Opinion
Case No. 07-10008.
June 27, 2007
ORDER DENYING MOTION FOR RECONSIDERATION
Debtor, Wendy Jane Titelman, pro se, seeks in her Motion for Reconsideration relief from the judgement and order of this Court under Fed.R.Civ.P. 60(b), made applicable by Fed.R.Bankr.P. 9024. (Doc. 30). This Court's prior Order alters important aspects of the automatic stay as it relates to certain domestic relations litigation currently pending in Cobb County, Georgia Superior Court involving these parties. (Doc. 28). For the reasons that follow, the Motion for Reconsideration will be denied.
The Debtor's Motion is entitled "Motion For Reconsideration Of Order Dated May 7, 2007, Conditioning Automatic Stay On Motion For Relief From Automatic Stay And Motion For New Trial" ("Motion for Reconsideration") (Doc. 30).
PROCEDURAL HISTORY
The issue before the Court arises from a motion for relief from the automatic stay ("Motion for Relief") filed by Andrew Titelman, Debtor's ex-spouse. See Doc. 22. The Debtor filed a response to the Motion for Relief and the matter was set for a May 7, 2007 hearing. The Debtor did not appear at her hearing, but Mr. Titelman did, after hiring an Ohio attorney to represent him and traveling to Cincinnati from Georgia. The hearing went forward without the Debtor. After carefully reviewing all of the pleadings and hearing arguments presented by Mr. Titelman's counsel, the Court entered an order ("Relief Order") conditioning the automatic stay which the Debtor in this proceeding seeks to overturn. See Doc. 28.
MOTION FOR RECONSIDERATION
By her Motion for Reconsideration, the Debtor seeks to vacate the Relief Order and have the entire matter reset for hearing. The Debtor contends that such relief is warranted because she did not receive notice of the May 7, 2007 hearing until several hours after it concluded.
NOTICE OF THE MAY 7, 2007 HEARING
The Motion for Relief was filed on April 6, 2007. The Debtor filed a response on April 26, 2007. See Doc. 24. Pursuant to 11 U.S.C. § 362(e)(1), the Court set a hearing to resolve the parties' dispute on May 7, 2007. Notice of the May 7, 2007 hearing was issued on April 27, 2007, and served on the Debtor and the Movant's attorney by first class mail on April 29, 2007. See Doc. 25.
DEBTOR'S EFFORTS TO COLLECT HER MAIL
At the time that the hearing notice was served, the Debtor's address of record was 3608 Eastern Avenue, Cincinnati, Ohio. According to the Motion for Reconsideration, the Debtor was in the process of moving from her Eastern Avenue address beginning on April 30, 2007. Also, according to the Debtor's motion, on May 3, 2007, she retrieved her mail from Eastern Avenue, but did not find the hearing notice. The Debtor also claims not to have collected her mail from her Eastern Avenue address until May 7, 2007, at 4:00 p.m. It was then, according to the Debtor, that she first discovered the notice of the hearing set for May 7, 2007, at 11:00 a.m. Debtor has never filed an official notice of change of address with the Clerk as required by Fed.R.Bankr.P. 4002.
LAW ANALYSIS
The Motion for Reconsideration is predicated upon Fed.R.Civ.P. 60(b), made applicable by Fed.R.Bankr.P. 9024.
The Debtor alternatively predicates the Motion for Reconsideration on Fed.R.Civ.P. 59, made applicable pursuant to Fed.R.Bankr.P. 9023. To prevail under Rule 59(e), the Debtor must demonstrate: (1) that the May 7, 2007 order was the result of a manifest error of fact or law; or (2) the existence of newly discovered evidence. See In re Wilson, 349 B.R. 831, 834 (Bankr. D. Idaho 2006). The Debtor has not alleged any of the foregoing.
Where Rule 60(b) is invoked to set aside a default judgment, a trial court is directed to consider three equitable factors derived from Fed.R.Civ.P. 55 jurisprudence as to "good cause" for setting aside default entries: (1) whether plaintiff will be prejudiced if the judgment is vacated; (2) whether the defendant had a meritorious defense; and (3) whether culpable conduct of the defendant led to the default. United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 1983). In addition to considering the equitable factors enumerated in United Coin Meter, the court must also find that one of the specific requirements of Rule 60(b) is met.
In re Geberegeorgis, 310 B.R. 61, 67 (B.A.P. 6th Cir. 2004).
The three part test articulated in Gebereoeorgis has been applied by a bankruptcy court in the context of a motion for relief from stay in In re Wilson, 399 B.R 831 (Bankr. D. Idaho 2006). The Wilson court granted relief from stay when the debtor failed to respond. Thereafter, the debtor filed a motion to vacate the order contending that he did not know about the motion prior to the response deadline because he had failed to check his mail for several days. In denying the motion to vacate, the court in Wilson reasoned as follows:
There are only two differences between Wilson and the instant case. First, the Debtor filed a timely response to the Motion for Relief. Second, a hearing was held in the instant case. The Court views these as distinctions without a difference. In both cases there was a default. It simply occurred at a different juncture in the proceeding.
First, Debtor's own culpable conduct (i.e., his unjustified failure to retrieve his mail from the mailbox) led to his delayed knowledge of the filing of Citizen's motion. Second, Debtor does not offer any potential meritorious defense to the motion. . . . Debtor cannot demonstrate, if the order for stay relief were vacated, how he could successfully oppose its reentry after further proceedings. Finally . . . a potential for prejudice exists. Citizens has incurred expenses associated with entry of the stay relief order and repossession of the vehicle which Debtor has not offered to reimburse.
Wilson, 349 B.R. at 835. Applying the standards set forth in Geberegeorgis and Wilson to the present facts, we reach a similar result.
1. Debtor's Culpability
The Debtor's own culpable conduct led to the default. The only reason the Debtor did not know about the May 7, 2007 hearing prior to its occurrence was, by her own admission, because she did not check her mail on May 4th, May 5th or May 6th.
The hearing notice was served by first class mail on Sunday April 29, 2007. First class mail requires one to three days for delivery. See http://pe.usps.com/text/dmm100/choosing.htm. Allowing for the full three days for delivery, the notice of the hearing should have been received on May 3, 2007. Accordingly, had the Debtor checked her mail at the old address she may have known about the hearing as early as May 4th or May 5th, well in time to attend. Because she did not, she is responsible for her default.
Because the Court serves all mail through the Bankruptcy Noticing Center, all notices are mailed from Virginia.
The Court did everything it could to give the Debtor as much notice as possible. Section 362(e)(1) requires courts to set a hearing within thirty days of the filing of a motion for relief from stay. The Motion for Relief was filed on April 6, 2007. A hearing is not set until a response is filed. Because the Debtor filed her response on April 26, 2007, being the last day to file a timely response, the Court had only ten days to set a hearing. On April 27, 2007, the Court discovered the Debtor's response and immediately set the matter for hearing on May 7, 2007. The Court could not have acted more quickly to discover the response or to set the hearing. Moreover, by setting the hearing for May 7, 2007, the Court gave the Debtor as much time to prepare for the hearing that § 362(e)(1) permits.
Those who seek bankruptcy relief cannot simply bury their heads in the sand, but must remain vigilant in order to protect their rights. Given that the Debtor was relocating her residence in the middle of the proceedings, she should have taken extra precautions to watch for notice of the impending hearing related to the Motion for Relief. Debtor's failure to do so was not explained. These facts, taken together with Debtor's litigious nature and her pattern of non-compliance with the orders of the Georgia courts, leads this Court to the believe that she was seeking to avoid receiving notice of the hearing on the Motion for Relief, intentionally, or at the very least, that she was seeking to manufacture an excuse for purposes of delaying the proceedings further.
2. Meritorious Defense
As noted, Mr. Titelman seeks relief from stay to continue prosecuting contempt proceedings pending in state court against the Debtor which were suspended by the bankruptcy filing. Specifically, Mr. Titelman has two motions pending in state court. The first, a Motion For Clarification Of Final Judgment And Decree ("Motion for Clarification") asks the state court to interpret the parties' divorce decree to determine that Mr. Titelman is the sole owner of a rental property held by the parties during their marriage. The second is an Application For Contempt Citation that seeks to have the state court hold the Debtor in contempt for her alleged failure to comply with the terms of the divorce decree and a January 30, 2006 contempt order entered against her.
The Debtor's response to the Motion for Relief failed to state any defense, let alone a meritorious defense. See Doc. 24. The response states: "Now Comes Wendy Jane Titelman, Debtor, and hereby objects to relief from stay." The Debtor's Motion for Reconsideration simply asks the Court "to set a new trial on [the Motion for Relief] until such time that the Court determines [that the January 30, 2006 contempt order is] void for lack of due process or the double jeopardy violations." (Emphasis added.) These are not meritorious defenses to the Motion for Relief.
The Rooker-Feldman doctrine prohibits lower federal courts from exercising jurisdiction over a collateral attack upon a state court judgment. Lance v. Dennis, 126 S.Ct. 1198, 1199 (2006). Therefore, a collateral attack upon a state court judgment is not a meritorious defense to a motion for relief from stay. See In re Betzold, 316 B.R. 906 (Bankr. N.D. Ill. 2004) (granting relief from stay to continue arbitration proceedings, notwithstanding debtor's contention that arbitration proceedings were irretrievably tainted, where Rooker-Feldman doctrine precluded bankruptcy court from revisiting issues previously decided by arbitrator).
When termination of the automatic stay is pursued to continue state court divorce proceedings to determine the parties' property rights, bankruptcy courts are obliged to grant it. See In re White, 851 F.2d 170, 173 (6th Cir. 1988) ("the bankruptcy court properly deferred to the divorce court's greater expertise on the question of what property belongs to whom"). Relief from stay is also appropriate to continue with criminal contempt proceedings. In re Lincoln, 264 B.R. 370, 373-74 (Bankr. E.D. Pa. 2001). As to civil contempt, this Court conditioned the stay to permit Mr. Titelman to liquidate, but not collect, such claims.
Mr. Titelman has filed a complaint to determine the dischargeability of the marital obligations. The state court proceedings will serve to liquidate the marital obligations. Thereafter, this Court will rule on the dischargeability claims still pending before it.
3. Prejudice To Mr. Titelman
If the Motion for Reconsideration were granted, Mr. Titelman would be greatly prejudiced. He lives in Georgia, where the parties resided during their marriage. Unlike the Debtor, Mr. Titelman appeared for the May 7, 2007 hearing. In the process, he incurred travel expenses in the amount of $835.60. Moreover, he has incurred legal expenses in the amount of $1,387 related to: (1) preparation for the May 7, 2007 hearing; (2) attendance at the May 7, 2007 hearing; and (3) opposition to the Motion for Reconsideration.
A review of the docket in this case leads this Court to believe that the Debtor is using the bankruptcy process abusively to frustrate Mr. Titelman's state court claims. Mr. Titelman is by far the largest creditor in this case. The Debtor's schedules reflect no secured debt and general unsecured debt in the amount of $191,158.07. Mr. Titelman is scheduled as holding a disputed unsecured claim in the amount of $158,303.97. Accordingly, Mr. Titelman accounts for almost 83% of the Debtor's general unsecured debt. Another $12,673, or 6.6%, of the general unsecured debt appears to be of inconsequential value to the Debtor given that it has been "charged off" according to Schedule F.
Finally, this case was filed on January 3, 2007. Two days later, the Debtor filed an "emergency motion" to stay a January 8, 2006 hearing in state court regarding Mr. Titelman's Motion for Clarification and Application for Contempt. The Court concludes from these facts that this bankruptcy filing was intended only to thwart an attempt by Mr. Titelman to pursue legitimate state law claims.
4. Weighing of Geberegeorgis Factors
Based upon the foregoing, the Court concludes that none of the Geberegeorgis factors favor the Debtor. Her failure to attend the May 7, 2007 hearing was due to her own failure to monitor her mail and/or her bankruptcy docket. She has failed to advance a meritorious defense to the Motion for Relief, simply hoping that this Court will "void" a state court judgment in violation of the Rooker-Feldman doctrine. The Court finds that Mr. Titelman would be greatly prejudiced if the Court were to grant the Motion for Reconsideration, incurring further expenses and attorney's fees in response to what might be perceived as an abusive use of the bankruptcy system.
CONCLUSION
For the foregoing reasons, the Motion for Reconsideration is hereby DENIED. IT IS SO ORDERED.
Even if the Geberegeorgis factors weighed in favor of vacating the Relief Order, it is questionable whether the Motion for Relief could be reset for hearing in light of 11 U.S.C. § 362(e)(2), which provides in relevant part:
[I]n a case under chapter 7 . . . in which the debtor is an individual, the stay under subsection (a) shall terminate on the date that is 60 days after a request is made by a party in interest under subsection (d), unless —
(A) a final decision is rendered by the court during the 60-day period beginning on the date of the request; or
(B) such 60-day period is extended —
(i) by agreement of all parties in interest; or
(ii) by the court for such specific period of time as the court finds is required for good cause, as described in findings made by the court.
The Motion for Relief was filed on April 6, 2007. The sixty day period expired on June 5, 2007, without an agreement to extend or findings by the Court.