Court Opinion

ID: 3031231
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:45:39.418289+00
Date Added: 2024-06-11T12:23:32.464804
License: Public Domain

Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

1-23-2007

In Re: Leroy Jones
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-4725

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007

Recommended Citation
"In Re: Leroy Jones " (2007). 2007 Decisions. Paper 1758.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/1758

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2007 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                                                   NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

                         No. 05-4725

                  IN RE: LEROY C. JONES;
                  CATHERINE L. JACKSON,
                                  Debtors

                    LEROY C. JONES;
                 CATHERINE L. JACKSON

                               v.

          COUNTRYWIDE HOME LOANS, INC.;
                ROBERT E. UNTIG

                        Leroy C. Jones;
                      Catherine L. Jackson;
                       *William C. Miller,
                                     Appellants

                  *(Pursuant to F.R.A.P. 12(a))

        On Appeal from the United States District Court
           for the Eastern District of Pennsylvania
                    (D.C. No. 05-cv-02548)
            District Judge: Honorable Marvin Katz

          Submitted Under Third Circuit LAR 34.1(a)
                      January 18, 2007

                              1
             Before: SLOVITER, RENDELL, and CUDAHY,* Circuit Judges

                                    (Filed: January 23, 2007)

                                           OPINION

SLOVITER, Circuit Judge.

       The property of the Plaintiffs/Appellants, Leroy C. Jones and Catherine L.

Jackson, was sold by the mortgagee (also “Lender”) on October 1, 20011 pursuant to a

sheriff’s sale. The issue before us is whether the District Court properly concluded that

the United States Bankruptcy Court for the District of New Jersey annulled the automatic

stay and thereby validated the sheriff’s sale of Appellants’ home. Because we write

primarily for the parties who are familiar with the facts, we set forth only those facts that

are necessary to our disposition.

                                               I.

       Plaintiffs/Appellants2 Leroy Jones and Catherine Jackson, husband and wife and

the debtors in this case (“the Debtors”), filed a joint Chapter 13 bankruptcy case on

                    *
                       Hon. Richard D. Cudahy, United States Senior Circuit
             Judge for the United States Court of Appeals for the Seventh
             Circuit, sitting by designation.
                    1
                     The District Court opinion states that the sale took place
             on October 29, 2001. The difference in date is immaterial for our
             purposes.
                    2
                       William M. Miller is also named as a Plaintiff/Appellant
             in this case, but is not identified as a debtor.

                                               2
February 3, 2004 in the United States Bankruptcy Court for the Eastern District of

Pennsylvania. On that same day, the Debtors also filed an adversary proceeding against

Defendants/Appellees Countrywide Home Loans, Inc. (“the Mortgagee”) and Robert

Untig, the Sheriff of Sussex County, New Jersey (“the Sheriff”), seeking, among other

things, to set aside the October 1, 2001 sheriff’s sale of their former home on the ground

that Countrywide violated the automatic stay in a bankruptcy case that they had

previously filed in the United States Bankruptcy Court for the District of New Jersey.

Plaintiffs seek restoration of their title to the property and compensatory and punitive

damages against Countrywide and Untig for violation of the automatic stay. A brief

recitation of the history surrounding this case is necessary to put the claims presently

before us in perspective.

       On or about October 29, 1999, the Debtors purchased a home in Wantage, New

Jersey. Countrywide is the assignee of the original mortgagee. After the debtors became

in arrears on their mortgage payments, Countrywide filed a complaint in the Superior

Court of New Jersey to foreclose its mortgage. On March 22, 2001, the Superior Court

entered final judgment in favor of Countrywide and issued a writ of execution directing

the Sheriff of Sussex County to sell the property in execution upon the judgment. The

property was scheduled for a sheriff’s sale on June 11, 2001. Leroy Jones, under the

name Kenneth Jackson,3 responded by filing a bankruptcy petition in the United States

                    3
                   The record reveals a number of aliases for Debtor. Leroy
            Jones was also known as Kenneth Clifford, Alan Jones, and

                                              3
Bankruptcy Court for the District of New Jersey. The scheduled sale was canceled upon

notification of the bankruptcy filing. On August 9, 2001, the court entered an order

dismissing the case due to Debtor’s failure to appear and file the required schedules in

support of his case. Countrywide thereafter continued its efforts to foreclose the

mortgage and the sheriff’s sale was ultimately conducted on October 1, 2001. On

September 28, 2001, the Debtors filed a second Chapter 13 bankruptcy case in the United

States Bankruptcy Court for the District of New Jersey. The Debtors claim to have

notified both Countrywide and the Sheriff of the filing prior to the October 1, 2001 sale,

but Defendants dispute receiving such notice.

       On November 19, 2001 the New Jersey Bankruptcy Court dismissed the Debtors’

second bankruptcy proceeding, and on February 19, 2002 issued an “Order Vacating

Dismissal, Annulling the Automatic Stay, Allowing Prospective In Rem Relief as to Real

Property and Dismissing Case.” App. at 168. On April 19, 2002, the court, in response

to the Debtors’ motion, reinstated the case and the automatic stay on the condition that the

Debtors cure the balance of their post-petition arrears and resume regular monthly

payments. The Debtors failed to fulfill these obligations and as a result, on May 5, 2003,

the New Jersey Bankruptcy Court issued a second order annulling the stay. The Debtors

did not appeal either annulment order, and on June 3, 2003 the case was dismissed.

       Thereafter, the Debtors filed this action in which the sole remaining claim alleges

            Jackson.

                                             4
that the sheriff’s sale violated the automatic stay that resulted from the filing of their

second Chapter 13 bankruptcy case. The Bankruptcy Court granted Defendants’ motion

for summary judgment, concluding that the annulment orders issued by the New Jersey

Bankruptcy Court on February 19, 2002 and May 5, 2003 retroactively validated the

sheriff’s sale. The Debtors appealed, and the United States District Court for the Eastern

District of Pennsylvania affirmed. A timely appeal to this court followed. Our standard

of review is plenary. Schlumberger Res. Mgmt. Servs., Inc. v. Cellnet Data Sys., Inc. (In

re Cellnet Data Sys., Inc.), 327 F.3d 242, 244 (3d Cir. 2003).

                                              II.

       The Debtors argue that both the Bankruptcy Court and the District Court

improperly concluded that the United States Bankruptcy Court for the District of New

Jersey annulled the automatic stay and thereby validated the sheriff’s sale. They argue

that those courts improperly deprived them of the opportunity to prove that they gave fair

notice of the sale to the Lender and the Sheriff. They contend that because they notified

the mortgagee and the sheriff of this filing, the sale should not have occurred and, in

consequence, there should not have been a sale to validate, and an annulment of the stay

could not have validated the sale. They also contend that an annulment should not be

ordered when the debtor provides notice to a sheriff or judgment creditor, but rather must

be reserved for extraordinary circumstances not present in this case. We need not decide

the issue of notice vel non because it would not affect our disposition.

       11 U.S.C. § 362(d) provides, “On request of a party in interest and after notice and

                                               5
a hearing, the court shall grant relief from the stay provided under subsection (a) of this

section, such as by terminating, annulling, modifying, or conditioning such stay --

(1) for cause. . . .” (Emphasis added). We considered this provision in our decision in In

re Siciliano, 13 F.3d 748 (3d Cir. 1994), a case that presented facts similar to those

presented here. Id. at 749. The debtor there, Siciliano, had filed his second bankruptcy

petition after repeatedly defaulting on mortgage payments. The sheriff, who had not been

notified of the bankruptcy filing, held a foreclosure sale three days thereafter. The

bankruptcy court and the district court both denied the lender relief from the automatic

sale to retroactively validate the sale. Id. We reversed on the basis of § 362(d),

explaining that “the inclusion of the word ‘annulling’ in the statute . . . indicates a

legislative intent to apply certain types of relief retroactively and validate proceedings

that would otherwise be void ab initio.” Id. at 751. We concluded that the bankruptcy

court “erred when it dismissed [the lender’s] motion for relief from the . . . automatic stay

as void, not voidable” and remanded the case to the bankruptcy court to determine

whether Siciliano could satisfy the equity requirement imposed by 11 U.S.C. § 362(d)(2).

Id. The holding in that case that “[a]n annulment can operate retroactively to rehabilitate

violations of an automatic stay,” id. at 752, established the legal principle applicable here.

       The Debtors seek to distinguish this case from Siciliano on the ground that the

debtor in Siciliano did not notify the lender or the sheriff of his bankruptcy filing. As

noted earlier, there is a dispute as to whether the Debtors notified both the Sheriff and the

lender of their filing. Notably, the Debtors did not appeal either of the two annulment

                                               6
orders.

          The Debtors argue that the annulment orders did not expressly provide for a

validation of the sale. The February 19, 2002 order was styled as an “Order Vacating

Dismissal, Annulling the Automatic Stay, Allowing Prospective In Rem Relief as to Real

Property and Dismissing Case,” and provided that “[t]he automatic stay of Bankruptcy

Code section 362(a) is vacated[.]” App. at 168. Similarly, the May 5, 2003 order was

one “Annulling Stay and Allowing Prospective In Rem Relief as to Real Property” and

expressly allows proceeding with “the eviction process without further Order of this

Court . . . .” App. at 190. The District Court concluded that “[t]he orders issued by the

Bankruptcy Court of the District of New Jersey on February 19, 2002 and May 5, 2003

annulled the automatic stay and retroactively validated the Sheriff’s Sale.” App. at 6-7.

The Court further concluded that “[g]iven the unambiguous nature of the meaning of

annulment, a Bankruptcy Court’s annulment order need not specifically state that it is

retroactively validating a violation of an automatic stay; it is sufficient that the order state

that the automatic stay is annulled. The retroactive effect is implicit in the order.” App.

at 7. We agree.

                                              III.

          In sum, our review of the Bankruptcy Court and District Court decisions does not

reveal any error.4 We will affirm the judgment of the District Court.

                      4
                        In light of our decision, we need not reach the Appellees’
               additional argument that Appellants’ claim is barred by res

                                               7
________________

          judicata.

                      8