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In Re: William T. Torppey Debtor.

August 9, 2012


The opinion of the court was delivered by: William J. Martini, U.S.D.J.:


This matter comes before the Court on pro se Debtor William T. Torppey's appeal of the decision of the Honorable Rosemary Gambardella, United States Bankruptcy Judge, to vacate the discretionary stay of a pending sheriff's sale of Debtor's real property which is in mortgage foreclosure (the "Foreclosure Sale"), as set forth in Judge Gambardella's May 8, 2012 Order. Debtor has also filed a motion with this Court to indefinitely stay the Foreclosure Sale pending his appeal of that ruling. For the reasons set forth below, the decision of the Bankruptcy Court is AFFIRMED, Debtor's motion to stay the Foreclosure Sale pending his appeal to this Court is DENIED, as moot, and, this matter is DISMISSED.


The facts in this matter are largely undisputed. Debtor and his wife, Donna Y. Torppey, are the owners of real property that is currently in mortgage foreclosure and which is located at 172 Fairmount Avenue, Chatham, NJ 07928 (the "Chatham Property"). Appellee Capital One, N.A. ("Capital One") is the first secured mortgage holder of that property, as set forth in the parties' mortgage documents (the "Mortgage"). On April 5, 2005, based on the Torppeys' failure to make mortgage payments, and pursuant to the terms of the Mortgage, foreclosure proceedings on the Chatham Property were initiated in New Jersey Superior Court at Case No. F-5836-05. As a result of the state court action, a Foreclosure Sale of the Chatham Property was originally scheduled for December 9, 2010. However, that sale has yet to occur, in large part because, since 2005, Debtor and his wife have collectively filed for bankruptcy on seven separate occasions, and all seven filings have affected Capital One's rights under the Mortgage.

For purposes of this appeal, it is sufficient to note that in the sixth of the Torppeys' cases at Bankruptcy No. 11-21289, the Bankruptcy Court entered an Order on June 30, 2011, which stated that "if any future bankruptcy cases are filed by this Debtor/Debtors, or any other occupant or owner of the [Chatham Property], within one (1) year from the date of this order, such a bankruptcy filing shall not trigger the automatic stay [of any pending Foreclosure Sale] under 11 U.S.C. [362](a) as to the [Chatham Property]" (the "11-21289 Order"). Judge Gambardella later explained that the Bankruptcy Court ordered prospective relief from the automatic stay in large part because of the Torppeys' history of filing bankruptcy petitions. (Hr'g Tr. 13 May 30, 2012, ECF No. 10.)

Thereafter, on February 6, 2012, three days before a Foreclosure Sale of the Chatham Property was scheduled to occur, Debtor initiated the Torppey's seventh bankruptcy case when he filed a Chapter 13 Petition at Bankruptcy No. 12-12849.

However, because that filing occurred within one year of the 11-21289 Order, an automatic stay of the Foreclosure Sale was presumptively inapplicable. Nonetheless, on April 19, 2012, Judge Gambradella, in her discretion, entered an Order in Bankruptcy No. 12-12849 which modified the 11-21289 Order by granting an additional sixty-day stay of Foreclosure Sale beginning on February 21, 2012. As a condition of that extension, Debtor was required to comply with certain requirements, including that a contract of sale for the Chatham Property be procured by April 23, 2012 (the "12-12849 Conditional Stay Order").

Shortly thereafter, on April 23, 2012, Judge Gambardella held a hearing to address whether a continued stay of the Foreclosure Sale was appropriate. Evidently, she indicated that the stay would be vacated effective May 8, 2012, but that no Foreclosure Sale could occur before June 8, 2012.*fn1 Judge Gambardella later explained the basis for that decision: Specifically, that pursuant to the 12-12849 Conditional Stay Order, "a contract of sale [of the Chatham Property] was to be procured by April 23, 2010. [And because] a sale contract was not obtained[,] the Court entered an order vacating the stay on May 8, 2012." (Hr'g Tr. 14 May 30, 2012, ECF No. 10.)

On May 1, 2012, Debtor appealed Judge Gambardella's decision to lift the conditional stay to this Court.*fn2 Thereafter, Debtor moved before the Bankruptcy Court to stay any Foreclosure Sale throughout the pendency of his appeal. At the May 30, 2012, hearing on that motion, Debtor advocated for the stay to be reinstated because "reality [did] finally set in," he had recently listed the Chatham Property on the market, was now "in full mode to get [it] sold," and estimated that a sale could occur in four to eight weeks. (Id. at 8, 10, 12.) In response, the Bankruptcy Court noted that because it did not have any proof of a pending sale, Debtor's assurances amounted to "a lot of hearsay on the record." (Id. at 12.) Also in the course of the hearing, Elizabeth Wassell, counsel for Capital One, incorrectly indicated that Debtor owed Capital One over $1,000,000.*fn3 (Id. at 9.) Debtor correctly disputed that figure on the record. (Id. at 11.)

At the same hearing, the Bankruptcy Court denied Debtor's motion to reinstate and indefinitely extend the stay pending appeal, but further extended the earliest date that a Foreclosure Sale could occur by two weeks, to June 22, 2012.*fn4 (Id. at 13-21.) In making that ruling, Judge Gambardella explained that in light of the11-21289 Order, Debtor's February 6, 2012, bankruptcy petition did not invoke the protections of the automatic stay. (Id. at 13.) Judge Gambardella also noted that the only proof before the Court which favored reinstating the stay was "Mr. Torppey's belief that the [Chatham Property] can now be sold at upwards of $980,000." (Id. at 15.) Tellingly, Judge Gambardella also recognized that "[t]he Court has already given Mr. Torppey a significant amount of time in order to accomplish the sale of this property and I do not believe there has been any demonstrable progress to date." (Id. at 16.)

II.Legal Analysis

Presently before the Court is Debtor's appeal of Judge Gambardella's decision to lift the conditional stay of the pending Foreclosure Sale.*fn5 This Court has jurisdiction to hear the Debtor's appeal pursuant to 28 U.S.C. § 158(a); see also United States v. Pelullo, 178 F.3d 196, 200 (3d Cir. 1999). On appeal, this Court reviews "the bankruptcy court's legal determinations de novo, its factual findings for clear error and its exercise of discretion for abuse thereof." In re Trans World Airlines, Inc., 145 F.3d 124, 130--31 (3d Cir. 1998). In that regard, the decision "to annul the automatic stay is a decision [that is] committed to the bankruptcy court's discretion, and may be reversed only for abuse of that discretion." In re Myers, 491 F.3d 120, 128 (3d Cir. 2007). An abuse of discretion occurs when the court's decision "rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact." Hanover Potato Products, Inc. v. Shalala, 989 F.2d 123, 127 (3d Cir.1993).

A.The Automatic Stay

Generally speaking, an initial bankruptcy petition operates to automatically stay actions or proceedings by creditors to recover claims or judgments from a bankrupt debtor. 11 U.S.C. ยง 362(a); In re Beers, No. 10-4299, 2011 WL 1627046, at *1 n. 2 (D.N.J. Apr. 28, 2011). However, bankruptcy courts also have broad authority to make exceptions to and to annul the automatic stay based on the individual circumstances of each case. See, e.g., Capital Communications Federal Credit Union v. Boodrow, 197 B.R. 409 (N.D.N.Y. 1996), aff'd, 126 F.3d 43 (2d Cir. 1997), cert. denied 522 U.S. 1117 (1998); see also In re Wilson, 116 F.3d 87, 91 (3d. Cir. 1997) (relief from the automatic ...

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