within the previous year.

2. Subsection 362(c)(3)(B)

Two, subsection 362(c)(3)(B) specifically provides that if - all within the 30-day

period: (1) a party in interest makes a request that the stay be extended; (2) notice of

that request is given; and (3) a hearing on the request is held, the court may extend the

stay as to any or all creditors, if the moving party establishes certain facts.

3. Subsection 362(c)(3)(C)(i)

Three, subsection 362(c)(3)(C)(i) provides that under certain circumstances, it is

presumed that the current case was not filed in good faith as to all creditors and that

presumption may be overcome only if the moving party proves by clear and convincing

evidence that the case was filed in good faith.

4. Subsection 362(c)(3)(C)(ii)

Four, subsection 362(c)(3)(C)(ii) provides that under certain circumstances, it is

presumed that the current case was not filed in good faith as to a specific creditor and

that presumption may be overcome only if the moving party proves by clear and

convincing evidence that the case was filed in good faith.

C. Application of the Law to the Facts

Based on the facts, the Court finds that the debtor met her burden under both

subsection 362(c)(3)(C)(i) and subsection 362(c)(3)(C)(ii).

The debtor has a substantial ability to pay now where there was none after the

prior case was confirmed. Clearly there was an initial ability to pay in the prior case.

That case was confirmed. Something went wrong. That is demonstrated by the

debtor’s failure to make payments in the prior case after confirmation. The debtor

explained that after she filed her prior case, her husband was not able to work for three

to four months. That of course, does not mean that the debtor would never have the

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ability to make payments or that the debtor’s situation could not change and she would

again have the ability to make payments. The debtor testified that her husband has

more work now than he has had in the past.

This Court finds that while the debtor may not have had the ability to make past

payments, the Court finds, at least for purposes of the pending motion and objection,

that the debtor had the ability to make her payments when she filed her new case, and

therefore she filed that case in good faith. The debtor has overcome the presumption

that she did not. Her circumstances have changed substantially from the point of the

dismissal of the prior case.

On the other hand, it appears to the Court that the intended impact of the

amendments to section 362 was to restrict bankruptcy protection to a debtor that has

had a case pending and dismissed during the year proceeding the filing of the current

case. This is particularly true in regard to a subsection 362(c)(3)(C)(ii) creditor where

the stay was terminated, conditioned, or limited where the creditor had commenced an

action against the debtor in the prior case. In that regard, the Court finds that while the

stay should be extended as to the objecting creditor, the stay should be, as it was in the

prior case, conditioned.

III. Conclusions

Based on the above, the Court finds that the stay should be extended to the end

of the current case (unless modified later through a separate order) as to all creditors,

except Wilhemina Properties LLP. As to Wilhemina Properties LLP, the Court finds that

the stay should be extended to the end of the current case with the exception that if the

debtor fails to make any mortgage payment according to the parties’ contract, beginning

with February 2006, relief from the stay will be provided to Wilhemina Properties LLP

without further notice or hearing.

IV. Order

Based on the pleadings and arguments of counsel, it is ORDERED, ADJUDGED

and DECREED that:

1. The Motion for Continuation of the Automatic Stay and for Expedited

Hearing is GRANTED in part and DENIED in part. As to all creditors, the

stay is extended to the end of the current case (unless modified later

through a separate order). As to Wilhemina Properties LLP, the stay is

extended to the end of the current case with the exception that if the

debtor fails to make any mortgage payment according to the parties’

contract, beginning with February 2006, relief from the stay is granted to

Wilhemina Properties LLP without further notice or hearing;

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2. The Opposition to Debtor’s Motion to Extend Automatic Stay is

SUSTAINED in part and OVERRULED in part;

3. This order is a written opinion for purposes of the E-Government Act, Pub.

L. No. 107-347. 

DONE this the 27 day of January, 2006. th

/s/Benjamin Cohen 

BENJAMIN COHEN

United States Bankruptcy Judge

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