## Facts

- Donald and Rosa Brown (the debtors) owned real property, and Aspen Shackleton III, LLC (Shackleton) held a lien on the property.
- In 2011, the Browns filed a Chapter 13 bankruptcy case (the prior case).
- In the prior case, Shackleton moved for relief from the automatic stay, and the bankruptcy court granted relief on July 12, 2012.
- The Browns sought voluntary dismissal of the prior case; the court granted the motion, and the prior case was dismissed on August 15, 2012.
- On August 16, 2012, the Browns filed a new Chapter 13 case (the present case).
- Because the Browns had been debtors in a case dismissed within one year before the present case, the automatic stay in the present case would expire after 30 days unless extended by court order.
- On August 23, 2012, the Browns moved to extend the automatic stay.
- The bankruptcy court granted the stay-extension motion for all creditors except Shackleton, and the extension order was entered on October 5, 2012.
- After the extension order, Shackleton conducted a foreclosure sale of the real property.
- The Browns moved to set aside the foreclosure sale, claiming the sale violated the automatic stay.

## Issues

1. In a repeat-filing Chapter 13 case governed by § 362(c)(3), did the automatic stay (as extended by court order for all creditors except Shackleton) bar Shackleton from foreclosing on the Browns’ real property?

## Decision

- The court denied the Browns’ motion to set aside the foreclosure sale.
- The court determined that Shackleton was not restrained by the automatic stay in the present case because the stay was not extended as to Shackleton under the court’s § 362(c)(3)(B) order.

## Legal Principles

- Under 11 U.S.C. § 362(c)(3), when an individual debtor files a bankruptcy case within one year after dismissal of a prior case, the automatic stay is temporary and will expire after 30 days unless the court extends it.
- A debtor may seek to extend the stay under § 362(c)(3)(B), but the court may grant relief that is limited in scope, including relief that extends the stay for some creditors while excluding others.
- When a creditor is expressly excluded from a stay-extension order entered under § 362(c)(3)(B), that creditor is not subject to the extended stay and may proceed with enforcement actions consistent with the Bankruptcy Code.
- A debtor seeking to set aside a foreclosure as a stay violation must show that the foreclosure occurred while the automatic stay (or an extended stay) was in effect as to the foreclosing creditor and the affected property interest.

## Conclusion

In the Browns’ second Chapter 13 case filed shortly after dismissal of their prior case, the court’s stay-extension order extended the stay for all creditors except Shackleton. Because Shackleton was excluded from the extension, the court concluded the foreclosure sale did not violate the automatic stay and denied the Browns’ request to set the sale aside.


In re Brown, 2013 WL 2318414 (2013)