United States District Court, N.D. Illinois, Eastern Division
In re TINA RICE-HARRIS, Debtor.
FIRST FEDERAL SAVINGS BANK, Appellee. TINA RICE-HARRIS, Appellant,
MEMORANDUM OPINION AND ORDER
Rice-Harris appeals the bankruptcy court's denial of her
motion to extend the thirty-day automatic stay authorized by
11 U.S.C. § 362(c)(3)(A). Doc. 1. The bankruptcy
court's ruling is affirmed.
following facts are not in dispute. Rice-Harris married
Matthew Harris in March 2013. Doc. 12-1 at 120. Approximately
a year earlier, Harris had purchased in fee simple a property
located at 1100 West Chestnut Street in Chicago (the
“Property”). Id. at 94. Harris financed
the purchase with a $680, 100 promissory note from First
Federal Savings Bank secured by the Property. Ibid.
September 2014, Harris executed a quitclaim deed,
transferring the Property to himself and Rice-Harris as
tenants by the entirety. Id. at 95, 122-24. When
Harris died, Rice-Harris became the sole owner of the
Property through the right of survivorship. Id. at
111. Rice-Harris continues to live on the Property, but
because she was not a signatory to the promissory note, she
has no personal financial obligation to First Federal.
Id. at 95; Doc. 12-2 at 35. On April 3, 2015, after
the note went into default, First Federal filed a foreclosure
suit in the Circuit Court of Cook County, Illinois. Doc. 12-1
at 95. Judgment against the Property, but not Rice-Harris
personally, entered in that case on October 27, 2016.
Ibid.; No. 17 B 2304 (Bankr. N.D. Ill.), Dkt. 17-1.
filed her first Chapter 13 petition on January 26, 2017-the
day the redemption period associated with the state court
foreclosure proceeding expired. Doc. 12-1 at 90, 113; Doc.
12-2 at 29; No. 17 B 2304 (Bankr. N.D. Ill.), Dkt. 1, Dkt. 17
at 5. On May 23, 2017, the bankruptcy court granted the
Chapter 13 trustee's motion to dismiss the case under 11
U.S.C. § 1307(c)(1) for Rice-Harris's
“unreasonable delay” in providing her creditors
with the required “business packet and statement of
financial affairs.” No. 17 B 2304 (Bankr. N.D. Ill.),
Dkts. 24, 30. On July 25, 2017, Rice-Harris filed her second
Chapter 13 petition, which is the subject of this appeal.
Doc. 12-1 at 8.
certain exceptions, filing a bankruptcy petition
“operates as a stay, applicable to all entities, of
… any act to … enforce against property of the
debtor any lien … [that] secures a claim that arose
before the commencement of the case.” 11 U.S.C. §
362(a)(5). Ordinarily, the stay remains in place for the
duration of the bankruptcy proceeding-that is, until the time
the case is closed or dismissed or a discharge is granted,
whichever comes first. See id. § 362(c)(2). The
Bankruptcy Code, however, limits the automatic stay's
length for certain categories of repeat filers. As relevant
here, when a debtor files a subsequent petition after having
a “case … pending within the preceding 1-year
period … dismissed, ” the automatic stay lasts
for only thirty days. Id. § 362(c)(3)(A);
see In re Paulino, 2014 WL 5358409, at *1 (Bankr.
S.D.N.Y. Oct. 20, 2014) (“§ 362(c)(3) of the
Bankruptcy Code provides that a debtor loses the protection
of the automatic stay after 30 days in a case filed within 12
months of the dismissal of an earlier proceeding.”).
The Code nevertheless permits a “party in interest,
” including the debtor, to move for an extension
“before the expiration of the 30-day period, ”
but “only if the party in interest 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);
see In re Roberts, 2015 WL 7257918, at *2 (D. Haw.
Nov. 16, 2015) (“The bankruptcy court may extend the
thirty-day stay if a party files a timely motion showing that
the second bankruptcy case was filed in good faith.”).
certain circumstances, the Code imposes a presumption,
rebuttable by “clear and convincing evidence to the
contrary, ” that the subsequent filing was not made in
good faith. 11 U.S.C. § 362(c)(3)(C). As relevant here,
the presumption applies in the case of a debtor whose
“previous case … was dismissed within …
[the preceding] 1-year period, after the debtor failed to
… file or amend the petition or other documents as
required by this title or the court without substantial
excuse.” Id. § 362(c)(3)(C)(II)(aa);
see Marshall v. Blake, __ F.3d __, 2018 WL 1417550,
at *13 (7th Cir. Mar. 22, 2018) (“Blake filed a
previous bankruptcy case that was dismissed within one year
of the filing of this matter due to Blake's failure to
make plan payments. As a result, this case was presumed to
have been filed in bad faith. To rebut this presumption and
extend the automatic bankruptcy stay at the outset of this
case, Blake had to provide clear and convincing evidence that
this case was filed in good faith.”) (citation and
internal quotation marks omitted). The presumption also
applies if “there has not been a substantial change in
the financial or personal affairs of the debtor since the
dismissal of the next most previous case.” 11 U.S.C.
§ 362(c)(3)(C)(III); see In re Gibas, 543 B.R.
570, 596-97 (Bankr. E.D. Wis. 2016) (discussing the statutory
27, 2017, two days after filing her second Chapter 13
petition, Rice-Harris moved under § 362(c)(3)(B) to
extend the thirty-day automatic stay. Doc. 12-1 at 9, 87-92.
In her affidavit accompanying the motion, Rice-Harris averred
that she “intend[ed] to put the Property on the Market
in April 2018 and expect[ed] to close on a sale prior to the
end of June 2018. … [T]he net proceeds from the sale
of the Property will be in excess of the claim held by First
Federal Savings Bank.” Id. at 92. Rice-Harris
added that this second Chapter 13 proceeding “was filed
in good faith. I have retained different bankruptcy counsel
from [the earlier case], and have put forth a plan which I
believe will repay my creditors in an appropriate and
responsible manner.” Ibid. After First Federal
objected to Rice-Harris's motion, id. at 94-102,
the bankruptcy court held hearings on August 3 and August 10,
Doc. 12-2 at 1, 13.
August 10 hearing, the bankruptcy court orally denied
Rice-Harris's motion for two independent reasons.
Id. at 22. First, the court held that because
Rice-Harris's right of redemption under state law had
expired, she no longer had an ownership interest in the
Property, which was therefore no longer property of the
bankruptcy estate. Id. at 20-21. Second, after
noting that the § 362(c)(3)(C) presumption (that her
second petition was not filed in good faith) applied
“as a result of the dismissal of [her] prior Chapter 13
case” for failure to provide creditors with required
documents, the court held that Rice-Harris had not
“rebutted that presumption by clear and convincing
evidence.” Id. at 23. The court also held that
there had been no “change … in the financial or
personal affairs of the debtor since the dismissal of the
prior case … sufficient to rebut the
presumption.” Ibid. The court, however,
permitted Rice-Harris to file additional briefing on the
question whether she still had a cognizable interest in the
Property despite the expiration of the redemption period.
Id. at 25-26.
third and final hearing on August 24, the bankruptcy court
first held, in light of Colon v. Option One Mortgage
Corp., 319 F.3d 912 (7th Cir. 2003), that it had
incorrectly concluded at the August 10 hearing that
Rice-Harris did not have an ownership interest in the
Property. Doc. 12-2 at 28-30. The court nevertheless
reaffirmed its earlier holding that Rice-Harris had failed to
rebut the § 362(c)(3)(C) presumption by clear and
convincing evidence. Id. at 32-34. Relying on In
re Love, 957 F.2d 1350 (7th Cir. 1992), the court looked
to the “totality of the circumstances”
surrounding her second bankruptcy petition. Id. at
31. The court considered these factors from Love:
“the timing of the petition, how the debt arose, the
debtor's motive in filing the petition, and how the
debtor's actions affect its creditors.”
Ibid. The court also considered the following
additional factors: “why the debtor's prior case
was dismissed, including the debtor's conduct in that
case, the likelihood that the debtor will have a steady