William Warren Ingram

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
In re:
WILLIAM INGRAM,
Debtor.
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Case No. 10-21313
Chapter 13
Judge Arthur I. Harris
MEMORANDUM OF OPINION 1
This pro se chapter 13 case is currently before the Court on a motion for
relief from stay filed by pro se creditor, Allen Davis. Davis seeks relief from stay
so that he can resume eviction proceedings he initiated against the debtor, William
Ingram, in the Housing Division of the Cleveland Municipal Court. Those state
court proceedings have been stayed as a result of the bankruptcy case that Ingram
filed on November 17, 2010. For the reasons that follow, the motion for relief
from stay is granted.
1 This memorandum of opinion is not intended for official publication.
The court incorporates by reference in this paragraph and adopts as
the findings and orders of this court the document set forth below.
This document was signed electronically on January 13, 2011, which
may be different from its entry on the record.
IT IS SO ORDERED.
Dated: January 13, 2011
_____________________________
Arthur I. Harris
United States Bankruptcy Judge
__________________________________________________________________________________________
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Factual and Procedural Background
The residential real property at issue in this motion for relief from stay is
located at 915 London Road, Cleveland, Ohio. Apparently, Allen Davis is the
current owner of the property, and the debtor, William Ingram, currently resides
there; however, Ingram’s exact status as a tenant, holdover tenant, holder of a land
contract, or some other status, is uncertain. According to online records of the
Cuyahoga County Auditor and records in Ingram’s current and previous
bankruptcy cases, Ingram purchased the property in question on May 7, 2004.
After Ingram defaulted on his mortgage, the property was eventually sold at a
foreclosure sale on June 16, 2008, and the sale was confirmed on August 18, 2008.
Although Ingram was unsuccessful in his numerous attempts to retain ownership of
the property in previous bankruptcy cases, Ingram did receive a chapter 7
discharge in Case No. 07-19493 on April 6, 2009.
On June 17, 2009, Davis apparently purchased the property from the bank
that was the successful bidder at the sheriff’s sale. Davis apparently paid $9,000
for the property. It is unclear whether Davis and Ingram had any relationship
before Davis purchased Ingram’s former residence from the bank in 2009. It
appears that in May of 2010, Ingram and Davis entered into negotiations for
Ingram to purchase the property on some sort of rent-to-own arrangement.
Whether those negotiations resulted in a binding agreement, and the terms of any
such agreement remain uncertain. Nevertheless, the parties apparently are in
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agreement that Ingram took possession of the property in June of 2010 and remains
in possession of the property as of this date. The parties also apparently agree that
Ingram paid Davis $2,250 as a deposit or down payment, plus two additional
payments of $500 each, for a total of $3,250. It is also undisputed that Davis has
initiated eviction proceedings against Ingram in the Housing Division of the
Cleveland Municipal Court, and that Ingram has raised various defenses and
counterclaims in those state court proceedings.
It is also undisputed that Davis obtained an eviction order from the state
court; however, that eviction order was vacated by the state court as a result of the
new bankruptcy case that Ingram filed on November 17, 2010. After Ingram filed
his pro se bankruptcy case, Davis filed a pro se motion seeking relief from stay so
that Davis could resume eviction proceedings against Ingram in state court. The
Court heard argument on Davis’s motion on an expedited basis on December 16,
2010. After the initial hearing, the Court ordered Ingram to promptly deposit with
the Court $2,500, which the Court estimated was the amount needed to cure
Ingram’s default on his purported rent-to-own contract with Davis. On
December 17, 2010, Ingram deposited the required funds. On January 6, 2011, the
Court heard further argument from Davis and Ingram on the motion for relief from
stay, after which the Court took the matter under advisement.
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Discussion
Section 362 of the Bankruptcy Code provides in pertinent part:
(d) On request of a party in interest and after notice and a hearing, the court
shall grant relief from the stay provided under subsection (a) of this section,
such as by terminating, annulling, modifying, or conditioning such stay--
(1) for cause, including the lack of adequate protection of an interest
in property of such party in interest;
(2) with respect to a stay of an act against property under
subsection (a) of this section, if--
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective
reorganization.
A bankruptcy court may lift the automatic stay “for cause.” 11 U.S.C. § 362(d)(1).
Because the Code provides no definition of what constitutes “cause” under
§ 362(d), courts must determine whether discretionary relief is appropriate on a
case-by-case basis. See Trident Ass’n Ltd. P’ship v. Metropolitan Life Ins. Co.( In
re Trident Associates Limited P’ship), 52 F.3d 127, 131 (6th Cir. 1995)) (holding
that a bankruptcy court must consider the “totality of the circumstances” when
deciding to lift the automatic stay for cause); Laguna Ass’n Ltd. P’ship v. Aetna
Cas. & Sur. Co. (In re Laguna Associates Limited Partnership), 30 F.3d 734, 737-
38 (6th Cir. 1994)).
In a typical lease arrangement or land contract, a chapter 13 debtor would
normally have the opportunity to promptly cure a default, compensate a party for
any pecuniary loss, and provide adequate assurance of future performance. See
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11 U.S.C. § 1322(b)(3). There is also a specific provision for the cure of a lease
“involving residential property in which the debtor resides as a tenant under a lease
or rental agreement and with respect to which the lessor has obtained before the
date of the filing of the bankruptcy petition, a judgment for possession of such
property against the debtor.” 11 U.S.C. § 362(b)(22). Whether the purported
agreement between Ingram and Davis fits within this provision is unclear.
To the extent that the state court has determined that there was no binding
agreement, or that the relationship between the parties is at best a month-to-month
tenancy, Ingram has no contract to cure. Therefore, any opportunity to cure a
default through a chapter 13 bankruptcy plan would be of no benefit. It would be
analogous to a debtor opposing a creditor’s motion seeking relief from stay after a
leased vehicle’s term had already expired. If the term of the lease is over, the
debtor no longer has a contract to cure.
On the other hand, if Ingram partially performed on an agreement which was
never binding, Ingram might well be entitled to recover damages from Davis to the
extent that he paid Davis for more than the rental value of the property. Whether
Davis must return some or all of the $3,250 that Ingram paid as a down
payment/rent, or whether Ingram owes damages to Davis for additional rent
beyond $3,250 is uncertain. Nevertheless, this Court believes that the Housing
Division of the Cleveland Municipal Court is better situated to make these
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determinations. And, in particular, to the extent that it appears that the state court
has already determined that there is no written lease or binding rent-to-own
contract that Ingram might cure, the Court finds good cause for granting relief from
stay. Should the state court eventually determine that there is a binding legal or
equitable agreement between Davis and Ingram that can be cured, Ingram would be
free to file a motion seeking reinstatement of the automatic stay in this Court.
Finally, the Court is uncertain about what to do with the $2,500 that Ingram
deposited with the Clerk of the Bankruptcy Court on December 17, 2010. If this
were a written lease that fell within 11 U.S.C. § 362(b)(22) and (l), the proper step
would be to turn the funds over to Davis as lessor. But the state court’s
determination that there apparently is no binding written lease suggests that this
provision is inapplicable. In addition, during argument before this Court on
January 6, 2011, Davis indicated that he would prefer a simple order giving him
relief from stay, rather than to continue litigation over the $2,500 deposited with
the Court. Accordingly, absent a written request by Davis filed by January 27,
2011, the Court will issue an order directing the clerk to return the $2,500 to
Ingram.
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Conclusion
For the reasons stated above, Davis’s motion for relief from stay is granted,
and the automatic stay is terminated with respect to the premises located at
915 London Road, Cleveland, Ohio. Pursuant to Bankruptcy Rule 4001(a)(3), this
order is itself stayed until the expiration of 14 days after its entry. In addition,
unless Davis files a written request with this Court by January 27, 2011, seeking
turnover of the $2,500 to himself or to the Clerk of the Cleveland Municipal Court,
the Court will issue an order directing the clerk to return the $2,500 to Ingram.
IT IS SO ORDERED.
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