Memorandum of Decision Re: Violation of Adequate Stay
It is worth emphasizing that § 362(a)(5), unlike other subsections of § 362(a), addresses property of the debtor, as distinguished from property of the estate. Thus the revesting of property of the estate in the debtor which occurs under § 1327(c), Bankruptcy Code, upon confirmation of a chapter 13 plan, does not terminate the stay.
See also In re Talbot, 124 F.3d 1201, 1208 (10th Cir.1997)("Property subject to retained liens need not remain in the bankruptcy estate to remain protected against collection activities of pre-petition creditors. See 11 U.S.C. § 362(a)(5) & (c)(2)."); In re Whigham, 195 B.R. 667, 671 (E.D.Mich.1996); In re Henline, 242 B.R. 459, 466 (Bankr.D.Minn.1999). Thus, defendants' acts violated the automatic stay regardless of whether the residence was still property of the estate or had revested in David. Acts taken in violation of the automatic stay are void. In re Schwartz, 954 F.2d 569, 572 (9th Cir.1992). Once David was discharged, perfection of the lien was permanently barred by § 524(a)(3) of the Bankruptcy Code. Accordingly, Rubin and Hunter can have no valid right, title or interest in the proceeds from the sale of the Sedgwick residence except to the extent that the proceeds have been administered in the pending Canadian bankruptcy proceedings and thereafter awarded to Charlene. (2) The matter of the cross-complaint against David is more problematical. Rubin and Hunter argue that their claims arose postpetition, in which case prosecution was not stayed. However, it appears that the basis of the cross-complaint may have been David's perfectly lawful assertion of his bankruptcy rights. If so, then the cross-complaint was probably an act in violation of the stay. The court will defer decision on that matter at this time, although it will stay further prosecution. For the foregoing reasons, David's motion for partial summary judgment will be granted. The court will take the following actions:
1. It shall be deemed without substantial controversy that defendants, and each of them, violated the automatic stay by attempting to create a postpetition lien on the Sedgwick residence.
2. Pursuant to FRCP 54(b), and it appearing that it is necessary to accommodate bankruptcy proceedings in Canada and that there is no just reason for delay, the court will direct the immediate entry of a judgment declaring that Rubin and Hunter have no right, title or interest in the proceeds of the sale of the residence by virtue of their abstract of judgment and permanently enjoining them from asserting any interest therein by action or inaction until after the proceeds have been administered under Canadian bankruptcy proceedings.
3. A preliminary injunction shall issue barring prosecution of the cross-complaint during the pendency of this adversary proceeding.
4. The issue of damages, attorney's fees and costs will be reserved pending final resolution of the remaining issues.
Counsel for David shall submit an appropriate form of order granting his motion, an appropriate form of judgment as stated in paragraph 2 above, and an appropriate form of preliminary injunction.
Dated: May 15, 2001 ___________________________ Alan Jaroslovsky U.S. Bankruptcy Judge
1. The Canadian trustee has commenced an ancillary proceeding in this court pursuant to § 304 of the Bankruptcy Code. The court believes that its judgment in this matter will accomplish the results desired by that trustee.
2. Unless, of course, assertion at that time would violate Canadian bankruptc