FIRST UNION NATIONAL BANK, WILLIAM R. HOKE, TRUSTEE, DAVID J. WITHEFT, WILLIAM C. SMITH, JR. and MANNING, FULTON & SKINNER, P.A., Appellants, v. HAYWOOD M. CLAYTON, Appellee. 
2:97CV620
UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA, GREENSBORO DIVISION 1998 U.S. Dist. LEXIS 4108

January 16, 1998, Decided
January 16, 1998, Filed

DISPOSITION: [*1]  Reversed. 

COUNSEL: For FIRST UNION NATIONAL BANK, DAVID J. WITHEFT, MANNING, FULTON & SKINNER, P.A., appellants: WILLIAM CARR SMITH, JR., MANNING, FULTON & SKINNER, RALEIGH, NC. WILLIAM R. HOKE, Trustee, appellant, Pro se, RALEIGH, NC. For WILLIAM C. SMITH, JR., appellant: WILLIAM C. SMITH, JR., MANNING, FULTON & SKINNER, RALEIGH, NC. HAYWOOD M. CLAYTON, appellee, Pro se, CHAPEL HILL, NC. 

JUDGES: James A. Beaty, Jr., United States District Judge. 
OPINION BY: James A. Beaty, Jr. 

OPINION:
MEMORANDUM OPINION and ORDER
Beaty, District Judge.
This case is before the Court on appeal from the April 17, 1997 Order of United States Bankruptcy Judge Catherine R. Carruthers. The appellants, First Union National Bank ("First Union"), filed an appeal from Bankruptcy Judge Carruthers` Order which granted the Motion for Sanctions filed by appellee, Haywood M. Clayton ("Clayton"). Clayton had requested sanctions based upon an alleged violation of an automatic stay provided by Section 362 of the United States Bankruptcy Code. The essence of the alleged violation as stated in the appeal is whether the act of postponing a previously scheduled non-judicial foreclosure sale is a violation of the automatic [*2]  stay provided for in Section 362 of the Bankruptcy Code. The legal arguments presented by the parties in their briefs n1 and the facts as contained in Bankruptcy Judge Carruthers` April 17, 1997 Order sufficiently state the facts that are necessary for this Court`s consideration of this matter. Therefore, the Court finds that oral argument by the parties will not aid the Court in the decisional process.

n1 The appellee previously filed a Motion for Extension of Time [Document # 5] to file his brief in this case, and subsequently filed the brief on July 30, 1997. In order to resolve this matter, the Court in its discretion allows Clayton`s Motion for Extension of Time and deems the brief to have been timely filed for consideration by this Court. However, the Court will consider Clayton`s brief only to the extent that it addresses the issue raised by First Union`s appeal questioning the Bankruptcy Court`s finding that the filing of a Notice of Postponement of the Sale was a violation of the automatic stay provided for in Section 362(a) of the Bankruptcy Code. Therefore, the Court will not address Clayton`s attempt to raise an issue as to the Bankruptcy Court`s denial of damages, particularly in view of this Court`s ruling as to whether a violation did or did not occur.

[*3] 

I. Procedural Background

Briefly stated, the facts revealed that First Union, pursuant to a note and deed of trust, initiated a foreclosure proceeding against real property owned by Clayton and his wife. This foreclosure was initially stayed by a Chapter 13 bankruptcy petition filed by Clayton on December 8, 1995. As a result of Clayton`s default in the payment schedule established for the December 8, 1995 Chapter 13 petition, the Chapter 13 plan was dismissed by the Bankruptcy Court on December 6, 1996. Shortly after the dismissal, First Union reopened the foreclosure action and scheduled a foreclosure sale for January 3, 1997. On January 2, 1997, Clayton responded to First Union`s action by filing a voluntary petition for relief pursuant to Chapter 7 of the United States Bankruptcy Code. First Union learned of Clayton`s petition for bankruptcy on the same day it was filed, that is, January 2, 1997. This new petition was filed only one day before the foreclosure sale had been scheduled to take place at the Orange County Courthouse. On January 3, 1997, an agent for First Union appeared at the scheduled sale to advise anyone present that the sale would not take place. However,  [*4]  neither Clayton nor anyone else appeared at the sale. Thereafter, pursuant to North Carolina law, see N. C. Gen. Stat. §  45-21.21, an agent for First Union filed with the Orange County Clerk of Court a Notice of Postponement of the foreclosure sale until 10:30 a.m. on January 21, 1997. In addition to posting the Notice of Postponement at the Orange County Courthouse, the agent for First Union mailed a copy of the Notice of Postponement to Clayton by regular first class mail.

On January 9, 1997, Clayton filed a Motion for Sanctions against First Union contending that, by filing a Notice of Postponement of the foreclosure sale scheduled for January 3, 1997, First Union violated the automatic stay which was imposed as a result of Clayton`s bankruptcy petition of January 2, 1997. Bankruptcy Judge Carruthers agreed with Clayton and concluded in the April 17, 1997 Order that First Union`s action in filing the Notice of Postponement of the foreclosure sale was a continuation of the legal proceeding against Clayton. As such, Bankruptcy Judge Carruthers viewed the postponement of the sale as a violation of the automatic stay provisions of Section 362(a) of the Bankruptcy Code because [*5]  the postponement was a "mere deferral of dates on which events are to transpire." For the reasons stated herein, the Court will reverse the April 17, 1997 Order entered in this case by the Bankruptcy Court.

II. Discussion

Section 362 of Title 11 of the United States Code provides in relevant part as follows:

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title ... operates as a stay, applicable to all entities, of-- (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

...

(h) An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys` fees, and, in appropriate circumstances, may recover punitive damages.

The automatic stay imposed by 11 U.S.C. §  362(a) "`is one of the fundamental debtor protections provided [*6]  by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.`" Checkers Drive-In Restaurants v. Commissioner of Patents & Trademarks, 311 U.S. App. D.C. 188, 51 F.3d 1078, 1081-82 (D.C. Cir. 1995) (citations omitted) (quoting S. Rep. No. 95-989, at 54-55 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840; H.R. Rep. No. 95-595 at 340 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6296). However, the specific issue raised by the present appeal is whether the action taken by First Union of postponing a previously scheduled non-judicial foreclosure sale is a violation of the automatic stay provisions of Section 362(a) of the Bankruptcy Code. As acknowledged by the Bankruptcy Court below, under the prevailing view, postponing a foreclosure sale is not violative of the automatic stay provisions. "Postponement notices which specify a new sale date merely preserve the status quo between creditor and debtor." Workingmen`s Sav. & Loan  [*7]   Ass`n of Dellwood Corp. v. Kestner, 438 Pa. Super. 186, 652 A.2d 327, 328 (Pa. Super. Ct. 1994) (citing Zeoli v. RIHT Mortgage Corp., 148 B.R. 698, 702 (D.N.H. 1993), and First Nat`l Bank v. Roach (In re Roach), 660 F.2d 1316, 1318-1319 (9th Cir. 1981)). The court in Bam Investments, Inc. v. Roberts, 172 Ariz. 602, 838 P.2d 1363, 1365 (Ariz. 1992), also observed that the court in Roach "reasoned that such postponements `merely maintained the status quo, and did not harass, interfere or gain any advantage.`" Id. It was further noted that the maintaining of the status quo was consistent with the purpose of the automatic stay. 838 P.2d at 1365.

While the Bankruptcy Court`s April 17, 1997 Order recognized the "practicability" of the conclusions reached by courts which have adopted the prevailing view as to the effect of a postponement of a foreclosure sale, the Bankruptcy Court described the postponement in this case in terms of a "mere deferral of dates on which events are to transpire." There is no question that actually conducting the sale on a date in the future would be a violation of the automatic stay. However, this Court finds that the postponement of the [*8]  sale in this instance was a defensive or responsive action taken by First Union following Clayton`s action of initiating a Chapter 7 bankruptcy petition shortly after his Chapter 13 plan had been dismissed. Because of the automatic stay associated with Clayton`s new Chapter 7 petition, filed only one day before the previously scheduled foreclosure sale, the only appropriate action for First Union to take was to postpone the sale. Consistent with North Carolina law, First Union posted the Notice of Postponement of the Sale at the Orange County Courthouse and provided Clayton with a copy of the Notice of Postponement by regular first class mail. See N. C. Gen. Stat. §  45-21.21. The Court finds that First Union`s action in this regard cannot be viewed as an effort to harass Clayton or to gain any advantage by postponing the foreclosure sale which had been scheduled prior to Clayton`s filing a new bankruptcy petition on January 2, 1997.

The Bankruptcy Court`s Order ultimately acknowledged that the only effect of the act of postponing the sale in this case was to maintain the status quo. However, this acknowledgment did not occur until the Bankruptcy Court`s discussion of whether [*9]  damages should be imposed against First Union in view of its ruling on the violation of the stay issue. n2 In the words of the Order itself, it is stated that "although the court disagrees with the majority of courts that the postponement of a foreclosure sale does not constitute a violation of the automatic stay, the court does agree with the general premise (as stated by the majority of courts) that the practical effect of any such action is to maintain the status quo." More significantly, the Bankruptcy Court recognized that "the postponement of the foreclosure sale was not prosecuted by First Union to harass the Debtor and the parties` substantive rights have not changed." At this point in the Order, the Bankruptcy Court was only one step from the conclusion that has been reached by a majority of courts addressing this specific issue. Based upon the facts presented by this appeal, it is this Court`s conclusion that First Union`s act of postponing the foreclosure sale, previously scheduled for the day after Clayton filed his Chapter 7 petition, was appropriate. The Court also concludes that the postponement of the sale was for the purpose of maintaining the status quo and not to [*10]  harass Clayton or to gain an unfair advantage over anyone. The Court further concludes that First Union`s postponement of the sale in this instance was not a violation of the automatic stay provisions of Section 362(a) of the Bankruptcy Code.

n2 This Court`s ruling eliminates any need to consider the Bankruptcy Court`s ruling on the damage issue, even if it were properly before this Court.

IT IS THEREFORE ORDERED that the Bankruptcy Order of April 17, 1997 granting Clayton`s Motion for Sanctions against First Union is Reversed.

This the 16 day of January, 1998.

James A. Beaty, Jr.

United States District Judge