Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-19-06030/USCOURTS-ca8-19-06030-0/pdf.json

Parties Involved:
Miguel Ignacio Benitez
Appellant

Document Text:

United States Bankruptcy Appellate Panel

For the Eighth Circuit 

___________________________

No. 19-6030

___________________________ 

In re: Miguel Ignacio Benitez

 Debtor - Appellant

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Appeal from United States Bankruptcy Court 

for the Western District of Missouri - St. Joseph

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Submitted: January 14, 2020

 Filed: February 4, 2020

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Before SCHERMER, NAIL and SHODEEN, Bankruptcy Judges. 

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SCHERMER, Bankruptcy Judge

Miguel Ignacio Benitez (Debtor) appeals the bankruptcy court’s1 dismissal of

his Chapter 13 bankruptcy case. We have jurisdiction over this appeal from the final 

order of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons that follow, 

we affirm. 

ISSUE

The issue on appeal is whether the bankruptcy court properly dismissed the 

Debtor’s Chapter 13 case as void because it was a violation of the automatic stay in 

his pending Chapter 7 bankruptcy case. We hold that it did. 

1

 The Honorable Brian T. Fenimore, Chief Judge, United States Bankruptcy Court 

for the Western District of Missouri.

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BACKGROUND

In 2017, the Debtor filed a Chapter 7 bankruptcy petition. The bankruptcy 

court granted the motion for relief from the automatic stay filed by a secured creditor, 

PBS Credit Services, Inc. (Creditor), with respect to real property (Property) in 

which the Debtor held an interest. The court also denied the Debtor’s motion “for 

reconsideration of” the order granting stay relief. 

Less than two weeks after the bankruptcy court denied the Debtor’s request to 

reconsider its stay relief order, and while his Chapter 7 case was pending, the Debtor 

filed his Chapter 13 petition. He had not obtained a Chapter 7 discharge and the 

Chapter 7 trustee had not abandoned the Property. The bankruptcy court promptly 

issued an order requiring the Debtor to appear and show cause why his Chapter 13 

case should not be dismissed as a violation of the automatic stay in his alreadypending Chapter 7 case. After a hearing at which the Debtor appeared and argued, 

the bankruptcy court dismissed the Debtor’s Chapter 13 case as a violation of the 

automatic stay in his pending Chapter 7 case. It also offered alternative grounds for 

dismissal.

STANDARD OF REVIEW

“We review the bankruptcy court’s legal conclusions de novo and its factual 

findings for clear error.” Ad Hoc Comm. of Non-Consenting Creditors v. Peabody 

Energy Corp. (In re Peabody Energy Corp.), 933 F.3d 918, 924 (8th Cir. 2019). The 

bankruptcy court’s decision to dismiss a Chapter 13 case is reviewed for an abuse of 

discretion. Marshall v. McCarty (In re Marshall), 596 B.R. 366, 368 (B.A.P. 8th 

Cir. 2019), aff’d, No. 19-1634, 2019 WL 4657414 (8th Cir. 2019). “[T]he 

applicability of the automatic stay to a pending matter is an issue of law.” LaBarge 

v. Vierkant (In re Vierkant), 240 B.R. 317, 320 (B.A.P. 8th Cir. 1999).

DISCUSSION

When a debtor files a bankruptcy petition, Bankruptcy Code § 362(a)(3) 

imposes an automatic stay of “any act . . . to exercise control over property of the 

estate.” 11 U.S.C. § 362(a)(3). The stay is “applicable to all entities,” including the 

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Debtor. 11 U.SC. §362(a). The Eighth Circuit Court of Appeals has included within 

the scope of the stay attempts to exercise control over property of the estate. Knaus 

v. Concordia Lumber Co., Inc. (In re Knaus), 889 F.2d 773, 774 (8th Cir. 1989)

(quoting 11 U.S.C. §362(a)(3)) (“Upon the filing of a bankruptcy petition, section 

362 imposes automatically a stay upon most actions by creditors to satisfy their 

claims against the debtor, including attempts ‘to exercise control over property in 

the estate.’ ”). 

As the bankruptcy court stated, other than the relief obtained by the Creditor, 

the automatic stay in the Debtor’s Chapter 7 case was still in place when the Debtor 

filed his Chapter 13 petition. 11 U.S.C. §362(c)(1) and (2) (In the case of an 

individual Chapter 7 debtor, generally the automatic stay “of an act against property 

of the estate . . . continues until such property is no longer property of the estate,” 

and the automatic “stay of any other act . . . continues until the earliest of . . . the 

time the case is closed;. . . the time the case is dismissed; or . . . the time a discharge 

is granted or denied.”). 

Based on the facts of this case, we agree with the bankruptcy court that the 

filing of the Debtor’s Chapter 13 case violated the automatic stay in his Chapter 7

case and was void. Vierkant, 240 B.R. at 325 (“[A]n an action taken in violation of 

the automatic stay is void ab initio.”). By filing his Chapter 13 petition, the Debtor 

attempted to exercise control over his interest in the Property, which is undisputed 

to be property of his Chapter 7 bankruptcy estate.2

 The record shows that the Debtor 

treated the Chapter 7 and Chapter 13 estates as co-equal. As he admits in his brief 

on appeal, the Debtor listed his interest in the Property as an asset on his Chapter 13 

2 We take no position on the question of whether the filing of Debtor’s chapter 13 

petition had any effect on the property of the bankruptcy estate in his pending chapter 

7 case. See In re Shankman, 382 B.R. 591, 595 (Bankr. E.D.N.Y. 2008) (“[I]f an 

asset is property of the estate in a Chapter 7 case, it is not property of the debtor at 

the time of the filing of the subsequent Chapter 13 case, and therefore does not 

become property of the estate in the Chapter 13 case. In other words, an asset cannot 

be property of the estate in two bankruptcy cases at the same time.”).

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schedules. And, the record supports the bankruptcy court’s observation that the 

Debtor filed his Chapter 13 case as an effort to stop the foreclosure of the Property 

noticed by the Creditor after it obtained stay relief in the Debtor’s Chapter 7 case. 

See In re Munroe, 568 B.R. 631 (Bankr. E.D. Mich. 2017) (Debtors’ filing of 

Chapter 13 case violated the automatic stay in their still-pending Chapter 7 case 

where it was obvious debtors filed the Chapter 13 case in an effort to obtain a stay

against and prevent a foreclosure sale by creditor who already obtained stay relief in 

the Chapter 7 case). As the bankruptcy court found, the Debtor filed his Chapter 13 

case less than two weeks after the court denied the Debtor’s motion to reconsider the 

order granting relief from the stay to the Creditor. 

In its oral ruling, the bankruptcy court offered alternative grounds for 

dismissing the Debtor's Chapter 13 case. However, in its order to show cause, the 

bankruptcy court only directed the Debtor to appear and show cause why his Chapter 

13 case should not be dismissed as a violation of the automatic stay in his pending 

Chapter 7 case. Any consideration of these alternative grounds is therefore 

inappropriate. Young v. Young (In re Young), 507 B.R. 286, 296-97 (B.A.P. 8th Cir. 

2014) (reversing imposition of sanctions under 11 U.S.C. § 105, where bankruptcy 

court's order to show cause did not mention possibility of being sanctioned for 

alleged misrepresentations during hearing on order to show cause); Morgan v. 

Goldman (In re Morgan), 375 B.R. 838, 849-851 (B.A.P. 8th Cir. 2007) (limiting 

review of bankruptcy court's order to show cause to grounds set forth therein); 

Crofford v. Conseco Fin. Serv'g Corp. (In re Crofford), 301 B.R. 880, 885 (B.A.P. 

8th Cir. 2003) (limiting review of bankruptcy court's order to show cause to analysis 

of FED. R. BANKR.P. 9011(c)(1)(B), where order to show cause did not mention 

either bankruptcy court's inherent powers or 11 U.S.C. § 105).

CONCLUSION

For the reasons stated, the decision of the bankruptcy court is AFFIRMED. 

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