6 ABR 211

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

In re:
DONNA MARIE BARR,

Debtor.

Case No. A99-00171-DMD
Chapter 13

ORDER DISMISSING CHAPTER 13 CASE, ANNULLING THE
STAY AND VESTING PROPERTY IN THE STATE OF ALASKA

The State of Alaska's motion for relief from stay, nunc pro tunc, and its motion to dismiss duly came before the court for hearing on September 2, 1999. Just prior to the hearing, the debtor filed her own request for dismissal. The parties have briefed the issues regarding dismissal and the effect of dismissal. After reviewing the briefs and hearing the oral argument of counsel, IT IS ORDERED:

1. This case is dismissed, subject, however, to this court's retention of jurisdiction over the State of Alaska's motion for relief from stay and determination of the effect of dismissal under 11 U.S.C. § 349. The Chapter 13 Trustee, Larry Compton is authorized to return to the debtor any funds collected from the debtor, after payment of trustee's fees and expenses and bankruptcy clerk's fees, if any;

2. The automatic stay of 11 U.S.C. § 362(a) is annulled as to the State of Alaska, and its motion for nunc pro tunc relief from stay is granted, nunc pro tunc, to March 1, 1999;

3. The effect of dismissal of this action will be to vest title to the following described real property with the State of Alaska:

Description: Lot 7-A, Block 2, Vanover Subdivision, according to Plat No. 77-55, filed in the Anchorage Recording District, Third Judicial District, State of Alaska.

6 ABR 212

Title to this property will not revest in the debtor.

Discussion

This is Ms. Barr's third chapter 13 petition in the last three years. All three petitions involved her efforts to save income property, a twelve-plex financed by the State of Alaska, from foreclosure. Ms. Barr's first petition was filed in February of 1997 before Judge Ross.⁽¹⁾ Ms. Barr defaulted on her payments to the trustee and the case was dismissed in December of 1997.⁽²⁾ Three months later, Ms. Barr filed her second chapter 13 petition.⁽³⁾ A plan to sell the State's twelve-plex was confirmed on July 6, 1998.⁽⁴⁾ No sale occurred and the debtor again defaulted on her plan payments. Her second chapter 13 case was dismissed on December 10, 1998.⁽⁵⁾

The State scheduled a foreclosure sale for February 12, 1999. Ms. Barr filed an action in State Superior Court against the State. On February 11, 1999, the State Superior Court scheduled a hearing on the debtor's motion for a temporary restraining order. Prior to the commencement of the hearing, the State and Ms. Barr entered into a settlement agreement regarding the State's foreclosure sale. The conditions of the agreement pertinent to the matter as stated in the Affidavit of Mary Ellen Beardsley are as follows:

a. The State's foreclosure sale scheduled for February 12, 1999, would be postponed to February 19, 1999, 6 ABR 213 to allow Ms. Barr time to determine if her refinancing loan was available from the lender.

b. If the refinancing loan was still available to Ms. Barr, then the State would further postpone the sale from February 19th to March 2, 1999.

c. Ms. Barr was required to close her refinancing loan by the end of business on February 26, 1999.

d. Ms. Barr was having difficulty obtaining sufficient funds to close the loan. To assist her with the closing, the State agreed to reduce its total payoff by as much as $16,000.00.

e. If Ms. Barr failed to close the loan by February 26th, the State would be permitted to proceed with the foreclosure sale on March 2, 1999, without further interference from Ms. Barr. In particular, the court stated that the debtor would not be able to file another TRO motion to prevent the sale if she failed to close the loan.⁽⁶⁾

Ms. Barr's loan did not close on February 26, 1999. She filed the instant chapter 13 petition on March 1, 1999. The State conducted a foreclosure sale on March 2, 1999, unaware of Ms. Barr's third chapter 13 filing. The State purchased the property with an offset bid of $251,626.00.

Upon discovering that Ms. Barr had, again, filed a chapter 13 petition, the State moved for relief from stay nunc pro tunc to March 1, 1999, and to dismiss. A hearing was held on these motions on April 7, 1999.⁽⁷⁾ At that time, the debtor indicated she had a firm sale for the twelve-plex for the sum of $500,000.00. The State's motion to dismiss and motion for relief from stay nunc pro tunc were 6 ABR 214 continued without date. An order confirming sale of the twelve-plex for $500,000.00 was entered on May 3, 1999.⁽⁸⁾ The sale failed. After the closing date was extended, and no closing occurred, the State brought its motion for relief from stay and for dismissal back on for hearing on September 2, 1999. Just prior to the hearing, the debtor requested voluntary dismissal.

By seeking dismissal of the case under 11 U.S.C. § 1307(b), Barr attempts a preemptive strike against the State's motion to retroactively terminate the stay. Barr's right to dismiss is unequivocal, and absolute.⁽⁹⁾ While she has a right to dismiss, the court retains jurisdiction to determine pending and ancillary matters,⁽¹⁰⁾ as well as the effect of dismissal.⁽¹¹⁾

The State's pending motion for relief from stay seeks relief retroactive to March 1, 1999. Violations of the stay are void.⁽¹²⁾ 11 U.S.C. § 362(d) gives the court wide discretion to grant retroactive relief from the stay, however.⁽¹³⁾ Here, retroactive relief from stay is appropriate. After two unsuccessful chapter 13s, and 6 ABR 215 an attempted restraining order in state court, the debtor entered into a settlement agreement with the State. She violated that agreement by filing her third bankruptcy petition, a filing that has the earmarks of bad faith. Further, after obtaining yet another six months of delay in her third chapter 13 case, nothing has materialized. No plan has been confirmed, nor has the debtor sold or obtained refinancing for the twelve-plex. Because of Ms. Barr's legal maneuverings, the State has already had to wait three years to foreclose on its collateral. There is no basis for further delay. To force the State to again notice a foreclosure sale would be unwarranted, burdensome to the State, and contrary to the parties' settlement agreement. Its request for retroactive relief from stay will be granted.

Finally, title to the property will revest in the State, pursuant to 11 U.S.C. § 349(b) which states, in part:

b. Unless the court, for cause, orders otherwise, a dismissal of a case other than under section 742 of this title -

. . . .
(3) revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case under this title.

Here, there is cause for revesting title to the twelve-plex, on dismissal of this case, in the State of Alaska. Ms. Barr has engaged in a string of lengthy, unsuccessful chapter 13's, along with state court litigation, in an effort to thwart the State's foreclosure efforts. Ms. Barr has also violated her settlement agreement with the State, which would have permitted the State's foreclosure on March 2nd to go forward unimpeded.

6 ABR 216 Her conduct is ample cause for revesting the property in the State. To hold otherwise would simply reward her vexatious conduct.

Accordingly, although Ms. Barr is entitled to dismissal of this case, she will not retain title to the twelve-plex. For the reasons stated above, the State's motion for nunc pro tunc relief from stay will be granted, and title to the twelve-plex will vest in the State, rather than Ms. Barr, on dismissal.

DATED: October 15, 1999.

1. 6 ABR 212 Case No. A97-00116-HAR.

2. 6 ABR 212 Case No. A97-00116-HAR. Id., Docket Entry No. 122.

3. 6 ABR 212 Case No. A97-00116-HAR. Case No. A98-00181-DMD.

4. 6 ABR 212 Case No. A97-00116-HAR. Id., Docket Entry No. 67.

5. 6 ABR 212 Case No. A97-00116-HAR. Id., Docket Entry No. 78.

6. 6 ABR 213 Case No. A97-00116-HAR. Aff. of Mary Ellen Beardsley, Docket Entry No. 20, Case No. A99-00171-DMD.

7. 6 ABR 213 Case No. A97-00116-HAR. No opposition to those motions was filed by the debtor prior to the hearings or at any time in these proceedings.

8. 6 ABR 214 Case No. A97-00116-HAR. Docket Entry No. 44, Case No. A99-00171-DMD.

9. 6 ABR 214 Case No. A97-00116-HAR. Nash v. Kester (In re Nash), 765 F.2d 1410 (9th Cir. 1985).

10. 6 ABR 214 Case No. A97-00116-HAR. "The bankruptcy court has jurisdiction to dispose of pending and ancillary matters after dismissal of the underlying bankruptcy case." Lawson v. Tilem (In re Lawson), 156 B.R. 43, 47 (B.A.P. 9th Cir. 1993); see also Porges v. Gruntal & Co., Inc. (In re Porges), 44 F.3d 159 (2nd Cir. 1995)(bankruptcy court retained jurisdiction over adversary proceeding even after chapter 13 debtor withdrew his bankruptcy petition); Davis v. Courington (In re Davis), 177 B.R. 907 (B.A.P. 9th Cir. 1995)(an action for wilful violation of the stay survives dismissal of the chapter 13 bankruptcy case); Citizens First Nat'l Bank v. Rumbold & Kuhn, Inc., 64 B.R. 790 (Bankr. C.D. Ill. 1986)(court retained jurisdiction to adjudicate rights to proceeds from sale of crops after dismissal of chapter 11 petition).

11. 6 ABR 214 Case No. A97-00116-HAR. 11 U.S.C. § 349(b).

12. 6 ABR 214 Case No. A97-00116-HAR. In re Nat'l Envtl. Waste Corp., 129 F.3d 1052, 1054 (9th Cir. 1997), cert. denied, ___ U.S. ___, 118 S.Ct. 2368 (1998), citing Schwartz v. United States (In re Schwartz), 954 F.2d 569, 571-72 (9th Cir. 1992).

13. 6 ABR 214 Case No. A97-00116-HAR. Schwartz, 954 F.2d at 572-73.