In the first opinion at the circuit level, the First Circuit latches onto the lousy drafting of Section 362(c)(3)(A) to end the automatic stay entirely, 30 days after the second filing within a year.

- Rochelle Quick Take

View Rochelle Summary
Case Type:
Case Status:
18-1573 (1st Circuit, Dec 12,2018) Published
Section 363(c)(3)(A) terminates the entire stay thirty days after the filing of a second petition-- as to the actions against the Debtor, the debtor's property, and property of the bankruptcy estate.
Procedural context:
Maine's Bureau of Revenue Services (MRS) has a claim for a tax debt owed by Leland Smith, a repeat Chapter 13 bankruptcy filer. In this appeal, MRS and Smith dispute the scope of the termination of the Bankruptcy Code's automatic stay for repeat filers like Smith who file a second petition for bankruptcy within a year of the dismissal of a prior bankruptcy case. The bankruptcy court ruled that the automatic stay had terminated in full, including as to property of the estate. The district court affirmed. There were no dispute about the facts, the Court of Appeals examined the bankruptcy court's legal conclusion de novo. The National Association of Consumer Bankruptcy Attorneys appeared as amici curiae.
Leland Smith's first Chapter 13 case, filed in August 2011, was dismissed in October 2014 when Smith failed to make the payments required under his Chapter 13 bankruptcy plan. Two months later, in December 2014, Smith filed another Chapter 13 petition. This was also dismissed, in November 2016, because Smith failed to make required payments. A month later, on December 28, 2016, Smith filed his third Chapter 13 bankruptcy petition. Smith's last two cases, which were both pending in the same one-year period, caused § 362(c)(3)(A) to apply. While the Chapter 13 plan was being considered, Smith and MRS disputed the scope of the automatic stay. Neither Smith nor another "party in interest," moved for the continuation of the automatic stay, as allowed under § 362(c)(3)(B). As a result, in January 27, 2017, thirty days after the filing of his December 2016 petition, some part of the stay had terminated under § 362(c)(3)(A). MRS moved for an order under § 362(j) confirming the extent to which the automatic stay had terminated. Id. § 362(j). MRS argued that § 362(c)(3)(A) had terminated the automatic stay in full on January 27. Smith argued in opposition that § 362(c)(3)(A) specifically, the phrase "with respect to the debtor," meant that the stay terminated on January 27 only as to actions against the debtor and the debtor's property, not as to actions against the property of the bankruptcy estate. The Court of Appeals reasoned that the location of the phrase "property securing such debt" after "the stay under subsection (a)" and the combination of the phrase with "with respect to a debt" and "with respect to any lease" indicate that the clause summarizes the actions stayed in "subsection (a)." That subsection stays actions against both property of the debtor and property of the estate. Since understood that the text of § 362(c)(3)(A), including the phrase "with respect to the debtor," does not on its own obviously support or obviously foreclose either party's reading, the court turned to statutory context and congressional purpose for further evidence. after analyzing the application of section 362(c)(3)(A) alongside Section 362(c)(3)(B), which allows the request for extension of the automatic stay by the debtor or any party in interest, the court concluded that the statute's words are not so clear and turn to the Congress' intent. Considering the House Judiciary Committee report saying that the BAPCPA had provisions intended to deter serial and abusive bankruptcy filings and the inclusion of 362 (c)(3)(A) to discourage filing for a benefit of trigerring the automatic stay, rather than from some valid reason. the Court concluded that the purpose of the BAPCPA was best achieved by interpreting section 362 (c)(3)(A) to terminate the entire stay, including as to estate property.
Lynch, Stahl and Barron

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

3310 in the system

3191 Summarized

1 Being Processed