Opinion
Case No. 03-32997
August 20, 2003
MEMORANDUM OPINION AND ORDER
Hearing was held on June 18, 2003, on a notice to show cause issued for debtor's failure to attend her § 341 meeting of creditors. The court also heard motion by pro se creditor Ricky C. Walker to reconsider its June 9, 2003, order denying his motions to dismiss this chapter 13 bankruptcy case and to allow a pre-petition foreclosure sale of debtor's residential real property to stand by annulling the automatic stay.
Walker is the second mortgage holder on debtor's realty located at 9321 Electra Court, Richmond, Virginia. At hearing on August 14, 2003, the court granted relief from stay to Citifinancial Mortgage Company, the first mortgage holder on debtor's property. Citifinancial's motion did not include a request for an annulment of the stay.
For the reasons stated in this opinion the court will dismiss the show cause and allow this case to go forward. Further, the court will deny Walker's motion to reconsider its recent opinion and order denying Walker's motion to dismiss. There is no evidence to suggest that the ruling was incorrect when entered, and the case will not be dismissed. However, considering the information now available, the court finds cause to grant Walker relief from the automatic stay concerning debtor's realty.
Findings of Fact.
Notice to Show Cause Debtor
This is debtor's third bankruptcy filing since 1997. Debtor's first case was filed on May 15, 1997, and was dismissed on debtor's motion on July 6, 2000. Debtor's second case was filed on August 19, 2002, and was dismissed on December 9, 2002, for debtor's failure to commence payments to trustee.
The instant case was filed on March 25, 2003, under chapter 13 of the Bankruptcy Code and debtor's first meeting of creditors was set for May 13, 2003. Debtor failed to appear at the meeting in violation of Local Bankruptcy Rule 2003-1(B)(2)(a). Pursuant to Local Rule 1017-3 the automatic dismissal of this case was suspended because debtor had filed a bankruptcy case in the preceding 12 months. In lieu of automatic dismissal, a notice to show cause was issued requiring debtor to appear and show cause why her case should not be dismissed.
Walker's Motion to Reconsider
Walker is a second deed of trust holder on a parcel of real property designated as Lot 17, Block A, Section 3, North Run Terrace Subdivision, located at 9321 Electra Court in Henrico County, Virginia, and owned by debtor and her husband. On March 25, 2003, a foreclosure sale of the property was held and Walker made a bid on the property for $135,000.00. However, prior to formal completion of the sale debtor filed this chapter 13 case.
Walker's motion to reconsider was filed on June 16, 2003, and seeks to have the court reconsider its June 9, 2003, order denying his motion to dismiss this bankruptcy case. The motion notes that there have been several past bankruptcy petitions filed by debtor and her husband to stop foreclosure sales. On this basis, Walker alleges that debtor's filing of this case was fraudulent. Thus he seeks permission to complete the foreclosure sale scheduled on March 25, 2003, and also asks the court to dismiss debtor's case.
Debtor's husband has filed the following bankruptcy cases on an individual basis: 1) chapter 7, case number 92-30557; 2) chapter 13, case number 94-31328; 3) chapter 13, case number 94-31947; 4) chapter 13, case number 00-33643; and 5) chapter 7, 01-36700. Debtor and her husband filed the following bankruptcy case as joint debtors: chapter 13, case number 97-33399. Finally, debtor has filed the following chapter 13 cases individually: 1) 02-67081; and 2) 03-32997 (the present case).
Discussion and Conclusions of Law.
The court finds no reason to grant Walker's motion to dismiss the case at this time and will give debtor an opportunity to propose a chapter 13 plan. If the case is ultimately dismissed before debtor completes a plan, it will be dismissed with prejudice at that time.
The court will treat Walker's motion to allow the foreclosure to stand as a motion for relief from the automatic stay under 11 U.S.C. § 362(d).
According to Walker's motion, debtor's real property carries a first deed of trust with a balance in excess of $157,064.56. Walker's bid on the property at the foreclosure sale was in the amount of $135,000.00, a sum that may have been the high bid. The first mortgage holder agreed to a payoff amount of $91,461.21 at the foreclosure sale. If the sale is not allowed to stand the first mortgage holder will demand a $110,000.00 payoff at the next sale. If this occurs, Walker will suffer a loss of about $20,000.00 and will be unable to recoup his loan amount based on the current tax assessment of only $126,100.00 and fair market value of $140,000.00.
Debtor filed no response to the motion and did not attend the hearing on the motion to dismiss. Based on the allegations in Walker's motion, which are deemed admitted based on debtor's failure to respond, the court concludes that debtor has no equity in this property and that relief from the stay is warranted.
Relief from the automatic stay may be granted to a creditor for a number of reasons set out in § 362(d) of the Bankruptcy Code. A court may grant relief from stay "for cause" where a party was not adequately protected or the debtor had no equity in the property and it was not necessary for debtor's reorganization. 11 U.S.C. § 362(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 . . .
11 U.S.C. § 362(d).
The court finds that in light of debtor's (and her husband's) filing history, and the other circumstances of the case, relief from stay in the instant case is warranted. Annulment of the stay is not warranted, as Walker has requested. The first lien holder did not request that the stay be annulled and the court will not grant such extraordinary relief for the second mortgage holder.
The court makes no determination as to whether the foreclosure sale on March 25, 2003, was valid. However, debtor will be permitted to continue in this bankruptcy case, and the show cause will be dismissed. In the event the case is ultimately dismissed, the court will consider a dismissal with prejudice.