Eudis Edwin Tanner, Jr. and Mary Carolyn Shaw Tanner

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
FAYETTEVILLE DIVISION
IN RE:
EUDIS EDWIN TANNER, JR.
MARY CAROLYN SHAW TANNER
DEBTORS
CASE NO.
05-00853-8-ATS
ORDER ALLOWING MOTION FOR RELIEF FROM STAY AND
DENYING MOTION TO DISMISS
The matters before the court are the motion to dismiss and motion
for relief from the automatic stay filed by RBC Centura Bank. A
hearing took place in Raleigh, North Carolina on July 19, 2005.
Eudis Edwin Tanner, Jr. and Mary Carolyn Shaw Tanner filed a
petition for relief under chapter 13 of the Bankruptcy Code on February
3, 2005. This is the Tanners’ second filing. Their first case, Case
No. 03-09723-8-ATS, was filed on November 7, 2003, in conjunction with
a chapter 11 filing by the Tanners’ business, Carolina Paving Company
of Fayetteville, Inc., Case No. 03-09724-8-ATS. The Tanners’ prior
chapter 13 filing was dismissed on August 30, 2004, for failure to make
payments and to obtain confirmation of a plan, while the chapter 11
case was converted to chapter 7 on June 23, 2004.
The Tanners are obligated to RBC as guarantors on loans to
Carolina Paving. On August 20, 2004, the court entered an order in the
Tanners’ prior case allowing relief from the automatic stay for RBC to
foreclose on the real property securing its debt. Under the terms of
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the order, RBC was required to foreclose on certain commercial property
first, and if that sale did not bring sufficient proceeds to pay RBC in
full, it could return to the court to seek relief to foreclose on the
Tanners’ residence. On July 30, 2004, RBC also obtained relief from
the automatic stay to foreclose on the commercial property in the
Carolina Paving case.
After the Tanners’ prior case was dismissed, RBC completed the
foreclosure of the commercial property, which was purchased by RBC for
a credit bid in the amount of $312,000. RBC has since been unable to
sell the property. RBC also conducted a foreclosure sale on the
Tanners’ residence, and the Tanners filed the instant case during the
10-day upset bid period. RBC now seeks relief from the automatic stay
to proceed with the foreclosure of the residence, contending that the
note in question has matured, and the Tanners’ plan does not provide
adequate protection to RBC.
The Tanners oppose the motion. Their plan provides that the
Tanners will pursue litigation against several banks for "various bad
acts," the expected recovery from which will be more than sufficient to
pay all creditors in full. In the meantime, the debtors propose to
make only nominal payments to the trustee.
The Tanners contend that the alleged "bad acts" took place
beginning in May 2002 and continued through 2003 or 2004. Accordingly,
when the court entered its order on August 20, 2004, allowing RBC to
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foreclose on the commercial property and then return to the court to
foreclose on the residence if necessary, the Tanners were aware of
their potential claims against the banks. The court is not persuaded
that anything has changed since it entered the order on August 20,
2004, that should alter the result. In addition, the debtors have
offered no adequate protection to RBC while they pursue the litigation,
and they have offered no means for repayment should their claims fail.
Cause exists to terminate the stay, and the motion will be allowed.
Based on the foregoing, the motion for relief from the automatic
stay is ALLOWED. RBC also filed a motion to dismiss the case, but that
motion is DENIED.
SO ORDERED.
DATED: July 20, 2005
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