IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
HOSPITAL, INC. No. 1-85-00143
NATIONAL EMERGENCY SERVICES,
v. A.P. No. 1-87-0079
WILLIAM B. GROVER, Trustee,
ORDER DENYING MOTION FOR SUMMARY JUDGMENT
This action has been brought by plaintiff National Emergency Services, Inc., to determine the validity
of its security interest. Prior to the commencement of this action, the bankruptcy court denied National
Emergency's motion for relief from the automatic stay on the grounds that its security interest was
defectively perfected. The issue here is whether the doctrine of collateral estoppel prohibits National
Emergency from relitigating the issue.
Collateral estoppel can only be used when the issue determined in the prior action was essential
judgment in the prior action. 21 Fed.Proc.L.Ed., sec. 51:212. While the bankruptcy court in the relief from
stay motion did specifically find that National Emergency's security interest was invalid, it only needed to
find that the validity of the security interest was not sufficiently clear in order to deny the motion. First
National Bank of Denver v. Turley
(8th Cir.1983) 705 F.2d 1024, 1026. See also In re Millerburg
(Bkrtcy.E.D.N.C.1986) 61 B.R. 125, 127, which held that a relief from stay motion should be denied if
there is a "high probability" that the security interest is avoidable. Since it was not absolutely necessary for
the bankruptcy court to determine that the security interest of National Emergency was invalid in order to
deny its motion for relief from the stay, this court cannot give the finding collateral estoppel effect.
IT IS THEREFORE ORDERED that the motion for summary judgment is denied.
Dated: August 8, 1987 _________________________