The opinion of the court was delivered by: Arthur J. Schwab United States District Judge
Appellant Dawna Rochelle Biggs, the debtor in a Chapter 7 bankruptcy proceeding, appeals the November 14, 2006 Order of the United States Bankruptcy Court for the Western District of Pennsylvania granting creditor Appellee Housing Authority of the City of Pittsburgh's ("HACP") motion for relief from the automatic stay for bankruptcy, 11 U.S.C. § 362, thus permitting HACP to commence eviction proceedings in state court against Ms. Biggs based upon her previous failure to keep up with her rent payments and to pay accumulated arrearage. After careful consideration of the thorough and well advocated briefs in support and in opposition to reversal of the decision, this Court holds that relief from the automatic stay in this case and any eviction proceedings in state court related to her bankruptcy proceedings and discharge of her debt are precluded by section 525(a) of the Bankruptcy Code, 11 U.S.C. § 525(a), and will therefore vacate the Order of November 14, 2006.
District courts have jurisdiction over appeals from the final orders of the Bankruptcy Court pursuant to 28 U.S.C. § 158(a). Orders lifting an automatic stay and, often, orders denying motions to lift automatic stays, are considered final and appealable orders. See In re Graves, 33 F.3d 242, 246 n. 9 (3d Cir. 1994); United States v. Pelullo, 178 F.3d 196, 200 (3d Cir. 1996); In re CGE Shattuck, LLC, 255 B.R. 334 (Bankr.Panel 1st Cir. 2000) (grant or denial of motion for relief from automatic stay, being analogous to order lifting or refusing to lift preliminary injunction, is a final order, from which appeal will lie) (collecting cases).
The standard of appellate review is the same for the district court and for the Court of Appeals, both of which review findings of fact for clear error and exercise plenary review over questions of law. In re Mintze, 434 F.3d 222, 227-28 (3d Cir. 2006); In re Schick, 418 F.3d 321, 323 (3d Cir. 2005). In reviewing decisions denying relief from the automatic stay provisions of the Bankruptcy Code, it is well-established that courts apply the abuse of discretion standard. Baldino v. Wilson, 116 F.3d 87, 89 (3d Cir. 1997). An abuse of discretion exists whenever a judicial action is "arbitrary, fanciful, or clearly unreasonable," Stecyk v. Bell Helicopter Textron, Inc., 295 F.3d 408 (3d Cir. 2002), or when improper legal standards, criteria, or procedures are used. Stuebben v. Gioioso (In re Gioioso), 979 F.2d 956, 959 (3d Cir. 1992) (bankruptcy court abuses its discretion when its ruling is founded on an error of law); In re FRG, 115 B.R. 72, 73 (E.D.Pa. 1990) (abuse of discretion exists whenever a judicial action is "arbitrary, fanciful, or unreasonable, or when improper standards, criteria, or procedures are used.") (citations omitted).
Factual Background and Procedure
The Bankruptcy Court did not file a written opinion, nor did it otherwise make any findings of fact or conclusions of law when it issued its order on November 14, 2006 granting HACP's motion for relief from the automatic stay. However, there do not appear to be any significant disputes of fact (if any) and the parties essentially agree on the statement of the facts material and necessary to decide the legal issues presented. Therefore, this appeal may be decided on the agreed-to facts, as a matter of law.
Since March 1995, Appellant and her now 13 year old son have resided in a subsidized housing community in Pittsburgh, Pennsylvania known as the Bedford Dwellings that are owned and operated by HACP. All HACP leases, including Appellant's, are for an initial one year period, followed thereafter by month-to-month leases which are renewed monthly unless "good cause" exists for termination.
In December 2003, HACP imposed a retroactive surcharge against Ms. Biggs for rent delinquencies, and the parties entered into an agreement for repayment of arrearage according to a monthly installment schedule, which payments were in addition to her monthly rent of $113.00. However, Appellant soon found herself unable to meet these financial obligations and became delinquent again, so in February 2004, HACP initiated eviction proceedings in state court.
After the local District Justice entered judgment for HACP and issued an order for eviction and notice to vacate, on March 24, 2004 Appellant filed for Chapter 13 bankruptcy which had the automatic effect of staying all state court proceedings. Appellant submitted and the Bankruptcy Court approved a Chapter 13 Plan for Reorganization, which included payments in addition to her monthly rent of approximately $1,600 in arrearage in installments over 36 months, but she was unable to keep her commitments under the Plan. Her last payment to the Trustee was on September 7, 2005.
HACP filed a Motion for Relief from Stay on September 21, 2006, "due to the Debtor's failure to make payments to the Trustee." Brief for Appellee at 3. By then, Appellant's accumulated arrearage was approximately $3,700. On October 6, 2006, Appellant voluntarily converted her Chapter 13 reorganization Bankruptcy to a Chapter 7 Bankruptcy seeking to have her debt discharged, and the Bankruptcy Court approved the conversion on October 23, 2006. Appellant asserts that, since that time, she has made and will continue to make all current monthly rental payments.
Appellee adds in its recitation of the facts, and Appellant does not dispute, that the Chapter 7 Trustee did not assume her lease, and therefore, by operation of law, 11 U.S.C. § 365(d)(1), the lease was deemed "rejected" after 60 days had passed without assumption of the lease by the Trustee.
On November 14, 2006, HACP presented its Motion for Relief from Stay to the Honorable M. Bruce McCullough, Chief Bankruptcy Judge for the Western District of Pennsylvania. The Bankruptcy Court heard argument on the motion, but declined Appellant's request for an evidentiary hearing and/or for submission of briefs. Following the argument, the Bankruptcy Court granted HACP's motion without findings of fact, conclusions of law or legal analysis on the record or in writing. On November 27, 2006, the Bankruptcy Court denied Appellant's Motion to Stay his order pending appeal to this Court.
Ms. Biggs then filed a timely Notice of Appeal to this Court. On February 14, 2007, Appellant filed a Motion to Stay (doc. no. 10) eviction proceedings with this Court, asserting that she received, from HACP earlier that day, a notice to vacate the premises on or before February 20, 2007, or face forcible eviction. In its response, HACP amicably agreed to "suspend the eviction proceeding" until at least seven days following this Court's decision in the pending appeal, and, based upon this wise decision, this Court denied Appellant's motion to stay as moot on February 16, 2007.
11 U.S.C. Section 525(a) -- The "Anti-discriminatory" Provision.
Section 525 of the Bankruptcy Code provides, in ...