Joy Denby-Peterson v.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________

No. 18-3562
_______________

In re: JOY DENBY-PETERSON,
Appellant
______________

Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 1-17-cv-09985)
District Judge: Hon. Noel L. Hillman
______________

Argued May 23, 2019
______________

Before: McKEE, SHWARTZ, and FUENTES, Circuit
Judges.

(Filed: October 28, 2019)
______________
Ellen M. McDowell [Argued]
Daniel Reinganum
McDowell Law
46 West Main Street
P.O. Box 127
Maple Shade, NJ 08052

Counsel for Appellant

Craig Goldblatt [Argued]
WilmerHale
1875 Pennsylvania Avenue, N.W.
Washington, DC 20006

Counsel for Amicus Curiae in Support of the District
Court’s Judgment

______________

OPINION OF THE COURT
______________

FUENTES, Circuit Judge.

At the center of this bankruptcy appeal is “America’s
first sports car”: the Chevrolet Corvette.1 Joy Denby-Peterson
purchased a Chevrolet Corvette in July 2016. Several months
later, the Corvette was repossessed by creditors after Denby-
Peterson defaulted on her car payments. Denby-Peterson
subsequently filed an emergency voluntary Chapter 13
petition in the Bankruptcy Court for the District of New

1
H.R. Res. 970, 110th Cong. (2008).

2
Jersey. She then notified the creditors of the bankruptcy filing
and demanded that they return the Corvette to her.

After the creditors did not comply with her demand,
Denby-Peterson filed a motion for turnover in the Bankruptcy
Court. She sought an order (1) compelling the creditors to
return the Corvette to her, and (2) imposing sanctions for the
creditors’ alleged violation of the Bankruptcy Code’s
automatic stay.2 The Bankruptcy Court entered an order
mandating turnover of the Corvette to Denby-Peterson but
denying Denby-Peterson’s request for sanctions. The
Bankruptcy Court denied the sanctions request on the basis
that the creditors did not violate the automatic stay by failing
to return the repossessed Corvette to Denby-Peterson upon
receiving notice of the bankruptcy filing. Denby-Peterson
appeals from an order of the District Court affirming the
Bankruptcy Court.

We are now presented with an issue of first impression
for our Court: whether, upon notice of the debtor’s
bankruptcy, a secured creditor’s failure to return collateral
that was repossessed pre-bankruptcy petition is a violation of
the automatic stay. We answer in the negative, and thus join
the minority of our sister courts—the Tenth and D.C.
Circuits—in holding that a secured creditor does not have an
affirmative obligation under the automatic stay to return a
debtor’s collateral to the bankruptcy estate immediately upon
notice of the debtor’s bankruptcy because failure to return the
collateral received pre-petition does not constitute “an[] act . .
. to exercise control over property of the estate.”3 We will

2
See 11 U.S.C. §§ 362(a)(3), (k).
3
Id. § 362(a)(3).

3
therefore affirm the order of the District Court affirming the
Bankruptcy Court.

I.

A. Facts

On July 21, 2016, Debtor Joy Denby-Peterson
purchased a used yellow 2008 Chevrolet Corvette from a car
dealership named Pine Valley Motors. To finance her
purchase, Denby-Peterson entered into a retail installment
contract with Pine Valley Motors, which, in turn, assigned its
rights under the contract to its affiliate company, NU2U Auto
World.4 Under the contract, Denby-Peterson agreed to pay (1)
a $3,000 cash down payment; (2) a deferred down payment of
$2,491 by August 11, 2016 to pay sales taxes and registration
fees to obtain permanent license plate tags; and (3) weekly
installment payments of $200 for 212 weeks. Between July
2016 and February 2017, Denby-Peterson made payments
totaling $9,200 under the contract, including the $3,000 down
payment applied on the day of the sale. She never made the
required down payment of $2,491. As a result, the creditors
repossessed the Corvette in February or March 2017.5 The

4
For the sake of brevity, we will collectively refer to Pine
Valley Motors and NU2U Auto World as “the creditors.”
5
The retail installment contract’s “repossession” clause
states, in relevant part: “[i]f you are in default, we may take
the vehicle from you after we give you any notice required by
law.” Bankr. Petition No. 17-15532-ABA, Doc. No. 17-5 at 3.
“Default,” in turn, is defined as including, among other
things: (1) “failure to pay any installment when due”; (2)
“failure to perform or breach of any section of th[e] contract”;

4
Corvette was never titled or registered in Denby-Peterson’s
name.

B. Bankruptcy Court Proceedings

i. Denby-Peterson’s Chapter 13 Bankruptcy
Petition

After the Corvette was repossessed, Denby-Peterson
filed a voluntary petition for relief under Chapter 13 of the
Bankruptcy Code on March 21, 2017. Under Section 362 of
the Code, the filing of the petition triggered an automatic stay
of “any act to obtain possession of property of the estate or of
property from the estate or to exercise control over property
of the estate.”6

Within two days, the creditors received notice of
Denby-Peterson’s bankruptcy filing. Counsel for Denby-
Peterson had notified them of the filing and demanded that
they return the Corvette to Denby-Peterson. Counsel also
maintained that the creditors’ failure to return the Corvette

and (3) “failure to obtain and maintain the insurance required
by th[e] contract.” Id.

Before the Bankruptcy Court, the parties disputed the
date of repossession. Denby-Peterson claimed that the
Corvette was repossessed on March 13, 2017, while the
creditors claimed that it was repossessed one month earlier, in
February 2017. All parties nevertheless agree that the
repossession occurred before Denby-Peterson filed for
bankruptcy.
6
11 U.S.C. § 362(a)(3).

5
would result in a violation of the automatic stay. He faxed a
letter to the creditors which stated, in relevant part:

BE ADVISED your failure to release the
vehicle to Ms. Denby-Peterson is a violation of
the Automatic Stay. If the vehicle has not been
released before 5pm today, this firm will seek
damages, costs, and attorneys’ fees against your
company for willful violations of the automatic
stay.7

The creditors did not comply with Denby-Peterson’s demand
and thus remained in possession of the Corvette.

ii. Denby-Peterson’s Motion for Turnover and
Sanctions

Denby-Peterson then filed a motion8 for turnover in
Bankruptcy Court, asking the Bankruptcy Court to (1) order
the creditors to return the Corvette to her, and (2) impose
sanctions for the creditors alleged violation of the automatic
stay. Denby-Peterson sought costs and attorneys’ fees for
filing the motion; compensation for “non-economic

7
Bankr. Petition No. 17-15532-ABA, Doc. No. 5-3 at 3. See
11 U.S.C. § 362(k)(1).
8
The motion was entitled “motion for return of repossessed
auto and seeking sanctions against creditor for violat[ing] the
automatic stay.” Bankr. Petition No. 17-15532-ABA, Doc.
No. 5 (original in uppercase and bold).

6
damages”; punitive damages; and “all other relief the Court
deem[ed] just and equitable.”9

The creditors opposed the motion. They also filed a
proof of claim, asserting a security interest in the Corvette in
the amount of $28,773.10

iii. The Bankruptcy Court’s Decision

Following a two-day hearing, the Bankruptcy Court
issued a written decision and order granting the motion in part
and denying it in part. The Bankruptcy Court, inter alia,
granted Denby-Peterson’s request for turnover and thus
ordered the creditors to return the Corvette to Denby-Peterson
within seven days, but denied Denby-Peterson’s sanctions
request.

9
Bankr. Petition No. 17-15532-ABA, Doc. No. 5-7 at 3. See
11 U.S.C. § 362(k)(1) (stating, in relevant part, that “an
individual injured by any willful violation of a stay . . . shall
recover actual damages, including costs and attorneys’ fees,
and, in appropriate circumstances, may recover punitive
damages”); see also In re Lansaw, 853 F.3d 657, 667 (3d Cir.
2017), cert. denied sub nom. Zokaites v. Lansaw, 138 S. Ct.
1001 (2018) (“expressly concluding that ‘actual damages’
under § 362(k)(1) include damages for emotional distress
resulting from a willful violation of the automatic stay.”).
10
The retail installment contract’s “security interest” clause
provides that (1) Denby-Peterson gave the creditors a security
interest in, inter alia, the Corvette, and (2) the security
interest “cover[ed] all amounts [she] owe[d].” Bankr. Petition
No. 17-15532-ABA, Doc. No. 17-5 at 3.

7
 The Bankruptcy Court held, inter alia, that (1) the
creditors must return the Corvette under the Bankruptcy
Code’s turnover provision in Section 542(a),11 and (2) the
creditors did not violate the automatic stay by retaining
possession of the Corvette upon receiving notice of the
bankruptcy filing. Thus, the Bankruptcy Court determined
that the creditors were not liable for sanctions based on an
alleged violation of the automatic stay.

In reaching its holdings, the Bankruptcy Court found
that Denby-Peterson had an equitable interest in the Corvette
at the time of the bankruptcy filing, and therefore, the
Corvette was property of the estate subject to turnover.12

Next, the Bankruptcy Court considered whether the
creditors violated the automatic stay by failing to return the
Corvette after learning of the bankruptcy filing. It identified
the split among our sister circuits on this issue, pointing out
that the Second, Seventh, Eighth, and Ninth Circuits (“the
majority”) have held that the Bankruptcy Code’s turnover
provision requires immediate turnover of estate property that
was seized pre-petition and that failure to do so violates the

11
See 11 U.S.C. § 542(a) (stating, in relevant part, that “an
entity, other than a custodian, in possession, custody, or
control, during the case, of property that the [debtor] may use,
sell, or lease under section 363 of this title . . . shall deliver to
the [debtor], and account for, such property or the value of
such property, unless such property is of inconsequential
value or benefit to the estate”).
12
See id. § 541(a) (defining “property of the estate,” in
relevant part, as “all legal or equitable interests of the debtor
in property as of the commencement of the case”).

8
automatic stay.13 However, the Tenth and D.C. Circuits (“the
minority”) “have instead held that a creditor does not violate
the stay in regard to property of the estate if it merely
maintains the status quo.”14 The Bankruptcy Court noted that
the minority was critical of the majority’s rule that Section
542(a)’s turnover provision “is self-effectuating” because “it
does not allow for the possibility of defenses to turnover.”15

The Bankruptcy Court ultimately adopted the minority
position, describing it as “particularly persuasive”16 and
pointing out that “[f]rom the inception of this case there was
an issue regarding exactly what . . . [Denby-Peterson]’s
interest in . . . [the Corvette] was.”17 Accordingly, the
Bankruptcy Court concluded that the creditors did not violate
the automatic stay by failing to turn over the Corvette to
Denby-Peterson “prior to adjudication of . . . [her] right to

13
See In re Fulton, 926 F.3d 916 (7th Cir. 2019); In re
Weber, 719 F.3d 72 (2d Cir. 2013); In re Del Mission Ltd., 98
F.3d 1147 (9th Cir. 1996); In re Knaus, 889 F.2d 773 (8th
Cir. 1989); see also In re Rozier, 376 F.3d 1323, 1324 (11th
Cir. 2004) (per curiam) (holding that the “district court did
not err by affirming the bankruptcy court’s order holding [the
creditor] in willful contempt of the automatic stay . . . by
refusing to return the vehicle”).
14
In re Denby-Peterson, 576 B.R. 66, 80 (Bankr. D.N.J.
2017) (citing In re Cowen, 849 F.3d 943 (10th Cir. 2017);
United States v. Inslaw, Inc., 932 F.2d 1467 (D.C. Cir.
1991)).
15
Denby-Peterson, 576 B.R. at 82.
16
Id.
17
Id.

9
redeem the [Corvette],” and thus, sanctions were not
warranted.18

C. Denby-Peterson’s Appeal to the District Court

Denby-Peterson appealed the Bankruptcy Court’s
order denying her sanctions request. Similar to the
Bankruptcy Court, the District Court found “the minority
position more persuasive.”19 The District Court thus affirmed
the Bankruptcy Court’s order denying Denby-Peterson’s
sanctions request.20

Denby-Peterson now appeals to our Court.21 Because
the creditors are not participating in this appeal, we appointed

18
Id. at 83.
19
Denby-Peterson v. Nu2u Auto World, 595 B.R. 184, 190
(D.N.J. 2018).
20
While Denby-Peterson’s appeal to the District Court was
pending, the Bankruptcy Court dismissed the underlying
bankruptcy case based on Denby-Peterson’s failure to make
all required pre-confirmation payments to the Trustee. Before
addressing the merits of the appeal, the District Court
concluded that Denby-Peterson’s appeal was not mooted by
the dismissal because the automatic-stay-related issue “is an
ancillary issue not closely intertwined with the underlying
bankruptcy.” Denby-Peterson, 595 B.R. at 188.
21
The District Court had jurisdiction under 28 U.S.C. § 158
(a). We have jurisdiction under 28 U.S.C. § 158(d)(1).
Because the District Court acted as an appellate court, we
review its determinations de novo. In re Bocchino, 794 F.3d
376, 379 (3d Cir. 2015). We review the legal conclusions of

10
Craig Goldblatt as amicus curiae to defend the judgment of
the District Court.22
II.

On appeal, Denby-Peterson renews her argument that
the creditors violated the automatic stay by not returning the
repossessed Corvette upon learning of the bankruptcy filing.
To provide context for the issue before us, we will discuss the
Bankruptcy Code’s automatic stay before addressing the
merits of this appeal.

Under Section 362 of the Bankruptcy Code, entitled
“[a]utomatic stay,” the filing of a bankruptcy petition
automatically triggers a stay.23 Of particular relevance to this
appeal, subsection (a)(3) provides that a bankruptcy petition
“operates as a stay, applicable to all entities, of . . . any act to

the Bankruptcy Court de novo and its factual determinations
for clear error. Id. at 380.

Generally, “[t]he imposition or denial of sanctions is
subject to abuse-of-discretion review.” In re Miller, 730 F.3d
198, 203 (3d Cir. 2013). We have not, however, addressed
our standard of review for the imposition or denial of
sanctions for violations of the automatic stay. We
nevertheless need not do so now given that (1) the
Bankruptcy Court denied sanctions based on its conclusion
that the creditors did not violate the automatic stay, and (2)
we now hold that both the Bankruptcy Court and the District
Court correctly concluded that there was no such violation.
22
We thank Mr. Goldblatt for his excellent briefing and oral
advocacy in this matter.
23
11 U.S.C. § 362.

11
obtain possession of property of the estate . . . or to exercise
control over property of the estate.”24 Property of the
bankruptcy estate, in turn, generally includes “all legal or
equitable interests of the debtor in property as of the
commencement of the case,”25 “wherever located and by
whomever held.”26

The automatic stay imposed by the Bankruptcy Code
has a “twofold” purpose:

(1) to protect the debtor, by stopping all
collection efforts, harassment, and foreclosure
actions, thereby giving the debtor a respite from
creditors and a chance ‘to attempt a repayment
or reorganization plan or simply be relieved of
the financial pressures that drove him [or her]
into bankruptcy;’ and (2) to protect ‘creditors
by preventing particular creditors from acting
unilaterally in self-interest to obtain payment

24
Id. § 362(a)(3). See H.R. Rep. No. 95-595, at 340 (1977)
(stating that “[s]ubsection (a) defines the scope of the
automatic stay, by listing the acts that are stayed by the
commencement of the case”).
25
11 U.S.C. § 541(a)(1).
26
Id. § 541(a). In a Chapter 13 case, such as this case, the
concept of property of the estate is broader. See id. § 1306
(a)(1) (providing that the Chapter 13 estate includes, in
addition to the property specified in Section 541, property
“that the debtor acquires after the commencement of the
bankruptcy case” but before the case is either closed,
dismissed, or converted).

12
 from a debtor to the detriment of other
creditors.’27

In furtherance of the automatic stay’s overarching purpose,
Section 362(a)(3) “prevent[s] dismemberment of the estate,”
and enables an “orderly” distribution of the debtor’s assets.28

The consequences for willful violations of the
automatic stay are set forth in Section 362(k) which provides
that, subject to one exception, “an individual injured by any
willful violation” of the automatic stay is entitled to “actual
damages, including costs and attorneys’ fees, and, in
appropriate circumstances, may recover punitive damages.”29
We have explained that “[i]t is a willful violation of the
automatic stay when a creditor violates the stay with
knowledge that the bankruptcy petition has been filed.
Willfulness does not require that the creditor intend to violate

27
Constitution Bank v. Tubbs, 68 F.3d 685, 691 (3d Cir.
1995) (quoting Maritime Elec. Co. v. United Jersey Bank, 959
F.2d 1194, 1204 (3d Cir. 1991)). See Taggart v. Lorenzen,
139 S. Ct. 1795, 1804 (2019) (explaining that the automatic
stay “aims to prevent damaging disruptions to the
administration of a bankruptcy case in the short run”); Inslaw,
932 F.2d at 1473 (“The object of the automatic stay provision
is essentially to solve a collective action problem—to make
sure that creditors do not destroy the bankrupt estate in their
scramble for relief.”).
28
H.R. Rep. No. 95-595, at 341.
29
11 U.S.C. § 362(k)(1). See id. § 362(k)(2) (providing a
“good faith” exception to Section 362(k)(1)).

13
the automatic stay provision, rather it requires that the acts
which violate the stay be intentional.”30

III.

With the foregoing statutory background in mind, we
now turn our attention to the issue of first impression before
our Court: whether, upon receiving notice of a bankruptcy
petition, a secured creditor violates the automatic stay by
maintaining possession of collateral that it lawfully
repossessed pre-petition. Specifically, we must decide
whether the creditors’ failure to return the Corvette to Denby-
Peterson upon learning of her bankruptcy filing was a
violation of the automatic stay.31

As we previously acknowledged, there is a circuit split
on this issue, which we have not yet joined. Under the
majority position, held by the Second, Seventh, Eighth, Ninth,
and Eleventh Circuits, a secured creditor, upon learning of the
bankruptcy filing, must return the collateral to the debtor and
failure to do so violates the automatic stay.32 However, both
the Tenth and D.C. Circuits disagree with the majority’s

30
In re Lansdale Family Rests., Inc., 977 F.2d 826, 829 (3d
Cir. 1992) (internal citations omitted).
31
It is undisputed here that the creditors repossessed the
Corvette before Denby-Peterson had filed for bankruptcy and
that the Corvette was property of Denby-Peterson’s
bankruptcy estate.
32
See Fulton, 926 F.3d 916; Weber, 719 F.3d 72; Del
Mission, 98 F.3d 1147; Knaus, 889 F.2d 773; Rozier, 376
F.3d 1323.

14
interpretation of the automatic stay provision.33 Under their
view, a secured creditor is not obligated to return the
collateral to the debtor until the debtor obtains a court order
from the Bankruptcy Court requiring the creditor to do so.
Thus, according to the minority, a creditor does not violate
the automatic stay by retaining possession of the collateral
after being notified of the bankruptcy filing.

Here, Denby-Peterson urges us to adopt the view of
the majority of our sister circuits, advancing two theories in
support of her position that the creditors violated the
automatic stay. First, she maintains that the creditors’ failure
to return the Corvette violated the plain language of Section
362(a)(3)’s automatic stay provision by being “an[] act . . . to
exercise control over property of the estate.”34 Second,
Denby-Peterson asserts that Section 362(a)(3)’s automatic
stay provision and Section 542(a)’s turnover provision
operate together such that a violation of the turnover
provision results in a violation of the automatic stay. Thus,
according to Denby-Peterson, the creditors were required to
immediately turn over the Corvette, and by not doing so, they
violated the automatic stay. For the reasons that follow, we
are not persuaded by those arguments and thus hold that the
creditors in this case did not violate the automatic stay. In so
holding, we join the minority of our sister circuits.

33
See Cowen, 849 F.3d 943; Inslaw, 932 F.2d 1467.
34
11 U.S.C. § 362(a)(3).

15
 IV.

A.

We begin our interpretation of Section 362(a)(3) of the
Bankruptcy Code “where all such inquiries must begin: with
the language of the statute itself.”35

In examining the Bankruptcy Code, we are not “guided
by a single sentence or member of a sentence, but look to the
provisions of the whole law, and to its object and policy.”36
Thus, to determine the plainness or ambiguity of Section
362(a)(3)’s statutory language, in addition to considering the
statutory language itself, we may also engage in “a studied
examination of the statutory context.”37 If we ultimately
determine that a provision “is clear and unambiguous, [we]

35
Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 69 (2011)
(internal quotation marks omitted).
36
Kelly v. Robinson, 479 U.S. 36, 43 (1986) (internal
quotation marks omitted). See In re Price, 370 F.3d 362, 369
(3d Cir. 2004) (emphasizing that “in interpreting the
Bankruptcy Code, the Supreme Court has been reluctant to
declare its provisions ambiguous, preferring instead to take a
broader, contextual view”); Official Comm. of Unsecured
Creditors of Cybergenics Corp., ex rel. Cybergenics Corp. v.
Chinery, 330 F.3d 548, 559 (3d Cir. 2003) (“Statutory
construction is a holistic endeavor, and this is especially true
of the Bankruptcy Code.” (quotation marks, alterations and
citations omitted)).
37
Price, 370 F.3d at 369.

16
must simply apply it.”38 However, if we find that a provision
is ambiguous,39 “we then turn to pre-Code practice and
legislative history to find meaning.”40

With these principles of construction in mind, we will
now examine the language of Section 362(a)(3). To reiterate,
Section 362(a)(3) provides, in relevant part, that the filing of
a bankruptcy petition “operates as a stay . . . of . . . any act to .
. . exercise control over property of the estate.”41 According
to Denby-Peterson, under the plain language of the automatic
stay, a creditor who does not turn over property of the estate
after a debtor demands its return exercises control over that
property, thereby violating the automatic stay. While we
agree that Section 362(a)(3) is unambiguous, we decline to
hold that a plain reading of that Section compels the
conclusion that the creditors in this case violated the
automatic stay by failing to turn over the Corvette to Denby-
Peterson.

The operative terms and phrases of Section 362(a)(3)
are “stay,” “act,” and “exercise control.” Because the

38
In re KB Toys Inc., 736 F.3d 247, 251 (3d Cir. 2013) (citing
Roth v. Norfalco L.L.C., 651 F.3d 367, 379 (3d Cir. 2011)).
39
See Price, 370 F.3d at 369 (explaining that “a provision is
ambiguous when, despite a studied examination of the
statutory context, the natural reading of a provision remains
elusive”).
40
In re Friedman’s Inc., 738 F.3d 547, 554 (3d Cir. 2013).
41
11 U.S.C. § 362(a)(3).

17
Bankruptcy Code does not define them, we must look to their
ordinary meanings.42

We start with the meaning of the word “stay.” Black’s
Law Dictionary defines “stay” as “[t]he postponement or
halting of a proceeding, judgment, or the like” or “[a]n order
to suspend all or part of a judicial proceeding or a judgment
resulting from that proceeding.”43 Moreover, Webster’s Third
New International Dictionary defines “stay” as a noun (as it
is used in Section 362) as: (1) “a bringing to a stop,” (2) “the
action of halting,” and (3) “the state of being stopped.”44

Next, the noun “act” means, among other things,
“[s]omething done; the action or process of achieving this.”45
Black’s Law Dictionary similarly defines “act,” in relevant

42
See Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct.
1752, 1759 (2018).
43
Stay, Black’s Law Dictionary (11th ed. 2019). Black’s Law
Dictionary further defines “automatic stay” as “[a] bar to all
judicial and extrajudicial collection efforts against the debtor
or the debtor’s property, subject to specific statutory
exceptions.” Id.
44
Webster’s Third New International Dictionary 2231
(1993); see Stay, Oxford English Dictionary Online,
https://www.oed.com/view/Entry/189408?rskey=uCJBz6&
result=3&isAdvanced=false (including, among its definitions
of “stay,” “[t]he action of stopping or bringing to a stand or
pause”) (last visited Aug. 15, 2019).
45
Act, Oxford English Dictionary Online,
https://www.oed.com/view/Entry/1888?rskey=eprROF&
result=4 (last visited Aug. 15, 2019).

18
part, as “[s]omething done or performed,” or “[t]he process of
doing or performing.”46

Finally, as to the phrase “exercise control,” we will
separately consider the verb “exercise” and the noun
“control.” The relevant definition of “exercise” is “[t]o put in
action or motion.”47 Webster’s Third New International
Dictionary also defines “exercise,” in relevant part, as “to . . .
make effective in action.”48 Additionally, “control,” as a
noun, means, among other things, “[t]he fact or power of
directing and regulating the actions of people or things;
direction, management; command.”49

From these definitions, we gather that Section
362(a)(3) prohibits creditors from taking any affirmative act
to exercise control over property of the estate. As correctly
pointed out by the District Court, the statutory language “is
prospective in nature . . . the exercise of control is not stayed,

46
Act, Black’s Law Dictionary (11th ed. 2019).
47
Exercise, Oxford English Dictionary Online,
https://www.oed.com/view/Entry/66089?rskey=QNVdyF&
result=2&isAdvanced=false (last visited Aug. 15, 2019); see
Exercise, Black’s Law Dictionary (11th ed. 2019) (describing
“exercise” as meaning, in relevant part, “[t]o make use of; to
put into action”).
48
Webster’s Third New International Dictionary 795.
49
Control, Oxford English Dictionary Online,
https://www.oed.com/view/Entry/40562?rskey=qZlHZj&
result=1 (last visited Aug. 15, 2019); see Control, Black’s
Law Dictionary (11th ed. 2019) (identifying “the power or
authority to manage, direct, or oversee” as one of the
definitions of “control”).

19
but the act to exercise control is stayed.”50 Therefore, we
agree with the minority position held by two of our sister
courts—the text of Section 362(a)(3) requires a post-petition
affirmative act to exercise control over property of the
estate.51
B.

Here, a post-petition affirmative act to exercise control
over the Corvette is not present. The creditors repossessed the
Corvette before Denby-Peterson had filed for bankruptcy.
Accordingly, pre-bankruptcy petition, the creditors had
possession and control of the Corvette, and post-bankruptcy
petition, the creditors merely passively retained that same
possession and control. Although the creditors exercised
control over the Corvette by keeping it in their possession
after learning of the bankruptcy filing, the requisite post-
petition affirmative “act . . . to exercise control over” the
Corvette is not present in this case.52 An application of the
plain language of the statute to the facts of this case thus
shows that the creditors did not violate the automatic stay.53

50
Denby-Peterson, 595 B.R. at 190.
51
See Cowen, 849 F.3d at 949 (concluding that Section
362(a)(3) “stays entities from doing something to . . . exercise
control over the estate’s property”); Inslaw, 932 F.2d at 1474
(“The automatic stay, as its name suggests, serves as a
restraint only on acts to gain possession or control over
property of the estate.”).
52
11 U.S.C. § 362(a)(3).
53
Denby-Peterson’s characterization of the creditors’ post-
petition behavior as a refusal to return the Corvette upon
request does not alter our conclusion. A creditor’s refusal to
comply with a debtor’s turnover request is not an affirmative

20
 Our conclusion is bolstered by the legislative purpose
and underlying policy goals of the automatic stay. It is well-
established that one of the automatic stay’s primary purposes
is “‘to maintain the status quo between the debtor and [his]
creditors, thereby affording the parties and the [Bankruptcy]
Court an opportunity to appropriately resolve competing
economic interests in an orderly and effective way.’”54 Here,
the creditors had possession of the Corvette both before and
after the bankruptcy filing. Thus, by keeping possession of
the Corvette after learning of the bankruptcy filing, the
creditors preserved the pre-petition status quo. To hold that
such a retention of possession violates the automatic stay
would directly contravene the status-quo aims of the
automatic stay.

In sum, the plain language of the automatic stay
provision in Section 362(a)(3) and the automatic stay’s
legislative purpose indicate that Congress did not intend
passive retention to qualify as “an act to . . . exercise control
over property of the estate.”55 In light of our interpretation of
Section 362(a)(3), we thus hold that the creditors did not

act; rather, it is inaction. Denby-Peterson’s attempt to reframe
creditors’ failure to act as an affirmative act is unavailing as it
does not alter the passive nature of the creditors’ post-petition
role in relation to the Corvette. See Nat’l Fed’n of Indep. Bus.
v. Sebelius, 567 U.S. 519, 555 (2012) (recognizing “the
distinction between doing something and doing nothing”).
54
Taylor v. Slick, 178 F.3d 698, 702 (3d Cir. 1999) (quoting
Zeoli v. RIHT Mortg. Corp., 148 B.R. 698, 700 (D.N.H.
1993)) (emphasis and alteration in original).
55
11 U.S.C. § 362(a)(3).

21
engage in a post-petition “act to . . . exercise control” over the
Corvette and thus did not violate the automatic stay. 56

C.

Denby-Peterson, on the other hand, disregards the
automatic stay’s legislative purpose and instead relies on
Section 362(a)(3)’s scarce legislative history to support her
position. She maintains that her “plain language reading of
Section 362 is bolstered by the 1984 Amendments to the
Bankruptcy Code.”57 We disagree.

Given Section 362(a)(3)’s unambiguous text, we need
not resort to legislative history to uncover its meaning.58 In
any event, we point out that the relevant legislative history
fails to shed light on Congress’s intent behind the 1984
addition of the “exercise control over property of the estate”
clause. The legislative history reveals that, as originally
enacted in 1978, Section 362(a)(3) only stayed “any act to
obtain possession of property of the estate or of property from
the estate.”59 Thereafter, in 1984, Congress amended Section
362(a)(3) by inserting the “or to exercise control over

56
Id.
57
Appellant’s Br. at 13.
58
See Doe v. Hesketh, 828 F.3d 159, 167 (3d Cir. 2016).
59
Bankruptcy Reform Act of 1978, Pub. L. 95-598, § 362
(a)(3), 92 Stat. 2549, 2570 (1978).

22
property of the estate” clause.60 Congress, however, “gave no
explanation of its intent.”61

Denby-Peterson nevertheless urges us to follow the
Seventh Circuit’s view that “the mere fact that Congress
expanded the provision to prohibit conduct above and beyond
obtaining possession of an asset suggests that it intended to
include conduct by creditors who seized an asset pre-
petition.”62 We will not do so because the legislative history
would be pertinent only to the extent that Congress clearly
expressed an intent to interpret Section 362(a)(3) contrary to
its plain language. Here, Congress did not express any intent,
much less an intent to include creditors’ passive retention of
property that was seized pre-petition.63 Moreover, even

60
Bankruptcy Amendments and Federal Judgeship Act of
1984, Pub. L. No. 98-353, § 362(a)(3), 98 Stat. 333, 371
(1984).
61
In re Young, 193 B.R. 620, 623 (Bankr. D.D.C. 1996).
62
Thompson v. Gen. Motors Acceptance Corp., LLC, 566
F.3d 699, 702 (7th Cir. 2009). See Fulton, 926 F.3d at 923
(declining to overrule Thompson and reiterating that the
amendment “suggested congressional intent to make the stay
more inclusive by including conduct of ‘creditors who seized
an asset pre-petition’” (quoting Thompson, 566 F.3d at 702));
see also Weber, 719 F.3d at 80 (describing the amendment as
a “significant textual enlargement” that supports the view that
“Congress intended to prevent creditors from retaining
property of the debtor in derogation of the bankruptcy
procedure . . . without regard to what party was in possession
of the property in question when the petition was filed”).
63
See Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc.,
447 U.S. 102, 108 (1980) (“Absent a clearly expressed

23
assuming that Section 362(a)(3) is ambiguous, thereby
warranting consideration of legislative history, the legislative
history’s silence provides no guidance regarding Congress’s
rationale for adding the “or to exercise control over property
of the estate” clause. Accordingly, the interpretation that
Denby-Peterson urges us to adopt is unsupported by Section
362(a)(3)’s legislative history as well as its statutory
language.

V.

We now consider Denby-Peterson’s final attempt to
overcome the plain language of Section 362(a)(3). Denby-
Peterson asserts that Section 362’s automatic stay should be
read in conjunction with Section 542(a)’s allegedly self-
effectuating turnover provision. We are not persuaded.

Under Section 542(a), creditors who are in possession
of property of the estate must turn over such property to the
debtor “during the [Bankruptcy] case.”64 The turnover
provision states, in relevant part, that “an entity, other than a
custodian,” such as a creditor,65

legislative intention to the contrary, th[e] [statutory] language
must ordinarily be regarded as conclusive.”).
64
11 U.S.C. § 542(a). In a Chapter 13 case, such as this case,
the debtor retains control over property of the estate. See id.
§ 1306(b). Accordingly, a Chapter 13 trustee does not take
possession or liquidate property of the estate, except with
respect to money collected for the purpose of making
distributions to creditors under a plan. See id. §§ 1302, 1303.
65
See id. § 101(10)(A).

24
 in possession, custody, or control, during the
case, of property that the [debtor] may use, sell,
or lease under section 363 . . . , or that the
debtor may exempt under section 522 . . . shall
deliver to the [debtor], and account for, such
property or the value of such property, unless
such property is of inconsequential value or
benefit to the estate.66

Denby-Peterson contends that we should join the
majority of our sister circuits and conclude that: (1) Section
542(a)’s turnover provision is self-executing; (2) therefore,
the creditors had a mandatory duty to return the Corvette to
Denby-Peterson upon receiving notice of the bankruptcy
filing; and (3) when the creditors rejected Denby-Peterson’s
demand for turnover, they violated the automatic stay.67 We
respectfully disagree with the majority. For the following
reasons, we conclude that Denby-Peterson’s threefold
argument is unpersuasive.

A.

First, in our view, Section 542(a)’s turnover provision
is not self-executing; in other words, a creditor’s obligation to

66
Id. § 542(a). See id. § 1303 (providing the Chapter 13
debtor “the rights and powers of a trustee under sections
363(b), 363(d), 363(e), 363(f), and 363(l)”); id. § 1306(b)
(stating, in relevant part, that “the [Chapter 13] debtor shall
remain in possession of all property of the estate”).
67
See Fulton, 926 F.3d 916; Weber, 719 F.3d 72; Del
Mission, 98 F.3d 1147; Knaus, 889 F.2d 773.

25
turn over estate property to the debtor is not automatic.68
Rather, the turnover provision requires the debtor to bring an
adversary proceeding in Bankruptcy Court in order to give the
Court the opportunity to determine whether the property is
subject to turnover under Section 542(a).

Both the Federal Rules of Bankruptcy Procedure and
the text of the turnover provision support our conclusion by
demonstrating that the debtor’s right to turnover is subject to
substantive and procedural requirements that must be
evaluated by the Bankruptcy Court.69 It is only after the
Bankruptcy Court determines whether those requirements are
met that the debtor’s right to turnover is triggered.

i.

We start with the procedure behind turnover. Denby-
Peterson argues that a creditor’s duty to turn over collateral is
automatically triggered when a creditor receives notice of the
bankruptcy petition. In other words, procedurally, says

68
But see Fulton, 926 F.3d at 924 (reaffirming that Section
362(a)(3) “becomes effective immediately upon filing the
petition and is not dependent on the debtor first bringing a
turnover action”); Weber, 719 F.3d at 79 (“Section 542
requires that any entity in possession of property of the estate
deliver it to the trustees, without condition or any further
action: the provision is self-executing.” (internal quotation
marks omitted)).
69
See 4 Norton Bankr. L. & Prac. 3d § 62:3 (2019) (stating
that “several [Bankruptcy] Code provisions play a role in
determining whether a turnover will be ordered pursuant to
Code § 542(a)”).

26
Denby-Peterson, all the debtor must do to initiate turnover is
file a bankruptcy petition and notify the creditor of the filing.
However, Federal Rule of Bankruptcy Procedure 7001(1)
explicitly indicates otherwise. Under that Rule, the debtor
must bring a request for turnover in an adversary proceeding
before a Bankruptcy Court.70 Accordingly, contrary to
Denby-Peterson’s claim, the debtor must not only file a
bankruptcy petition, he or she must also initiate a turnover
proceeding by (1) filing a complaint in Bankruptcy Court and
(2) serving a creditor with a copy of the complaint.71 This
procedural requirement negates any possibility that a
creditor’s duty to turn over property is automatic.72

70
See Fed. R. Bankr. P. 7001(1) (identifying, in relevant part,
“a proceeding to recover money or property” as an adversary
proceeding).
71
“An adversary proceeding is essentially a self-contained
trial—still within the original bankruptcy case—in which a
panoply of additional procedures apply,” In re Mansaray-
Ruffin, 530 F.3d 230, 234 (3d Cir. 2008)
(citing Fed. R. Bankr. P. 7001-7087), including the
requirement that a complaint must be filed to commence such
a proceeding, see Fed. R. Bankr. P. 7003 (stating that Federal
Rule of Civil Procedure 3 “applies in adversary
proceedings”).
72
Here, as noted by the Bankruptcy Court, Denby-Peterson
did not initiate an adversary proceeding. Instead, she filed a
motion for turnover entitled, in relevant part, “Motion for
Return of Repossessed Auto.” Denby-Peterson, 576 B.R. at
69.

Faced with this procedural posture, the Bankruptcy
Court concluded that the parties waived their right to an

27
 ii.

Moreover, the plain language of the Bankruptcy
Code’s turnover provision also shows that the provision is not
self-effectuating. Section 542(a) provides that only property
of the estate, as defined in Section 541, that is either (1)
“property that the [debtor] may use, sell, or lease under
section 363” or (2) property “that the debtor may exempt
under section 522,” is subject to turnover.73 The turnover
provision also explicitly limits the right to turnover to estate
property that (1) is in the possession, custody or control of a
creditor, and (2) is not “of inconsequential value or benefit to
the estate.”74 Thus, on its face, the turnover provision
includes numerous explicit conditions that must be satisfied
before a property is subject to turnover.

In the case before us today, Denby-Peterson asks us to
essentially ignore Section 542(a)’s statutory prerequisites and
find that a creditor must immediately turn over any collateral

adversary proceeding. See In re Village Mobile Homes, Inc.,
947 F.2d 1282, 1283 (5th Cir. 1991) (“Compliance with the
requisites of an adversary proceeding may be excused by
waiver of the parties.”). Treating the matter as a contested
motion, the Court then addressed the merits of the turnover
request. This difference in the procedural mechanism used to
achieve turnover does not change our conclusion because,
regardless of the form, a debtor must initiate a procedural
event before the Bankruptcy Court in order for turnover to
occur, if applicable, under the Bankruptcy Court’s
supervision.
73
11 U.S.C. § 542(a).
74
Id.

28
that a debtor deems to be subject to turnover. We will not do
so. We further note that mandating creditors to automatically
turn over any property that the debtor deems worthy of
turnover would allow debtors to temporarily strip creditors of
their rights to assert affirmative defenses such as laches,75 or
to claim that the property is not property of the estate. While
it is true that creditors would presumably be able to assert
these defenses in Bankruptcy Court after turning over the
collateral to the debtor, we do not read the turnover provision
as placing the onus on creditors to surrender the collateral and
then immediately file a motion in Bankruptcy Court asserting
their rights.

In sum, in light of the plain language of Section
542(a)’s turnover provision, and the procedural and
substantive requirements underlying turnover, it would be
illogical for us to interpret the turnover provision as imposing
an automatic duty on creditors to turn over collateral to the
debtor upon learning of a bankruptcy petition. We therefore
reject Denby-Peterson’s claim that the turnover provision is
self-effectuating.76 Instead, we conclude that the turnover

75
See In re Mushroom Transp. Co., Inc., 382 F.3d 325, 337
(3d Cir. 2004); see also In re Stancil, 473 B.R. 478, 484
(Bankr. D.D.C. 2012) (“The plain language of section 542(a)
demonstrates that establishing inconsequential value or
benefit to the estate is an affirmative defense to a turnover
action.”).
76
Denby-Peterson’s reliance on the Supreme Court’s decision
in United States v. Whiting Pools, Inc. is misplaced. 462 U.S.
198, 201 (1983). Contrary to Denby-Peterson’s claim that
Whiting Pools implicitly supports the proposition that the
turnover provision is self-effectuating, Whiting Pools

29
provision is effectuated by virtue of judicial action. The
Chapter 13 debtor must first seek court intervention, such as
through an adversary proceeding, and then the Bankruptcy

suggests the opposite: that the turnover provision is not self-
effectuating because adequate protection can serve as a
condition precedent before turnover. See 11 U.S.C. § 542(a)
(providing that “property that the [debtor] may use, sell, or
lease under section 363” may be subject to turnover); id.
§ 363(e) (stating, in relevant part, that “the court, with or
without a hearing, shall prohibit or condition such use, sale,
or lease as is necessary to provide adequate protection of such
interest”); id. § 361 (providing examples of “adequate
protection”).

In Whiting Pools, the Bankruptcy Court, not the
Chapter 11 debtor, ordered the creditor to turn over property
to the debtor. 462 U.S. at 201. Moreover, it did so only “on
the condition that [the Chapter 11 corporate-debtor] provide
the [creditor] with specified [adequate] protection for its
interests.” Id. See id. at n.7 (“Pursuant to [Section 363(e) of
the Bankruptcy Code], the Bankruptcy Court set the
following conditions to protect the tax lien: [the debtor] was
to pay the [creditor] $20,000 before the turnover occurred;
[the debtor] also was to pay $1,000 a month until the taxes
were satisfied; the [creditor] was to retain its lien during this
period; and if [the debtor] failed to make the payments, the
stay was to be lifted.”). Whiting Pools thus suggests that
turnover is required upon (1) the debtor’s filing of a motion
for turnover, and (2) the issuance of a court order.

30
Court, not the debtor, must ultimately decide whether certain
property must be turned over to the debtor.77

B.

Additionally, we point out that our interpretation of the
turnover provision is not changed by the turnover provision’s
use of the phrase “shall deliver to the [debtor].”78 As argued
by Denby-Peterson, it may well be so that the word “shall”
strongly suggests that turnover is mandatory.79 However,

77
We also note that under pre-Code practice, turnover was
not viewed as self-effectuating. Before the Bankruptcy Code
was enacted, a secured creditor, who had repossessed
collateral pre-bankruptcy, retained possession pending the
Bankruptcy Court’s entry of a turnover order, see Ralph
Brubaker, Turnover, Adequate Protection, and the Automatic
Stay (Part I): Origins and Evolution of the Turnover Power,
33 Bankr. L. Letter No. 8, at 4-7 (Aug. 2013), and “[n]othing
in the legislative history evinces a congressional intent to
depart from that [pre-Code] practice.” Whiting Pools, 462
U.S. at 208. See In re VistaCare Grp., LLC, 678 F.3d 218,
227-28 (3d Cir. 2012) (recognizing that “courts should be
‘reluctant to accept arguments that would interpret the Code .
. . to effect a major change in pre-Code practice,’ absent at
least some suggestion in the legislative history that such a
change was intended” (quoting Dewsnup v. Timm, 502 U.S.
410, 419 (1992))).
78
11 U.S.C. § 542(a).
79
See Alabama v. Bozeman, 533 U.S. 146, 153 (2001) (“The
word ‘shall’ is ordinarily the language of command.” (internal
quotation marks omitted)); Dessouki v. Att’y Gen. of United
States, 915 F.3d 964, 966 (3d Cir. 2019) (recognizing that

31
turnover is mandatory only in the context of an adversary
proceeding presided over by the Bankruptcy Court. Under
Rule 7001(1), the debtor must bring an adversary proceeding
seeking turnover. True, the turnover provision states: “shall
deliver,” but the question before us is when must a creditor
deliver? The answer is when the Bankruptcy Court says so in
the context of an adversary proceeding brought under Rule
7001(1). We view the statutory and procedural framework as:
(1) the Chapter 13 debtor must seek court relief, such as by
initiating an adversary proceeding requesting turnover; (2) the
Bankruptcy Court then determines whether the property is
subject to turnover; and (3) if it is, in accordance with that
determination, the Bankruptcy Court issues a court order
compelling a creditor to turn over property to the debtor.

Our conclusion is further supported by the United
States Supreme Court’s reasoning in Citizens Bank of
Maryland v. Strumpf.80 In that case, the Court considered the
interplay between the automatic stay81 and the turnover
provision in Section 542(b). Notably, notwithstanding the

“the word ‘shall’ imposes a mandatory requirement”); see
also Shall, Black’s Law Dictionary (11th ed. 2019) (defining
“shall,” in relevant part, as “[h]as a duty to; more broadly, is
required to,” and characterizing that usage as “the mandatory
sense that drafters typically intend and that courts typically
uphold”).
80
516 U.S. 16 (1995).
81
As relevant to Strumpf, the filing of a bankruptcy petition
stays “the setoff of any debt owing to the debtor that arose
before the commencement of the [bankruptcy] case . . .
against any claim against the debtor.” 11 U.S.C. § 362(a)(7).

32
word “shall” in that turnover provision, the Strumpf Court did
not interpret the provision as self-executing.

Section 542(b)’s turnover provision states: “an entity
that owes a debt that is property of the estate . . . shall pay
such debt to . . . the trustee.”82 However, an entity is excused
from that obligation “to the extent that such debt may be
offset under section 553 . . . against a claim against the
debtor.”83 Thus, similar to the turnover provision at issue in
this case, the turnover provision in subsection (b) includes the
word “shall” as well as a defense to turnover.

In Strumpf, the Supreme Court held that a bank’s
temporary withholding of funds in a debtor’s bank account,
pending resolution of the bank’s setoff right,84 did not violate
the automatic stay. In reaching that holding, the Court
reasoned, among other things, that interpreting Section
542(b)’s turnover provision as self-executing would
“eviscerate” the provision’s exceptions to the duty to pay.85
Here, we likewise decline to interpret Section 542(a)’s “shall
deliver” clause in a way that would disregard the provision’s
explicit defenses.86

82
Id. § 542(b) (emphasis added).
83
Id.
84
See Strumpf, 516 U.S. at 19 (“Petitioner refused to pay its
debt, not permanently and absolutely, but only while it sought
relief under § 362(d) from the automatic stay.”).
85
Id. at 20.
86
See Smith v. City of Jackson, 544 U.S. 228, 233 (2005)
(“[W]hen Congress uses the same language in two statutes
having similar purposes . . . it is appropriate to presume that

33
 C.

Even assuming the turnover provision is self-
executing, as pointed out by the Tenth Circuit, “there is still
no textual link between [Section] 542 and [Section] 362.”87
The language of the automatic stay provision and the turnover
provision do not refer to each other. The absence of an
express textual link between the two provisions indicates that
they should not be read together, so violation of the turnover
provision would not warrant sanctions for violation of the
automatic stay provision.

VI.

Guided by the plain language of the Bankruptcy
Code’s automatic stay and turnover provisions, the legislative
purpose and policy goals of the automatic stay, and the
reasoning of the Supreme Court and our two sister circuits,
we hold that a creditor in possession of collateral that was
repossessed before a bankruptcy filing does not violate the
automatic stay by retaining the collateral post-bankruptcy
petition.

We will thus affirm the order of the District Court
affirming the Bankruptcy Court’s order denying Denby-
Peterson’s request for sanctions.

Congress intended that text to have the same meaning in both
statutes.”).
87
Cowen, 849 F.3d at 950.

34