In Re Shamus Holdings, LLC v. Lbm Financial, LLC

This bankruptcy appeal stands at the intersection of state and federal law. The issue presented concerns the interplay between a state statute placing temporal limitations on the enforcement of stale mortgages and the automatic stay provisions of the Bankruptcy Code. The bankruptcy court ruled that the mortgagee’s unqualified right to extend the limitations period by performing an essentially ministerial act (recording of an extension) rendered the tolling provision associated with the automatic stay inapposite and the mortgage obsolete. Shamus Holdings, LLC v. LBM Fin., LLC (In re Shamus Holdings, LLC), 409 B.R. 598, 606 (Bankr. D. Mass. 2009). At the first level of appellate review, the district court saw the matter quite differently; it ruled that the mortgage remained in force for the duration of the automatic stay. LBM Fin. LLC v. Shamus Holdings, Inc., No. 1:09-cv-11668, 2010 WL 4181137, at *2 (D. Mass. Sept. 28, 2010). After careful consideration, we affirm the district court’s decision.

The relevant facts are not now in dispute. The encumbered property is a condominium unit in Boston, Massachusetts. On May 9, 2003, the owner, Foundry Realty, LLC, executed and delivered a second mortgage to the appellee, LBM Financial, LLC. The mortgage, which secured the due performance of a guaranty, had a stated term of four months.