The above mentioned case came prior to the Court in the defendant’s movement for summary judgment filed on August 1, 2006, in reaction to your debtor-plaintiff’s grievance alleging the creditor-defendant violated the automatic stay [i.e. 11 U.S.C. В§ 362(a)] by cashing the plaintiff’s check after she filed a petition for relief under Chapter 13 for the U.S. Bankruptcy Code. The defendant avers it failed zip19.com payday loans to break the automated stay because regarding the exclusion supplied in 11 U.S.C. В§ 362(b)(11). The Court has jurisdiction over this matter pursuant to 28 U.S.C. В§В§ 157 and 1334. The Court heard dental arguments on September 12, 2006 and directed the events to register extra briefs coping with if the check at problem qualified as being an instrument that is negotiable. For the reasons stated below, the Court discovers the motion for summary judgment is born to be ISSUED.
On April 15, 2006, the plaintiff received a “payday loan” for $500.00 through the defendant. In return for the $500.00 loan, the plaintiff provided the defendant a search for $587.50, that was designed to spend the key of this loan plus interest and costs. The defendant consented to support the check until April 29, 2006. May 9, 2006, the debtor-plaintiff filed for Chapter 13 bankruptcy relief. For purposes for this summary judgment, the defendant stipulates it received notice of this plaintiff’s bankruptcy before negotiating her check always. May 16, 2006, the defendant provided the plaintiff’s look for re re payment, however it had been rreturned as a result of funds that are insufficient. Even though the check wasn’t compensated, the plaintiff did incur NSF fees imposed by her bank for issuing a inadequate check. On June 1, 2006, the plaintiff initiated this adversary proceeding for breach associated with stay that is automatic.
Roles regarding the events
The defendant contends that since the check had been a negotiable instrument, depositing and presenting it for re payment had not been a breach associated with automatic stay pursuant towards the exemption supplied in Section 362(b)(11) associated with the Bankruptcy Code. The defendant cites different instances when courts have actually determined presentment of a negotiable tool just isn’t a breach associated with the automated stay. For instance, in Thomas v. cash Mart Fin. Serv., Inc. (In re Thomas), the Eighth Circuit discovered cash Mart, the creditor in a cash advance transaction, ended up being especially excepted through the stay whenever it attempted to acquire payment on checks by tendering them into the drawee bank. 428 F.3d 735 (8 th Cir. 2005). The defendant contends checks for cash advance payday loans are “negotiable instruments” as defined by instance legislation. See Franklin v. Qwick money of Martin (In re Franklin), 254 B.R. 718, 720 (Bankr. W.D. Tenn. 2000) (cash loan business deferred presentment of plaintiff’s check, therefore the court found such presentment for the instrument that is negotiable the petition date wasn’t a breach regarding the automated stay); see additionally In re Noffsinger, 316 B.R. 283 (Bankr. W.D. Ky. 2004) (the court discovered presentment of debtor’s 19 checks fell inside the concept of negotiable instrument, together with simple language for the automated stay statute managed, exempting the creditor through the automated stay; nonetheless, the creditor in this instance had not been a money advance/payday loan creditor).
The Bankruptcy Code will not define “negotiable tool.” Nevertheless, area 7-3-104(a) of this Alabama Code, describes an instrument that is negotiable:
[A]n unconditional promise or purchase to spend a set amount of cash, with or without interest or other fees described within the vow or purchase, if it: (1) is payable to bearer or even purchase at that time it really is given or first has control of a owner;
(2) is payable on need or at an absolute time; and (3) doesn’t state every other undertaking or instruction because of the individual guaranteeing or purchasing payment to accomplish any work aside from the re re payment of cash. . . .
After oral arguments regarding the defendant’s movement, the Court directed the parties to further brief the problem of whether this specific check had been a negotiable instrument due to the way the number of the check ended up being finished because of the plaintiff. The plaintiff’s check must satisfy the requirements of Ala as stated above, to be a negotiable instrument. Code В§ 7-3-104(a). One of these brilliant needs could it be must certanly be a promise that is unconditional pay a “fixed amount of cash.” The numerical quantity of the check is “$587.50”, however the quantity stated in words reads “five eighty-seven and 50/100 bucks.” The Court must first see whether the ambiguity from the face of this check ended up being adequate resulting in the check not to be payable for a hard and fast amount of cash, therefore using it out from the definition of an instrument that is negotiable. If the check is certainly not a negotiable tool, then your defendant cannot gain benefit from the exclusion towards the automated stay.
The plaintiff together with defendant knew the check ended up being designed for its amount that is numerical.e. $587.50) since there had been other writings confirming the total amount of the re re re payment due as soon as the loan matured. But, “[n]egotiability is set through the face, the four-corners, regarding the tool regardless of extrinsic facts.” Participating Parts Assoc., Inc. v. Pylant, 460 Therefore. 2d 1299 (Ala.Civ.App. 1984), quoting Holsonback v. First State Bank, 394 therefore. 2d 381 (Ala.Civ.App. 1981). Because we understand the regards to the root deal, we realize that the term “hundred” had been omitted through the level of the check claimed in terms. The plaintiff designed to result in the check payable in the fixed level of “five hundred eighty-seven and 50/100 bucks.” but, let’s say the deal required the Plaintiff to pay for five thousand eighty-seven and 50/100 bucks? A stranger to the transaction might not know what amount was intended from the word description of the amount of the check, e.g from the four corners of the check. hundred, thousand, etc. clearly, he/she would assume it absolutely was “hundred” as the amount that is numerical unambiguous. Could a complete stranger properly count on the numerical amount in coping with the check?