David Dwayne Benefield and Cynthia Sue Benefield

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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
DAVID DWAYNE BENEFIELD and
CYNTHIA SUE BENEFIELD,
Debtors. 	No. 11-10-11077 SA
MEMORANDUM OPINION IN SUPPORT OF ORDER
GRANTING MOTION FOR DETERMINATION THAT STAY IS NOT IN EFFECT
PURSUANT TO 11 U.S.C. § 362(c)(4),and
DENYING AS MOOT MOTION FOR ORDER RETROACTIVELY ANNULLING
AUTOMATIC STAY
Before the Court are three motions and the objections
thereto: the Motion for Determination that Stay is Not in Effect
Pursuant to 11 U.S.C. § 362(c)(4) filed by Creditors Danny and
Shirley Slaysman (doc 7) and the response thereto (doc 24) by
Debtors Cynthia Sue Benefield and David Dwayne Benefield,
Debtors’ Emergency Motion to Declare the Automatic Stay in Effect
or in the Alternative to Reinstate Automatic Stay Pursuant to
Section 362(c)(4) (doc 8), and Creditors’ Motion for Order
Retroactively Annuling [sic] Automatic Stay (doc 11) and Debtors’
response thereto (doc 26). 	The Court will grant Creditors’
Motion for Determination that the Stay is Not in Effect (doc 7)
and deny Creditors’ Motion for Stay Relief (doc 11) as moot. 	The
Court will address, and deny, Debtors’ Emergency Motion to
Declare the Stay in Effect or to Reinstate the Stay (doc 8) in a
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1 The reason for the bifurcation is that Creditors are entitled
to the prompt issuance of a comfort order declaring the stay is
not in effect. § 362(c)(4)(A)(ii). 	Addressing fully the issue of
the imposition of the stay pursuant to § 362(c)(4)(B) should not
further delay the entry of the § 362(c)(4)(A)(ii) order.
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separate memorandum opinion and order. 1
Debtors filed their voluntary chapter 11 petition on March
5, 2010 (doc 1), the first two motions were filed on March 10,
and the stay relief motion on March 11. 	At the March 30, 2010
preliminary hearing (minutes – doc 27), the Court ordered the
parties to file simultaneous briefs, which they did on April 16
(docs 28 and 29 respectively). 	The Court conducted the final
hearing on the motions on April 22 and June 18, 2010 (combined
minutes – doc 54). 	At the conclusion of the final hearing, the
Court took the matters under advisement. 	These are core
proceedings pursuant to 28 U.S.C. § 157(b)(2)(A) and (G).
Background
As is apparent from the nature of the motions, Debtors have
been frequent bankruptcy filers. 	Each of them filed several
times in the District of Arizona. 	Their odyssey through three
bankruptcy filings in the District of New Mexico had its
beginnings when they negotiated the purchase of their New Mexico
Angus cattle operation from Mr. Slaysman. 	The sale closed in
December 2006, and the contract terms (Purchase Agreement – Farm
and Ranch – ex 38) called for, among other things, monthly
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2 Debtors were required to serve their motion for a (new) trial
no later than ten days after the entry of the judgment. 	1-059(B)
NMRA.
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interest-only payments of $1,650 for two years followed by a
balloon payment for the remainder of the purchase price. 	From
the testimony and the exhibits, the Court finds that an initial
cooperative and friendly relationship between Creditors and
Debtors gradually deteriorated into anger and hostility as
Debtors failed to make timely payments and ended up blaming
Creditors for their problems. 	In September 2008 Creditors filed
a foreclosure action in the District Court for the Seventh
Judicial District for Catron County, New Mexico, and had the
complaint served on Debtors. 	Stipulated Order Resolving
Slaysmans’ Motion for Relief from Automatic Stay and Providing
Adequate Protection for Slaysmans’ Interest in Property (No. 12-
08-14483, doc 45) at 2. 	Inexplicably Debtors did not respond to
the complaint, and consequently on December 5, 2008 the state
court entered a default judgment of foreclosure which also
ordered the sale of the property. 	Id. 	Debtors filed a motion
set aside the default judgment on December 19, id., but still
found themselves faced with the distinct possibility of the
imminent loss of the operation. 2
Unable to find a bankruptcy attorney to represent them, on
December 31, 2008 Debtors filed a chapter 12 bankruptcy petition.
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3 The Court ruled that Debtors (1) failed to filed their chapter
12 plan within 90 days of the filing of the petition, (2) failed
to obtain the required credit and budget counseling prior to
filing their petition, and (3) did not prove that they met the
requirements to file as “family farmers”.
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In re David and Cynthia Benefield, No. 12-08-14483. 	After a
somewhat winding and confusing procedural course, which included
the entries of appearances by two different counsel for Debtors
(one of whom withdrew early in the case), that case was dismissed
on October 14, 2009 for Debtors’ failure to timely file a plan of
reorganization. 	Doc 87. 	In the oral findings of fact and
conclusions of law upon which the ruling was predicated, this
Court specifically found that Debtors had not acted in bad faith.
Debtors promptly refiled another chapter 12 case on November
12, 2009. 	In re David and Cynthia Benefield, No. 12-09-15173.
Again they were unrepresented by counsel. 	Creditors promptly
filed Slaysmans’ Emergency Motion to Dismiss Debtors’ Chapter 12
Bankruptcy Pursuant to 11 U.S.C. § 109 (doc 10), which came on
for a final hearing on February 4, 2010, was continued on
February 10, and concluded on February 11. 	The Court again
recited findings of fact and conclusions of law orally on the
record 3 and an order dismissing the chapter 12 case was entered
February 12, 2010. 	The instant case promptly ensued three weeks
later.
Discussion
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4 Sic. 	Cases are not “filed” under § 707(b).
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The critical issue in this case is whether the automatic
stay in this case, Debtors’ third, should be imposed despite the
dismissal of two previous cases within the preceding year (as
requested by Debtors), or whether the Court should declare that
the status quo is and will continue to be that there has been no
automatic stay in effect from the outset of the case (as
requested by Creditors). 	The relevant portion of the applicable
statute is as follows:
(4)(A)(I) 	if a single or joint case is filed by or
against a debtor who is an individual under this title,
and if 2 or more single or joint cases of the debtor
were pending within the previous year but were
dismissed, other than a case refiled under section
707(b), 4 the stay under subsection (a) shall not go
into effect upon the filing of the later case; and
(ii) ...;
(B) if, within 30 days after the filing of the later
case, a party in interest requests the court may order
the stay to take effect in the case as to any or all
creditors (subject to such conditions or limitations as
the court may impose), after notice and a hearing, only
if the party in interest demonstrates that the filing
of the later case is in good faith as to the creditors
to be stayed;
(C) a stay imposed under subparagraph (B) shall be
effective on the date of the entry of the order
allowing the stay to go into effect; and
(D) for purposes of subparagraph (B), a case is
presumptively filed not in good faith (but such
presumption may be rebutted by clear and convincing
evidence to the contrary)--
(I) as to all creditors if--
(I) 2 or more previous cases under this title
in which the individual was a debtor were
pending within the 1-year period;
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5 Sic. 	The extra “not” appears to produce a result precisely the
opposite of what Congress intended.
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(II) a previous case under this title in
which the individual was a debtor was
dismissed within the time period stated in
this paragraph after the debtor failed to
file or amend the petition or other documents
as required by this title or the court
without substantial excuse (but mere
inadvertence or negligence shall not be
substantial excuse unless the dismissal was
caused by the negligence of the debtor's
attorney)...; or
(III) there has not been a substantial change
in the financial or personal affairs of the
debtor since the dismissal of the next most
previous case under this title, or any other
reason to conclude that the later case will
not 5 be concluded, if a case under chapter 7,
with a discharge, and if a case under chapter
11 or 13, with a confirmed plan that will be
fully performed; or
(ii) as to any creditor that commenced an action
under subsection (d) in a previous case in which
the individual was a debtor if, as of the date of
dismissal of such case, such action was still
pending or had been resolved by terminating,
conditioning, or limiting the stay as to such
action of such creditor.
Section 362(c)(4).
Summarizing the relevant portion of the statute in question,
the stay does not come into effect automatically “if 2 or more
single or joint cases of the debtor were pending within the
previous year but were dismissed”. 	Section 362(c)(4)(A)(I). 	In
this case, the stay never came into effect due to the two
previous cases dismissed within a year of the filing of this
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6 Perforce Creditors’ motion to annul the stay is moot.
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case. 	Section 362(c)(4)(A)(I) is unambiguous on this issue.
Nelson v. George Wong Pension Trust (In re Nelson), 391 B.R. 437,
446-53 (9 th Cir. BAP 2008) (citing cases). 	To that extent,
Creditors’ motion must be granted, declaring that fact. 6 	§
362(c)(4)(A)(ii).
The Court will therefore issue an order declaring that the
stay is not and has not been in effect in this case.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	August 20, 2010
Copies to:
Cynthia Sue Benefield
HC 32 Box 216
Quemado, NM 87829
David Dwayne Benefield
HC 32 Box 216
Quemado, NM 87829
Christopher M Gatton
Attorney for Slaysman
Law Office of George Dave Giddens, PC
10400 Academy Rd., #350
Albuquerque, NM 87111
Alice Nystel Page
Office of US Trustee
PO Box 608
Albuquerque, NM 87103-0608
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