In re Michelle D. Tubman (U.S. Bankruptcy Ct., MD)

Filed March 26, 2007—Opinion by Judge Robert A. Gordon

Debtor, who had a Chapter 13 case dismissed within the preceding 1-year period, moved to extend the automatic stay in her current Chapter 13 case, after the expiration of the 30-day post-petition period. After an initial hearing, the Debtor filed a motion for declaratory judgment as to the extent of the termination of the stay under Section 362(c)(3)(A) and sought imposition of a stay under Section 105(a). A secured creditor, holder of a deed of trust on Debtor’s residence, objected to both motions, arguing that the automatic stay under Section 362(a) had expired in toto by operation of law. The Bankruptcy Court held that: (1) the automatic stay terminated by operation of law on the 30th day post-petition under Section 362(c)(3)(A), (2) an untimely filed motion cannot serve to reimpose the automatic stay under Section 362(c)(3)(B), (3) the termination of the stay under Section 362(c)(3)(A) was limited in scope and the stay, while terminating as to the Debtor, did not terminate as to property of the estate, and (4) the alternative relief requested by Debtor under Section 105(a) appeared unnecessary in light of the Court’s ruling.

The devision is available in PDF.

In Re: Marnitta L. King (King v. Wells Fargo Bank, N.A.) (U.S. Bankruptcy Court)

Filed March 20, 2007. Memorandum Opinion by Judge Thomas J. Catliota.

Marnitta L. King (the "Debtor") is a joint owner of the real property located at 5015 Cumberland Street, Capitol Heights, Maryland (the "Property"). Wells Fargo Bank, N.A. ("Wells Fargo") is a secured creditor by virtue of a promissory note, repayment of which is secured by a deed of trust duly recorded among the land records of Prince George's County. There was no dispute that both the note and the deed of trust were executed by the Debtor and the other joint owner (the "Codebtor").

The Debtor filed the instant bankruptcy case seeking relief under chapter 13 of the United States Bankruptcy Code (the "Code") on September 15, 2006, intending to stop a foreclosure sale of the Property scheduled for later that same day. The Debtor alerted Wells Fargo of the bankruptcy filing but Wells Fargo indicated that they would not stop the foreclosure sale because the Debtor had filed two previous bankruptcy cases within a one year period (both cases having been dismissed) and, consequently, there was no automatic stay by virtue of Section 362(c)(4)(A)(i) of the Code. The foreclosure sale was held, at which Wells Fargo was the successful bidder.

The Debtor subsequently filed a Motion to Set Aside Sell [sic], asserting that the foreclosure sale was held in violation of the codebtor stay of Section 1301(a) of the Code, which barred Wells Fargo from proceeding with a post-petition foreclosure sale even though the automatic stay did not arise as to the Debtor pursuant to Section 362(c)(4)(A)(i). Wells Fargo argued that the "vitality of the codebtor stay is at the mercy of the status of the automatic stay."

The Court held that the terms of Section 362(c)(4)(A) are unambiguous in that only the automatic stay of Section 362(a) is prevented from going into effect "when the factual predicate enumerated in Section 362(c)(4) exists. Section 362(c)(4)(A)(i) does not address the applicability of the codebtor stay that arises under Section 1301(a), and it certainly does not provide that the codebtor stay of Section 1301 does not come into effect if the circumstances of Section 362(c)(4) are met." Further, the Court found that, "Nowhere in Section 1301(a) is the codebtor stay limited, qualified, or effected by Section 362(c)(4)." The Court concluded that Wells Fargo's "foreclosure sale was in violation of the codebtor stay and is void."

This opinion is available in PDF.

Akzenta Paneele + Profile GmbH v. Unilin Flooring N.C. LLC (Maryland U.S.D.C.)

Decided December 12, 2006--Opinion by Judge William D. Quarles, Jr.

Patent-owner Akzenta filed suit against Unilin for infringing its patent. Akzenta later amended its complaint to allege infringement of a newly-issued continuation of the first patent. In answering the amended complaint, Defendant Unilin asserted unenforcability due to inequitable conduct as to the second patent and, allegedly for the first time, also as to the first patent. In its inequitable conduct defense, Unilin argued that Akzenta prosecuted the patents without disclosing information suggesting prior use, which would bear on patentability to the PTO.

Akzenta submitted both patents at issue to the PTO for reexamination and moved to stay the litigation pending reexamination of the patents. It also moved to strike portions of Unilin's answer to Akzenta's amended complaint.

The Court denied the stay based on a likelihood of prejudice to Unilin, given that no other factors weighed heavily in favor of or against granting a stay and Akzenta failed to demonstrate that it would suffer any hardship without one. Although Unilin should have sought leave of court to amend the answer as it did, the Court declined to strike any part of the amended answer given the close relationship between the two patents at issue and the Court’s broad discretion in granting leave to amend.

The full opinion is available in PDF.