Serial Filings and the Automatic Stay

Posted by NCBRC - January 15, 2019

Under section 362(c)(3), the automatic stay terminates in its entirety after 30 days, when the debtor has had a previous case dismissed within one year of filing the second case. Smith v. State of Maine Bureau of Rev. Servs., 910 F.3d 576 (1st Cir. 2018).

Mr. Smith filed a case in December, 2014, which was dismissed in November, 2016. A month later in December, 2016, he filed another case. Mr. Smith did not move for a continuation of the automatic stay. In February, 2017, the Maine Bureau of Revenue Services sought an order under 362(j) that the stay had terminated. Mr. Smith argued that section 362(c)(3)(A) terminated the automatic stay only “with respect to the debtor” and not as to actions against property of the estate. The bankruptcy court held that the automatic stay had terminated in its entirety. The district court affirmed.

On appeal to the First Circuit, the court first addressed Mr. Smith’s plain meaning argument that the phrase “with respect to the debtor” unambiguously limited the scope of the stay’s termination. Finding flaws in this argument, the court concluded that the meaning of section 362(c)(3) was not plain. In its analysis, the court identified “oddities, including redundancy in § 362(c)(3)(A)” which led them to conclude that string application of the canons of interpretation, including the rule against superfluities, would also be unhelpful. Finding neither party’s textual analyses sufficient, the court ultimately turned to statutory context and congressional intent. Digging deep into the legislative history, the court concluded that Congress’s purpose was to curb serial filings and that, as a consequence, its intent more closely aligned with the creditor’s argument rather than the debtor’s.

NCBRC and NACBA filed an amicus brief in support of the debtor.

Smith 1st Cir Dec 2018



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