In re: RONALD WILLIAM KIPPS

Summarized by Amir Shachmurove , Brown Rudnick LLP
1 year 8 months ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

23-2307 & 23-2308 (3rd Circuit, May 07,2024) Not Published

Tag(s):

Ruling:

As had the U.S. District Court for the Middle District of Pennsylvania (DC), the U.S. Court of Appeals for the Third Circuit (Circuit) affirmed orders issued by the U.S. Bankruptcy Court for the Middle District of Pennsylvania (BC) that denied reconsideration of an order granting summary judgment to Margaret Stinavage-Kipps (MSK) in an adversary proceeding for alleged violations of the automatic stay launched by chapter 13 debtor Ronald W. Kipps (DR) and one rejecting the DR's plan, overruling his objection to MSk's bankruptcy claim, and granting MSK relief from the automatic stay.

Procedural context:

In the BC, the DR brought an adversary proceeding against MSK for alleged violations of the automatic stay. In relevant part, the complaint alleges two "willful violation[s]" of section 362(a)(1) pursuant to section 362(k)(1): orders by the Pennsylvania Court of Common Pleas, Susquehanna County (SC). the state tribunal presiding over the 2012 divorce action between MSK and the DR, directing (1) the Susquehanna County Prothonotary (Prothonotary) to execute deeds to certain real property on the DR's behalf and (2) the DR to appear for a contempt hearing. As the BC found, the former order was a truly ministerial act unaffected by the stay per section 362(b)(2)(A)(iv). The latter action, in turn, was the SC's own, MSK neither its author nor its cause and thus not liable for any kind of stay violation. In other words, MSK was not the right defendant, even if the order had, in fact, constituted a violation of section 362(a)(1), for the SC issued the order of contempt for what it perceived to be the DR's offenses against it. A motion for reconsideration followed, as did its denial, as did the DC's affirmance of that reconsideration's rebuff. Separately, the BC ruled in MSK's favor on three issues relevant to the DR's bankruptcy case. It denied confirmation of the DR's Fifth Amended Plan because he did not show “cause” to pay out claims to his creditors over a period longer than three years, as required by § 1322(d)(2). It further overruled his objection to MSK's claim for $419,871.09, which represented the sum awarded by the SC as part of an equitable distribution order. And lastly it granted MSK relief from the stay so as to allow her to pursue all of her rights under that same order. All these orders too, the DC affirmed. The DR timely appealed all the above orders and issues, with one wrinkle. Specifically, the Circuit would deem the DR to have forfeited one ground by failing to mention it in his opening brief on appeal: that "[t]he Bankruptcy Court found that [MSK] was not responsible for the State Court's order directing [the DR]to appear for contempt proceedings, and it repeated this finding in denying [the DR's] motion for reconsideration." Indeed, due to that failing, the Third Circuit would decline to wade into the parties' debate on whether the contempt was either civil or criminal. After all, the DR's silence was an "independent reason to affirm."

Facts:

In 2017, the SC issued a divorce decree and ordered an equitable distribution of the marital estate (Equitable Distribution Order), under which Kipps was required to convey certain real property and pay $419,871.09 to MSK. The DR appealed the Equitable Distribution Order to the Pennsylvania Supreme Court; despite his subsequent loss, the DR refused to comply with the Equitable Distribution Order. In light of this intransigence, MSK petitioned the SC to direct the Susquehanna County Prothonotary to execute deeds to the real property on the DR's behalf. Before a hearing could be held, the DR filed for relief under chapter 13. Despite this filing, on the same May 2019 day, the SC ordered the Prothonotary to execute the deeds, having concluded that its order was a “ministerial act” not barred by the automatic stay, and ordered the DR to appear for a contempt hearing. At that June 2019 hearing, the SC found the DR in contempt.

Judge(s):

David J. Porter; Tamika Montgomery-Reeves; and Jane Richards Roth

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