Elaine Stewart

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: ELAINE STEWART : Chapter 13
:
Debtor(s) : Bky. No. 08-10109ELF
O R D E R
AND NOW, the Debtor having commenced this chapter 13 bankruptcy case on January
7, 2008,
AND, Washington Mutual Bank, c/o Countrywide Home Loans, Inc. (“Countrywide”)
having filed a Proof of Claim on March 17, 2008 (“the Proof of Claim”), asserting a claim in the
total amount of $45,179.59 (“the Total Claim”), which includes prepetition arrears of $26,681.76
(“the Arrears”);
AND, Countrywide asserting in the Proof of Claim that its claim is secured by the
Debtor’s real property;
AND, the Debtor having filed Objections to the Proof of Claim on June 9, 2008 and
Amended Objections on September 22, 2008;
AND, through the Objections and the Amended Objections, the Debtor having contested
the accuracy and/or reasonableness of the itemized components of both the Total Claim and the
Arrears;
* * *
AND, the Debtor having proposed a chapter 13 plan that provides for a cure of the
Arrears on the Proof of Claim pursuant to 11 U.S.C. §1322(b)(5);
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AND, the Debtor having represented that if the Total Claim is allowed only in the amount
of approximately $45,179.59, the Debtor intends to modify her chapter 13 plan to provide for full
payment of the Total Claim pursuant to 11 U.S.C. §1325(a)(5)(B);
AND, Countrywide having represented that it erred in its Proof of Claim in asserting that
the Total Claim is only $45,179.59 and that if the Debtor proposes to pay off the Total Claim
through her chapter 13 plan, Countrywide will amend the Proof of Claim and assert that the
Total Claim is approximately $65,874.50;
AND, Countrywide’s position that the correct Total Claim is approximately $65,874.50
being based in part on an Order of the Court of Common Pleas, Philadelphia County dated
January 3, 2008 and entered on January 16, 2008 (“the Order”) in Washington Mutual Bank c/o
Countrywide Home Loans, Inc. v. Stewart, No. 3348, July Term 2001 (C.P. Phila.) (“the State
Court Action”);1
AND, the parties agreeing that resolution of the issues in the contested matter and the
conduct of the hearing presently scheduled for January 13, 2009 (i.e., the Debtor’s Objections
and Amended Objections to the Proof of Claim) will be simplified and facilitated if the court
were to make a threshold determination whether the Order entered in the State Court Action is
binding on this court or whether it is void because it was entered in violation of 11 U.S.C.
1 As long as the Debtor’s proposes to cure the Arrears, as opposed to paying the Total
Claim, Countrywide does not consider the amount of the Total Claim set forth in the Proof of Claim to be
a material issue. However, because the Debtor has represented that if the Total Claim is allowed in the
amount of approximately $45,000, she will modify her chapter 13 plan to propose to pay the Total Claim
in full through her plan, there is a real dispute between the parties regarding the proper amount of the
Total Claim. Therefore, even though Countrywide has not formally asserted, in its Proof of Claim, that
the Total Claim is approximately $65,000, there is a real and concrete dispute between the parties and
this ruling is not an advisory opinion.
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§362(a)(1);
AND, both parties having submitted memoranda of law on the issue, which have been
considered by the court;
* * *
AND, the State Court Action having been commenced on July 21, 2001;2
AND, judgment by default in the amount of $45,179.59 having been entered in favor of
Countrywide and against the Debtor in the State Court Action on September 26, 2001;
AND, Countrywide having filed a Motion to Reassess Damages (“the Motion to
Reassess”) in the State Court Action on November 30, 2007, with a response deadline of
December 20, 2008;
AND, no response to the Motion to Reassess having been filed;
AND, the state court judge having signed an Order on January 3, 2008 (“the Order”)
granting the Motion to Reassess, which Order states:
Plaintiff’s judgment is hereby Reassessed to $68,874.50, plus interest at
the rate set forth in the note and mortgage and costs of this action through
and including the Sheriff’s Sale of the Property or payment of the
mortgage loan in full;
AND, the Order not having been entered on the state court docket until January 16, 2008;
AND, this court inferring that no hearing was held on the Motion to Reassess because it
was uncontested and that the Order was signed by the state court judge in chambers and
2 In issuing this Order, I have reviewed and considered the state court docket in the State
Court Action. A bankruptcy court may take judicial notice of the matters of record in the state courts
within its jurisdiction. E.g., In re Soto, 221 B.R. 343, 347 (Bankr. E.D. Pa. 1998).
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therefore, that no party had any knowledge of the existence of the Order prior to its entry on the
state court docket;
AND, in the time period between the signing of the Order and its docketing, (i.e., on
January 7, 2008), the Debtor having commenced this bankruptcy case;
* * *
AND, the Debtor contending that the Order was not effective until its entry on the state
court docket and that such entry, after the commencement of the bankruptcy case, violated the
automatic stay, 11 U.S.C. §362(a)(1), rendering the Order void;
AND, in response, Countrywide contending that the Order was effective on the date that
it was signed (i.e., January 3, 2008), a date prior to commencement of this bankruptcy case and
before the automatic stay took effect;
* * *
AND, Countrywide’s position being based on three (3) legal propositions, all three (3) of
which this court concludes are correct statements of the law:
1. the signing of a court order by a judicial officer is a judicial action,
2. in Pennsylvania, the mere entry of a judgment on the docket by the
Prothonotary is a ministerial act, see generally Gotwalt v. Dellinger, 577
A.2d 623, 625 (Pa. Super. 1990) (“prothonotary performs ministerial
functions only, and is not authorized to engage in judicial functions”), and
3. under federal law, the performance of a purely ministerial act is not the
continuation of a judicial action or proceeding in violation of 11 U.S.C.
§362(a)(1), e.g. In re Aultman, 223 B.R. 481, 485 (Bankr. W.D. Pa. 1998); see
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also In re Capgro Leasing Associates, 169 B.R. 305, 313-17 (Bankr. S.D.N.Y.
1994).
AND, the above three (3) propositions, taken together, sometimes being referred to as the
“ministerial exception” to §362(a)(1), an exception which “stems from the common-sense
principle that a judicial ‘proceeding’ within the meaning of section 362(a) ends once a decision
on the merits has been rendered,” In re Petit, 217 F.3d 1072, 1079 (9 Cir. 2000);th 3
AND, the “ministerial exception” to §362(a)(1) not being applicable (and therefore, the
automatic stay applying) to judicial action falling within the literal terms of §362(a)(1) that takes
place after the commencement of a bankruptcy case, see, e.g., In re Soares, 107 F.3d 969 (1 Cir.st
1997);
AND, in the circumstances presented in this case, the court concluding that judicial action
(as opposed to mere ministerial action) occurred after the commencement of this bankruptcy case
and that the entry of the Order in the State Court Action was stayed under §362(a)(1) by the
commencement of this bankruptcy case on January 7, 2008;4
3 I observe that the term“exception” is probably a misnomer. Cases such as Petit hold that
no “judicial action against the debtor” occurs if an order rendered by the court prepetition is docketed
postpetition by a court clerk that lacks discretion to modify the terms of the order. This is not an
exception but rather a holding that the conduct at issue falls outside the statutory provision. A true
“exception” to §362(a)(1) would if action that undeniably constitutes “ judicial action against the debtor”
were held not subject to §362(a)(1) as a judicially created exception to or gloss on the provision.
4 Countrywide’s position, which finds support in Aultman, is that the only judicial action
that took place was the signing of the Order on January 3, 2008 (prior to the bankruptcy case) and that
everything that occurred thereafter was the ministerial act of the Prothonotary. In response, the Debtor
suggests that because there was no public pronouncement of the court’s decision prior to its entry on the
docket (i.e, that the Order was a “book-entry” order, see Debtor’s Memorandum at 3, rather than a
written order that memorialized a decision previously announced in open court or otherwise previously
communicated to the parties), the judicial act of rendering a decision on the Motion to Reassess was not
completed until its entry on the docket.
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I am persuaded by the Debtor’s argument.
Initially, I observe that none of the Pennsylvania decisions (state or federal) that I have
reviewed involve the same facts or the precise issue presented here, i.e., whether a judicial decision that
was signed and dated in chambers and without disclosure to any of the parties is effective and complete
on signing or upon docketing. See In re Levine, 228 B.R. 164, (Bankr. W.D. Pa. 1998) (underlying facts
not entirely clear, but it appearing that the state court publicly issued an opinion and order thereby
rendering the subsequent docketing of a judgment a purely ministerial act); Aultman, 223 B.R. at 482
(opinion does not disclose manner in which the court order was rendered, stating only that the decision
was made “at the conclusion of litigation,” implying that the decision was announced in open court
before it was put in written form for docketing); Gotwalt v. Dellinger, 577 A.2d at 624 (case not
involving the effective date of a judicial order but rather, the prothonotary’s lack of authority to enter
judgment under Pa. R. Civ. P. 1037(b) on filing of praecipe by defendant); Lansdowne v. G.C. Murphy
Co., 517 A.2d 1318 (Pa. Super. 1986) (case not involving the effective date of a judicial order but rather,
the prothonotary’s ministerial duty to enter judgment under Pa. R. Civ. P. 1037(a) on filing of praecipe
by defendant).
My research does not reveal any Pennsylvania decision (state or federal) that holds that a
Pennsylvania judicial decision that was signed and dated in chambers, without some public disclosure of
the decision, is effective upon signing rather than docketing. Thus, I consider the precise issue to be one
of first impression in this court.
I conclude that the judicial act of rendering a decision in a court case is not complete
until the judge’s decision regarding the rights of the parties is made public either orally or by placing the
decision on the public docket or in some other fashion. In my view, the communication of the “decision”
to the parties and/or the public is an inherent part of judicial action. See Ortiz v. O. J. Beck & Sons, Inc.,
611 S.W.2d 860, 865 (Tex. Civ. App.1980) (announcement of decision is “integral and necessary part” of
the judicial function of rendering judgment); accord Wood v. Griffin & Brand of McAllen, 671 S.W.2d
125, 128 (Tex. App. 1984); People ex rel. Schwartz v. Fagerholm,161 N.E.2d 20, 23 (Ill. 1959). In our
jurisprudential system, the exercise of judicial power is a public function. The power is not exercised in
secret; an order is not effective instantaneously upon the stroke of the pen in the splendid solitude of the
judge’s private chambers. See Commonwealth Loan Co. v. Baker, 214 N.E.2d 904, 908 (Ill. App. 1966).
Thus, if a decision is announced orally in open court, the judicial action has been completed and the
docketing of an order memorializing the decision is purely ministerial. But, where the judge signs an
order in chambers and the first public action is the docketing of the order, judicial action is not complete
until docketing. Indeed, arguably, in those circumstances, no judicial action or exercise of the judicial
power has even taken place prior to some form of public pronouncement of the judge’s decision.
Therefore, I conclude that there is ongoing judicial action up to the docketing of an order signed in
chambers even though, by docketing the order, the clerk is simultaneously performing a ministerial
function.
In this case, I infer from the state court docket and the nature of the proceeding that no
hearing was held on the Motion to Reassess, that the Order was signed by the judge in chambers and that
there was no public notice or announcement of the Order prior to its docketing, thirteen (13) days later.
Applying the principles discussed above, in this case, I find that the act of docketing Order had both
judicial and ministerial components. Because the act was not purely ministerial, I conclude that the stay
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It is therefore and hereby DETERMINED that, at the January 13, 2008 hearing, the
Debtor may present any and all evidence relevant to her objection to the Total Claim (as defined
above) and is not precluded from doing so by the entry of the Order in the State Court Action.
Date: December 5, 2008
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
precluded further judicial action and that the reassessed judgment is not valid. See generally In re Myers,
491 F.3d 120, 127 (3d Cir. 2007) (actions taken in violation of the automatic stay are void).
Finally, I point out the limited consequences of this decision. The effect of this ruling is
only that the Debtor will have the opportunity to dispute, on the merits, Countrywide’s position that the
Total Claim (which is not yet formally part of its filed Proof of Claim) is approximately $65,000.
Whether the Debtor’s victory will bear any fruit in the form of a allowed Total Claim sufficiently low to
render a “payoff plan” feasible remains to be seen and will depend on the evidence presented at the
hearing scheduled for January 13, 2009
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