Winfred Dale Harris

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
WINFRED DALE HARRIS
DEBTOR
CASE NO.
04-01644-5-ATS
ORDER CONSTRUING ORDER OF JANUARY 31, 2005
The matter before the court is the motion of Evelyn Harris, the
spouse of the chapter 13 debtor Winfred Dale Harris, to reconsider the
court’s order of January 31, 2005, in which the court granted Eastern
Savings Bank’s motion for relief from the automatic stay with respect
to property owned by the debtor and Mrs. Harris, located at 100
Arbordale Court in Cary, North Carolina. The issue is whether the
order granted "in rem" relief with respect to the real property, and
Mrs. Harris seeks modification of the order so that it does not
preclude the protection of the property by the automatic stay generated
by her own bankruptcy petition, which was filed in the Middle District
of North Carolina (No. 05-81362).
Mr. Harris filed a petition for relief under chapter 13 of the
Bankruptcy Code on May 3, 2004, and Eastern Savings Bank, FSB filed a
motion for relief from the automatic stay. The motion requested that
"said relief be ‘in rem’ relief as to this creditor and this property
as Debtor’s bankruptcies have delayed this creditor from being able to
pursue its State court remedies for more than 2 years." There was no
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response to the motion, and an order was entered granting relief from
the stay. The order provided that " ‘in rem’ relief is hereby granted
to Eastern Savings Bank so that no bankruptcy filed by the Debtor or
the Co-Debtor shall impair the rights of the Movant to foreclose on the
herein-referenced property and pursue its State remedies under the Note
and Deed of Trust." There was no appeal from the order.
Mrs. Harris argues that the in rem relief that was granted in the
order of January 31 applies only to her spouse, and that principles of
due process and equity dictate that she should have the protection of
the automatic stay in her own chapter 13 case. She does not
specifically address the questions of due process, notice and
jurisdiction in her brief, but at the hearing she did offer several
cases holding that non-debtor spouses or co-owners must be served with
a summons naming them as defendants, in an adversary proceeding, if
their rights in property are to be subjected to limitation through an
order providing in rem relief. See In re Snow, 201 B.R. 968, 976
(Bankr. C.D. Ca. 1996); In re Amey, 314 B.R. 864, 870-71 (Bankr. N.D.
Ga. 2004).
A bankruptcy court may, pursuant to 11 U.S.C. § 105, grant in rem
relief from the automatic stay in favor of a creditor with respect to
a debtor and non-debtor where the debtor and the non-debtor have abused
the bankruptcy process with successive "tag-team" filings designed to
frustrate a secured creditor’s foreclosure rights. In re Price, 304
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B.R. 769, 773 (Bankr. N.D. Ohio 2004); see also In re Roeben, 294 B.R.
840, 847 (Bankr. E.D. Ark. 2003) (grant of in rem relief does not
require that property co-owner be subject to court’s jurisdiction); In
re Yimam, 214 B.R. 463, 466 (Bankr. D. Md. 1997) (bankruptcy court has
power to issue an in rem order binding a nonparty spouse).
In rem relief is an extraordinary remedy, to be granted in
extraordinary circumstances where ordinary relief will be ineffective.
The request for in rem relief must be clear and unequivocal and the
order granting the relief must clearly specify the effect of the in rem
relief granted. In this case the language of Eastern Savings Bank’s
motion was not sufficiently specific to put Mrs. Harris on notice that
she might not have the protection of the automatic stay if she filed a
bankruptcy case in the future. The language of the order that was
entered is more specific, but still does not clearly state that the
automatic stay in a case filed by Mrs. Harris is not effective to
protect her interest in the real property.
The court interprets the order of January 31 to mean that the
automatic stay in any case filed by the debtor, Winfred Dale Harris, or
by his spouse, Evelyn Harris, will not protect the interest of Mr.
Harris in the property. There is no similar protection with respect to
Mrs. Harris. In other words, the in rem relief provided in the order
of January 31 relates to the interest of Mr. Harris in the real
property and not to the interest of Mrs. Harris. Whether or not the
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stay in Mrs. Harris’s case should continue with respect to the interest
of Mrs. Harris is a matter for the bankruptcy judge in that case to
decide.
SO ORDERED.
DATED: June 6, 2005
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