Tony Frederick Washington faced foreclosure on his property by Nationstar Mortgage and later U.S. Bank. Starting in 2015, Washington filed for bankruptcy six times, and each petition was dismissed. On May 19, 2022, he filed another bankruptcy petition the morning of a scheduled foreclosure sale, which proceeded later that day. Washington sued the creditors and the property purchaser, alleging they willfully violated the automatic bankruptcy stay and seeking $6 million in damages. The bankruptcy court dismissed the suit, finding no automatic stay existed under 11 U.S.C. § 362(c)(4)(A)(i) due to his prior dismissed filings, and the district court affirmed that decision.
The Fifth Circuit applied de novo review to the dismissal, focusing on the statutory text of 11 U.S.C. § 362(c)(4)(A)(i). The court noted that for an individual debtor, if two or more single or joint cases were pending within the previous year and were dismissed, the automatic stay under subsection (a) shall not go into effect upon the filing of the later case. The court took judicial notice of Washington's prior filings: one dismissed ten months prior and another dismissed three months prior to the May 2022 filing. Consequently, the automatic stay was terminated in its entirety by operation of law. The court rejected Washington's argument that the creditors were required to seek a court order confirming no stay was in effect under § 362(c)(4)(A)(ii). The court reasoned that the plain language of the statute allows a party to request such confirmation but does not mandate it. Since the stay never went into effect, there was nothing for the creditors to violate, and the complaint failed to state a claim upon which relief could be granted.
This decision reinforces the strict application of the repeat-filer provision in the Bankruptcy Code, clarifying that creditors are not required to take affirmative steps to confirm the absence of a stay before proceeding with foreclosure. It limits the ability of repeat filers to use bankruptcy filings as a tactical delay mechanism to halt foreclosure sales without first obtaining a court order extending the stay. The ruling leaves open the question of whether a debtor can obtain relief from the stay under § 362(c)(4)(B) in future filings, but confirms that without such an order, the stay is non-existent.
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