Judges of the Court
Automatic Stay 362(a) — In general
Reusser v. Wachovia Bank, N.A. 525 F.3d 855, 861 (9th Cir. 2008)
“. . .[A] final order lifting an automatic stay is binding as to the property or interest in question–the res– and its scope is not limited to the particular parties before the court. Thus, while Wachovia was the deed of trust holder, but Washington Mutual was the movant under § 362, the order lifting the stay applied to Wachovia, even though it wasn’t mentioned in the order.
In re Johnson, 346 B.R. 190, 194 (9th Cir. BAP 2006)
Bankruptcy court has jurisdiction to annul the stay and impose sanctions for its violation even after the case is dismissed.
In re Sewell, 345 B.R. 174, 182 (9th Cir. BAP 2006)
“Debtors’ case was reinstated and the automatic stay was reimposed as of the time the Reinstatement Order was docketed, not when it was signed. . . The bankruptcy court had discretion to determine when Debtors’ case was reinstated and the automatic stay was reimposed.” Foreclosure sale was allowed to stand, as it occurred between the time the case was dismissed and the reinstatement order was docketed.
In re Tippett, 338 B.R. 82 (9th Cir. BAP 2006), aff’d, 542 F.3d 684 (9th Cir. 2008)
Debtor-initiated transfers are outside the scope of the automatic stay.
Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005)
District Court had jurisdiction to decide whether automatic stay applied to a proceeding pending before it.
In re Umali, 345 F.3d 818 (9th Cir. 2003)
Bankruptcy petition filed in violation of court-imposed 180-day bar did not trigger automatic stay, since it was void.
40235 Washington St. Corp. v. Lusardi, 329 F.3d 1076 (9th Cir. 2003), cert. denied, 124 S.Ct. 469 U.S. 2003)
Section 549(c) is not an exception to § 362. It is designed to protect purchasers from the debtor, whereas 362 is designed to protect the debtor.
In re Allen, 300 F.3d 1055 (9th Cir. 2002)
Chapter 11 plan which did not incorporate pre-confirmation § 362 stipulation and order was properly confirmed, where stipulation did not recite that it would be binding on the debtor in a chapter 11 plan.
In re Canter, 299 F.3d 1150 n. 4 (9th Cir. 2002)
“Because the stay under § 362 is “automatic” and “self-executing” only upon filing of a bankruptcy petition, no authority exists for “reinstating” an automatic stay that has been lifted.”
In re Mitchell, 279 B.R. 839 (9th Cir. B.A.P. 2002)
The bona fide purchaser defense of § 549 (c) to a trustee's action to avoid a postpetition transfer does not provide an exception to the automatic stay. Purchaser out of a foreclosure that occurred a day after bankruptcy filed violated § 362.
In re Bibo, Inc., 200 B.R. 348 (9th Cir. B.A.P. 1996), opinion vacated, 139 F.3d 659 (9th Cir. 1998)
Debtor’s subordinate lien interest in property precluded senior lien holder from foreclosing on property - § 362
In re Del Mission Limited, 98 F.3d 1147 (9th Cir. 1996)
State violated automatic stay by knowingly retaining disputed taxes after bankruptcy court ordered them repaid
Citizens Bank of Maryland v. Strumpf, 116 S.Ct. 286 (1995)
Administrative hold is not a setoff, i.e., no violation of stay
In re Ramirez, 183 B.R. 583 (9th Cir. B.A.P. 1995)
Property seized under pre-petition-bankruptcy judgment levy remains part of bankruptcy estate for purposes of automatic stay
1. Client files are property of attorney’s estate
2. Stay applied even after completion of levy
3. Test for willful violation of stay
4. Damages measured from time files removed from office
Bigelow v. C.I.R., 65 F.3d 127 (9th Cir. 1995)
Tax court proceedings to resolve a disputed notice of deficiency and assertion of overpayment following a bankruptcy court order of discharge did not constitute an ‘act against property of the bankruptcy estate’ and did not violate the stay
Delpit v. Comm’r Internal Revenue Service, 18 F.3d 768 (9th Cir. 1994)
Stay applies to appeal from Tax court judgment regarding debtor’ alleged tax deficiency
Hillis Motors, Inc. v. Hawaii Auto. Dealer’s Ass’n, 997 F.2d 581 (9th Cir. 1993)
Revocation of certificate of incorporation violated automatic stay even though it occurred post-confirmation
In re Glasply Marine Industries, Inc., 971 F.2d 391 (9th Cir. 1992)
Postpetition real estate taxes are subject to the automatic stay
In re Schwartz, 954 F.2d 569 (9th Cir. 1992)
(IRS tax assessment and lien made in violation of 362 is void, not voidable
In re Advanced Ribbons & Office Products v. U.S. Interstate Distrib., 125 B.R. 259 (9th Cir. B.A.P. 1991)
Foreclosure on stock of guarantor in debtor not a violation of 523(a)(6)
In re Abrams, 127 B.R. 239 (9th Cir. B.A.P. 1991)
Failure to return property after knowledge of bankruptcy is willful violation
Globe Investment & Loan Co., Inc., 867 F. 2d 556 (9th Cir. 1989)
(1) Non-creditor mortgagee had no standing to assert stay violation
(2) stay does not provide protection to creditors
Matter of Lockard, 884 F.2d 1171 (9th Cir. 1989)
(Rejecting Piccinin, i.e., unusual circumstances exception to general rule that 362 does not cover non-debtors.)
In re Teerlink Ranch Ltd., 886 F.2d 1233 (9th Cir. 1989)
(Stay n/a to court having jurisdiction over debtor)
In re Shamblin, 890 F.2d 123 (9th Cir. 1989)
(1) IRS tax sale in violation of stay is void, not voidable
(2) questionable whether stay could ever be annulled retroactively
In re Krueger , 88 Bankr 238 (9th Cir. B.A.P. 1988)
(Ch 13 case dismissed without due process, thus stay never lifted, thus foreclosure sale void.)
§ 362(a) and Abandonment
Catalano v. CIR, 279 F.3d 682 (9th Cir. 2002)
An order lifting or modifying the automatic stay by itself does not constitute a de facto abandonment of the property of the estate. Procedures under § 554 must be followed before property is legally abandoned.
§ 362(a) — Annulment
In re Fjeldsted, 293 B.R.12 (9th Cir. B.A.P. 2003)
Finding of bona fide purchaser status under § 549(c) is not sufficient cause to annul the stay under a “balancing of the equities” test. Court suggests 12 factors to examine in determining whether to annul.
In re Cady, 266 B.R. 172 (9th Cir. B.A.P. 2001), aff'd, 315F.3d 1121 (9th Cir. 2003)
1) Balance of the equities supported denial of retroactive annulment of the stay;
2) Creditor did not violate the automatic stay by filing a nondischargeability abstract of judgment, since under state law it created no lien on estate property, and since there was no stay in effect when the property was abandoned to the debtor upon closing of the case.
In re National Environmental Waste Corp., 129 F.3d 1052 (9th Cir. 1997), cert denied,
524 U.S. 952, 118 S.Ct. 2368,(1998)
Standards for annulling the stay - Factors
1) How much notice the creditor had of filing
2) Did debtor assert it as a defense
3) Would Court have lifted stay anyway
4) Egregiousness of creditor’s conduct
Here, retroactive annulment of automatic stay is supported by debtor’s long delay in objecting to substantial notice of contract’s termination relied on by debtor in obtaining confirmation of reorganization plan.
In re Kissinger, 72 F.3d 107 (9th Cir. 1995)
Court does not abuse its discretion in granting retroactive annulment of automatic stay where bankruptcy petition filed during recess in action against debtor.
Retroactive relief should only be granted in extreme circumstances, In re Shamblin, 890 F.2d 123, 128 (9th Cir. 1989)
§ 362(a) — Interplay with Cal. law
In re Nghiem, 264 B.R. 557 (9th Cir. B.A.P. 2001), cert. denied, 539 U.S. 905 (2003)
Lender not required to give additional actual notice of foreclosure sale after bankruptcy case was dismissed, where lender had orally postponed sale during pendency of case as required by state law. In re Tome, 113 B.R. 626 (Bankr. C.D. Cal. 1990) rejected.
In re Bebensee-Wong, 248 B.R. 820 (9th Cir. B.A.P. 2000)
Recording of trustee's deed 14 days after foreclosure sale and 2 days after bankruptcy petition was filed related back to the time and date of the sale under Cal. Civ. Code § 2924h(c), and did not violate the automatic stay . (Court distinguishes case where foreclosure sale occurred after bankruptcy petition filed, implying that in that situation, the sale would be void.)
In re Hilde, 120 F.3d 950 (9th Cir. 1997)
Under California law, judgment creditor need not “perfect” lien created by service on debtor of order to appear for examination to defeat avoidance of lien by bankruptcy trustee.
§ 362(a) — Lawsuits and collection efforts
Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002)
Under § 362(a), the prohibition against continuation of judicial actions requires that the action be automatically dismissed or stayed, and not merely that it not be pursued.
In re Arneson, 282 B.R. 883 (9th Cir. B.A.P. 2002)
The automatic stay applies to collection efforts on a dischargeability judgment rendered in a previous bankruptcy case.
In re LPM Corp., 300 F.3d 1134 (9th Cir. 2002)
Bankruptcy court order requiring immediate payment of post-petition rent as an administrative priority did not relieve the landlord of the necessity of obtaining relief from the automatic stay before proceeding with a writ of execution.
In re Baldwin Builders, 232 B.R. 406 (9th Cir. B.A.P. 1999)
Bankruptcy creditor’s post-petition suits to enforce pre-petition mechanic’s lien violated automatic stay.
In re Way, 229 B.R. 11 (9th Cir. B.A.P. 1998)
Post-petition dismissal of debtor’s pre-petition state court lawsuit did not violate automatic stay.
In re Luz International, Ltd., 219 B.R. 837 (9th Cir. B.A.P. 1998)
Bankruptcy court erred in electing to decide merits of complex multi-party setoff claim in hearing on underwriter’s motion for relief from automatic stay
In re Turner, 204 B.R. 988 (9th Cir. B.A.P. 1997)
Municipal court judgment may be void for having been entered in violation of bankruptcy stay.
In re Conejo Enterprises, Inc., 96 F.3d 346 (9th Cir. 1996)
Bankruptcy court did not abuse discretion in failing to lift stay to allow remanded state court action to go forward where claimant filed a proof of claim.
Parker v. Bain, 68 F.3d 1131 (9th Cir. 1995)
1.) Stay prevents an appeal by a debtor when the action or proceeding below was against the debtor
2.) Appeal on a claim by the debtor against another is not stayed
3.) Appeal on counterclaim against debtor is stayed
Dean v. Trans World Airlines, 72 F.3d 754 (9th Cir. 1995), cert. denied, 519 U.S. 863 (1996)
Post-filing dismissal of action against bankruptcy debtor violates automatic stay where decision to dismiss requires court to first consider other issues presented by or related to
In re White, 186 B.R. 700 (9th Cir. B.A.P. 1995)
Although debtor is stayed from appealing an adverse judgment where the action was brought against him, the cross-defendant is not stayed from seeking a dismissal of debtor’s cross-complaint.
In re Robbins, 964 F.2d 342 (4th Cir. 1992)
Lifting stay to liquidate claim in a divorce case.
Noli v. C.I.R., 860 F.2d 1521 (9th Cir. 1988)
(Validity of order from bench lifting stay on Tax Ct proceeding)
In re Cimarron Investors,848 F.2d 974 (9th Cir. 1988)
(Interest - under secured creditor not entitled to interest to compensate for delay caused by stay of foreclosure)
In re Kemble, 776 F.2d 802 (9th Cir. 1985)
Judicial economy alone justifies lifting stay to permit state ct lawsuit to proceed.
§ 362(a) — Reopening
In re Aheong, 276 B.R. 233 (9th Cir. B.A.P. 2002)
Bankruptcy court properly reopened case and annulled stay based on debtor's delay in raising the issue and failure to follow the local rule.
§ 362 — State Court Authority
In re Dunbar, 245 F.3d 1058 (9th Cir. 2001)
State administrative law judge’s decision regarding scope of the automatic stay in bankruptcy did not preclude independent review by bankruptcy court.
In re Gruntz, 202 F.3d 1074 (9th Cir. 2000) (en banc)
1) Only bankruptcy court has authority to finally determine whether the stay applies.
2) § 362(b)(1) excepts all criminal proceedings from the stay, regardless of their purpose.
Hinduja v. Arco Products Co., 102 F.3d 987 (9th Cir. 1996)
Stipulated order for lifting automatic stay that incorporates terms of settlement does not bar separate action for breach of stipulation or underlying agreement in district court. Trustee was not required to seek enforcement of stipulation in bankruptcy court .
§ 362(b) Exceptions
Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005)
California attorney general’s suit under the Clayton Act did not seek to protect the pecuniary interest of the state, and thus fell under § 362(b)(4).
Allen v. Allen, 275 F.3d 1160 (9th Cir. 2002), aff’d in part, 23 Fed.Appx. 859 (9th Cir. 2002)
Action seeking modification of existing support award was exempt from the automatic stay under § 362(b)(2)(A)(ii)
In re Chapman, 264 B.R. 565 (9th Cir. B.A.P. 2001)
Section 362(b)(4) does not stay a civil forfeiture action by the government brought under 21 U.S.C. § 881(a)(7).
In re First Alliance Mortgage Co., 263 B.R. 99 (9th Cir. B.A.P. 2001)
State’s prosecution to judgment of claims for civil penalties, attorney fees and restitution under consumer laws is exempted under § 362(b)(4).
In re Berg, 230 F.3d 1165 (9th Cir. 2000)
Award of attorney fees imposed as a sanction under FRAP 38 for pursuing a frivolous appeal excepted from the stay under § 362(b)(4).
In re Boggan, 251 B.R. 95 (9th Cir. B.A.P. 2000)
Creditor who retained possession of debtor's car in order to continue perfection of its statutory repairman's lien did not violate automatic stay pursuant to § 362(b)(3).
In re Weisberg, 136 F.3d 655 (9th Cir. 1998), cert denied, 525 U.S. 826 , 119 S.Ct. 72(1998)
Stockbroker need not seek relief from automatic stay to liquidate bankruptcy debtor’s shares of stock pledged as collateral for “margin loan” § 362(b)(6)
In re Universal Life Church, 128 F.3d 1294 (9th Cir. 1997), cert. denied, 524 U.S. 952 (1998)
The Court of appeals affirmed a judgment of the district court and dismissed on appeal. The court held that the IRS’ revocation of a religious-organization debtor’s tax-exempt status is permissible under the police and regulatory power exception to the bankruptcy automatic stay
NLRB v. Continental Hagen Corp., 932 F.2d 828 (9th Cir. 1991)
(NLRB action not affected by stay under § 362(b)(4))
National Labor Relations Board v. Continental Hagen Corporation., 932 F.2d 828 (9th Cir. 1991)
NLRB action not affected by automatic bankruptcy stay
In re Wade, 115 B.R. 222 (9th Cir. B.A.P. 1990) aff’d. 948 F.2d 1122 (1991)
Attorney’s state bar excepted from bankruptcy proceedings as governmental unit. Assertion of counter claim in relief from stay motion procedurally improper
In re Poule, 91 B.R. 83, (9th Cir. B.A.P. 1988)
(state licensing bureau not stayed from imposing fine under 362(b)(4)
In re Nelson, 391 B.R. 437 (9th Cir. BAP 2008)
Section 362(c)(4) is not ambiguous. Where two or more bankruptcy cases have been pending in the same year, no automatic stay of any kind goes into effect upon filing the third case.
In re Johnson, 346 B.R. 190, 194 (9th Cir. BAP 2006)
In rem orders purporting to affect the stay in future cases are void.
In re Delaney-Morin, 304 B.R. 365 (9th Cir. B.A.P. 2003)
Bankruptcy court erred in granting relief from the stay because of postpetition defaults, where the hearing was noticed as a nonevidentiary one, the nature of the defaults upon which the order was based were not alleged in the motion, the debtor was not present at the hearing, and there was no competent evidence to support a finding of such defaults.
In re Duvar Apt., Inc., 205 B.R. 196 (9th Cir. B.A.P. 1996)
Debtor’s bad faith filing warranted lifting stay
In re Sun Valley Newspapers, Inc., 171 B.R. 71 (9th Cir. B.A.P. 1994)
(d)(2) standard - re effective reorg, is it patently unconfirmable? Does it have a realistic chance of being confirmed? Plausible..probable...assured
Equity under (d)(2) = value less all encumbrances
In re CBJ Development, 202 B.R. 467 (9th Cir. B.A.P. 1996)
Combination hotel and bar was not “single asset real estate” and was therefore subject to automatic stay
§ 362(k) (formerly 362(h))
In re Ozenne, 337 B.R. 214 (9th Cir. BAP 2006)
Storage company that sold debtor’s personal property after being notified of his bankruptcy filing committed willful violation of the automatic stay, since under Cal. Civil Code § §1980-1991, the debtor had the right to redeem it up to the time of sale. Standard for a willful violation restated.
In re Williams, 323 B.R. 691 (9th Cir. BAP 2005), aff’d, 204 Fed. Appx. 582 (9th Cir. 2006).
Debtor may be entitled to damages for willful violation of the automatic stay, even though the stay was subsequently annulled.
In re Peralta, 317 B.R. 381 (9th Cir. BAP 2004)
“It is settled that the “willfulness test” for automatic stay violations merely requires that: (1) the creditor know of the automatic stay; and (2) the actions that violate the stay be intentional. . . .No specific intent is required; a good faith belief that the stay is not being violated “is not relevant to whether the act was ‘willful’ or whether compensation must be awarded.” In re Goodman, 991 F.2d 613, 618 (9th Cir.1993).
In re Hayden, 308 B.R. 428 (9th Cir. B.A.P. 2004)
Towing company did not willfully violate automatic stay by failing to return debtor’s impounded car, where statew of Washington gave the company a lien for towing and storage.
In re Dawson, 390 F.3d 1139 (9th Cir. 2004)
Damages for emotional distress caused by willful violations of the automatic stay are available under § 362(h).
In re Stinson, 295 B.R. 109 (9th Cir. B.A.P. 2003), aff’d in part, reversed in part,
128 Fed.Appx. 30 (9th Cir.2005)
1. Court properly prorated fees based on proportion of claims upon which debtor prevailed, where debtor’s counsel was given two opportunities to correct her inadequate fee application, but failed to do so;
2. In the absence of significant economic loss, emotional distress damages are improper.
3. Court properly balanced the equities in denying punitive damages.
In re Campion, 294 B.R. 313 (9th Cir. B.A.P. 2003)
Collection company that knows of automatic stay but whose computer mistakenly sends a collection notice willfully violates the automatic stay, entitling the debtor to attorney fees.
In re Dyer, 322 F.3d 1178 (9th Cir. 2003)
“Serious” punitive damages may not be awarded under § 105 for civil contempt of the automatic stay by entities who are not individuals. Only compensatory sanctions, attorney fees and compliance with the stay may be awarded.
In re Roman, 283 B.R. 1 (9th Cir. B.A.P. 2002)
Attorneys fees are a part of the actual damages allowed by the statute. The debtor has a duty to mitigate the amount of fees incurred. Sanctions may not be awarded under both § 362(h) and § 105.
In re Colortran, Inc., 210 B.R. 823 (9th Cir. B.A.P. 1997), aff’d in part, vacated in part, 165 F.3d 35 (9th Cir. 1998)
Freight forwarder willfully violated automatic stay by withholding bankruptcy debtor’s shipment.
In re McHenry, 179 B.R. 165 (9th Cir. B.A.P. 1995)
Technical violation of the stay did not warrant actual or punitive damages
In re Davis, 177 B.R. 907 (9th Cir. B.A.P. 1995)
Debtor’s damages action for violation of automatic stay does not become moot because underlying case dismissed
Havelock v. Taxel (In re Pace), 56 F.3d 1170 (9th Cir. B.A.P. 1995), aff’d. in part, vacated in part., 67 F.3d 187 (9th Cir. 1995)
Under § 105 stay applies to unscheduled assets even though case closed. Trustee could recover attorney fees and costs under 362(h) as an “individual”.
“A trustee in bankruptcy is not an “individual” and thus may not recover damages under 362(h) but may seek sanctions under bankruptcy code §105(a).
In re Cascade Roads, Inc., 34 F.3d 756 (9th Cir. 1994)
U.S. is not covered by 362(h); while civil contempt power may not exist in bankruptcy court, sanctions power does.
In re Goodman, 991 F.2d 613 (9th Cir. 1993)
Standard for willful violation; 362(h) applies only to individuals, but civil contempt available
In re Stainton, 139 B.R. 232 (9th Cir. B.A.P. 1992)
When willful violation found, court must award debtor all reasonable fees
In re Pinkstaff, 974 F.2d 113 (9th Cir. 1992)
IRS liable for damages under 362(h); no sovereign immunity under 106(a), at least where IRS has filed a claim
In re Bulson, 117 B.R. 537 (9th Cir. 1990), aff’d. 974 F.2d 1341 (9th Cir. 1992)
Award of atty fees to debtor for wilful violation by IRS of stay.
In re Bloom, 875 F.2d 224 (9th Cir. 1989)
Standard. for finding willful violation of stay - damages and interest
In re Taylor, 884 F.2d 478 (9th Cir. 1989)
(1) damages for violation - 362(h)
(2) res judicata - stay lift order may be res judicata in subsequent case,
see In re Taylor, 77 B.R. 237 (9th Cir. B.A.P. 1987) criticized.
In re Zumbrun, 88 B.R. 250 (9th Cir. B.A.P. 1988)
§ 362 (h) sanctions
Section 362(h) (2005 version)
In re Dumont, 383 B.R. 481, 489 (9th Cir. BAP 2008)
“Ride through” option under pre-BAPCPA law was eliminated in 2005. However, “if a debtor is in compliance with sections 521(a)(6) or 362(h)(1) and (2), then section 521(d) has no effect, and enforcing an ipso facto default clause is still barred by the Code.”