Carlota M. Böhm United States Bankruptcy Judge
Chapter 7 Appearances: Brian C. Thompson, Esq. for Debtor-Respondent, Sharon A. Lagania
David W. Raphael, Esq. for Movant, First National Bank of Pennsylvania
MEMORANDUM ORDER
The matter before the Court is the Motion for Relief from the Automatic Stay ("Motion") filed by First National Bank of Pennsylvania ("Movant"), seeking relief from the automatic stay pursuant to 11 U.S.C. §362(d)(1) and (2) relative to Debtor's 2009 Kia Rondo ("Vehicle"). Debtor avers that Movant lacks the requisite standing to bring the within Motion due to Movant's alleged failure to perfect its security interest in the Vehicle.
This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§157 and 1334. This is a core matter pursuant to 28 U.S.C. §157(b)(2)(G), and the Court will enter final judgment. However, if the United States District Court determines pursuant to the rationale set forth in Stern v. Marshall, 131 S.Ct. 2593 (2011), that this Court does not have the authority to enter final judgment, then the Memorandum Order entered shall constitute the Court's proposed findings of fact and conclusions of law and recommendation to the District Court.
"The automatic stay is one of the most fundamental protections granted the debtor under the Bankruptcy Code. Its purpose is three-fold: 'to prevent certain creditors from gaining a preference for their claims against the debtor; to forestall the depletion of the debtor's assets due to legal costs in defending proceedings against it; and, in general, to avoid interference with the orderly liquidation or rehabilitation of the debtor.'" Izzarelli v. Rexene Products Co. (In re Rexene Products Co.), 141 B.R. 574, 576 (Bankr.D.Del.1992)(citations omitted). "However, the stay is not meant to be indefinite or absolute, and in appropriate instances, relief may be granted." Id. (citation omitted).
Under 11 U.S.C. §362(d), "[o]n request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay-- (1) for cause, including the lack of adequate protection of an interest in property of such party in interest; (2) with respect to a stay of an act against property under subsection (a) of this section, if-- (A) the debtor does not have an equity in such property; and (B) such property is not necessary to an effective reorganization[.]" (emphasis added). To qualify as a party in interest, the moving party must possess a legally protected interest that has either been adversely affected or is in danger of being adversely affected. In re Alcide, 450 B.R. 526, 535 (Bankr.E.D.Pa. 2011). Additionally, the moving party must be asserting its own rights and not those of another entity. Id. In the within matter, Debtor avers that Movant does not possess the requisite standing to bring the Motion due to Movant's failure to perfect its security interest in the Vehicle.
Section 9303(c) of the Pennsylvania Commercial Code, which addresses laws governing perfection and priority of security interests in goods covered by a certificate of title holds, in part, that the "local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title." See 13 Pa.C.S.A. § 9303(c). Accordingly, perfection of a security interest in a motor vehicle, for which a certificate of title is issued, is governed by state law, and in this case, Pennsylvania law.
Under Pennsylvania law, a security interest in a vehicle titled within the Commonwealth of Pennsylvania is perfected upon receipt by the department of (1) a completed application specifying the lienholder's name and address, (2) payment of the fee required by 75 Pa.C.S.A. §1953, and (3) the manufacturer's statement of origin or the existing certificate of title for the vehicle. See 75 Pa.C.S.A. §1132.1(a). "Upon perfection of a security interest in a vehicle, the department shall issue a certificate of title with the names of the first two lienholders and indicate the number of additional lienholders existing at that time. . ." See 75 Pa.C.S.A. §1132.1(d). Once issued by the appropriate department, a certificate of title is prima facie evidence of the facts appearing on the certificate. See 75 Pa.C.S.A. § 1106(c).
Section 362(g) of the United States Bankruptcy Code provides that in hearings brought under §362(d) requesting relief from stay, the requesting party has the burden of proof on the issue of debtor's equity in property, whereas the party opposing relief has the burden of proof on all other issues. O'Neal Steel, Inc. v. Chatkin (In re Chatkin), 465 B.R. 54, 60 (Bankr.W.D.Pa.2012); See also 11 U.S.C. §362(g). Despite this reading, courts, including this Honorable Court, have previously held that, with respect to "all other issues" an initial burden is placed on the requesting party to make a prima facie showing of cause sufficient to support the party's request for relief from stay. In re Chatkin, 465 B.R. at 61. If a prima facie case is shown, the burden then shifts to the party opposing relief to show lack of cause to grant relief from stay. Id.; See also In re Rexene Products Co., 141 B.R. at 576-577. With respect to standing, the moving party bears the burden of proving that it is a party in interest under 11 U.S.C. §362(d). In re Alcide, 450 B.R. at 534.
Upon consideration of the Motion, Debtor's response thereto, the arguments and evidence set forth at the evidentiary hearing held March 26, 2014, the parties' post-trial briefs and respective reply briefs, and the entire record of this case, the Court finds as follows:
The Court notes that it did not take into consideration the Affidavits submitted with First National Bank of Pennsylvania's Brief in Support of Motion for Relief from the Automatic Stay, docketed as Doc. No. 88 in the within matter, in rendering this Memorandum Order.
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1. On or about May 19, 2009, Debtor entered into a Motor Vehicle Installment Sale Contract ("Contract") for the purchase of a 2009 Kia Rondo ("Vehicle"). The Contract was assigned to Movant.
2. Shortly thereafter, Debtor received in the mail a Certificate of Title for a Vehicle issued by the Pennsylvania Department of Transportation on June 24, 2009 ("June 24, 2009 Title"). No liens were listed on the June 24, 2009 Title.
3. On October 8, 2009, a Certificate of Title for a Vehicle was issued by the Pennsylvania Department of Transportation ("October 8, 2009 Title") for the Vehicle indicating a first lien in favor of Movant.
4. Debtor's arguments that the October 8, 2009 Title contains noticeable discrepancies are unpersuasive. The Court believes that any inconsistencies between the address of the Debtor and named Secretary of Transportation as they existed as of the date of issue, October 8, 2009, and what is listed on the October 8, 2009 Title may be attributable to the fact that the copy of the October 8, 2009 Title provided to the Court was not generated until February 2014. Moreover, Debtor's arguments regarding the reported mileage on the October 8, 2009 Title, as well as the car dealership's lack of authority to record the lien are insufficient to overcome the Movant's prima facie showing that Movant's security interest was properly recorded. See 75 Pa.C.S.A. § 1106(c).
5. Further, the Court finds that Debtor's testimony at the evidentiary hearing that she believed she owned the Vehicle free and clear of liens upon receipt of the June 24, 2009 Title is not credible. Debtor testified that although she received the June 24, 2009 Title, Debtor continued to make payments to Movant thereafter, even obtaining extensions on payments from Movant after experiencing financial difficulty. Based on Movant's averments, Debtor did not cease making payments until October 18, 2012, over three years later. The Court finds it implausible that Debtor would make payments on a lien she did not believe to be enforceable for three years. The Court's finding is further supported by the fact that on Schedule D of Debtor's Petition, Debtor listed Movant as holding a secured claim in the Vehicle and proposed to pay Movant as a secured claim holder in both her Chapter 13 Plan dated June 21, 2012, as well as her subsequent amended plans.6. Accordingly, pursuant to 75 Pa.C.S.A. §1132.1(d) and §1106(c), Movant perfected its security interest in the Vehicle on or about October 8, 2009, over two and one-half years prior to the filing of Debtor's June 7, 2012 Chapter 13 Petition. Thus, though Movant perfected its title several months after the date of the Contract, Movant held a valid security interest in the Vehicle as of the time of Debtor's bankruptcy filing and, consequently, has standing to bring the within Motion.
7. Movant established, and Debtor has failed to rebut, a prima facie showing of cause sufficient to support Movant's request for relief. Movant avers that Debtor has failed to make adequate protection payments to Movant since October 18, 2012. At the evidentiary hearing, Debtor not only failed to refute Movant's assertions, but acknowledged that despite extensions on payments given to Debtor by Movant, Debtor was ultimately unable to make payments to Movant. Thus, the Court finds that Movant has established "cause" for relief under §362(d)(1).
8. The Court further finds that the Debtor has no equity in the Vehicle and, as the within case is filed under Chapter 7 of the Bankruptcy Code, that the Vehicle is not necessary for the reorganization of Debtor.
9. Accordingly, Movant is entitled to relief from stay pursuant to 11 U.S.C. §362(d)(1) and 11 U.S.C. §362(d)(2).
Based on the foregoing, it is hereby ORDERED, ADJUDGED, and DECREED, that the Motion for Relief from the Automatic Stay is GRANTED. Date: August 7, 2014
/s/Carlota M. Böhm
Carlota M. Böhm
United States Bankruptcy Judge
CASE ADMINISTRATOR TO MAIL TO:
Office of the United States Trustee
Natalie Lutz Cardiello, Trustee
Brian C. Thompson, Esq.
David W. Raphael, Esq.