Pamela Knapper

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
PAMELA KNAPPER 	:
Debtor 	: 	Bankruptcy No. 05-36519F
.................................................
MEMORANDUM
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Bankers Trust Company, acting as trustee for Amresco Residential
Securities Corporation Mortgage Loan Trust 1998 (hereinafter “Bankers Trust”), has filed
a motion to annul the bankruptcy stay pursuant to 11 U.S.C. § 362(d)(1). The motion for
annulment of the stay submits three bases for relief: the failure of the debtor to give notice
of her bankruptcy filing until after the completion of a state court litigation, Motion, ¶ 7;
the debtor’s bad faith in filing this chapter 13 case, Motion, ¶ 8; and the debtor’s futile
attempt to reorganize by retaining ownership of real estate previously sold to the movant
by the Sheriff of Philadelphia County years ago, via foreclosure sale, Motion, ¶¶ 9-11.
The debtor opposes the relief sought by Bankers Trust. She contends that
the bankruptcy stay should remain in place until the state court has resolved her challenge
to the sheriff sale. Answer, ¶ 4. Alternatively, she argues in general that annulment is
“extraordinary relief” which is not warranted in these circumstances. Answer, ¶ 5.
The chapter 13 trustee, after hearing all of the evidence presented and the
arguments of counsel, stated in open court that he does not oppose the relief sought by
Bankers Trust.
After an evidentiary hearing, the following facts were proven.
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As debtor’s counsel noted at the hearing, Bankers Trust offered in evidence1
copies of docket entries for eight bankruptcy filings, including the present case, but omitted one
filing in 2002, docketed at Bankr. No. 02-17323.
I take judicial notice, under Fed. R. Evid. 201 (incorporated into bankruptcy2
cases by Fed. R. Bankr. P. 9017), of the docket entries of this prior case. See Maritime Elec. Co.,
Inc. v. United Jersey Bank, 959 F.2d 1194, 1200 n.3 (3d Cir. 1991); Levine v. Egidi, 1993 WL
69146, at *2 (N.D. Ill. 1993); In re Paolino, 1991 WL 284107, at *12 n.19 (Bankr. E.D. Pa.
1991); see generally In re Indian Palms Associates, Ltd., 61 F.3d 197 (3d Cir. 1995).
2
I.
The debtor filed the above-captioned chapter 13 case on October 13, 2005.
This is the debtor’s ninth bankruptcy filing since May 24, 1990. Ex. M-1. All nine cases
were commenced as chapter 13 reorganization cases. Exs. M-1 to M-8. 	The eighth case1
began on May 16, 2002, and involved an adversary proceeding commenced by the debtor
against Bankers Trust seeking, inter alia, to set aside the foreclosure sale of the real
property located at 8612 Gilbert Street, Philadelphia, Pennsylvania. The Third Circuit
Court of Appeals held on May 24, 2005 that this bankruptcy court had no subject matter
jurisdiction to hear the debtor’s challenge to that sale. In re Knapper, 407 F.3d 573 (3d
Cir. 2005). Shortly thereafter, on June 13, 2005, the debtor converted her chapter 13 case
to one under chapter 7. She received her chapter 7 discharge on October 5, 2005 and her
eighth case was closed on October 13, 2005. 2
On April 10, 2002 (just prior to the debtor’s filing of her eighth case),
Bankers Trust, which had obtained title to the Gilbert Street property by sheriff’s deed,
see Ex. M-10, commenced an ejectment action in state court against the debtor in order to
recover possession of the realty. Ex. M-12. On December 2, 2004—while the debtor’s
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The debtor does not dispute the movant’s allegation that no notice was given of3
the bankruptcy filing prior to the state court adjudication. Indeed, her counsel confirmed this fact
at the evidentiary hearing. Rather the debtor asserts that she did not “unreasonably delay” such
notice, Answer ¶ 3, and that Bankers Trust “could have easily surmised that the Debtor would
make such a [bankruptcy] filing” prior to the effective date of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005, P.L. 109-8. Id. The effective date of that legislation was
October 17, 2005.
Despite the debtor’s contentions, for purposes of this motion to annul the stay, I
find that neither the state court nor Bankers Trust either knew or should have known of her latest
bankruptcy filing prior to November 15, 2005, when she filed a suggestion of bankruptcy with
the state court.
3
eighth bankruptcy case was still pending, and prior to the Third Circuit ruling—the debtor
initiated in state court a civil action against Bankers Trust challenging the latter’s title to
the Gilbert Street property and seeking to recover ownership of her former realty. Ex. M-
11. In May 2005, the debtor sought to consolidate her 2004 state court lawsuit with the
pending 2002 state court ejectment action. That consolidation request was granted by the
state court on June 14, 2005. Ex. M-12.
On September 26, 2005, a non-jury trial was held on these two consolidated
state court lawsuits. Exs. M-16 and M-17. On October 13, 2005, the debtor filed her
ninth bankruptcy case under chapter 13. She did not, however, provide notice of the
filing to Bankers Trust or to the state court until November 15, 2005, when she filed a
suggestion of bankruptcy. Ex. M15; see also Motion, ¶ 7; Answer, ¶ 3. 	Prior to such3
notice, on November 9, 2005, the state court issued its rulings against the debtor in both
lawsuits. That is, on November 9, 2005, the state court entered judgment in ejectment in
favor of Bankers Trust and also entered judgment in favor of Bankers Trust on the
debtor’s challenge to its ownership of the Gilbert Street realty. Ex. M-16.
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The debtor’s bankruptcy schedules I and J disclose monthly income of $2,0004
and monthly expenses of $1,944. Ex. M-15. Those expenses do not include any rent or
mortgage payments, although the debtor still resides in the Gilbert Street realty. Id. Thus, it
would not appear that she could afford to cure any future mortgage obligation to Bankers Trust
without substantial contributions from non-debtor individuals.
4
On November 17, 2005, the debtor filed post-trial motions in state court.
Those motions were still pending as of the date of the hearing on this motion to annul the
bankruptcy stay, and are scheduled to be heard in state court on January 6, 2005.
Finally, the debtor has filed a proposed chapter 13 plan, dated October 24,
2005. Ex. M-14. Under this plan, she will pay the chapter 13 trustee only $50 per month
for 36 months. Id., ¶ 2. The plan also provides that she will prosecute her state court
lawsuit against Bankers Trust to recover title to the Gilbert Street property; and if
successful, “with the help of her husband, who is presently on work release, she will
provide sufficient payments to cure the defaults owed to Bankers.” Id. at ¶ 3. 	The4
trustee’s report reflects that he has not received any plan payments from the debtor as of
December 27, 2005. Ex. M-9. The debtor, however, testified that she recently tendered
one payment and is one month delinquent in plan payments to the trustee.
II.
In general, the filing of a bankruptcy case stays the continuation of all
lawsuits against the debtor by virtue of section 362(a)(1). See, e.g., Maritime Elec. Co. v.
United Jersey Bank, 959 F.2d 1194, 1204 (3d Cir. 1991). Moreover, section 362(a)(3) of
the Code enjoins not only actions to obtain property of the estate but also actions to obtain
property “from the estate.” Therefore, even though Ms. Knapper held no ownership
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interest in the Gilbert Street realty on October 13, 2005 when she filed this bankruptcy
case, clearly the property was in the debtor's possession. As such, the bankruptcy stay
applied and Bankers Trust was required to seek relief from the stay in order to eject the
debtor— that is, to oust her from possession. See In re Atlantic Business and Community
Corp., 901 F.2d 325, 328 (3d Cir. 1990); In re 48th Street Steakhouse, Inc., 835 F.2d 427
(2d Cir. 1987), cert. denied, 485 U.S. 1035 (1988). As a result, the entry of a judgment in
ejectment on November 9, 2005, which occurred post-petition, could be viewed as an
improper violation of the bankruptcy stay.
Recognizing this problem, Bankers Trust now seeks to have the bankruptcy
stay “annulled.” Section 362(d) permits the automatic stay to be “terminat[ed],
annull[ed], modif[ied] or condition[ed].” The Third Circuit Court of Appeals has
explained 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.” In re Siciliano, 13 F.3d 748, 751 (3d Cir. 1994). In a
subsequent decision, the Court of Appeals provided the following analysis of the
bankruptcy stay and the power of a bankruptcy court to retroactively terminate it:
The purpose of the automatic stay is twofold: (1) to protect
the debtor, by stopping all collection efforts, harassment, and
foreclosure actions, thereby giving the debtor a respite from
creditors and a chance “to attempt a repayment or
reorganization plan or simply be relieved of the financial
pressures that drove him into bankruptcy;” and (2) to protect
“creditors by preventing particular creditors from acting
unilaterally in self-interest to obtain payment from a debtor to
the detriment of other creditors.” Maritime Elec. Co. v.
United Jersey Bank, 959 F.2d [1194] at 1204 [3d Cir. 1991].
The stay is “automatic” because it is triggered upon the filing
of a bankruptcy petition regardless of whether the other
parties to the stayed proceeding are aware that a petition has
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been filed. The automatic stay cannot be waived. Relief from
the stay can be granted only by the bankruptcy court having
jurisdiction over a debtor's case. Id. A party in interest may
obtain relief from stay, pursuant to § 362(d)(1), by requesting
the relief from the bankruptcy court and, after notice and a
hearing, showing cause. 11 U.S.C. § 362(d)(1).
The automatic stay is of broad scope, directing that “[a]ll
judicial actions against a debtor seeking recovery on a claim
that were or could have been brought before commencement
of a bankruptcy case, are automatically stayed.” Maritime,
959 F.2d at 1203, 1206. Thus, “[o]nce triggered by a debtor's
bankruptcy petition, the automatic stay suspends any
non-bankruptcy court's authority to continue judicial
proceedings then pending against the debtor.” Id. at 1206.
Unless relief from the stay is granted, the stay continues until
the bankruptcy case is dismissed or closed, or discharge is
granted or denied. 11 U.S.C. § 362(c). Once a stay is in
effect, without relief from the bankruptcy court, “the parties
themselves [can]not validly undertake any judicial action
material to the ... claim against” the debtor. Id. at 1207. This
includes the filing of motions, which are void ab initio, unless
the bankruptcy court later grants retroactive relief. [FN6] Id.
at 1207, n. 13.
FN6. Generally, judicial actions and
proceedings against the debtor are void ab initio
absent relief from the stay. Id. We have,
however, recognized that section 362(d), which
requires the bankruptcy court to grant relief
from the stay under certain circumstances and
permits such relief to be applied retroactively,
would allow the bankruptcy court to grant
annulment of a stay, thereby making acts in
violation of the stay voidable, rather than void
ab initio. See In re Siciliano, 13 F.3d 748,
750-51 (3d Cir. 1994).
Constitution Bank v. Tubbs, 68 F.3d 685, 691-92 (3d Cir. 1995) (emphasis added);
accord, e.g., Eastern Refractories Co. Inc. v. Forty Eight Insulations Inc., 157 F.3d 169,
172 (2d Cir. 1998). In other words, section 362(d)(1) empowers this court to retroactively
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To the extent that the debtor prosecuted a lawsuit against Bankers Trust5
postpetition, the automatic stay would not apply. See Maritime Elec. Co. v. United Jersey Bank,
959 F.2d at 1204-05.
7
validate the November 9, 2005 state court judgment in ejectment, which was in technical
violation of the automatic stay, by virtue of the annulment of the stay. 5
In general, whether to grant relief from the automatic stay under section
362(d)(1), including the decision whether to annul the stay, is left to the discretion of the
bankruptcy court. See, e.g., In re National Environmental Waste Corp., 129 F.3d 1052,
1054 (9th Cir. 1997). In determining whether to exercise such discretion and
retroactively terminate the stay, courts have noted that annulment of the stay is
appropriate only in limited circumstances. See, e.g., In re Stockwell, 262 B.R. 275, 280
(Bankr. D. Vt. 2001). In order to help identify such circumstances, some courts have
focused upon the following two factors:
(1) whether the creditor was aware of the bankruptcy petition;
and (2) whether the debtor engaged in unreasonable or
inequitable conduct, or prejudice would result to the creditor.
In re National Environmental Waste Corp., 129 F.3d at 1055.
Other courts, in analyzing the factors needed to justify annulling the stay,
parse these two factors into more specific elements:
It is well recognized that a determination of whether to grant
relief from stay retroactively is within the wide latitude of the
Court with each decision being considered on a case-by-case
basis. . . . The party seeking retroactive lift stay relief has the
burden of proving that the action taken in violation of the stay
falls within the narrow exceptions to the rule voiding actions
taken in violation of the stay. . . . Similarly, under § 362(g),
the debtor has the burden of proof with respect to showing
equitable grounds for denying the requested relief. . . .
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In order to determine whether the circumstances are
sufficiently compelling to warrant nunc pro tunc lift stay
relief, courts have considered a variety of factors:
(1) if the creditor had actual or constructive
knowledge of the bankruptcy filing and,
therefore, of the stay; (2) if the debtor has acted
in bad faith; (3) if there was equity in the
property of the estate; (4) if the property was
necessary for an effective reorganization; (5) if
grounds for relief from the stay existed and a
motion, if filed, would likely have been granted
prior to the automatic stay violation; (6) if
failure to grant retroactive relief would cause
unnecessary expense to the creditor; and (7) if
the creditor has detrimentally changed its
position on the basis of the action taken.
In re Stockwell, 262 B.R. at 280-81 (citations omitted); see also In re Williams, 257 B.R.
297, 301 (Bankr. W.D. Mo. 2001).
In sum, courts have generally concluded that annulment of the stay should
be limited to circumstances demonstrating “unfair prejudice” to a creditor, including
consideration of whether the creditor seeking annulment had a valid legal basis for lifting
the automatic stay at the time that the challenged action occurred, but failed to request
such relief because it was unaware of any bankruptcy filing. See In re Syed, 238 B.R.
126, 133 (Bankr. N.D. Ill. 1999). In addition, because a creditor may obtain relief from
the bankruptcy stay for “cause” under section 362(d)(1) whenever the evidence presented
would support dismissal of the case due to a bad faith filing, see, e.g., In re Can-Alta
Properties, Ltd., 87 B.R. 89, 91 (B.A.P. 9th Cir. 1988) (and cases cited); In re Harris, 192
B.R. 334, 337 (Bankr. W.D.N.Y. 1996); Matter of Nelson, 66 B.R. 231 (Bankr. D.N.J.
1986), aff'd without op., 838 F.2d 1207 (3d Cir. 1988); In re Augustus Court Associates,
43 B.R. 352, 354 (Bankr. E.D. Pa. 1984), it also follows that a court should consider the
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good faith of a bankruptcy filing when determining the appropriateness of granting
annulment relief under section 362(d)(1).
III.
In determining the appropriate exercise of discretion under section
362(d)(1) under these facts, I observe that trial on Bankers Trust’s ejectment action
occurred in September 2005, prior to the debtor’s bankruptcy filing. The state court
decision dated November 9, 2005 granting judgment in ejectment was rendered
postpetition, but without knowledge by either Bankers Trust or the state court of the
pendency of Ms. Knapper’s last bankruptcy filing. I also note that the ejectment trial was
consolidated at the debtor’s request with the trial on the debtor’s lawsuit against Bankers
Trust, which latter claim was not stayed by section 362(a). See Maritime Elec. Co. v.
United Jersey Bank, 959 F.2d at 1205 (“Thus, within one case, actions against a debtor
will be suspended even though closely related claims asserted by the debtor may
continue.”).
Had Bankers Trust known of the bankruptcy filing as soon as it occurred on
October 13, 2005 and then sought to terminate the automatic stay, this entity would have
been granted prospective relief from the bankruptcy stay in order to prosecute its pending
ejectment action. There are a number of reasons for this conclusion.
First, where a debtor files bankruptcy after a matter has been tried in state
court, but before an adjudication has been entered, a bankruptcy court will usually
terminate the automatic stay to permit the completion of the lawsuit. Indeed, the
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legislative history surrounding termination of the bankruptcy stay for cause under section
362(d)(1) contains the following statement:
[I]t will often be more appropriate to permit proceedings to
continue in their place of origin, when no great prejudice to
the bankruptcy case will result, in order to leave the parties to
their chosen forum and to relieve the bankruptcy court from
many duties that may be handled elsewhere.
S. Rep. No. 989, 95th Cong., 2d Sess. 50 (1978).
Based upon the above-quoted legislative history, courts have long
recognized that it is within the sound discretion of the bankruptcy courts to grant relief
from the automatic stay and thereby defer to a non-bankruptcy forum—which has
jurisdiction over the dispute, and in which significant time and funds have already been
expended—the resolution of pending litigation involving state law issues. See, e.g., In re
Robbins, 964 F.2d 342, 345-46 (4th Cir. 1992); Matter of Holtkamp, 669 F.2d 505 (7th
Cir. 1982); In re Castlerock Properties, 781 F.2d 159, 163 (9th Cir. 1986); In re Olmstead,
608 F.2d 1365 (10th Cir. 1979); In re Hoffman, 33 B.R. 937 (Bankr. W.D. Okla. 1983);
In re Philadelphia Athletic Club, Inc., 9 B.R. 280 (Bankr. E.D. Pa. 1981); 3 Collier on
Bankruptcy, ¶ 362.07[3][a] at 362-84 (L. King, 15th ed. rev. 2003) (“[R]elief may also be
granted when necessary to permit litigation to be concluded in another forum, particularly
if the nonbankruptcy suit involves multiple parties or is ready for trial”).
In this instance, as of October 2005, the state court ejectment lawsuit had
been pending since 2002, or for more than three years. A non-jury trial of this litigation
had already occurred prepetition with the parties awaiting only the state court’s decision.
In addition, this lawsuit had also been consolidated with a related claim raised by the
debtor: a claim which the Court of Appeals had previously held was outside the
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jurisdiction of this bankruptcy forum and therefore could only be adjudicated in the state
court system. Under these circumstances, there would have been no legitimate purpose
served in continuing the bankruptcy stay and thereby precluding the state court from
issuing its ruling on both matters. Accordingly, the bankruptcy stay would have been
terminated in favor of Bankers Trust’s prosecution of its ejectment action, had this entity
known of the debtor’s latest bankruptcy filing in October 2005.
Second, while the bankruptcy stay applies to property in the debtor’s
possession, even if the debtor does not have title to the property, such a possessory
interest without any right of ownership or contractual right to possession is not much
protected by the bankruptcy stay. Relief from the stay typically will be granted to the
owner, or a secured creditor of the owner, except in the unusual circumstance where the
debtor can demonstrate that the interest of the party seeking relief is adequately protected.
See In re Moore & White Co., Inc., 83 B.R. 277, 281 (Bankr. E.D. Pa. 1988); see
generally Zagata Fabricators, Inc. v. Superior Air Products, 893 F.2d 624, 627 (3d Cir.
1990) (“the failure of a debtor to pay rent affords the landlord the opportunity to convince
the bankruptcy court to lift the stay and permit the landlord to seek an ejectment order
from state court”).
In considering the issue of adequate protection, a bankruptcy court must
determine whether there is some legitimate purpose to be served in bankruptcy by keeping
the debtor in possession of property owned by another, and in which she has no
contractual right to possess. See generally First National Fidelity Corp. v. Perry, 945 F.2d
61 (3d Cir. 1991) (mortgagee properly granted relief from stay when chapter 13 filing
occurred after foreclosure judgment—because, under bankruptcy law in effect at that
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In light of the adverse state court ruling on November 9th, the debtor cannot6
persuasively argue that there is a likelihood of success on her challenge to Bankers Trust’s
ownership interest of the Gilbert Street property.
12
time, the debtor/homeowner was unable to use chapter 13 to cure the mortgage default);
In re Halley, 70 B.R. 283 (E.D. Pa. 1987) (when mortgage loan matured prepetition,
chapter 13 petition may not cure loan default and relief from the stay should be granted).
If a bankruptcy filing serves no legitimate purpose in keeping the debtor in possession of
realty in those circumstances, then the moving party should be granted relief from the stay
to exercise its non-bankruptcy law rights to recover possession from the debtor. Id.
In these particular circumstances, once the foreclosure sale of Ms.
Knapper’s interest in realty took place prior to her bankruptcy filing, the debtor had no
right to cure or reinstate her mortgage under Pennsylvania law. See In re Brown, 75 B.R.
1009 (Bankr. E.D. Pa. 1987); In re Rouse, 48 B.R. 236 (Bankr. E.D. Pa. 1985). Nor does
she have any right to cure this default in a chapter 13 proceeding under current federal
bankruptcy law. 11 U.S.C. § 1322(c)(1). 	Essentially, in seeking to continue the
automatic stay, Ms. Knapper proposes to litigate her non-bankruptcy claim against
Bankers Trust in state court (persumably through posttrial motions and appeals) while
remaining in possession of the realty. And as Bankers Trust is neither her mortgagee nor
her lessor, she would remain in possession without any compensation being paid to the
record owner of the property. Clearly, the debtor’s position does not adequately protect
the ownership interest of Bankers Trust; nor does it offer any legitimate purpose in
continuing the bankruptcy stay. 6
Third, as mentioned earlier, this is the debtor’s ninth attempt at
reorganization, and it was filed on the same date that her eighth case was concluded. The
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debtor offers no evidence to demonstrate that this ninth case is any different from the one
that just ended, and in which she was unable to reorganize.
A bankruptcy reorganization petition filed without any legitimate prospect
of reorganization is done in bad faith in that it only delays action under state law by
creditors. That is, while the Code does not contain any express limitation on refiling a
bankruptcy case after another is dismissed, many courts have recognized that it is
inappropriate for a debtor to file another bankruptcy reorganization case (under chapters
11, 12 or 13) after dismissal of an earlier one, unless there has been a material change of
circumstances which demonstrates that the second (or later) reorganization attempt now
has a possibility of success after the first had failed. See generally, e.g., Matter of
Elmwood Development Co., 964 F.2d 508 (5th Cir. 1992); In re Chisum, 847 F.2d 597
(9th Cir.), cert. denied sub nom., Mortgage Mart, Inc. v. Rechnitzer, 488 U.S. 892 (1988);
In re Johnson, 708 F.2d 865 (2d Cir. 1983); In re Oglesby, 158 B.R. at 606 (“A genuine
change in circumstances may justify a debtor’s multiple filings.”); In re McKissie, 103
B.R. 189, 192 (Bankr. N.D. Ill. 1989).
Therefore, when there are successive reorganization bankruptcy filings
without any material changes in circumstances, the repeat filing is generally viewed to be
in “bad faith.” E.g., Matter of Elwood Development Co., 964 F.2d at 511-12; compare
In re Barrett, 964 F.2d 588, 592 (6th Cir. 1992) (change in circumstances made the
debtor’s successful reorganization extremely likely and the filing undertaken in good
faith). Since an earlier filing has been unsuccessful, there is little reason for a debtor to
believe that another case will yield any different result. See In re Oglesby, 158 B.R. at
606 (“The bankruptcy court must concern itself with whether the debtor is merely trying
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to frustrate the statutory requirements through a strategy of successive filings in an
attempt to abuse the bankruptcy process.”).
Indeed, serial or successive bankruptcy filings may be evidence of misuse
of the bankruptcy process, intended only to forestall the foreclosure efforts of a secured
creditor, and therefore not filed in good faith. See, e.g., In re Huerta, 137 B.R. 356, 367
(Bankr. C.D. Cal. 1992). The “kind of ‘changed circumstances’ required to justify a
successive filing must be positive changes” reflecting on the debtor’s ability to
successfully reorganize under chapter 13. Id. at 368.
Moreover, when an individual has filed many failed reorganization cases, as
in this instance, the need for evidence demonstrating a material change in circumstances
supporting a reasonable possibility of reorganization grows heavier. See In re LeGree,
285 B.R. 615, 620 (Bankr. E.D. Pa. 2002). 	In addition, the serial filer may have abused
the system with prior bad-faith filings and that conduct must also be considered before
permitting a new petition. See id.
In determining whether a new filing would be in good faith, the bankruptcy
court has the discretion to reach the appropriate result in a particular case based upon all
of the circumstances. See In re Lilley, 91 F.3d 491, 496 (3d Cir. 1996); Matter of Love,
957 F.2d 1350, 1354 (7th Cir. 1992); In re Mazzocone, 180 B.R. 782 (E.D. Pa. 1995).
And in considering a debtor’s good faith in filing, the Third Circuit Court of Appeals has
placed the burden of persuasion upon the debtor. See In re Tamecki, 229 F.3d 205, 207
(3d Cir. 2000); In re SGL Carbon Corp., 200 F.3d 154, 162 n.10 (3d Cir. 1999).
Essentially, once the creditor demonstrates that there have been serial filings, the debtor
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must come forward with evidence demonstrating that the bankruptcy process is not being
misused. See In re LeGree, 285 B.R. at 618.
Here, there is no evidence that this ninth bankruptcy filing is little more
than an attempt by the debtor to obtain a stay of an ejectment action while she litigates her
claim against Bankers Trust in state court. There was no evidence offered that the
circumstances of this ninth filing are materially different from those present during her
eighth filing, during which she was unable to complete the chapter 13 process.
Finally, as noted by the Fifth Circuit Court of Appeals in Matter of Pinetree,
Ltd., 876 F.2d 34, 37 (5th Cir. 1989):
Should the automatic stay have applied to nullify Mutual
Benefit's foreclosure of Pinetree Plaza? Under the
circumstances of this case, we hold that it should not. It is
clear that absent bankruptcy, the debtor had no right
enforceable against Mutual Benefit by virtue of its unrecorded
deed in Pinetree Plaza. Were we to affirm the bankruptcy
court's judgment that the automatic stay applied, the parties
would be forced to readjudicate its removal, 11 U.S.C. §
362(d), and Mutual Benefit would have to conduct another
foreclosure proceeding. Further redundancy and delay would
needlessly result. Thus, where a creditor having no
knowledge of a pending bankruptcy forecloses in good faith
on the collateral, and where the debtor’s interest in that
collateral is unenforceable against that creditor, and where the
debtor, although notified in advance of the foreclosure, failed
to assert its status before the foreclosure, we conclude that the
automatic stay should have been annulled with respect to the
post-bankruptcy foreclosure.
Similarly, without knowledge of the debtor’s bankruptcy filing, the state
court ruled in November 2005 that Bankers Trust is entitled to possession of its realty.
Bankers Trust did not know of the bankruptcy filing either, so there was no overreaching
by the movant of federal law. Based upon the facts presented, there is no legitimate
purpose served by holding that state court judgment invalid. (Indeed, were I to hold that
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the November 9th judgment was improper under section 362(a), but also terminate the
stay prospectively under section 362(d), one would assume that the state court would
simply reissue its judgment, which is a needless expenditure of time and effort.
Moreover, if the state court could be persuaded to hold that its earlier ejectment order was
inconsistent with Pennsylvania law, it is now free to so rule in connection with the
debtor’s pending posttrial motions.)
Therefore, for all of the above-reasons, the bankruptcy stay will be annulled
and both parties left to their remedies in state court.
An appropriate order shall be entered.
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17
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
PAMELA KNAPPER 	:
Debtor 	: 	Bankruptcy No. 05-36519F
.................................................
ORDER
.................................................
AND NOW, this 5th day of January 2006, for the reasons stated in the
accompanying memorandum, it is hereby ordered that the motion of Bankers Trust
Company, acting as trustee for Amresco Residential Securities Corporation Mortgage
Loan Trust 1998, is granted and the bankruptcy stay is annulled pursuant to 11 U.S.C. §
362(d)(1), thus terminating the stay retroactively to October 14, 2005.
It is further ordered that Bankers Trust may exercise its state law rights to
eject the debtor and recover possession of the real property located at 8612 Gilbert Street,
Philadelphia, Pennsylvania. The stay is also lifted to that the debtor can exercise her state
law rights seeking to vacate or overrule any ejectment judgment concerning the Gilbert
Street realty.
It is further ordered that the ten day delay in the effective date of this order
shall not apply. Fed. R. Bankr. P. 4001(a)(3). Thus, the hearing scheduled in state court
for January 6, 2006 may take place.
BRUCE FOX
United States Bankruptcy Judge
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copies to:
Ms. Pamela Knapper
8612 Gilbert Street
Philadelphia, PA 19150
David A. Scholl, Esq.
Regional Bankruptcy Center of SE PA
Law Office of David A. Scholl
6 St Albans Avenue
Newtown Square, PA 19073
Leslie E. Puida, Esq.
Mellon Independence Center
701 Market Street, Suite 5000
Philadelphia, PA 19106-1532
William C. Miller, Esq.
Chapter 13 Trustee
111 S. Independence Mall, Suite 583
Philadelphia, PA 19106
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