Linton Properties LLC

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
LINTON PROPERTIES, LLC, et
al.,
Debtors.
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Case No. 08-00095
(Chapter 7)
Jointly Administered
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER RE
THE TRUSTEE’S MOTION TO VACATE RELIEF FROM AUTOMATIC STAY
Marc E. Albert is the Chapter 7 Trustee of the bankruptcy
estates of the debtors in these jointly administered cases,
Linton Properties, LLC (“Linton Properties”) and Ronald M. Linton
and Nancy G. Linton (“Lintons”). 	He has filed a motion to set
aside an order (the “Relief from Stay Order”) entered in favor of
Chesapeake Bank & Trust (“Chesapeake”) to the extent that the
order permitted Chesapeake to enforce writs of garnishment served
on accounts of the debtors. 	The trustee contends that the
garnishments that were the subject of the Relief from Stay Order
were ineffective by reason of improper service. 	Chesapeake
responds that the trustee is barred by prior orders of this court
from challenging the validity of the writs of garnishment, and
The Memorandum Decision and Order below is hereby
signed. Dated: October 10, 2008.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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that the writs in any event were valid and effective. 	This
decision sets forth my preliminary views regarding the trustee’s
motion.
In granting relief from the automatic stay while this case
was still pending as a chapter 7 case, the court was concerned
that a chapter 7 trustee might wish to assert that the writs were
avoidable or unenforceable, but until a trustee spoke on the
matter there was no reason not to let the garnisheed funds be
collected by Chesapeake so long as they were held by Chesapeake’s
counsel in escrow until a trustee in a later chapter 7 case
spoke. 	Now that the trustee has spoken, there is good reason to
vacate the order granting relief from the automatic stay.
The only issue to decide is whether to lift the stay, not to
decide whether the trustee’s claim is defeated by the defenses
that Chesapeake has raised. 	The papers filed regarding the
trustee’s motion raise substantial issues that are worthy of
resolution through an adversary proceeding. 	This does not
necessarily mean that I would rule in the trustee’s favor on the
legal issues the parties have briefed on the instant motion. 	It
only means that the trustee is entitled to have the status quo
restored to permit him adequate opportunity through an adversary
proceeding to press his challenge to the validity of Chesapeake’s
asserted liens, a challenge that is not demonstrably frivolous.
Had the trustee been present at the lift stay hearing in the
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chapter 11 case and noted his intention to pursue a claim that
the writs of garnishment were ineffective, I would have denied
the motion for relief from the automatic stay, subject to the
trustee’s promptly pursuing an adversary proceeding to determine
the validity of Chesapeake’s writs of garnishment. 	So long as
the trustee’s pursuit of his claim would not be plainly
frivolous, I would have ruled that it was premature at that
juncture to determine the correctness of the parties’ respective
positions regarding the validity of the liens and to determine
whether the trustee is barred from challenging the validity of
the asserted liens.
The parties’ papers on the instant motion may have already
briefed the legal issues as thoroughly as would occur were an
adversary proceeding to be brought. 	But it is preferable that
the issues be framed by way of an adversary proceeding. 	(Indeed,
Chesapeake contends that its liens can be declared invalid only
through an adversary proceeding as required by Fed. R. Bankr. P.
7001.) 	The point is to restore the status quo so that the
trustee may pursue his position by the ordinary vehicle of an
adversary proceeding, with a complaint and an answer to frame the
issues, and presumably motions for summary judgment to be filed
on the legal issues as to which there is no genuine factual
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1 	It would appear that the parties might be able
alternatively to file a stipulated record for purposes of a trial
of the adversary proceeding.
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dispute. 1
Nevertheless, I have already directed that a hearing on
Chesapeake’s Motion to Compel Trustee to Complete Sale of Real
Property will be held on October 15, 2008, at 2:00 p.m. 	Even if,
pursuant to my preliminary views expressed above, I vacate the
Relief from Stay Order, I will need to address whether the funds
are to continue to be held in escrow by Chesapeake’s counsel, and
also the amount of time that the trustee will be permitted to
file an adversary proceeding to determine the validity of the
writs of garnishment. 	Chesapeake will be free at the hearing to
attempt to sway me from my preliminary views expressed above. 	It
is thus
ORDERED that a hearing on the trustee’s motion will be heard
on October 15, 2008, at 2:00 p.m.
[Signed and dated above.]
Copies to: Debtor; Debtor’s attorney; Chapter 7 Trustee; Office
of United States Trustee; Katherine M. Sutcliffe Becker, Esq.;
Troy C. Swanson, Esq.; Craig M. Palik, Esq.
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