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Vitalich v. Bank of New York Mellon

United States District Court, N.D. California, San Jose Division

August 10, 2016

JOHN VITALICH, Appellant,
v.
THE BANK OF NEW YORK MELLON, fka BANK OF NEW YORK, Appellee.

          ORDER AFFIRMING BANKRUPTCY COURT’S ORDER ON MOTION FOR AN ORDER CONFIRMING NO AUTOMATIC STAY IN EFFECT

          BETH LABSON FREEMAN United States District Judge.

         Debtor/Appellant John Vitalich, proceeding pro se, has appealed an order of the Bankruptcy Court holding that the automatic stay terminated on December 6, 2015 with respect to the interest of Appellee BNY Mellon[1] in certain property of the bankruptcy estate, specifically, a parcel of real property located in Seaside, California (“the Seaside property”). The appeal turns on the question of whether the Bankruptcy Court properly applied 11 U.S.C. § 362(c)(3)(A) to terminate the automatic stay not only as to the debtor and the debtor’s property, but also as to the property of the bankruptcy estate. For the reasons discussed below, the Bankruptcy Court’s order is AFFIRMED.

         I. BACKGROUND

         Vitalich has filed serial bankruptcy cases and adversary proceedings which have prevented BNY Mellon from foreclosing on the Seaside property for more than eight years. Vitalich filed the Chapter 11 petition in the current case on November 6, 2015. Petition, Appellee’s Suppl. Appx. Tab BDE #1, ECF 27-2.[2] On December 1, 2015, Vitalich filed a “Motion for an Order to Extend or Impose the Automatic Stay in Pursuant to 11 U.S.C. § 362(c)(3) [or (4)], ” stating that absent further order of the Bankruptcy Court, the automatic stay would terminate on December 6, 2015. Motion for an Order to Extend or Impose the Automatic Stay, Appellee’s Suppl. Appx. Tab BDE #21, ECF 27-4. The statute referenced in the caption of Vitalich’s motion, 11 U.S.C. § 362(c)(3), provides in relevant part that when a debtor files a second bankruptcy case within one year after dismissal of an earlier bankruptcy case, the automatic stay “shall terminate with respect to the debtor on the 30th day after the filing of the later case.” 11 U.S.C. § 362(c)(3)(A). Upon the motion of any party in interest, and if notice is given and a hearing held before expiration of the thirty-day period, the court may extend the stay as to any or all creditors if the moving party demonstrates that the filing of the later case is in good faith as to the creditors to be stayed. 11 U.S.C. § 362(c)(3)(B).[3]

         Vitalich stated in his motion before the Bankruptcy Court that he had filed a prior Chapter 11 case in August 2015 which had been dismissed in September 2015, less than one year before his filing of the current Chapter 11 case. Motion for an Order to Extend or Impose the Automatic Stay, Appellee’s Suppl. Appx. Tab BDE #21, ECF 27-4. Vitalich stated that as a result of the prior bankruptcy case, the automatic stay in the present case would terminate on December 6, 2016. Id. He requested that the Bankruptcy Court extend or impose the automatic stay as to all creditors. Id. The Bankruptcy Court denied Vitalich’s motion and his subsequent motion for reconsideration of that ruling. BR Docket, Appellee’s Suppl. Appx. Tab BDE DKT, ECF 27-1. Both the initial ruling and the denial of reconsideration were made orally on the record without written order. Id.

         On December 8, 2015, BNY Mellon filed a motion seeking confirmation that under § 362(c)(3)(A) the automatic stay had terminated on December 6, 2015, thirty days after the filing of the present bankruptcy case. Motion for an Order Stating no Automatic Stay in Effect or, Alternatively, for Relief from Automatic Stay and Sanctions against the Debtor, Appellee’s Suppl. Appx. Tab BDE #30, ECF 27-6. BNY Mellon alternatively requested relief from the automatic stay. Id.

         On December 31, 2015, the Bankruptcy Court issued the written order that is the subject of the present appeal, titled “Order on Motion for an Order Confirming No Automatic Stay in Effect.” Order on Motion for an Order Confirming No Automatic Stay in Effect, Appellee’s Suppl. Appx. Tab BDE #39, ECF 27-7. In that order the Bankruptcy Court held that “the automatic stay provisions of 11 U.S.C. § 362 expired on 12/6/15” with respect to BNY Mellon’s interest in the Seaside property, and that BNY Mellon “may complete its foreclosure of said real property and proceed with post-foreclosure remedies, including any unlawful detainer action.” Id. The Bankruptcy Court did not address BNY Mellon’s alternative request for relief from the automatic stay. Id.

         Vitalich timely appealed the Bankruptcy Court’s order and elected to have the appeal heard by the district court rather than the Bankruptcy Appellate Panel. Notice of Appeal and Statement of Election, Appellee’s Suppl. Appx. Tab BDE #43, ECF 27-8. Both the Bankruptcy Court and this Court denied Vitalich’s motions for a stay pending appeal. Order on Debtor’s Motion for Stay Pending an Appeal, Appellee’s Suppl. Appx. Tab BDE #77, ECF 27-10; Order Denying Appellant’s Emergency Motion for Stay Pending Appeal, ECF 23. It is unclear whether BNY Mellon has foreclosed on the Seaside property or otherwise acted to enforce its interest in the property. The bankruptcy case is ongoing.

         II.ISSUE PRESENTED

         The single issue on appeal is whether the Bankruptcy Court erred as a matter of law in holding that the automatic stay expired as to the Seaside property, which is property of the bankruptcy estate, thirty days after the present bankruptcy case was filed. While Vitalich’s prior filings in the Bankruptcy Court reflected a belief that § 362(c)(3)(A) applied to the Seaside property, he now takes the position that § 362(c)(3)(A) terminates the automatic stay only as to the debtor and debtor’s property but not as to property of the estate.[4]

         III. JURISDICTION

         This Court has jurisdiction to hear appeals “from final judgments, orders, and decrees” of bankruptcy courts. 28 U.S.C. § 158(a)(1). The Ninth Circuit has “adopted a pragmatic approach to finality in bankruptcy . . . [that] emphasizes the need for immediate review, rather than whether the order is technically interlocutory.” In re Rosson, 545 F.3d 764, 769 (9th Cir. 2008) (internal quotation marks and citation omitted) (alterations in original). “[A] bankruptcy court order is considered to be final and thus appealable where it 1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed.” Id. (internal quotation marks and citation omitted) (alterations in original).

         Neither party addresses the issue of whether the Bankruptcy Court’s Order on Motion for an Order Confirming No Automatic Stay in Effect is a final, appealable order, although BNY Mellon asserts conclusorily that this Court has jurisdiction over the appeal pursuant to 28 U.S.C. § 158. The Court has been unable to discover a case specifically addressing the appealability of a bankruptcy court’s order confirming termination of the automatic stay under § 362(c)(3)(A). Unpublished decisions of the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) have treated such orders as appealable without discussion. See, e.g, In re Genaro, Nos. AK-06-1358-ZRB, 06-00198, 2007 WL 7535064 (9th Cir. BAP 2007). A published decision of the Ninth Circuit BAP addressed the proper interpretation of § 362(c)(3)(A) on appeal, but in the context of an appeal from the bankruptcy court’s order denying the debtor’s motion for damages for violation of the automatic stay, not in the context of a freestanding order confirming termination of the automatic stay. See In re Reswick, 446 B.R. 362 (9th Cir. BAP 2011).

         This Court concludes that an order confirming termination of the automatic stay under § 362(c)(3)(A) is final and appealable, as such an order “resolves and seriously affects substantive rights” and “finally determines the discrete issue to which it is addressed.” See Rosson, 545 F.3d at 769. This conclusion is consistent with the cases cited above, and with Ninth Circuit cases holding that “[o]rders granting or denying relief from the automatic stay are deemed to be final orders.” In re Nat’l Envtl. Waste Corp., 129 F.3d 1052, 1054 (9th Cir. 1997). While the Bankruptcy Court’s order in this case did not grant or deny relief from the automatic stay, but rather confirmed its termination as a matter of law, the issues are so closely related that this Court is of the view that the Ninth Circuit likewise would conclude that orders confirming termination of the automatic stay under § 362(c)(3)(A) are final and appealable.

         IV. ...


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