Sharon Rose v. Select Portfolio Servicing, et al

Disagreeing with a decision by the First Circuit last December, the Fifth Circuit rules that the ‘plain language’ in Section 362(c)(3)(A) does not terminate the automatic stay as to estate property 30 days after the second filing within one year.

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Case Type:
Case Status:
19-50598 (5th Circuit, Dec 10,2019) Published
5th Circuit affirmed District Court (W.D. Tx.) grant of summary judgment in favor of creditors seeking foreclosure against former serial bankruptcy filer. Texas common law and Section 362(c)(3)(A) tolled Texas statute of limitations during debtor's bankruptcies. While 362(c)(3)(A) terminated stay with respect to actions against debtor, it did not terminate stay as to property of the bankruptcy estate or actions against that property. Ongoing stay against property of the estate tolled state statute of limitations for foreclosure claims.
Procedural context:
Debtor filed four serial bankruptcy petitions in an effort to prevent creditors' foreclosure on her residence. Prior to the dismissal of her fourth bankruptcy, debtor filed quiet title suit in Texas state court, claiming that creditors were precluded from foreclosure due to the expiration of Texas' four-year statute of limitations. Creditors removed to federal district court (W.D. Tx.), and counterclaimed for judicial foreclosure. Both parties filed cross-motions for summary judgment. District Court denied debtor's motion and granted creditors' motion. Debtor appealed to 5th Circuit.
In 2005, debtor and her then-husband purchased property with a purchase-money mortgage. In 2010, debtor and her husband divorced. Debtor's husband was awarded the home, subject to a lien that required him to convey the home to debtor in the event of default. Debtor's husband defaulted shortly thereafter, and debtor failed to pay any amount as well. Creditors began sending default notices in 2013. Debtor began actively contesting foreclosure through litigation since early 2014, through state court lawsuits and filing bankruptcy four times, always on the eve of a foreclosure sale. Debtors four bankruptcies were pending for a total of 269 days. Before her last bankruptcy was dismissed, debtor sued to quiet title in state court, claiming that the statute of limitations had expired on creditors' power to foreclose. Creditors removed under diversity jurisdiction.
Owen, Southwick and Willett

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