Opinion
Case No. 0120895
December 7, 2001
ORDER GRANTING RELIEF FROM AUTOMATIC STAY
On December 4, 2001, this case came before the court on the Motion for Relief from the Automatic Stay filed by the State Loan and Investment Board (Board), formerly the Wyoming Farm Loan Board. The debtors opposed the motion.
The facts are not disputed. On July 12, 2000, the Board held a power-of-sale foreclosure sale of agricultural property owned by the debtors. The Board was the highest bidder. On that date, the debtors' statutory rights of redemption under Wyo. Stat. Ann. § 1-18-103 (b) (Lexis 2001) became effective, and the debtors had twelve months to redeem the property from the sale.
The debtors also had a tree-month right of possession. When the three-month period expired and the debtors did not vacate, the Board instituted eviction proceedings. After entry of a Forcible Entry and Detainer judgment, the parties negotiated an extension. When the extension expired, the debtors did not vacate.
On June 7, 2001, the debtors filed this chapter 13 case to delay the proceedings in order to give them time to redeem the property from the foreclosure sale. The debtors filed a chapter 13 plan, which was not confirmed, and did not address the Board's claim. No amendment has been filed
Legal Discussion
When the debtors filed their bankruptcy case, the time for exercising their right of redemption had not expired. Those redemption rights were property of the estate. 11 U.S.C. § 541 (a). Under 11 U.S.C. § 108 (b)(2), the time for exercising those redemption fights was extended under bankruptcy law for a period of 60 days from the order for relief; or to August 6, 2001. The extension is exclusive, and the redemption rights were not indefinitely extended by operation of the automatic stay under § 362(a). Johnson v. First Nat. Bank of Montevideo, Minn., 719 F.2d 270, 277 (8th Cir. 1983), cert. denied, 465 U.S. 1012 (1984), citing, In re Trigg, 630 F.2d 1370, 1373 (10th Cir. 1980) (concluding that automatic termination of lease following debtor's nonpayment of rent was not a proceeding that could be automatically stayed under the Bankruptcy Act of 1898); 3 Collier on Bankruptcy ¶ 362.03 [6][c] at 362-30 (15th ed. Revised 2001).
The debtors have not proposed to utilize the provisions of § 1322(b)(5) and indeed, argue that the decision of the Bankruptcy Appellate Panel in the case of In re McCarn, 218, B.R. 154 (10th Cir. BAP 1998) (holding that a § 1322(b) right to cure is unavailable once the foreclosure sale is held under Wyoming law) is inapplicable. The court is hard pressed therefore, to understand the lengthy discussion on the lack of merit in the McCarn decision. Regardless of their view, the McCarn decision represents the law in Wyoming.
The debtors seem also to contend that because they held legal title when they filed this case, they have some sort of ill-defined right to redeem indefinitely. No provision is cited in the Bankruptcy Code to support this argument
Having failed to exercise their redemption rights before expiration, the debtors contend those rights should be extended because of inequitable conduct by the Board. The debtors provided evidence that, after the redemption fights and the § 108 extension expired, they requested a pay-off amount from the Board in order to redeem. Three requests were made by letters dated August 16, 2001, August 24, 2001 and November 14, 2001, all of which occurred after the August 6, 2001 expiration of the redemption rights. The Board, for reasons unexplained, did not respond.
The issue is simply this: whether under Wyoming law the redemption fights of a mortgagor under a foreclosed real estate mortgage can be extended by inequitable conduct of the mortgagee, and if so, whether the refusal to provide a payoff amount after the redemption rights have expired is such inequitable conduct. The relief sought by the debtors at the hearing was the equitable imposition of a ten-day deadline in which they could redeem. The basis for the request is not relief provided by the Bankruptcy Code and therefore, the court concludes this question of Wyoming law should be decided, if at all, in a state court forum.
The Board's motion for relief from stay will be granted for cause, but the debtors will have the ten-day period requested. IT IS, THEREFORE, ORDERED that the Wyoming Farm Loan Board's motion for relief from stay is granted as of the date of this order for the Board to exercise its state law rights under the mortgage, the foreclosure and the other state court proceedings, with respect to the real property described as:
Township 14 North, Range 61 West, 6th P.M., Section 8: E2; Section 9: All less Railroad R/W; and Section 16: NW4 less Railroad R/W; and
FURTHER ORDERED that the provisions of F.R.Bankr.P. 7062 and Fed.R.Civ.P. 62(a) are not altered by this order, thereby providing the debtors with the ten-day period they seek during which time they may attempt to exercise their allegedly unexpired redemption rights, to negotiate with the State Loan and investment Board, or to take other action as they deem necessary to establish the asserted rights of redemption. This order shall constitute findings, conclusions and a final judgment under F.R.Bankr.P. 7052 and 9021.