Bedford Hill Community v. Brown (In re Brown)
Bedford Hill Community v. Brown (In re Brown)
Opinion of the Court
MEMORANDUM OPINION
KeJoyce Brown failed to pay the rent due under her residential real property lease and her landlord, Bedford Hill Community, obtained a judgment for possession of the premises from a Pennsylvania magisterial district judge. Before Bedford Hill could obtain possession of the real property, Brown appealed the decision and commenced this bankruptcy case. Although section 362 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended, the “Bankruptcy Code”) imposes an automatic stay that prevents the continuation of most collection actions, it does not unconditionally shield a debtor from eviction when the landlord obtained a judgment for possession prior to the bankruptcy.
In a prior case, the Court ruled that a magisterial district court decision which remains under appeal does not constitute a final judgment for possession for which the section 362(b)(22) exception applies.
I.
Brown resides in a subsidized housing unit that she leases from Bedford Hill. Although the total amount due to Bedford Hill under the lease is $231 per month, the portion of rent for which Brown is personally obligated to pay varies with her income. As of August 1, 2014, Brown was responsible for paying $70 per month to Bedford Hill. On March 1, 2015, her rent obligation was adjusted to $45 per month.
After Brown failed to pay her December 2014 rent, Bedford Hill instituted an action for possession and rent in the Pennsylvania magisterial district courts. On Janu
To prevent her eviction while the appeal was pending, Brown obtained a supersede-as which would effectively stay the judgment for so long as she deposited rental payments with the Allegheny County Department of Court Records. After making an initial, partial rental payment of $24 on January 15, 2015, Brown did not tender any further deposits. When Brown failed to remit the payments necessary to maintain the supersedeas, Bedford Hill filed a praecipe to terminate it on April 14, 2015.
Brown commenced this bankruptcy case on April 30, 2015 in an effort to obtain the benefit of the automatic stay imposed under section 362 of the Bankruptcy Code. She did not deposit any rent with the Clerk or make any certifications under section 362(1) of the Bankruptcy Code. Through its current motion,
II.
This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (G). The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(b). This Memorandum Opinion constitutes the Court’s findings of fact and conclusions of law pursuant to Federal Rules of Bankruptcy Procedure 7052 and 9014. Upon consideration of the motion, the supplemental pleadings filed by the parties, and the statements made by the parties at the hearings, the matter is ripe for adjudication.
A.
The automatic stay provision of the Bankruptcy Code acts as a temporary injunction that prevents creditors from engaging in collection efforts while a bankruptcy case is pending.
Although they are broad, the protections afforded by section 362 are not absolute. A myriad of exclusions to the automatic stay exist, including the exception under section 362(b)(22) for proceedings to recover possession of the premises under a residential real property lease:
[t]he filing of a petition ... does not operate as a stay ... of the continuation of any eviction, unlawful detainer action, or similar proceeding by a lessor against a debtor involving residential property in which the debtor resides as a tenant under a lease or rental agreement and with respect to which the lessor has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of such property against the debtor.9
Section 362(b)(22) authorizes a landlord to continue an eviction proceeding, unabated by the bankruptcy filing, when it possesses a prepetition judgment for possession of the debtor’s residence and the debtor fails to provide the required certifications and rental payment due at the time the bankruptcy petition is filed.
In this case, the applicability of section 362(b)(22) turns on whether the judgment of the magisterial district court constitutes a “judgment for possession.” The Court previously addressed the issue in Alberts when it considered whether a prepetition judgment from a magisterial district court constitutes a “judgment for possession” while under appeal.
Certain orders entered by some courts lose their requisite degree of firmness once an appeal is perfected and, as a result, the lower court order becomes nothing more than a nullity. One such narrow instance occurs when a judgment is subject to de novo review, which is nothing but a legal “Mulligan” or “do over” for the litigants in a different forum.12
The need for a de novo review stems from Article I, Section 6 of the Pennsylvania Constitution which secures “the right of trial by jury before rights of person or property are finally determined.”
B.
Bedford Hill does not challenge the holding in Alberts. Instead, it argues that the case is distinguishable because, unlike the debtor in Alberts, Brown did not make the payments necessary to maintain the supersedeas. Once the supersedeas was terminated, Bedford Hill claims it possessed an unfettered right to enforce the judgment which renders it sufficiently “final” to qualify as a judgment for possession under section 362(b)(22). To determine whether this contention has merit, the Court must consider whether the loss of a supersedeas nullifies or invalidates an existing appeal.
A supersedeas is “a prohibition against any further .execution processes” on a judgment rendered by a magisterial district judge.
A timely-filed notice of appeal automatically operates as a supersedeas, but the stay can be lost if not appropriately preserved. To maintain a supersedeas through the duration of an appeal, the tenant must remit payments to the protho-notary equivalent to “the lesser of three (3) months’ rent or the rent actually in arrears” on the date the appeal was filed, plus all future rental payment obligations as they accrue.
A tenant’s failure to maintain a supersedeas is not fatal to her appeal. Under Pennsylvania law, a supersedeas, bond, or other security is not necessary to pursue an appeal.
This issue likely arises infrequently because, for most tenants, maintaining possession of the residence is their primary concern. Once an eviction occurs, tenants have little incentive to continue their legal battle on appeal. The investment of time and effort to obtain a new residence and re-locate family and personal effects creates a “point of no return” for which few will want to reverse course.
Because the loss of a supersedeas has no impact on the validity of the underlying appeal, the Court finds that the mere ability to execute on a judgment, without more, does not clothe a previously-appealed judgment of a magisterial district court with the level of finality needed to satisfy section 362(b)(22). Indeed, the nature of the judgment itself is unaltered. Bedford Hill may have taken a step closer to eviction when it obtained an order for possession, but the judgment remains subject to de novo review on appeal and was unexecuted at the time the bankruptcy case was filed. Since the nature of Bedford Hill’s judgment is fundamentally the same as the one previously examined by Judge Deller, the Court finds that, supersedeas or not, the rationale of Alberts still applies. For these reasons, the Court concludes that the judgment of the magisterial district judge does not qualify as - a “judgment for possession” under section 362(b)(22).
Bedford Hill argues that the Court’s finding weakens the effect of any judgment for possession issued by a magisterial district judge. It places significant reliance on the case of Johnson v. Martofel, 797 A.2d 943 (Pa.Super. 2002) for the proposition that in the absence of a supersede-as, the judgment of a district justice
While Brown undoubtedly pursued bankruptcy relief to stave off eviction, thereby using the automatic stay to replace the lost supersedeas,
Brown currently proposed a chapter 13 plan that requires monthly payments of $70 to Bedford Hill over the course of 36 months, with the prepetition arrearage of
$488 cured through the plan.
III.
Based upon the foregoing, the Court will enter a separate Order denying the motion for relief from stay on the grounds that section 362(b)(22) does not apply to the judgment of a magisterial district court on appeal to the court of common pleas, notwithstanding the termination of a supersedeas. The Court’s find
. See 11 U.S.C. § 362(b)(22).
. See Housing Authority of Beaver County v. Sheri M. Alberts (In re Alberts), 381 B.R. 171 (Bankr.W.D.Pa. 2008).
. January 5, 2015 Judgment of the Magisterial District Judge [Dkt. No. 32-3],
. A supersedeas is terminated upon the filing of the praecipe. See Pa.R.C.P.M,D.J. 1008(B).
. See Motion for Authority to Proceed with Eviction and for Relief from the Automatic Stay [Dkt. No. 32],
. See In re Schaefer Salt Recovery, Inc., 542 F.3d 90, 100 (3d Cir. 2008); 11 U.S.C. § 362(a).
. Id.
. Id. (quoting In re Siciliano, 13 F.3d 748, 750 (3d Cir. 1994)).
. 11 U.S.C. § 362(b)(22).
. See 11 U.S.C. § 362(1)(4). Section 362(1) is an “exception to the exception” which defers the application of section 362(b)(22) for at least 30 days if the debtor certifies that she has the right to cure the prepetition default under applicable nonbankruptcy law and tenders payment of any rent that accrues during that period. 11 U.S.C. § 362(1)(1). If the debtor cures the prepetition default within the 30-day period, section 362(b)(22) may be rendered inapplicable and the landlord will be stayed from enforcing its rights under the prepetition judgment pending further order of the bankruptcy court. See In re Carpenter, 2015 WL 1956272, *1-2 (Bankr.D.Vt. Apr. 29, 2015). Since there is no dispute that Brown failed to timely cure the prepetition arrears, the Court need not address the impact of section 362(1).
. Alberts, 381 B.R. at 178.
. Id. See also Indep. Tech. Servs. v. Campo’s Express, Inc., 812 A.2d 1238, 1241 (Pa.Super. 2002) (The judgment of a magistrate district judge is nullified by perfection of a de novo appeal).
. See Application of Smith, 381 Pa. 223, 231, 112 A.2d 625, 630 (1955) (emphasis original); Article I, Section 6 of the Pennsylvania Constitution ("Trial by jury shall be as heretofore, and the right thereof remain inviolate.”); see also Smith v. Coyne, 555 Pa. 21, 26, 722 A.2d 1022, 1024 (1999).
. See Smith v. Coyne, 722 A.2d at 1027 (Cap-py, J., concurring); Haines v. Levin, 51 Pa. 412, 414 (1866) ("The commitment of initial jurisdiction in rent and possession disputes to the district justices has been upheld under Article I, Section 6 because it secures the right to a trial by jury prior to a final determination by providing for de novo appeal to the court of common pleas.”).
. See Pa.R.C.P.M.D.J. 1007(A) (including a note which provides that on appeal, "all parties will be free to treat the case as though it had never been before the magisterial district judge, subject of course to the Rules of Civil Procedure.").
. In re Alberts, 381 B.R. at 179.
. See Pa.R.C.P.M.D.J. 1001(4).
. Pa.R.C.P.M.D.J. 1008(B). Without a su-persedeas, a landlord may request an order of possession anywhere between 10 and 120 days after judgment is entered. See Pa. R.C.P.M.D.J. 515(B)(1).
. Pa.R.C.P,M.D.J. 1008(B).
. Id.
. Pa.R.C.P.M.D.J. 515(B)(2). Upon issuance of the order for possession from the magisterial district court, the executing officer will be directed to deliver actual possession of the property to the landlord. Pa.R.C.P.M.D.J.
. See Smith v. Coyne, 722 A.2d at 1024 ("Rule 1008B does not require the payment of rent in arrears in order to take an appeal, but only in order for the appeal to operate as a supersedeas.”) Pa.R.C.P.M.DJ. 1003.
. See, e.g., Herrington v. Puette, 1 Pa. D. & C.4th 550, 551 (Pa.Com.Pl. 1987) ("[T]he failure to file the appeal bond is not fatal to the actual appeal.”); Sweitzer v. Nonemaker, 14 Pa. D. & C.3d 714, 715 (Pa.Com.Pl. 1980) (finding that because no supersedeas was in place while the appeal was pending, the landlord was entitled to a writ of possession). As Bedford Hill noted in its supplemental brief [Dkt. No. 49], an “order for possession” is effectively congruent with a "writ of possession.” The difference lies in the fact that an "order for possession” is issued by a magisterial district judge pursuant to Pa. R.C.P.M.DJ. 516(a), while a “writ of possession" is issued by the prothonotary of a court of common pleas pursuant to Pa.R.C.P. 3160 and 3161.1.
. See Pa.R.C.P.M.DJ. 1006.
. Pa.R.C.P.M.D.J. 1008(B).
. See Pa.R.C.P.M.DJ. 1008(A)-(B); see also, e.g., Pa.R.C.P.M.DJ. 1008(C)(7)-(8) (discussing termination of the supersedeas as it relates to indigent tenants).
. It is also likely that a tenant who is unable to maintain a supersedeas by curing a rent arrearage cannot successfully establish a basis to vacate the decision of a magisterial district judge.
. See Smith v. Coyne, 722 A.2d at 1027 (Cap-py, J., concurring) (“The execution of a judgment of possession while an appeal is pending does not finally determine the issue of the tenant’s right to possession before it can be tried to a jury.").
. Haines v. Levin, 51 Pa. at 415; see also, e.g., Koontz v. Hammond, 62 Pa. 177, 182 (1869) (If a jury finds in favor of a tenant in the appeal of a landlord/tenant action, the tenant is entitled to damages sustained due to his removal from the leased premises.),
. In reaching this conclusion, the Court is mindful that exceptions to the automatic stay should be narrowly construed. See In re Lori, 241 B.R. 353, 354 (Bankr.M.D.Pa. 1999) (“Exceptions to the automatic stay are generally construed narrowly.”); see also In re The Fairchild Corp., 2009 WL 4546581, *4 (Bankr.D.Del. Dec. 1, 2009) (“[T]he structure of the automatic stay provisions generally supports a narrow interpretation of all exceptions to the automatic stay.”). Because the scope of the automatic stay is broad, the .exceptions provided for in section 362(b) are limited to further the purposes of the stay. In re Glabb, 261 B.R.' 170, 174 (Bankr.W.D.Pa. 2001). Section 362(b)(22) is just' one example of an exclusion which must be reviewed in this manner.
; Pursuant to Act 207 of 2004, the title of “district judge” was changed to "magisterial district judge.” 35 Pa. Bull. 518 (Jan. 21, 2005). By Order of Pennsylvania Supreme Court dated January 6, 2005, any reference to the term “district justice” in an order or other legal authority is deemed to refer to a "magisterial district judge.” Id.
. The impact of the court of common pleas ruling is evident from a review of the pertinent facts. Johnson’s property was sold in a tax sale and Martofel, the purchaser, obtained a judgment for possession from a district justice on August 18, 1999. Johnson appealed the decision and initially perfected a superse-deas, but .it was terminated on February 24, 2000 for lack of payment. After Johnson filed
Johnson commenced an appeal to challenge her eviction on the basis that a writ of possession was improperly issued in the absence of a judgment for possession. On appeal, the Superior Court affirmed the validity of the writ, finding that a judgment for possession was issued by a district justice and Johnson had failed to comply with both the April 12 agreement and December 22 order which imposed deadlines for her to vacate the property. Id. at 948.
. Pa. R.C.P.M.D.J. 515(B)(2) contemplates two scenarios that would prevent a landlord from seeking enforcement of a judgment from a magisterial district court: (1) maintenance of a supersedeas, or (2) a stay imposed under the Bankruptcy Code.
. See In re Alberts, 381 B.R. at 180 (Redress available to creditors whose interests are not adequately protected include a request for adequate protection, a request for relief from the automatic stay, a request to compel the immediate assumption or reject of the lease, or a request to dismiss the case for cause shown.).
. The Debtor’s proposed plan [Dkt. No. 14] has not yet been confirmed. Bedford Hill objects to confirmation of the proposed plan [Dkt. Nos. 29, 72].
Reference
- Full Case Name
- IN RE: KeJoyce J. BROWN, Debtor. Bedford Hill Community a/k/a Bedford Hill Apartments, Movant v. KeJoyce J. Brown and Ronda J. Winnecour, Chapter 13 Trustee
- Cited By
- 2 cases
- Status
- Published