Court Opinion

ID: 4163451
Source: CourtListenerOpinion
Date Created: 2017-04-26 17:03:20.388721+00
Date Added: 2024-06-11T14:37:55.338106
License: Public Domain

NOT PRECEDENTIAL
                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  _____________

                                       No. 16-3096
                                      _____________

              In re: MICHAEL T. BILLINGS & KATHLEEN BILLINGS,

                   MICHAEL T. BILLINGS; KATHLEEN BILLINGS,
                                               Appellants

                                              v.

                         PORTNOFF LAW ASSOCIATES, LTD.
                                _______________

                     On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                                (D.C. No. 2-16-cv-00778)
                         District Judge: Hon. Mark A. Kearney
                                    _______________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                   March 21, 2017

                Before: AMBRO, JORDAN, and ROTH, Circuit Judges.

                                   (Filed April 26, 2017)
                                     _______________

                                        OPINION
                                     _______________

       
        This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
JORDAN, Circuit Judge.

       Michael and Kathleen Billings failed to pay municipal fees and consequently

faced a foreclosure sale of their home. They declared bankruptcy, which resulted in an

automatic stay of the sale of their property. The township they were indebted to filed

several motions to postpone the sale while the bankruptcy proceeding continued. The

Billingses argue that filing those continuance motions was incompatible with the

automatic stay. We disagree and will affirm the District Court’s dismissal of their

Complaint.

I.     Background1

       The Billingses failed to pay about $4,500 in sewer, trash, and hydrant fees to West

Bradford Township. Accordingly, the Township obtained a default judgment against

them on November 11, 2013, which gave the Township a lien on their home. That same

day, the Township filed for a writ of execution based on the lien. It then scheduled a

sheriff’s sale for April 17, 2014.

       A few days before the scheduled sale, on April 11, 2014, the Billingses filed a

Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Eastern

District of Pennsylvania. Under § 362 of the Bankruptcy Code, the filing of that petition

automatically stayed the foreclosure sale. 11 U.S.C. § 362(a)(1). At the time scheduled

for the sale, the Township made an oral announcement postponing it, which is permitted

       1
         When reviewing the decision to grant a motion to dismiss, “we must accept as
true all well-pleaded facts and allegations, and must draw all reasonable inferences
therefrom in favor of the plaintiff.” Bell v. Cheswick Generating Station, 734 F.3d 188,
193 n.5 (3d Cir. 2013) (citation omitted). Therefore we recite the facts as alleged by the
Billingses.
                                             2
under Pennsylvania Rule of Civil Procedure No. 3129.3(b)(1). Subsequently, on five

separate occasions, the Township filed written motions with the Chester County Court of

Common Pleas seeking to continue the sheriff’s sale. Each of those motions was granted

and the date of sale was ultimately extended to November 19, 2015. At no point did the

Township request relief from the automatic stay issued by the Bankruptcy Court.

        In that Court, the Township filed a proof of claim for approximately $9,500,

including attorney fees and costs as well as interest. The Bankruptcy Court later

confirmed a plan that would allow the Billingses to pay off their debt to the Township in

full.

        The Billingses ultimately filed an adversary Complaint against Portnoff Law

Associates (“Portnoff”), the law firm representing the Township, arguing that the

repeated motions to continue the sheriff’s sale violated the automatic stay provision and

were sanctionable under 11 U.S.C. § 362(k)(1).2 They also sought to certify a class

action under Federal Rule of Bankruptcy Procedure 7023 to enjoin Portnoff from filing

similar motions in other Chapter 13 proceedings.

        Portnoff filed a motion to dismiss. It asserted that the continuance motions it filed

were consistent with this Court’s decision in Taylor v. Slick, 178 F.3d 698 (3d Cir. 1999).

The Bankruptcy Court granted the motion to dismiss without granting the Billingses

leave to amend. Billings v. Portnoff Law Associates, Ltd. (In re Billings), 544 B.R. 529

(Bankr. E.D. Pa. 2016). The Billingses then filed a Notice of Appeal to the United States

        2
         Section 362(k)(1) provides in relevant part that “an individual injured by any
willful violation of a stay … shall recover actual damages, including costs and attorneys’
fees, and, in appropriate circumstances, may recover punitive damages.”
                                              3
District Court for the Eastern District of Pennsylvania. It affirmed the Bankruptcy

Court’s decision. Billings v. Portnoff Law Associates, Ltd., 16-cv-778, 2016 WL
3344382 (E.D. Pa. June 10, 2016). This timely appeal followed.

II.    Discussion3

       The Billingses argue that the Bankruptcy Court and the District Court improperly

extended our decision in Taylor to postponements of a foreclosure sale that require a

creditor to seek a court order. But those Courts properly applied the precedent.

       The filing of certain bankruptcy petitions operates as an automatic stay on “the

commencement or continuation … of a judicial, administrative, or other action or

proceeding against the debtor[.]” 11 U.S.C. § 362(a)(1). In Taylor, we held that “[t]he

continuation of a sheriff’s sale, following the filing of a bankruptcy petition,” did not

constitute a “continuation” of foreclosure proceedings and therefore did not “violate[] the

automatic stay provisions of 11 U.S.C. § 362(a)[.]” 178 F.3d at 700. While that case

involved an oral announcement of postponement, its reasoning is fully applicable to any

request for a “continuance of a sheriff’s sale in accordance with state law procedure[.]”

Id. at 701. The touchstone of our analysis in Taylor was that the automatic stay

provisions are intended “to maintain the status quo between the debtor and [his]

       3
          The District Court had jurisdiction to review final orders from the Bankruptcy
Court under 18 U.S.C. § 158(a). We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1)
and 28 U.S.C. § 1291. “Because the District Court sat as an appellate court, reviewing an
order of the Bankruptcy Court, our review of the District Court’s determinations is
plenary.” SEC v. Bocchino (In re Bocchino), 794 F.3d 376, 379 (3d Cir. 2015) (citations
omitted). We likewise review de novo the Bankruptcy Court’s decision to dismiss the
Billingses’ claims for failure to state a claim upon which relief may be granted. Mayer v.
Belichick, 605 F.3d 223, 229 (3d Cir. 2010).

                                              4
creditors” in order to allow “the parties and the Court an opportunity to appropriately

resolve competing economic interests in an orderly and effective way.” Id. at 702

(emphasis and alteration in original) (citation omitted). And since a continuation

“connotes the postponement of a proceeding,” it “effectuates the purpose of § 362(a)(1)

by preserving the status quo until the bankruptcy process is completed or until the

creditor obtains relief from the automatic stay.” Id.; see also Angulo v. Emigrant

Mortgage Co. and Retained Realty, Inc. (In re Angulo), Adv. No. 9-398, 2010 WL
1727999, at *5 (Bankr. E.D. Pa. Apr. 26, 2010) (finding that judicial postponement of a

sale was proper under Taylor).

       The Billingses argue that allowing a creditor to file repeated motions for a

continuance will be unduly harmful to the debtor. We agree with the Bankruptcy Court,

though, “that it is hardly self-evident … that multiple postponements are detrimental to

debtors.” Billings, 544 B.R. at 536 n.8. To the contrary, allowing a creditor to continue

to delay the sale without requiring rescheduling and providing additional public notice

helps “avoid duplicative foreclosure costs that would eventually be deducted from the

proceeds of the sale (to the disadvantage of the debtor).” Taylor, 178 F.3d at 702. If

judicial continuances were unavailable, then creditors, and ultimately the debtor, would

incur the cost of rescheduling the sale and providing notice. See Billings, 544 B.R. at 536

n.8 (noting that the cost a “creditor must pay to schedule a sheriff’s sale [in Philadelphia

County] is at least $2,000”). Accordingly, allowing a judicial motion for a continuance is

fully compatible with the underlying aim of the automatic stay provision.

                                              5
       The Billingses also argue that the Township’s continuance motions are

distinguishable from the continuance motion in Taylor because the Township in this case

incurred attorneys’ fees that it would pass along to the Billingses as part of the tax lien.

The Billingses claim that, by incurring fees, the Township impermissibly altered the

status quo. That argument loses for two reasons.

        First, the Billingses failed to plead that they either have been or will be required

to pay for additional legal fees as a result of the continuance motions4 While they point

generally to attorneys’ fees and court costs that they have been required to pay to the

Township under the payment schedule established in the Chapter 13 proceeding, they do

not even allege that those costs were related to Portnoff’s work on the continuance

motions, let alone provide a breakdown showing what portion of the costs were related to

the continuance motions. They likewise fail to “identif[y] the precise source of authority

(court rule or statute) for the additional legal fees they expect to incur as a result of the

multiple continuance motions[.]” Billings, 544 B.R. at 535 n.7. Accordingly, any costs

are purely speculative at this point.5 The Billingses also argue that “they should be

       4
         Instead of alleging that they will be required to pay the Township’s attorneys’
fees, the Billingses merely cite to an opinion from the Bankruptcy Court which held that
Taylor is inapplicable in a “case where the Plaintiffs and Plaintiff class are subject to
additional legal fees in connection with the motions herein complained of.” (App. at 34)
(citing In re Townsville, 268 B.R. 95 (Bankr. E.D. Pa. 2001)). But even if that were a
correct statement of the law, the Billingses’ failure to allege that they would actually be
required to pay such fees is fatal to their argument.
       5
         Before the Bankruptcy Court and District Court, the Billingses apparently argued
that the costs that they themselves were required to incur to review the Township’s
motions improperly altered the status quo. To the extent their Complaint can be read as
making such an allegation, it is nonetheless unsupported by anything else in the
                                               6
allowed to take discovery … to show that the ‘status quo’ under Taylor was affected by

the repeated motions and the attendant attorneys[’] fees from such motions.” (Opening

Br. at 11.) But the Billingses’ Complaint is insufficient to survive a motion to dismiss

and does not justify forcing Portnoff to incur the costs of discovery. Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (holding that “[t]hreadbare recitals of the elements of a cause of

action, supported by mere conclusory statements,” are inadequate to survive a motion to

dismiss).

       Second, even if we were to assume that the Billingses would be required to pay for

the costs that the Township incurred in seeking a continuance, there would be no cause

for concern. As we concluded in Taylor, actions taken to preserve the state of affairs that

existed before a bankruptcy petition was filed are not prohibited by the Bankruptcy Code.
178 F.3d at 701-02. Preserving the status quo is not always a cost-free proposition,6 and

generally applicable fee-shifting provisions may ultimately require a debtor to pay some

or all of those costs. Requiring a debtor to pay the incidental price of maintaining the

Complaint. It is difficult to grasp why a debtor would incur much in the way of
attorneys’ fees in order to fight against a pro forma postponement motion that ultimately
benefits the debtor. In any event, as will be discussed further, any fees incurred would
not be incompatible with the automatic stay.
       6
         As the Bankruptcy Court noted, even seeking an oral postponement like the one
in Taylor likely imposes some costs. Billings v. Portnoff Law Associates, Ltd. (In re
Billings), 544 B.R. 529, 536 (Bankr. E.D. Pa. 2016), aff’d 2016 WL 3344382 (E.D. Pa.
June 10, 2016) (“The potential for a creditor to incur legal expenses (potentially
chargeable to the debtor) exists any time the creditor follows the state court rules that
authorize the postponement of a sheriff’s sale, regardless whether the procedure involves
an oral announcement or the filing of a written motion.”). So it is impossible to read
Taylor as prohibiting all legal action that incurs cost.

                                             7
status quo does not upset the status quo but helps to preserve it.7 Therefore the

Township’s continuance motions were proper and the Billingses have no cause for

complaint. Because we conclude that the Billingses’ claims were meritless as a matter of

law, there is also no basis for class standing. McNair v. Synapse Grp., 672 F.3d 213, 223

(3d Cir. 2012) (noting that the named plaintiffs’ failure to state a claim defeats standing).

III.   CONCLUSION

       For the foregoing reasons, we will affirm.

       7
         There is no evidence in this case that the Township abused the legal process by
making frivolous requests in order to incur excessive legal fees. To the contrary, filing
an unopposed motion for a continuance is relatively unobtrusive and necessary to
maintain the status quo. Allowing such motions to be filed will not “open up Pandora’s
Box[.]” (Opening Br. at 2.) We leave for another day the question of whether the filing
of frivolous or unduly-costly motions would violate the automatic stay provision.
                                              8