Billings v. Portnoff Law Associates, Ltd. , 687 F. App'x 163 ( 2017 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 16-3096
_____________
In re: MICHAEL T. BILLINGS & KATHLEEN BILLINGS,
MICHAEL T. BILLINGS; KATHLEEN BILLINGS,
Appellants
v.
PORTNOFF LAW ASSOCIATES, LTD.
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-16-cv-00778)
District Judge: Hon. Mark A. Kearney
_______________
Submitted Under Third Circuit L.A.R. 34.1(a)
March 21, 2017
Before: AMBRO, JORDAN, and ROTH, Circuit Judges.
(Filed April 26, 2017)
_______________
OPINION
_______________

This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
JORDAN, Circuit Judge.
Michael and Kathleen Billings failed to pay municipal fees and consequently
faced a foreclosure sale of their home. They declared bankruptcy, which resulted in an
automatic stay of the sale of their property. The township they were indebted to filed
several motions to postpone the sale while the bankruptcy proceeding continued. The
Billingses argue that filing those continuance motions was incompatible with the
automatic stay. We disagree and will affirm the District Court’s dismissal of their
Complaint.
I. Background1
The Billingses failed to pay about $4,500 in sewer, trash, and hydrant fees to West
Bradford Township. Accordingly, the Township obtained a default judgment against
them on November 11, 2013, which gave the Township a lien on their home. That same
day, the Township filed for a writ of execution based on the lien. It then scheduled a
sheriff’s sale for April 17, 2014.
A few days before the scheduled sale, on April 11, 2014, the Billingses filed a
Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Eastern
District of Pennsylvania. Under § 362 of the Bankruptcy Code, the filing of that petition
automatically stayed the foreclosure sale. 11 U.S.C. § 362(a)(1). At the time scheduled
for the sale, the Township made an oral announcement postponing it, which is permitted
1
When reviewing the decision to grant a motion to dismiss, “we must accept as
true all well-pleaded facts and allegations, and must draw all reasonable inferences
therefrom in favor of the plaintiff.” Bell v. Cheswick Generating Station, 734 F.3d 188,
193 n.5 (3d Cir. 2013) (citation omitted). Therefore we recite the facts as alleged by the
Billingses.
2
under Pennsylvania Rule of Civil Procedure No. 3129.3(b)(1). Subsequently, on five
separate occasions, the Township filed written motions with the Chester County Court of
Common Pleas seeking to continue the sheriff’s sale. Each of those motions was granted
and the date of sale was ultimately extended to November 19, 2015. At no point did the
Township request relief from the automatic stay issued by the Bankruptcy Court.
In that Court, the Township filed a proof of claim for approximately $9,500,
including attorney fees and costs as well as interest. The Bankruptcy Court later
confirmed a plan that would allow the Billingses to pay off their debt to the Township in
full.
The Billingses ultimately filed an adversary Complaint against Portnoff Law
Associates (“Portnoff”), the law firm representing the Township, arguing that the
repeated motions to continue the sheriff’s sale violated the automatic stay provision and
were sanctionable under 11 U.S.C. § 362(k)(1).2 They also sought to certify a class
action under Federal Rule of Bankruptcy Procedure 7023 to enjoin Portnoff from filing
similar motions in other Chapter 13 proceedings.
Portnoff filed a motion to dismiss. It asserted that the continuance motions it filed
were consistent with this Court’s decision in Taylor v. Slick, 178 F.3d 698 (3d Cir. 1999).
The Bankruptcy Court granted the motion to dismiss without granting the Billingses
leave to amend. Billings v. Portnoff Law Associates, Ltd. (In re Billings), 544 B.R. 529
(Bankr. E.D. Pa. 2016). The Billingses then filed a Notice of Appeal to the United States
2
Section 362(k)(1) provides in relevant part that “an individual injured by any
willful violation of a stay … shall recover actual damages, including costs and attorneys’
fees, and, in appropriate circumstances, may recover punitive damages.”
3
District Court for the Eastern District of Pennsylvania. It affirmed the Bankruptcy
Court’s decision. Billings v. Portnoff Law Associates, Ltd., 16-cv-778, 2016 WL
3344382 (E.D. Pa. June 10, 2016). This timely appeal followed.
II. Discussion3
The Billingses argue that the Bankruptcy Court and the District Court improperly
extended our decision in Taylor to postponements of a foreclosure sale that require a
creditor to seek a court order. But those Courts properly applied the precedent.
The filing of certain bankruptcy petitions operates as an automatic stay on “the
commencement or continuation … of a judicial, administrative, or other action or
proceeding against the debtor[.]” 11 U.S.C. § 362(a)(1). In Taylor, we held that “[t]he
continuation of a sheriff’s sale, following the filing of a bankruptcy petition,” did not
constitute a “continuation” of foreclosure proceedings and therefore did not “violate[] the
automatic stay provisions of 11 U.S.C. § 362(a)[.]” 178 F.3d at 700. While that case
involved an oral announcement of postponement, its reasoning is fully applicable to any
request for a “continuance of a sheriff’s sale in accordance with state law procedure[.]”
Id. at 701. The touchstone of our analysis in Taylor was that the automatic stay
provisions are intended “to maintain the status quo between the debtor and [his]
3
The District Court had jurisdiction to review final orders from the Bankruptcy
Court under 18 U.S.C. § 158(a). We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1)
and 28 U.S.C. § 1291. “Because the District Court sat as an appellate court, reviewing an
order of the Bankruptcy Court, our review of the District Court’s determinations is
plenary.” SEC v. Bocchino (In re Bocchino), 794 F.3d 376, 379 (3d Cir. 2015) (citations
omitted). We likewise review de novo the Bankruptcy Court’s decision to dismiss the
Billingses’ claims for failure to state a claim upon which relief may be granted. Mayer v.
Belichick, 605 F.3d 223, 229 (3d Cir. 2010).
4
creditors” in order to allow “the parties and the Court an opportunity to appropriately
resolve competing economic interests in an orderly and effective way.” Id. at 702
(emphasis and alteration in original) (citation omitted). And since a continuation
“connotes the postponement of a proceeding,” it “effectuates the purpose of § 362(a)(1)
by preserving the status quo until the bankruptcy process is completed or until the
creditor obtains relief from the automatic stay.” Id.; see also Angulo v. Emigrant
Mortgage Co. and Retained Realty, Inc. (In re Angulo), Adv. No. 9-398, 2010 WL
1727999, at *5 (Bankr. E.D. Pa. Apr. 26, 2010) (finding that judicial postponement of a
sale was proper under Taylor).
The Billingses argue that allowing a creditor to file repeated motions for a
continuance will be unduly harmful to the debtor. We agree with the Bankruptcy Court,
though, “that it is hardly self-evident … that multiple postponements are detrimental to
debtors.” Billings, 544 B.R. at 536 n.8. To the contrary, allowing a creditor to continue
to delay the sale without requiring rescheduling and providing additional public notice
helps “avoid duplicative foreclosure costs that would eventually be deducted from the
proceeds of the sale (to the disadvantage of the debtor).” Taylor, 178 F.3d at 702. If
judicial continuances were unavailable, then creditors, and ultimately the debtor, would
incur the cost of rescheduling the sale and providing notice. See Billings, 544 B.R. at 536
n.8 (noting that the cost a “creditor must pay to schedule a sheriff’s sale [in Philadelphia
County] is at least $2,000”). Accordingly, allowing a judicial motion for a continuance is
fully compatible with the underlying aim of the automatic stay provision.
5
The Billingses also argue that the Township’s continuance motions are
distinguishable from the continuance motion in Taylor because the Township in this case
incurred attorneys’ fees that it would pass along to the Billingses as part of the tax lien.
The Billingses claim that, by incurring fees, the Township impermissibly altered the
status quo. That argument loses for two reasons.
First, the Billingses failed to plead that they either have been or will be required
to pay for additional legal fees as a result of the continuance motions4 While they point
generally to attorneys’ fees and court costs that they have been required to pay to the
Township under the payment schedule established in the Chapter 13 proceeding, they do
not even allege that those costs were related to Portnoff’s work on the continuance
motions, let alone provide a breakdown showing what portion of the costs were related to
the continuance motions. They likewise fail to “identif[y] the precise source of authority
(court rule or statute) for the additional legal fees they expect to incur as a result of the
multiple continuance motions[.]” Billings, 544 B.R. at 535 n.7. Accordingly, any costs
are purely speculative at this point.5 The Billingses also argue that “they should be
4
Instead of alleging that they will be required to pay the Township’s attorneys’
fees, the Billingses merely cite to an opinion from the Bankruptcy Court which held that
Taylor is inapplicable in a “case where the Plaintiffs and Plaintiff class are subject to
additional legal fees in connection with the motions herein complained of.” (App. at 34)
(citing In re Townsville, 268 B.R. 95 (Bankr. E.D. Pa. 2001)). But even if that were a
correct statement of the law, the Billingses’ failure to allege that they would actually be
required to pay such fees is fatal to their argument.
5
Before the Bankruptcy Court and District Court, the Billingses apparently argued
that the costs that they themselves were required to incur to review the Township’s
motions improperly altered the status quo. To the extent their Complaint can be read as
making such an allegation, it is nonetheless unsupported by anything else in the
6
allowed to take discovery … to show that the ‘status quo’ under Taylor was affected by
the repeated motions and the attendant attorneys[’] fees from such motions.” (Opening
Br. at 11.) But the Billingses’ Complaint is insufficient to survive a motion to dismiss
and does not justify forcing Portnoff to incur the costs of discovery. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (holding that “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements,” are inadequate to survive a motion to
dismiss).
Second, even if we were to assume that the Billingses would be required to pay for
the costs that the Township incurred in seeking a continuance, there would be no cause
for concern. As we concluded in Taylor, actions taken to preserve the state of affairs that
existed before a bankruptcy petition was filed are not prohibited by the Bankruptcy Code.
178 F.3d at 701-02. Preserving the status quo is not always a cost-free proposition,6 and
generally applicable fee-shifting provisions may ultimately require a debtor to pay some
or all of those costs. Requiring a debtor to pay the incidental price of maintaining the
Complaint. It is difficult to grasp why a debtor would incur much in the way of
attorneys’ fees in order to fight against a pro forma postponement motion that ultimately
benefits the debtor. In any event, as will be discussed further, any fees incurred would
not be incompatible with the automatic stay.
6
As the Bankruptcy Court noted, even seeking an oral postponement like the one
in Taylor likely imposes some costs. Billings v. Portnoff Law Associates, Ltd. (In re
Billings), 544 B.R. 529, 536 (Bankr. E.D. Pa. 2016), aff’d 2016 WL 3344382 (E.D. Pa.
June 10, 2016) (“The potential for a creditor to incur legal expenses (potentially
chargeable to the debtor) exists any time the creditor follows the state court rules that
authorize the postponement of a sheriff’s sale, regardless whether the procedure involves
an oral announcement or the filing of a written motion.”). So it is impossible to read
Taylor as prohibiting all legal action that incurs cost.
7
status quo does not upset the status quo but helps to preserve it.7 Therefore the
Township’s continuance motions were proper and the Billingses have no cause for
complaint. Because we conclude that the Billingses’ claims were meritless as a matter of
law, there is also no basis for class standing. McNair v. Synapse Grp., 672 F.3d 213, 223
(3d Cir. 2012) (noting that the named plaintiffs’ failure to state a claim defeats standing).
III. CONCLUSION
For the foregoing reasons, we will affirm.
7
There is no evidence in this case that the Township abused the legal process by
making frivolous requests in order to incur excessive legal fees. To the contrary, filing
an unopposed motion for a continuance is relatively unobtrusive and necessary to
maintain the status quo. Allowing such motions to be filed will not “open up Pandora’s
Box[.]” (Opening Br. at 2.) We leave for another day the question of whether the filing
of frivolous or unduly-costly motions would violate the automatic stay provision.
8