United States District Court, E.D. Michigan, Southern Division
In re SALISHA BAKER, Debtor.
WAYNE COUNTY TREASURER, Appellee. SALISHA BAKER, Appellant,
OPINION AND ORDER DENYING MOTION FOR STAY PENDING
J. Michelson, United States District Judge
Baker wanted to secure a steady stream of retirement income.
So she purchased a number of rental properties at a tax
auction and started a property-management business. But
things did not go as planned. The income from the properties
did not cover her costs, and she ran up sizeable debts to the
Wayne County Treasurer and the Detroit Water and Sewerage
Department, among other creditors.
filed for bankruptcy. In the Chapter 13 bankruptcy
proceeding, Baker was able to “cram down” some
debts and negotiate a payment plan. She remains timely on her
plan payments. But in 2016, an illness kept her from work and
reduced her income. As a result, she failed to pay
post-petition property taxes for 2015 and 2016. Wanting to
initiate tax foreclosures, the Wayne County Treasurer moved
to lift the automatic stay that accompanied Baker's
bankruptcy filing. The bankruptcy court found cause to lift
the automatic stay. Baker moved to stay the bankruptcy
court's ruling pending an appeal. The bankruptcy court
denied Baker's motion.
now asks for the same relief from this Court.
2015, Salisha Baker filed a voluntary petition for Chapter 13
bankruptcy protection. (R. 5, PID 24-26.) At the time, Baker
had a job working for a company called MGIC. (R. 5, PID 64.)
To generate a consistent stream of retirement income, she
purchased several residential properties at tax auction and
started a property-management business. (R. 7, PID 359; R. 8,
PID 391.) Eventually, she came to own at least five
properties in the City of Detroit. (R. 8, PID 391.) But the
rental income and Baker's wages from MGIC did not cover
her costs to operate the properties. (R. 5, PID 66-70;
see also R. 5, PID 137.)
debts drove her to seek bankruptcy protection. Baker has
numerous creditors. At the time she filed her petition, Baker
owed the Wayne County Treasurer $49, 024.10 in unpaid
property taxes (for years 2010 to 2014). (R. 5, PID 45.) She
also owed the Detroit Water and Sewerage Department for
unpaid water bills. (R. 5, PID 51-52.) Chapter 13 protection
allowed Baker to “cram down” (i.e. reduce) the
property-tax and utility-bill debt, and she negotiated a
payment plan with her other creditors. (R. 5, PID 178-79,
183.) Her plan, covering a 60-month term, requires Baker to
make $675.00 payments every two weeks. (R. 5, PID 183.)
years, Baker made timely payments. (R. 5, PID 312, 323.) But
in 2016, an illness forced Baker to take a medical leave from
MGIC. (R. 8, PID 392.) Her reduced income affected her
ability to pay both her plan payments and her 2015 and 2016
property taxes. (Id.) Baker opted to make payments
to her plan and did not pay property taxes for any of her
properties for 2015 or 2016. (Id.) By operation of
state law, failing to pay property taxes created a lien on
the properties. See Mich. Comp. Laws § 211.40.
understand what happened next requires an understanding of
some bankruptcy law. Filing a voluntary petition for
bankruptcy protection operates as an automatic stay of
virtually any action against the debtor by virtually any
creditor. See 11 U.S.C. § 362(a). The automatic
stay affords some breathing room for the debtor to effect a
reorganization and prevents a disorderly rush by creditors to
collect. See H.R. Rep. No. 95-595, 95th Cong., 1st
Sess. 340 (1977). A creditor may, however, petition the
bankruptcy court to lift the automatic stay “for
cause.” 11 U.S.C. § 362(d)(1).
to Baker's situation, while the automatic stay did not
prevent Wayne County's liens from attaching, see
11 U.S.C. § 362(b)(18), it did initially prevent Wayne
County from enforcing those liens through tax foreclosure.
See 11 U.S.C. § 362(a)(4). So the Wayne County
Treasurer filed a motion in the bankruptcy court to lift the
stay. (R. 5, PID 250-54.) The Treasurer argued that
Baker's failure to pay post-petition property taxes
amounted to “cause” sufficient to lift the stay.
(R. 5, PID 261-62.) In response, Baker argued that her health
concerns and timely plan payments to the trustee counseled
against lifting the stay. (R. 5, PID 338.) The bankruptcy
court agreed with the Treasurer. (R. 5, PID 268-270.)
then asked the bankruptcy court to stay its decision pending
an appeal, but it declined to do so. (R. 8, PID 393.) Baker
filed her appeal. (R. 1.) To prevent the impending tax
foreclosure of her properties, Baker again seeks to stay the
bankruptcy court's lifting of the automatic stay.
Federal Rules of Bankruptcy Procedure allow a party to
request a stay from the district court. See Fed. R.
Bankr. P. 8007(b). A party must first seek relief in the
bankruptcy court, and if denied, a party may then petition
for review in the district court. Fed. R. Bankr. P.
8007(a)(1). A stay pending an appeal is similar to a
preliminary injunction, so the factors that govern a decision
to issue an injunction likewise govern a decision to issue a
stay. See Nken v. Holder, 556 U.S. 418, 434 (2009).
Those factors are: “(1) the likelihood that the party
seeking the stay will prevail on the merits of the appeal;
(2) the likelihood that the moving party will be irreparably
harmed absent a stay; (3) the prospect that others will be
harmed if the court grants the stay; and (4) the public
interest in granting the stay.” Mich. Coalition of
Radioactive Material Users, Inc. v. Griepentrog, 945
F.2d 150, 153 (6th Cir. 1991).
analyzing the four factors, the Court engages in an
individualized balancing act. See Id. at 1229
(holding that the factors are not “prerequisites that
must be met” but rather “considerations . . . to
be balanced”). The Supreme Court reasons that the first
two factors-likelihood of success and irreparable harm-weigh
the most. See Nken, 556 U.S. at 434. Parties must
show greater than a “possibility” of both.
Id. at 434-35. And they are closely related. See
Michigan Coalition of Radioactive Material Users, Inc. v.
Griepentrog, 945 F.2d 150, 154 (6th Cir. 1991)
(“The probability of success that must be demonstrated
is inversely proportional to the amount of irreparable injury
plaintiffs will suffer absent the stay. Simply stated, more
of one excuses less of the other.”). Finally, if after
weighing the first two factors, the scales tip decisively in
one direction or the other, the Court need not ...