What 5th Circuit Homeowners Must Know About Stay Injunction During Appeal Procedings

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If a party pursuing a collateral order appeal wants a stay of the trial court proceeding pending resolution of the attempted appeal, it must move for such order. Federal Rule of Appellate Procedure 8 governs motions for stay or injunctions while an appeal is pending. FED. R. APP. P. 8(a)(1)(C).

Rule 8 provides that a party must ordinarily move first in the district court for a stay of the order of a district court pending appeal or for an “order suspending, modifying, restoring, or granting an injunction” while an appeal is pending. FED. R. APP. P. 8(a)(1)(A), (C).

1. Contents and requirements of Motion for Stay filed in the Fifth Circuit

A party may bypass the district court and move for that relief in the court of appeals in the first instance by filing a motion showing that “moving first in the district court would be impracticable.” FED. R. APP. P. 8(a)(2)(A)(i).
If a party unsuccessfully sought a stay from the trial court, that party may seek a stay from the court of appeals by filing a motion stating that “a motion having been made, the district court denied the motion or failed to afford the relief requested and state any reasons given by the district court for its action.” FED. R. APP. P. 8(a)(2)(A)(ii).
Under either scenario—whether a stay was or was not sought in the district court in the first instance—any motion for stay in the court of appeals must also include:

(i) the reasons for granting the relief requested
and the facts relied on;
(ii) originals or copies of affidavits or other
sworn statements supporting facts subject to
dispute; and
(iii) relevant parts of the record.

FED. R. APP. P. 8(a)(2)(B); see also FED. R. APP. P. 18(a)(2)(B) (governing stays pending review of agency decision or order).
The Federal Rules of Appellate Procedure also require that the moving party give reasonable notice of the motion to all parties, including when, where, and to whom the application for stay or injunction is to be presented. FED. R. APP. P. 8(a)(2)(C). An original and three copies of the motion and supporting papers, together with a certificate of service, should be filed with the circuit clerk of the court of appeals. The motion does not need a cover, but must be securely bound so as to not obscure the text and so that it will lie reasonably flat when open.
There is no separate filing fee for filing a motion for stay or injunction in the court of appeals, but all required fees must have been paid in the underlying action before the court of appeals will act on the motion. Counsel should generally consult FED. R. APP. P. 27(a) and (d), 5TH CIR. R. 27.4, and the Internal Operating Procedure following 5TH CIR. R. 27.5 (which was effective December 1, 2002) concerning the requirements and format for motions. In particular, counsel should note that all motions should indicate whether they are opposed or not.
And, because a motion for stay or injunction is not merely a “procedural motion,” it must contain a certificate of interested persons. See 5TH CIR. R. 27.4.

The Fifth Circuit Internal Operating Procedures now clarify a gap in that existed in the rules until a few years ago regarding the lack of a regulation of the font size for motions. The Internal Operating Procedure following 5TH CIR. R. 27.5 makes clear that motions must comply with the typeface and type style requirements of FED. R. APP. P. 32(a)(5) and (6), which means that motions must be in no smaller than 14 point proportional typeface (or not more than 10½ characters per inch in monospaced typeface). The length of motions is limited to 20 pages, exclusive of the corporate disclosure statement (in the Fifth Circuit, the certificate of interested persons) and any accompanying documents authorized by Rule
27(a)(2)(B) and, in the specific context of a motion for stay or injunction, by Rule 8(a)(2)(B). FED. R. APP. P. 27(d)(2).

2. Response to Motion for Stay

Federal Rule of Appellate Procedure 8 governing motions for stay is silent concerning responses and replies. The general rule concerning motions provides that any party may file a response in opposition to a motion “within 10 days after service of the motion unless the court shortens or extends the time.” FED. R. APP. P. 27(a)(3)(A). In computing your response time, counsel should note that the computation-of-time rule in the Federal Rules of Appellate Procedure was recently amended (effective December 1 , 2013) and now provides that if the time for taking an action under the Federal Rules of Appellate Procedure is less than 11 days, then intervening Saturdays, Sundays, and legal holidays are excluded, unless the time period specifies that it is stated in calendar days. FED. R. APP. P. 26(a)(2).
Because the court may act on motions authorized by Rule 8 (for stay or injunction) in fewer than 10 days by giving reasonable notice that it intends to act sooner, if a party intends to respond to a motion for stay or injunction, it is a good idea to notify the clerk’s office as soon as possible and to transmit your response to the clerk’s office by overnight delivery as soon as it is ready. All responses received by the clerk before action on the motion are presented to the court for consideration.
As a general rule, the Fifth Circuit no longer sends a letter to the parties advising them that the court has received and filed a motion and identifying the deadline to file any response. The Fifth Circuit’s website advises of this change in its internal operating procedures and suggests that counsel register for the Fifth Circuit’s event notification service on its website to get notice right away of the filing any motions.
Any response is limited to 20 pages and, like the motion, must comply with the typeface and type style requirements of FED. R. APP. P. 32(a)(5) and (6). FED. R. APP. P. 27(d)(2); I.O.P. following 5TH CIR. R. 27.5

3. Reply
Although FED. R. APP. P. 27(a)(4) permits a reply to a response within 5 days after service of the response, the Fifth Circuit’s website warns that the court looks upon replies with great disfavor.
Not surprisingly, then, the court does not—as a general rule—grant extensions of time to file a reply to a response. Any reply is limited to 10 pages. FED. R. APP. P. 27(d)(2).

4. Internal processing A motion for stay filed in the court of appeals normally will be considered by a panel of the court.
FED. R. APP. P. 8(a)(1)(D). “But in an exceptional case in which time requirements make that procedure impracticable, the motion may be made to and considered by a single judge.” FED. R. APP. P. 8(a)(1)(D). If the motion is an emergency motion, the clerk’s office immediately assigns the motion to the next administrative judge in rotation on the court’s administrative log and simultaneously sends copies of the motion to the other panel members.
Motions are ordinarily considered without oral argument. FED. R. APP. P. 27(e).
The court of appeals may condition relief on a party’s filing a bond or other appropriate security in the district court. FED. R. APP. P. 8(a)(1)(E).

5. Appellate court jurisdiction to rule on a motion for stay or injunction Practitioners should note that neither a motion for stay nor a motion for injunction transfer jurisdiction to the appellate court. For the court of appeals to have jurisdiction to consider a motion for stay or for injunction, the court of appeals’ jurisdiction must first be properly invoked by the filing of a notice of appeal, in the case of a collateral-order appeal or section 1292(a)(1) appeal for example, or by the pendency of an original proceeding or a petition for permission to appeal. The motion for stay can be filed concurrent with a document invoking the appellate court’s jurisdiction, but it cannot precede the invocation of the appellate court’s
jurisdiction.

6. Reconsideration
A party aggrieved by the court’s ruling on a motion may file a “motion for reconsideration,” (not a motion or petition for “rehearing”). A motion for reconsideration of action on a motion must be filed within 14 days (unless the United States is a party in a civil case, see 5TH CIR. R. 27.1). Counsel should note that a motion for reconsideration must be physically received by the clerk’s office by the deadline; the mailbox rule does not apply to motions. Reconsideration requests are limited to 15 pages.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

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If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

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Why Homeowners Must Time Correctly Before Appealing Adverse Decisions

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CASE STUDY: 989 F.2d 1074

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must time correctly when appealling adverse ruling to avoid conflict of Jurisdiction. This case shows how wrong timing before filing a Notice of Appeal resulted to Dismissal of Appeal for Lack of Jurisdiction.

989 F.2d 1074

25 Fed.R.Serv.3d 62

Don Byron REILLY; Mary Lou Reilly, Plaintiffs-Appellants,
v.
Bruce HUSSEY, Attorney; Robert J. Phillips, Attorney;
Federal Land Bank of Spokane, Defendants-Appellees.

No. 91-35903.

United States Court of Appeals,
Ninth Circuit.

Argued and Submitted Nov. 2, 1992.
Decided March 23, 1993.

Don Byron Reilly and Mary Lou Reilly, pro se.

W. Arthur Graham, Cent. Coast Farm Credit, Arroyo Grande, CA, for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before: WRIGHT, HUG, and POOLE, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

The Reillys appeal pro se the district court’s order dismissing their adversary complaint. Because their notice of appeal was filed while a motion for rehearing was pending in the district court, we lack jurisdiction to hear their appeal.

FACTS AND PROCEDURAL HISTORY

2 In February 1977, the Reillys negotiated a loan from the Federal Land Bank of Spokane and gave as security a deed of trust to a ten-acre tract of land in Ravalli County, Montana. By February 1986, the Reillys were in default on the loan, having missed two annual payments, and had failed to pay real property taxes. The Bank initiated foreclosure proceedings.
3 The Reillys first attempted to avoid foreclosure by filing a Chapter 11 petition in the U.S. Bankruptcy Court, District of Montana, in January 1986. The court lifted the automatic stay so that the Bank could continue with pending foreclosure proceedings in Montana state court. The property was sold at a nonjudicial foreclosure sale in March 1987. The Reillys’ appeal to the Bankruptcy Appellate Panel for the Ninth Circuit was dismissed as moot.
4 In February 1987, while that appeal was pending, the Reillys sought to prevent foreclosure by filing an adversary proceeding in the bankruptcy court. They sought to void the deed of trust on the ground that the legal description was erroneous. The court dismissed their complaint, finding the deed valid under Montana law and not voidable under the Bankruptcy Code. The Reillys appealed to the U.S. District Court, District of Montana, which dismissed the appeal with prejudice.
5 In June 1988, on a creditor’s motion, the bankruptcy court converted the Reillys’ bankruptcy to a Chapter 7 proceeding. The Reillys appealed. Following the conversion, the bankruptcy court modified its order lifting the automatic stay to allow the Bank to continue an unlawful detainer action in state court. That court found the Reillys guilty of unlawful detainer and issued an order of ejectment. In October 1989, the BAP affirmed the conversion. Five weeks later, the Montana Supreme Court dismissed the Reillys’ appeal of their ejectment, finding that the issues raised were based solely on federal bankruptcy law and had already been decided in the federal proceedings.
6 In May 1989, the Reillys filed a second adversary complaint in the bankruptcy court, which is the basis of this appeal. The Reillys again complained, among other things, that the original order lifting the stay was improper. The bankruptcy court granted the Bank’s motion to dismiss the complaint.
7 The Reillys appealed. In March 1991, they filed an amended brief in which they argued, apparently for the first time, that because Judge Peterson failed to disqualify himself at the outset, all decisions of the bankruptcy court should be set aside.1 On June 4, 1991, the district court affirmed the bankruptcy court on all issues. First, the court held that the Reillys were barred by res judicata and collateral estoppel from challenging the order lifting the stay. Second, they failed to state a claim for relief under the Agricultural Credit Act of 1987 because the Act confers no private right of action. Third, res judicata barred their challenge to the validity of the deed of trust. The district court did not rule on whether Judge Peterson should have been disqualified.
8 Having suffered yet another adverse decision, the Reillys sought a hearing before us. The fate of their appeal is determined by the timing of their filings following the district court order. On June 14, 1991, they filed in the district court a motion to reconsider. On July 3, 1991, while their motion to reconsider was pending, they filed a notice of appeal. On July 29, 1991, the district court entered an order denying the motion to reconsider.
 JURISDICTION
9 We have jurisdiction to hear appeals from bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. 28 U.S.C. § 158(d). Such appeals are governed by the Federal Rules of Appellate Procedure, as amended in 1989. Fed.R.App.P. 6.
10 Rule 4(a)(4) of the Federal Rules of Appellate Procedure provides that a notice of appeal filed before the disposition of a post-trial motion “shall have no effect.” However, Rule 4(a)(4) does not apply in bankruptcy proceedings in which the district court or bankruptcy panel exercises appellate jurisdiction. Fed.R.App.P. 6(b)(1)(i). In contrast, Bankruptcy Rule 8015, which governs motions for rehearing2 by the district court or the bankruptcy appellate panel, is silent on the effect of appeals filed before a motion for rehearing is decided. See Bankr.Rule 8015, 11 U.S.C.A. (West Supp.1992). Rule 6(b)(2)(i) provides that, if a timely motion for rehearing is filed under Rule 8015, the time for appeal to the court of appeals runs from the entry of the order denying the rehearing.

11 The Advisory Committee on Appellate Rules deliberately omitted any provision regarding the effect of an appeal filed before the entry of an order denying a rehearing because it wished to “leave undisturbed the current state of law in that area.” Fed.R.App.P. 6, Advisory Committee Notes, 1989 Amendment, subdivision (b)(2). At the time of the amendment, this circuit had held that a notice of appeal in a bankruptcy case is null if it was filed while a motion for rehearing was pending in the district court. In re Stringer, 847 F.2d 549, 550 (9th Cir.1988). That holding is left undisturbed by the 1989 amendment of Fed.R.App.R. 6, and we reaffirm Stringer in this context.

12 In their zeal to pursue all possible avenues of review, the Reillys filed a notice of appeal while their motion for reconsideration was pending before the district court. Their notice of appeal was premature and a nullity: “[I]t is as if no notice of appeal were filed at all. And if no notice of appeal is filed at all, the Court of Appeals lacks jurisdiction to act.” Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 61, 103 S.Ct. 400, 403, 74 L.Ed.2d 225 (1982) (per curiam). Because the Reillys failed to file a notice of appeal after the district court denied their motion for reconsideration, we are without jurisdiction to hear their appeal.
13 Our holding does not deprive the Reillys of an opportunity to be heard. They have had their day in court; indeed they have had their days in many different courts. Clearly, they continue to feel aggrieved; but just as clearly, an unfavorable decision does not necessarily mean that a court has failed to fairly consider their arguments.
14 This appeal is dismissed for lack of jurisdiction.
15 DISMISSED.
1Bankruptcy Judge John L. Peterson presided over the chapter 11 proceedings and both adversary proceedings in the bankruptcy court. In June 1986, in the original bankruptcy hearing, Judge Peterson advised the parties of his wife’s minority stock interest in a creditor of the bankruptcy estate. He gave the parties the option of signing a remittal of disqualification or waiting for another bankruptcy judge. Both parties voluntarily signed the remittal

Under 28 U.S.C. § 455(e), a judge is not allowed to “accept from the parties to a proceeding a waiver of any ground for disqualification” based on the financial interest of the judge’s spouse. The Reillys did not seek review of the disqualification issue, however, until some five years and numerous proceedings later. While § 455 contains no explicit timeliness requirement, we have required that a motion to disqualify or recuse a judge under this section must be made in a timely fashion. Molina v. Rison, 886 F.2d 1124, 1131 (9th Cir.1989).

Moreover, in August 1990, while the present action was pending in district court, the Reillys filed a complaint with the Judicial Council of the Ninth Circuit alleging misconduct by Judge Peterson. We issued an order concluding that “[i]f the judge’s failure to recuse himself, despite the parties’ remittal, was conduct prejudicial to the effective and efficient administration of the business of the courts, appropriate and corrective action has been taken and this complaint therefore should be closed.” In re Charge of Judicial Misconduct, No. 90-80054, at 4 (9th Cir. Jan. 11, 1991).

2The Reillys filed a motion for “reconsideration.” The terms “rehearing” and “reconsideration” are used interchangeably. See In re Shah, 859 F.2d 1463, 1464 (10th Cir.1988); In the Matter of X-Cel, Inc., 823 F.2d 192, 194 (7th Cir.1987)

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

What Homeowners Must Know About Jurisprudential Exceptions to the Final Judgment

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Manu Homeowners in foreclosure litigations are confused as to what Court Orders should or should not be appealled. This post is designed to help clear those confusions as to what is appealable.

The primary gatekeeper at the door to the federal courts of appeals is the rule that only final judgments are appealable. The final judgment rule has performed this role well, for the most part. In certain cases, however, a trial court’s error on an interlocutory issue is effectively unreviewable on appeal from a final judgment. To deal with this type of injustice, the courts and Congress have created a patchwork of exceptions to the final judgment rule.

A. Collateral Order Doctrine:

The collateral order doctrine is sometimes called the Cohen collateral order doctrine, named for the landmark United States Supreme Court decision, Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949). When we talk about an order being final and appealable under the collateral order doctrine, we are still talking about an order that is appealable under section 1291.
The general rule is that “a party is entitled to a single appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation can be ventilated.” Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994). Accordingly, as noted in the preceding section, a decision is ordinarily considered final and appealable under section 1291 only if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233 (1945); see Digital Equip., 511 U.S. at 863 (quoting Catlin). The Supreme Court has recognized, however, “a narrow class of collateral orders which do not meet this definition of finality, but which are nevertheless immediately appealable under § 1291.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996). “Since Cohen, [the Supreme Court has] had many opportunities to revisit and refine the collateral-order exception to the final-judgment rule.” Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 276 (1988).

1. Three-prong test for the collateral order doctrine.

The Supreme Court has articulated a threeprong test to determine whether an order that does not finally resolve litigation is nonetheless appealable under section 1291. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978).
First, the order must “conclusively determine the disputed question.” Id. Second, the order must “resolve an important issue completely separate from the merits of the action.” Id. Third and finally, the order must be “effectively unreviewable on appeal from a final judgment.” Richardson-Merrell Inc. v. Koller, 472 U.S. 424, 431 (quoting Coopers & Lybrand, 437 U.S. at 468); accord Cunningham v. Hamilton County, 527 U.S. 198, 202 (1999) (“[C]ertain orders may be appealed, notwithstanding the absence of final judgment, but only when they ‘are conclusive, . . . resolve important questions separate from the merits, and . . . are effectively unreviewable on appeal from the final judgment in the underlying action.’” (quoting Swint v. Chambers County Comm’n, 514 U.S. 35, 42 (1995))); see also Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 490-91 (5th Cir. 2001) (restating the Cohen test as a four-step analysis: the decision (1) cannot be tentative, informal, or incomplete; (2) must deal with claims of right separable from, and collateral to, rights asserted in the action; (3) must be effectively unreviewable on the appeal from final judgment; and (4) must involve an issue too important to be denied review).

Under the first prong—that the order conclusively determine the disputed question—the Supreme Court has observed that there are two kinds of nonfinal orders: those that are “inherently tentative,” and those that, although technically amendable, are “made with the expectation that they will be the final word on the subject addressed.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 n.14 (1983). The latter category of orders meets the first prong of the collateral order doctrine.
Under the second prong—that the issue be separate from the merits—the Court has described it as a “distillation of the principle that there should not be piecemeal review of ‘steps towards final judgment in which they will merge.’” Moses H. Cone, 460 U.S. at 12 n.13 (quoting Cohen, 337 U.S. at 546). A classic case meeting the third p r o n g of the c o l l a t e r a l o r d e r doctrine—unreviewable on appeal from a final judgment—are denials of immunity from suit. As the Fifth Circuit explained in a recent case involving an appeal from a district court order denying a sheriff’s motion for summary judgment in an “official capacity” suit,

Official-capacity suits, in contrast [to
personal-capacity suits], ‘generally
represent only another way of pleading
an action against an entity of which an
officer is an agent.’” . . . [T]he plea
[here] ranks as a ‘mere defense to
liability’” [rather than immunity from
suit]. Because an erroneous ruling on
liability may be reviewed effectively on
appeal from final judgment, the order
denying the Sheriff’s summary
judgment motion in this “official
capacity” suit was not an appealable
collateral order.

Burge v. Parish of St. Tammany, 187 F.3d 452, 476-77 (5th Cir. 1999) (citations omitted); see Cunningham, 527 U.S. at 202. As its stringent requirements indicate, the collateral order doctrine is not to be applied liberally. “Rather, the doctrine “is ‘extraordinarily limited’ in its application.” Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 839 (5th Cir. 1986). Moreover, appealability under the collateral order doctrine must be determined “without regard to the chance that the litigation might be speeded, or a ‘particular injustice’ averted by a prompt appellate court decision.” Digital Equip., 511 U.S. at 868.

2. Examples of orders appealable under the collateral order doctrine.

A. Orders denying claims of immunity from suit asserted in a motion to dismiss or motion for summary judgment when the order is based on a conclusion of law:

  • Qualified immunity. Swint, 514 U.S. at 42 (citing Mitchell v. Forsyth, 472 U.S. 511, 526 (1985)); Gentry v. Lowndes County, 337 F.3d 481, 484 (5th Cir. 2003); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 576 (5th Cir. 2002).
  • Immunity under the Foreign Sovereign Immunities Act. Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 385 (5th Cir. 1999); Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380, 385-86 (5th Cir. 1991).
  • Absolute immunity. Swint, 514 U.S. at 42 (citing Mitchell, 472 U.S. at 526, and Nixon v. Fitzgerald, 457 U.S. 731 (1982)).
  • Eleventh Amendment immunity. Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139 (1993); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 573 (5th Cir. 2002); Reickenbacker v. Foster, 274 F.3d 974, 976 (5th Cir. 2001); see also Sherwinski v. Peterson, 98 F.3d 849, 851 (5th Cir. 1996) (denial of state’s motion to dismiss is appealable even if the district court’s order is not based on an express finding of no immunity if the end result is the same).
  • Refusal to rule on a claim of immunity from suit. Helton v. Clements, 787 F.2d 1016, 1017 (5th Cir. 1986).
  • Successive appeal of denial of qualified immunity defense. Behrens v. Pelletier, 516 U.S. 299 (1996) (holding that there can be two interlocutory appeals under the collateral order doctrine of denials of qualified immunity defenses in the same case: one appeal from the denial of a motion to dismiss, and a second appeal from the denial of a motion for summary judgment).
  •  B. Abstention-based stay, dismissal, and remand orders:
  • Under Colorado River abstention. Moses H. Cone, 460 U.S. at 9 (abstention-based stay order).
  • Under Burford abstention. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996) (abstention-based remand order).
  • Under Pullman abstention. Moses H. Cone, 460 U.S. at 9 & n.8 (citing Idlewild Liquor Corp. v. Epstein, 370 U.S. 713, 715 (1962)).

A district court order abstaining may take the form of an abstention-based stay order or an abstentionbased remand order. The Supreme Court addressed the appealability of abstention-based remand orders in Quackenbush. Most “remand” orders—those remanding removed cases back to state court for lack of subject-matter jurisdiction—are not reviewable by appeal or otherwise because of the bar to appellate review embodied in 28 U.S.C. § 1447(d). See Quackenbush, 517 U.S. at 714. If, on the other hand, a district court remands a case to state court for a reason other than lack of subject-matter jurisdiction, for example, in the interest of docket congestion, the bar to review in section 1447(d) does not apply, and the decision is reviewable. Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 352-53 (1976).

C. Pre-remand decisions made by a district court if that decision is “separable” from the remand order and independently reviewable through a mechanism such as the collateral order doctrine.

  • Dahiya v. Talmidge Int’l, Ltd., No. 02-31068, 2004 WL 1098838 (5th Cir. May 18, 2004) (citing City of Waco v. United States Fid. & Guar. Co., 293 U.S. 140 (1934); Heaton v. Monogram Credit Card Bank, 297 F.3d 416, 421 (5th Cir. 2002); Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 486 (5th Cir. 2001); Arnold v. State Farm Fire & Cas. Co., 277 F.3d 772, 776 (5th Cir. 2001); Linton v. Airbus Industrie, 30 F.3d 592, 597 (5th Cir. 1994); Angelides v. Baylor Coll. of Med., 117 F.3d 833, 837 (5th Cir. 1997)); Soley v. First Nat’l Bank, 923 F.2d 406, 410 (5th Cir. 1991); see also In re Benjamin Moore & Co., 318 F.3d 626 (5th Cir. 2002) (addressing the separable order doctrine to determine if collateral order doctrine conferred jurisdiction on the court to review the order of remand in a mandamus proceeding).

D. Order denying motions to intervene. Edward v. City of Houston, 78 F.3d 983, 992 (5th Cir. 1996) (en banc). But see Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370 (1987) (order granting motion to intervene but conditioning or restricting it is not immediately appealable; appeal must await final judgment).

E. Order deciding that plaintiff is not required to post security for payment of costs. Cohen, 337 U.S. at 547.

F. Order denying appointment of counsel to litigants who cannot afford counsel. Robbins v. Maggio, 750 F.2d 405 (5th Cir. 1985).

G. Order remanding action to state court pursuant to a contract between the parties. McDermott Int’l, Inc. v. Lloyds Underwriters, 944 F.2d
1199 (5th Cir. 1991).

H. Discovery orders directed to third parties. Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992) (Although discovery orders are normally reviewed by mandamus or on appeal from a contempt order, “A discovery order directed at a disinterested third party is treated as an immediately appealable final order because the third party presumably lacks a sufficient stake in the proceeding to risk contempt by refusing compliance.”).

I. Pre-contempt appeals by the President of the United States to avoid unnecessary constitutional confrontations between two coordinate branches of government. See United States v. Nixon, 418 U.S. 683 (1974). (Watch out for the United States Supreme Court’s decision in Cheney v. United States District Court (No. 03-475), in which one of the issues before the Supreme Court is “whether the court of appeals had mandamus or appellate jurisdiction to review the district court’s unprecedented discovery orders in this litigation” that, unlike United States v. Nixon, accepted a claim of executive privilege? Cheney v. United States Dist. Court, 124 S. Ct. 1391 (2004) (denying motion to recuse); see Cheney v. United States Dist. Court, 124 S. Ct. 958 (2003) (No. 03-475) (granting certiorari)).

J. Order requiring turnover of documents claimed to be privileged as attorney work product when the documents are already in the court’s possession because, “if the court already has lawful possession of the documents, a subsequent turnover order will be immediately enforceable without the necessity of holding the subpoenaed party in contempt.” In re Grand Jury Proceedings, 43 F.3d 966, 970 (5th Cir. 1994) (citing Perlman v. United States, 247 U.S. 7 (1918)).

K. Turnover order allowing a receiver to take possession of and sell corporate assets of nonparties. Maiz v. Virani, 311 F.3d 334, 339 n.4 (5th Cir. 2002).

L. Order approving receiver’s plan to distribute assets of investment company whose assets were frozen after the SEC investigated it for securities fraud. SEC v. Forex Asset Mgmt. LLC, 242 F.3d 325, 330 (5th Cir. 2001).

M. Order refusing to modify a prior consent decree where enforcement of the consent decree ran afoul of the State’s Eleventh Amendment Immunity. Frazar v. Gilbert, 300 F.3d 530, (5th Cir. 2002) (finding order also reviewable under 28 U.S.C. § 1291(a) because it was an order “refusing to dissolve or modify” an injunction), rev’d on other grounds, Frew ex rel. Frew v. Hawkins, 124 S. Ct. 899 (2004).

N. Order determining that former Department of Justice attorneys were eligible to act as fact and expert witnesses for private party in civil rights suit brought by government. EEOC v. Exxon Corp., 202 F.3d 755, 757 (5th Cir. 2000).

O. Orders affecting the media’s First Amendment rights. United States v. Brown, 250 F.3d 907, 913 n.8 (5th Cir. 2001) (orders protecting juror anonymity (citing United States v. Gurney, 558 F.2d 1202, 1206-07 (5th Cir. 1977)); Ford v. City of Huntsville, 242 F.3d 235, 240 (5th Cir. 2001) (court closure orders or confidentiality orders (citing Davis v. E. Baton Rouge Parish Sch. Bd., 78 F.3d 920, 926 (5th Cir. 1996)); see also United States v. Brown, 218 F.3d 415, 420 (5th Cir. 2000) (gag order that applied to attorneys, parties, and witnesses and prohibited them from discussing case with any public communications media was appealable under the collateral order doctrine by criminal defendant in whose trial the gag order was issued). But see United States v. Edwards, 206 F.3d 461, 462 (5th Cir. 2000) (per curiam) (collateral order doctrine did not apply to criminal defendant’s motion to lift gag order).

3. Examples of orders not appealable under the collateral order doctrine.

A. Order denying a motion to stay or dismiss federal court litigation under Colorado River abstention. Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275 (1988).

B. Order denying summary judgment motion based on Noerr-Pennington doctrine.
Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287, 290 (5th Cir. 2000).

C. Order denying claim of immunity from liability (as opposed to immunity from suit). Swint, 514 U.S. at 42 (citing Mitchell, 472 U.S. at 526).

D. Order denying claim of immunity from suit that turns on factual determinations. Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380, 385-86 (5th Cir. 1991). But cf. Mitchell, 472 U.S. at 528 (the resolution of legal issues which are appealable under the collateral order doctrine often will entail some “consideration of the factual allegations that make up the plaintiff’s claim for relief”).

E. Order denying claim of immunity from suit based on sufficiency of the evidence, i.e., whether there is a genuine issue of fact. Johnson v. Jones, 515 U.S. 304 (1995); Kinney v. Weaver, No. 00-40557, 2004 WL 811724, at *6 n.9 (5th Cir. Apr 15, 2004); Martinez v. Tex. Dep’t of Crim. Justice, 300 F.3d 567, 576 (5th Cir. 2002) (“For a qualified immunity appeal, however, our review of any factual disputes is limited to their materiality, not their genuineness.”).

F. In rare instances, denial of claims of immunity on the eve of trial. Edwards v. Cass County, 919 F.2d 273, 276 (5th Cir. 1990) (“If every denial of a motion for leave to file a summary judgment motion asserting qualified immunity were immediately appealable, defendants would have a guaranteed means of obtaining last-minute continuances. We read Mitchell v. Forsyth as affording defendants a reasonable opportunity to obtain review of their qualified immunity claims without losing part of their immunity rights by having to stand trial. However, Mitchell is not designed as an automatic exemption from the orderly processes of docket control.” “To hold otherwise would be to open the floodgates to appeals by defendants seeking delay by asserting qualified immunity at the last minute (or even, as here, following jury selection).”).

G. Order denying the summary judgment of government officials sued in their personal or individual capacities is not an appealable collateral order. Burge v. Parish of St. Tammany, 187 F.3d 452, 476-77 (5th Cir. 1999) (citing Swint, 514 U.S. at 42).

H. Order denying or granting stays pending arbitration. Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169 (5th Cir. 1988).

I. Order denying certification of a class. Coopers & Lybrand, 437 U.S. at 935 (now appealable by permission under Rule 23(f)).

J. Order denying motion to disqualify counsel. Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375 (1981).

K. Order granting motion to disqualify. Richardson-Merrell, Inc. v. Koller, 472 U.S. 424 (1985)

L. Order refusing to enforce a settlement agreement claimed by a party to protect it from suit. Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994).

M. Order denying a motion to dismiss based on the invalidity of service of process claiming immunity from such process. Van Cauwenberghe v. Baird, 486 U.S. 517, 521 (1988).

N. Orders concerning post-judgment discovery. Piratello v. Philips Elecs. N. Am. Corp., 360 F.3d 506, 508 (5th Cir. 2004) (order compelling party to appear at a deposition by a particular date, to answer questions regarding assets, and to produce documents requested, over a claim of self-incrimination; no jurisdiction over district court’s order under 1291 or collateral order doctrine; instead, the remedy was by appealing a contempt order)

Piratello, 360 F.3d at 508 (“This court has indicated its agreement with the Fourth Circuit’s view that the availability of an appeal through a contempt order renders the collateral order doctrine inapplicable to discovery orders. See A-Mark Auction Galleries, 233 F.3d at 898-99 (noting, with approval, the holding of MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 116, 119 (4th Cir. 1994)).”). In MDK, the Fourth Circuit said: “Courts have long recognized that a party sufficiently exercised over a discovery order may resist that order, be cited for contempt, and then challenge the propriety of the discovery order in the course of appealing the contempt citation. [citations omitted] Indeed, the Supreme Court has pointed to this path to appellate review as a reason why discovery orders are not appealable under Cohen.” MDK, Inc., 27 F.3d at 121

O. As a general matter, pre-trial discovery orders do not constitute final decisions under § 1291, and therefore, are not immediately appealable. See A-Mark Auction Galleries, Inc. v. Am. Numismatic Ass’n, 233 F.3d 895, 897 (5th Cir. 2000) (citing Church of Scientology v. United States, 506 U.S. 9, 18 n.11 (1992)); see Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 377 (1981).
The Supreme Court has held that a party that wishes to immediately appeal a discovery order “must [first] refuse compliance, be held in contempt, and then appeal the contempt order.” Church of Scientology, 506 U.S. at 18 n.11 (citing United States v. Ryan, 402 U.S. 530 (1971)). See infra p. 43 (mandamus may also be available when the discovery order requires disclosure of information claimed to be privileged).

P. Order granting or denying a motion to transfer venue under section 1404(a). Brinar v. Williamson, 245 F.3d 515, 517-18 (5th Cir. 2001); La. Ice Cream Distribs. v. Carvel Corp., 821 F.2d 1031, 1033 (5th Cir. 1987).

Q. Order of civil contempt. FDIC v. LeGrand, 43 F.3d 163, 168 (5th Cir. 1995); Lamar Fin. Corp. v. Adams, 918 F.2d 564, 566 (5th Cir. 1990).

R. Order of an agency review board remanding to an ALJ for further factfinding and consideration before final agency decision is rendered. Exxon Chems. Am. v. Chao, 298 F.3d 464, 469-70 (5th Cir. 2002).

B. Other Common-Law Doctrines of Finality

1. Gillespie “pragmatic finality” doctrine

Under the Gillespie doctrine, the requirement of finality is to be given a practical rather than a technical construction in determining the appealability in marginal cases of an order falling within what the Gillespie decision called the “twilight zone” of finality. Gillespie v. United States Steel Corp., 379 U.S. 148, 152-53 (1964). Counsel should avoid relying on the Gillespie doctrine.

The Supreme Court has distinguished Gillespie on grounds that, according to Professor Wright and his collaborators, “bury it quietly.” 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3913, at 479 (2d ed. 1992). In Coopers & Lybrand v. Livesay, the Supreme Court refused to apply the Gillespie doctrine to permit appeal from an order
decertifying a class action, even on the assumption that the result would be termination of the litigation. Rather than expanding Gillespie, the Court wrote that permitting such appeals under section 1291 would be plainly inconsistent with the policies underlying section 1292(b) and that “[i]f Gillespie were extended beyond the unique facts of that case, § 1291 would be stripped of all significance.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 n.30 (1978) (noting that Gillespie concerned a marginally final order disposing of an unsettled issue of national significance and that review of the issue “unquestionably implemented the same policy Congress sought to promote in §1292(b)”).

In fact, the most recent pronouncement from the Fifth Circuit about the vitality of the Gillespie doctrine is that the Fifth Circuit “no longer recognizes the exception.” Kmart Corp. v. Aronds, 123 F.3d 297, 300 (5th Cir. 1997); see Sherri A.D. v. Kirby, 975 F.2d 193, 202 n.12 (5th Cir. 1992) (calling practical finality more chimerical than real); United States v. Garner, 749 F.2d 281, 288 (5th Cir. 1985) (pragmatic finality approach has been virtually limited to facts of Gillespie). As the Fifth Circuit explained, Gillespie’s case-by-case approach to determining pragmatic finality is in fundamental conflict with the values and purposes of the final-judgment rule. See Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 841-42 (5th Cir. 1986); Newpark Shipbuilding & Repair, Inc. v. Roundtree, 723 F.2d 399 (5th Cir. 1984) (en banc).

If counsel finds a case supporting finality that sounds like it is based on practical or pragmatic finality, counsel should carefully trace the cases supporting the theory of finality to make sure that Gillespie is not the ultimate source of authority for that theory. An opinion’s pedigree is important. Counsel should make an informed decision about relying on those cases that rely on or are indirect progeny of Gillespie.

2. “Death knell” doctrine

Under the “death knell” doctrine, which is sometimes equated with the Gillespie doctrine, a case is final when a party is “effectively out of court.” Idlewild Liquor Corp. v. Epstein, 370 U.S. 713, 715 (1962); see McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982). The doctrine provides that any decision forcing a plaintiff to give up his claim, in effect, sounds the “death knell,” making it final for purposes of appeal. Coopers & Lybrand, 437 U.S. at 465-69.

Like the Gillespie doctrine, many commentators have argued that the death knell doctrine is all but a dead letter. Although the Fifth Circuit in the past noted that the Supreme Court did not actually overrule the death knell doctrine in Coopers & Lybrand, see McKnight, 667 F.2d at 479, the Fifth Circuit noted that the U.S. Supreme Court’s post-Cooper decision “in Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980), declared that its prior decision in Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), sounded the death knell to that doctrine.” Save the Bay, Inc. v. United States Army, 639 F.2d 1100, 1103 n.3 (5th Cir. Feb. 1981).

And, more recently, the Fifth Circuit observed that the Supreme Court did “limit the death knell exception” in Coopers & Lybrand and in its later decision, Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 10 n.11 (1983). See Kmart Corp. v. Aronds, 123 F.3d 297, 300 (5th Cir. 1997).

In Moses H. Cone, the Supreme Court held that Idlewild’s reasoning was limited to abstention or similar doctrines where all or an essential part of the federal suit goes to a state forum. Aronds, 123 F.3d at 300. Further, even in cases involving stays, the Fifth Circuit has stated that while it liberally construed the death knell exception in the past, it could no longer do so because the exception was limited to cases where the stay requires all or essentially all of the suit to be litigated in state court. See Aronds, 123 F.3d at 300 (citing United States v. Garner, 749 F.2d 281, 288 (5th Cir. 1985), and Kershaw v. Shalala, 9 F.3d 11, 14 (5th Cir. 1993)). And even in cases involving abstention doctrines, resort to the death knell doctrine is usually unnecessary; direct reliance may be placed on Moses H. Cone and the Supreme Court’s more recent decision in Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996).

3. Forgay “hardship–irreparable injury” exception

The Forgay doctrine, or, as it is sometimes called the “hardship and irreparable injury” exception to the final-judgment rule, grew out of Forgay v. Conrad, 47 U.S. (6 How.) 201 (1848). Today, the Forgay doctrine—if it has any continuing validity—is viewed a narrow exception to the final-judgment rule; it allows immediate appellate court review of district court orders that adjudicate part of one claim by directing the immediate delivery of property from one party to another, when there is the possibility that the losing party will experience irreparable harm or hardship if appeal of the execution is not allowed. Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d 506, 512 n.8 (6th Cir. 2001) (citing Forgay, 47 U.S. at 204); see also 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3910, at 328 (2d ed. 1992) (noting that the Forgay doctrine “is likely to be applied only to orders that improvidently direct immediate execution of judgments that involve part of the merits of a claim and are outside the limits of Rule 54(b)”).

Although the Forgay doctrine is occasionally cited, it—like the Gillespie and death knell doctrines—is probably a dead letter. Petties v. Dist. of Columbia, 227 F.3d 469, 473 (D.C. Cir. 2000) (“[W]e are not at all sure that Forgay has continuing vitality apart from the collateral order doctrine . . . .”); see Digital Equip., 511 U.S. at 868 (appealability under the collateral order doctrine must be determined “without regard to the chance that the litigation might be speeded, or a ‘particular injustice’ averted by a prompt appellate court decision”); see, e.g., Maiz v. Virani, 311 F.3d 334, 339 n.4 (5th Cir. 2002) (holding that it had appellate jurisdiction under the collateral order doctrine over an order directed at two nonparty corporations to turnover property “worth tens of millions of dollars”).
In fact, the two most recent Fifth Circuit cases citing the Forgay doctrine as a possible jurisprudential exception to finality were decided more than a decade ago. Goodman v. Lee, 988 F.2d 619, 626 (5th Cir. 1993) (citing Forgay for a narrow proposition, but distinguishing it); Lakedreams v. Taylor, 932 F.2d 1103, 1107 n.7 (5th Cir. 1991) (citing it in dicta).

The Forgay category of hardship finality is narrow, and according to the Wright & Miller treatise, has not generated a large number of appeals. 15A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3910 (2d ed. 1992). The most common, and the most expansive, jurisprudential exception to the finaljudgment rule is the collateral order doctrine.
Despite its stringent requirements and arguably limited applicability, the collateral order doctrine is the best chance of establishing appellate jurisdiction on a jurisprudential exception. Pan E. Exploration Co. v. Hufo Oils, 798 F.2d 837, 839 (5th Cir. 1986). But, if the facts of your case fit into the narrow and specific facts of the Forgay doctrine, counsel may wish to consider citing both the collateral order and Forgay doctrines and reviewing the Wright & Miller treatise’s treatment of the doctrine, which argues that “within its restricted sphere it provides a highly desirable elaboration of the final judgment rule.” 15A WRIGHT ET AL., supra, § 3910, at 329 (2d ed. 1996).

C. Procedure for Appealing Under the Collateral Order Doctrine

“An appeal taken under the collateral order doctrine is subject to all the usual appellate rules and time periods, including Rule 4 of the Federal Rules of Appellate Procedure.” United States v. Moats, 961 F.2d 1198, 1203 (5th Cir. 1992); see also Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 386 (5th Cir. 1999) (“While we said in Moats that appeals taken pursuant to the collateral order doctrine are subject to all of the usual appellate rules governing interlocutory appeals, we also specifically identified Rule 4.”). A party seeking to appeal under the collateral order doctrine should follow the appeal procedures under FED. R. APP. P. 4 that apply to appeals “as of right” from traditional final judgments (e.g., invoke the appellate court’s jurisdiction by filing a notice of appeal in the district court within the time specified by FED. R. APP. P. 4).

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Effective Use of Injunctions Can Make or Break Homeowner’s Foreclosure Case

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CASE STUDY: 5 F.3d 539 Unpublished Disposition

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must use injunctions to their advantage. Ignorance will not be to your advantage.

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

In re Evalyn PREBLICH, Debtor.
Evalyn PREBLICH, Appellant,
v.
Kenneth W. BATTLEY; Dennis Sammut, Appellees.

No. 92-36540.

United States Court of Appeals, Ninth Circuit.

Submitted Aug. 11, 1993.*
Decided Aug. 24, 1993.

Appeal from the United States District Court for the District of Alaska; No. CV-91-419-HRH, H. Russel Holland, Chief District Judge, Presiding.

D. Alaska

AFFIRMED.

Before PREGERSON, BRUNETTI and RYMER, Circuit Judges.

MEMORANDUM**

Chapter 7 debtor Evalyn Preblich appeals pro se from the district court’s affirmance of a bankruptcy court order authorizing the sale of certain bankruptcy estate property near Hope, Alaska to appellee Dennis Sammut by appellee-trustee Kenneth W. Battley. The district court held that because Preblich had failed to obtain a stay pending appeal, her challenge to the sale was moot under 11 U.S.C. Sec. 363(m). Preblich also petitions this court to stay the present appeal pending resolution by the Ninth Circuit Bankruptcy Appellate Panel of an allegedly related matter arising from the same bankruptcy. Sammut, meanwhile, moves this court to strike Preblich’s Reply Brief.

We have jurisdiction under 28 U.S.C. Sec. 1291. We affirm the order of the district court, and deny the motions of both parties.

I. MOOTNESS

The district court ruled that Preblich’s challenge to the bankruptcy court’s authorization of the sale of the subject property was moot under 11 U.S.C. Sec. 363(m) because she had failed to obtain a stay pending appeal. Preblich does not dispute the fact that she did not obtain a stay, but instead offers reasons why this situation should be excepted from the stay requirement. After careful consideration of these arguments, we conclude that all of them lack merit.

Section 363(m) provides that an appeal from the bankruptcy court’s authorization of the sale of certain property cannot affect the rights of a good faith purchaser, unless the debtor stays the sale pending an appeal.1 We have applied this statute strictly, and have recognized only two situations in which failure to obtain a stay will not render an appeal moot: “(1) where real property is sold to a creditor subject to the right of redemption and (2) where state law would otherwise permit the transaction to be set aside.” In re Mann, 907 F.2d 923, 926 (9th Cir.1990) (internal citations omitted). We have done so in the interest of promoting finality in bankruptcy. See In re Onouli-Kona Land Co., 846 F.2d 1170, 1172 (9th Cir.1988).

Preblich argues that her appeal of the sale authorization order is not moot because she holds a statutory right of redemption in the subject property which would authorize the setting aside of the sale under state law. Preblich fails, however, to explain either the factual or statutory basis of this claim. Indeed, she cites no Alaska law whatsoever for the proposition that the trustee’s sale of the property in this case may be set aside for any reason. Our own research, reveals that Alaska statutes do recognize a right of redemption, but only where property is sold to satisfy a judgment or other lien. See Alaska Stat. Secs. 09.35.250 (redemption by judgment debtor or successor), 09.45.190 (redemption after foreclosure of lien) (1983). The sale at issue here falls into neither of these categories; it was an ordinary sale of estate assets for the purposes of bankruptcy liquidation.

Preblich also argues that section 363(m) is not applicable to her appeal because Sammut did not purchase the property in “good faith” within the meaning of the statute. Specifically, Preblich contends that the sale price was not adequate, that the auction was not adequately advertised, and that the trustee agreed to pay for unnecessarily expensive environmental cleanup measures. We have defined a lack of good faith under this statute to constitute “fraud, collusion … or an attempt to take grossly unfair advantage of other bidders.” Onouli-Kona Land Co., 846 F.2d at 1173.

After reviewing Preblich’s contentions, we conclude that none are sufficient to establish a lack of good faith on the part of Sammut. First of all, we have explicitly held that good faith does not depend on the value paid for the subject property. Id. at 1174. Preblich’s contentions that Sammut did not pay a sufficiently high purchase price are therefore unavailing. Second, the fact that advertisement of the property was not as extensive as Preblich wished, does not render the sale fraudulent, collusive or unfair. According to the district court, the property was advertised in the Hope-Sunrise area, and was ultimately sold at an auction in which Sammut and one other individual bid against each other. Under these circumstances, we are unable to conclude that the sale lacked good faith. Third, the fact that the trustee may have paid more than necessary for environmental cleanup in connection with the sale is entirely irrelevant to Sammut’s good faith. Although these expenditures may have effectively lowered the purchase price, the inadequacy of that price will not establish that Sammut lacked good faith.

Finally, Preblich argues that her appeal should not be adjudicated moot under section 363(m), because the trustee unlawfully exercised control over the subject property. According to Preblich, the trustee recovered the property from Preblich’s husband and son as a fraudulent conveyance, under a judgment of the bankruptcy court. Preblich contends, however, that the fraudulent conveyance judgment was in error and that the trustee did not have a right to sell the property to Sammut.

However true Preblich’s contentions may be, the fraudulent conveyance issue was the subject of a separate bankruptcy court order which was separately appealable and is not presently before this court. Moreover, a finding that the trustee had improperly recovered the subject property for the bankruptcy estate would not overcome section 363(m). In the absence of a stay, section 363(m) renders moot any action which might affect the rights of a good faith purchaser. Although we have recognized narrow exceptions to this rule, see In re Mann, 907 F.2d at 926, an erroneous fraudulent conveyance holding on the part of the bankruptcy court would satisfy none of them.

II. MOTION TO STAY THE APPEAL

Subsequent to filing the present appeal, Preblich petitioned this court to stay this proceeding pending the resolution of another matter which is pending before the Ninth Circuit Bankruptcy Appellate Panel, BAP No. 92-1861. Preblich contends that “[i]f this case should be decided favorably for the appellant, the Ninth Circuit case would become moot. If it is decided unfavorably, then it will be [appealed] and consolidated with the current appeal so there will be just one appeal.” Preblich, however, gives no description of the issues involved in the BAP case or any explanation of why a favorable BAP decision would render the present appeal moot. For this reason we are not persuaded that staying the present appeal is necessary and accordingly deny Preblich’s motion.2

III. MOTION TO STRIKE

Sammut has moved to strike the Preblich’s Reply Brief on the ground that it raises matters not within the scope of her opening brief and introduces evidence which is not a part of the record. Because we reach the merits of Preblich’s appeal and reject it, we deny Sammut’s motion as moot.

IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s affirmance of the bankruptcy court’s order authorizing the sale of the subject property, deny Preblich’s motion to stay the present appeal and deny Sammut’s motion to strike Preblich’s Reply Brief.

AFFIRMED.

*The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1 The statute explicitly provides that:

The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.

11 U.S.C. Sec. 363(m).

2 Sammut suggests that the BAP case referred to by Preblich involves an attempt to reopen the adversary proceeding in which the bankruptcy court held that Preblich’s conveyance of the subject property to her husband and son was fraudulent. As we explained above, however, a finding that the conveyance was not fraudulent would not overcome the strict requirement in section 363(m) that a stay be obtained if an appellate court is to provide any relief affecting the rights of a good faith purchaser

Why Homeowners Must Effectively Use Court Injunctions To Save Their Homes

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CASE STUDY: 893 F.2d 1338 Unpublished Disposition

Effective Foreclosure Defense requires timing. If you time correctly, you can save your home. Homeowners presently in litigation must use injunctions to their advantage. Ignorance will not be to your advantage.

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

In re James MILLER, Jr. and Pamala F. Miller,
James MILLER, Jr. and Pamala F. Miller, Appellants,
v.
LINCOLN TITLE COMPANY, Appellee.

No. 88-5687.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 30, 1989.
Decided Jan. 12, 1990.

Before WILLIAM A. NORRIS, REINHARDT and TROTT, Circuit Judges.

I. MEMORANDUM*

1 The Millers (“Debtors”) seek reversal of an order of the Bankruptcy Appellate Panel (“BAP”) denying the Debtors’ Ex Parte Motion for Order Setting Aside Default Order and dismissing as moot the Debtors’ appeal of the dismissal of their Chapter 11 petition. The Debtors base their appeal on two arguments: (1) the BAP erred in denying the Debtors’ Rule 60(b) motion to set aside the default judgment; and (2) the BAP erred in dismissing the Debtors’ appeal of the bankruptcy court’s order dismissing their Chapter 11 case on the grounds of mootness. We affirm the BAP’s order dismissing the Debtors’ appeal insofar as it relates to the automatic stay and the sale of the property, due to the mootness of that issue, and we remand to the BAP the issues of timeliness of the Debtors’ appeal to the BAP and whether dismissal of the Debtors’ Chapter 11 petition for lack of prosecution of their earlier Chapter 13 petition was proper.

II. STATEMENT OF FACTS

2 The Debtors filed a Chapter 11 petition on June 12, 1986. On March 9, 1987, the U.S. Trustee filed a motion to dismiss the Chapter 11 case or, alternatively, to convert it to a Chapter 7 case. On March 31, 1987, Lincoln Title Company (“Lincoln”) filed a motion to join in the motion to dismiss and its own motion for dismissal. Lincoln based its motion to dismiss on the Debtors’ previous Chapter 13 case that was dismissed for failure to prosecute.1 Lincoln asked the court to take judicial notice of the fact that the Chapter 13 was dismissed pursuant to section 109(g)(1) of the Bankruptcy Code.2 On May 12, 1987, the bankruptcy court dismissed the Debtors’ Chapter 11 case based on the Debtors’ ineligibility to file the Chapter 11 case under section 109(g)(1). The order of dismissal was entered on May 15, 1987, and the Debtors filed their notice of appeal to the BAP on May 28, 1987, two days after the ten-day deadline prescribed by Bankruptcy Rule 8002. The respondent objected on the ground that the appeal was untimely and the BAP filed a conditional order of dismissal on July 22, 1987, inviting the Debtors to file a written explanation showing legal cause why the appeal should not be dismissed. On July 23, 1987, the Debtors filed a motion in opposition to the respondent’s objection. On September 9, 1987, the BAP issued an order denying the motion to dismiss. The order did not specify the BAP’s reasons for denial.
3  While the Chapter 11 case was pending, Creditway of America (“Creditway”) filed a motion for relief from the automatic stay. On September 17, 1986, the bankruptcy court entered an order modifying the automatic stay. This order denied Creditway’s motion to lift the stay subject to the following conditions to be performed by the Debtors: (1) Submission of proof of insurance on the subject property; (2) filing of schedules and statements by August 27, 1986; and (3) filing of a plan and disclosure statement on or before September 29, 1986. The order also stated that if the Debtors failed to perform any of these conditions, Creditway could file a declaration of default or order for relief from stay.
4  The Debtors complied with the first two requirements, but did not file a plan and disclosure statement by the prescribed deadline. However, the Debtors delivered a request for an extension of time to the trustee on September 26, 1986. The Trustee filed the request on September 30, 1986. On October 9, 1986, Creditway filed a document styled, “Declaration of Jeffrey A. Paris and Order Terminating Automatic Stay,” based on the Debtors’ noncompliance with the order to file a plan and disclosure statement by September 29. The Debtors claim to have received this declaration/order on October 20, 1986. On October 24, 1986, the court granted the Debtors’ request for an extension of time to file the plan and disclosure statement until October 27, 1986. On November 24, 1986, Judge Fenning signed Creditway’s proposed order terminating the automatic stay, and on December 16, 1986, entered a default order terminating the stay. The Debtors allege that neither the court nor Creditway provided them with a copy of any signed order. The Debtors did not appeal the November or December order.
5  On January 7, 1987, Creditway conducted a Trustee’s Sale of the property. The property was purchased by an independent third party. The Debtors then filed numerous papers in the state courts as well as the bankruptcy court seeking to set aside the sale. All actions were unsuccessful. In the meantime, the municipal court granted a Writ of Execution, Money Judgment for and Writ of Possession of Real Property on the foreclosed property.
6  On July 27, 1987, the bankruptcy court declined to hear the Debtors’ Complaint to Invalidate Sale of Real Property filed June 1, 1987, due to lack of subject matter jurisdiction since the bankruptcy case had been dismissed. The Debtors then filed with the BAP, on December 2, 1987, an ex parte motion to set aside the default order under Rule 60(b). The BAP denied the Debtors’ motion and dismissed their appeal as moot on January 11, 1988. The panel clarified this order at the request of the Debtors on March 11, 1988, and explained that because the order lifting the automatic stay was never appealed and the property was subsequently sold, the appeal was rendered moot. Debtors then filed a notice of appeal to the Ninth Circuit on February 10, 1988.

III. ANALYSIS

7 The court of appeals reviews a decision of the BAP de novo. Both the court of appeals and the BAP apply the same standard of review to the bankruptcy court judgment, reviewing findings of fact under the clearly erroneous standard and questions of law de novo. See In re Burley, 738 F.2d 981 (9th Cir.1984).

i. The Automatic Stay.

8 We affirm the order of the BAP denying the Debtors’ Rule 60(b) motion and dismissing their appeal insofar as it affects the automatic stay. The issue of the automatic stay and the sale of the Debtors’ residence has been rendered moot by the sale of the property to an independent third party.
9  This circuit has held that where a stay pending appeal is not requested or is not granted, a party risks losing its ability to realize the benefit of a successful appeal. See In re Combined Metals Reduction Co., 557 F.2d 179 (9th Cir.1977); In re Sun Valley Ranches, Inc., 823 F.2d 1373, 1374 (9th Cir.1987) (“We have generally held that where an automatic stay is lifted, the debtor’s failure to obtain a stay pending appeal renders an appeal moot after assets in which the creditor had an interest are sold.”). Where the property has been sold to an independent third party, this circuit has held that the appeal is moot, because the court cannot grant effective relief, at least in the absence of the third party. See In re Royal Properties, Inc., 621 F.2d 984, 987 (9th Cir.1980) (“Once the orders have been performed, an appeal attacking the order is moot. Nor may the appellants attack the validity of the sale or the deed in this appeal. The purchasers of the property have not been made parties to the appeal, and we cannot grant effective relief in their absence.”).
10  In the instant case, the default order was not appealed and a stay was not requested. The Debtors claim that they did not appeal because they were not served with the signed default order within the time period for appeal. Nonetheless, because the subject property was sold to an independent third party pursuant to a bankruptcy court order, we cannot grant effective relief in a proceeding to which the purchaser is not a party. Thus, we affirm the BAP’s denial of the Debtors’ Rule 60(b) motion and its order dismissing the Debtors’ appeal insofar as it affects the automatic stay.

ii. Dismissal of the Debtors’ Chapter 11 Petition

A. Extent of Property Involved

11 The BAP dismissed the Debtors’ appeal of the order dismissing their Chapter 11 case based on the sale of the Debtors’ residence rendering the appeal moot. However, it appears that the BAP mistakenly believed that the only property involved in the Debtors’ Chapter 11 case was the Debtors’ residence. Because other property appears to be involved, we reverse the BAP’s dismissal. On remand, the BAP should determine whether the Chapter 11 case involved other property.

B. Dismissal Under 11 U.S.C. Sec. 109(g)(1).

12  The bankruptcy court dismissed the Debtors’ Chapter 11 petition under section 109(g)(1). This section bars an individual who was a debtor in a previous Title 11 case pending in the preceding 180 days from being a debtor under Title 11 if the previous case was dismissed “for willful failure to abide by orders of the court, or to appear before the court in proper prosecution.” The Debtors’ earlier Chapter 13 case was dismissed for “failure to prosecute” and their subsequent Chapter 11 petition was filed within 180 days of that dismissal. The appellees argue that the dismissal for lack of prosecution of the Chapter 13 proceeding acts as a bar to the Debtors’ Chapter 11 filing. The appellants vigorously disagree, arguing that the Chapter 13 dismissal was not based on a willful failure to prosecute and that since section 109(g)(1) requires the element of willfulness, they are not barred from filing the Chapter 11 petition. The BAP did not consider this issue because it dismissed the appeal as moot. Thus, on remand if the BAP concludes that the appeal is timely (see section C infra ) and that property other than the house is involved, it should also consider the issue of whether the dismissal of the Debtors’ Chapter 13 case for failure to prosecute served to trigger the 180-day filing bar of section 109(g)(1).

C. Timeliness of the Appeal to the BAP.

13  The untimely filing of a notice of appeal is jurisdictional. In re Nucorp Energy, Inc., 812 F.2d 582 (9th Cir.1987). However, Bankruptcy Rule 8002 avoids potential hardship by allowing deadline extensions. If a party does not file the notice of appeal or an extension within the ten-day filing period, he may still receive an extension upon request within twenty days of the deadline if he can show “excusable neglect.” 11 U.S.C. Sec. 8002(c). The Debtors did not actually request an extension of time to file the appeal before the BAP and the BAP order did not indicate whether or not the Debtors had shown excusable neglect. Thus, on remand the BAP should reconsider the issue of the timeliness of the Debtors’ appeal or provide an explanation of the basis for its earlier determination.

AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this disposition.
*

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1  The Millers filed a Chapter 13 petition on November 7, 1985. On November 13, 1985, the court filed an order for the Millers to file a plan and statement, and an order to show cause why the case should not be dismissed. On December 2, 1985, a show cause hearing was held and the court dismissed the Chapter 13 petition for “failure to prosecute.” The Millers did not attend this hearing
2  Section 109(1)(g) states that an individual may not be a debtor under Title 11 if he has been a debtor in a Title 11 case pending at any time in the preceding 180 days if “the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution.” 11 U.S.C. Sec. 109(g)(1)

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

What Homeowners Must Know About Mortgage Foreclosure Mediation Program

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What is Mediation?
Mediation is a dispute resolution process in which an impartial person, a mediator, helps parties negotiatea mutually acceptable settlement. Mediation is non-binding, guided negotiations. Mediators do notdecide matters; rather they rely on the ability of the parties to reach a voluntary agreement without coercion.

What is the Mediator’s Role?
Mediators are non-judgmental, who listen to the parties and assist and guide the parties toward their own solution by helping them delineate and focus on the important issues and understand each other’s interests. Mediators may suggest creative and innovative solutions for the parties to consider. Mediators have no authority to impose an outcome or decide the outcome of a foreclosure action.Mediators are not permitted to give you legal or financial advice. Mediators’ focus settlement discussions, relaymessages, clarifications, questions, proposals and offers and counteroffers back and forth between theparties.

Who are the Mediators?
Mediators participating in the foreclosure mediation program are screened to ensure they have foreclosuremediation training in addition to basic mediation training.

Why Foreclosure Mediation?
Mortgage lenders do not generally want to own houses (especially in th
e current environment). Lenders are willing to talk with homeowner-borrowers aboutreasonable, practical solutions to bring aboutmortgage delinquency resolutions.

How Does Foreclosure Mediation Work?
Upon receipt of this Request for Foreclosure Mediation and Financial Worksheet by the Office ofForeclosure, the material will be distributed to court staff in the local courthouse and to the lender’s attorney. Local court staff will assign a mediator to your case and set a date for the mediation when the lender and homeowner-borrower must appear. Note. A request for mediation does not stay or otherwise delay the foreclosure action.

What Happens at a Foreclosure Mediation Session?
At the mediation session, you will meet with the mediator, the lender’s attorney and a representative of the lender (this person may appear by phone). The mediator will explain his or her role and will organize discussions about what arrangements you and the lender can agree upon that will allow you to keep your home. Commonly, mediators hold private caucuseswith each party to (1) focuses each party on thecrucial factors necessary for a successful resolution and (2) help each party analyze the strengths and weaknesses of their positions. If the mediation is successful, a foreclosure mediation settlement memorandum will be prepared by the mediator and signed by all parties.

What Are Some Possible Outcomes?
There are a number of possible solutions that you and the lender can explore. The solution will depend upon what you can afford (based on what your income and expenses are), what other resources you have, what type of loan you have, the amount you owe in arrearage and other factors that will be discussed during the mediation. Each lender has a slightly different loss mitigation program. However, every lender will require that you exhibit a reasonable ability to repay the modified monthly mortgage loan payment. If you cannot show ability to pay, then your lender has no incentive to do a workout. The following are some possible solutions:

Reinstatement: Your lender agrees that all amounts required to bring your loan current can be paid (including late fees, attorney fees, taxes, insurance, et cetera) and once these amounts are paid, the foreclosure will be dismissed and you will be back on your regular payment plan.

Repayment Plan: An agreement to resume making your regular monthly payments, plus a portion of the past due payments each month until you are caught up (i.e., the lender raises the monthly payment for a set period of time until the arrears amount is caught up).

Forbearance Agreement: Forbearance agreements are plans that allow borrowers to repay a loan delinquency over time. Regular monthly payments are made according to your loan agreement, and an additional monthly payment is made each month that is applied to the delinquent amount.
Once the delinquent amount is paid in full, the normal payment amount resumes. It fully reinstates the loan. A forbearance plan may include one or more of the following features: (a) suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of default; (b) a period during which the borrower is only required to make his/her regular monthly mortgage payment before beginning to repay the arrearage; (c) a repayment period of at least six months and (d) allow reasonable foreclosure costs and late fees accrued prior to the execution of the forbearance agreement to be included as part of the repayment schedule. However, they frequently may only be collected after the loan has been reinstated through payment of all principal, interest and escrow advances.

Extension Agreement: This is an agreement in which you pay a portion of the amount of your delinquency, and the remaining portion of the delinquent amount is added on the end of your loan.

Loan Modification: An agreement that permanently changes one or more terms of your mortgage. For example, (1) extend amortization (i.e., extending the number of years you have to repay the loan, such as, converting a 30-year loan to a 40-year loan), (2) converting a sub-prime 2-, 3- 5-, 7-year ARM loan into a fixed rate loan, (3) reducing the mortgage interest rate, (4) adding missed payments to the existing loan balance.

Loan Guarantee Partial Claim: If your mortgage is insured, your lender might help you with a one-time interest-free loan from your mortgage guarantor to bring your account current. You may be allowed to wait several years before repaying this loan.

Time to Refinance: Provided you have a reasonable prospect of arranging to refinance the loan, your lender may agree to some period during which it will not schedule a sheriff’s sale.

HOPE for Homeowners Program is a program for borrowers at risk of default and foreclosure and provides new, 30-year, fixed rate mortgages that are insured by the Federal Housing Administration (FHA). Refinancing without the benefit of a government program may be impractical for most homeowners. In today’s falling market, home values are often less than the amount of the original loan and refinancing lenders generally will loan no more than 70-80% of the value of the home.

Reverse Mortgage: Reverse mortgages, or home equity conversion mortgage (HECM) loans, are commonly used to help senior citizens tap into their home equity for retirement. As a foreclosure prevention device, you generally need to be age 62 or older and have adequate accumulated home equity.

Principal Reduction: Loan principal is reduced.
This may be possible if you have a negative amortization loan (you are paying less than is necessary to full amortize (payoff) the loan during the loan’s term) and the lender is willing to reduce principal to the original loan amount. A principal reduction program may be agreed upon in exchange for a shared appreciation mortgage (SAM). A SAM is a fixed rate, fixed term loan. In exchange for a lower interest rate, you agree to give up a portion of the home’s future value — the difference between what it is worth now and what it will be worth in the future.

Principal Forbearance: Forbearance of the repayment of part of the principal interest-free. The actual principal amount due and payable at maturity of the loan (or sale of the property) is the original unmodified principal amount, less any and all periodic principal payments that you make until maturity or sale. The loan payments only partially, not fully, amortize the loan. Contrast with Principal Reduction.

Mortgage Loan Assumption: Most mortgage loans include a “due on transfer” provision. If this provision is waived by the lender, it allows a qualified individual or entity to assume the loan’s payment obligations. This is often used to facilitate the sale of the property to a third party. The original lender may or may not release you from personal liability on the note if the individual or entity assuming the loan’s payment obligation defaults.

Deed in Lieu of Foreclosure: With a deed in lieu of foreclosure, you voluntarily execute a deed conveying your property to the lender in exchange for the lender canceling, in full or partial satisfaction, the debt owed on the loan. The lender often will agree to forgive any deficiency (the amount of the loan that isn’t covered by the sale proceeds) that remains after the house is sold. The lender will also agree not to initiate foreclosure proceedings or to terminate any initiatedforeclosure action.

Short sale: A sale for less than what you owe on the mortgage loan. Lenders may allow a home to be sold at a loss (consequently, the term short sale), because a short sale is nonetheless preferable to foreclosure. Foreclosure exposes lenders to potential substantial loss for litigation costs, carrying costs, including real estate taxes and insurance, and low forced sale bids or low resale prices. A short sale may be beneficial when a lender agrees to relieve you of liability for any deficiency (waive suing for a deficiency).

Voluntary Surrender/ Cash for Keys: Lenders may offer homeowners money to leave the home voluntarily without a post-foreclosure judgment eviction, if the house is in relatively good condition and undamaged.

What Happens If a Settlement Is Not Reached?
If mediation is unsuccessful, the foreclosure action will continue, ultimately leading to a sheriff’s sale, unless of course, YOU COMMENCE LITIGATION OR BANKRUPCTY IMMEDIATELY!

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

Wrongful Mortgage Foreclosure Monetary Awards – Case in Review

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CASE IN REVIEW 1:

Jury awards $5.4 million to couple after finding fraud in foreclosure case

Houston Chronicle  |  December 9, 2015   Jury awards couple $5.4 million in foreclosure case against Wells Fargo and its mortgage servicer.  David and Mary Ellen Wolf were several payments behind on their home mortgage and knew that foreclosure loomed.  They were puzzled, though, when a foreclosure notice came early in 2011 from Wells Fargo because they hadn’t done business with that bank. Click Here to Read More

CASE IN REVIEW 2:

NY Federal judge slams Wells Fargo for forged mortgage docs

Judge Robert Drain has a message for Wells Fargo: “Forged” foreclosure documents don’t cut it in New York’s federal courts. Click Here to Read More

 

 

How Florida Homeowner’s Counsels Can Effectively Use Stay of Proceedings to Delay Monetary Restitution Judgments after Foreclosure Pending Appeal or Wrongful Foreclosure

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What are your options should a money judgment be entered against your client? Aside from payment, there is appeal. But how do you stop the execution of the judgment during the appeal? What are your options if the order is one not solely for the payment of money, or is not a final order? A stay is a tool that the court uses to manage litigation and protect the rights of parties during appeals. This article discusses the use of stays in Florida’s state court system.

Stays Involving Appellate Review

Stays are commonly sought by the losing party either to maintain the status quo during interlocutory appeals or to suspend the execution of money judgments. To determine your options after an order or final judgment has been entered against your client, start with Fla. R. App. P. 9.310. This rule controls all proceedings in the Supreme Court and the district courts of appeal, and all proceedings in which the circuit courts exercise their appellate jurisdiction over decisions of the county courts, “notwithstanding any conflicting rules of procedure.”1

First, you will see Rule 9.310 applies only to orders that are appealed. Stays of orders that are not appealable are not controlled by this rule. Second, this rule divides the universe of appealable orders into those that are judgments solely for the payment of money and all others. The rule opens with the following prescription applicable to all those other orders: “A party seeking to stay a final or non-final order pending review shall file a motion in the lower tribunal, which shall have continuing jurisdiction, in its discretion, to grant, modify, or deny such relief. A stay pending review may be conditioned on the posting of a good and sufficient bond, other conditions, or both.”

Let’s take apart this dense language and examine its pieces.

First, the trial court, the “lower tribunal,” has the power to stay its own orders.2 That makes sense. Florida’s constitution creates the right to appeal orders of various kinds in art. V, §4(b)(1). The party’s right to appeal an order would be empty if orders and judgments could not be stayed pending review.

With limited exception, the decision to grant, modify, deny, or craft the conditions of a stay is a discretionary act entrusted to the trial court, but the discretion is not unfettered. No matter whether the judgment is one for the payment of money, declaratory, or injunctive relief, the lower tribunal cannot require an appellant to file a supersedeas bond as a precondition of the appeal.3 The right to appeal is guaranteed by the state constitution and may not be abridged by a trial court. Rule 9.310(f) gives the appellate court the power to review a trial court’s stay order when an appeal has been commenced. This, too, makes sense. The subject matter of the appellate court’s jurisdiction could be mooted if the parties’ legal positions were inexorably altered by the execution of the judgment before the appeal was concluded.

A wide range of orders is subject to appellate review, and all those orders are subject to Rule 9.310. This includes final orders, the appealable nonfinal orders listed in Fla. R. App. P. 9.130, and orders reviewable by way of petition for writ of certiorari, prohibition, or mandamus.

Final orders end the trial court’s labor in an action, and they come in many forms. They may be money judgments, declaratory judgments, or decrees. They can all be stayed. Nonfinal orders that may be immediately appealed, and, therefore, that may be stayed by the operation of Rule 9.310, include orders that concern

• Venue;

• Injunctions;

• The determination of the jurisdiction of the person;

• The determination of the right to immediate possession of property, including orders pertaining to writs of replevin, garnishment, or attachment;

• The determination of the right to immediate monetary relief or child custody in family law matters;

• The determination of the entitlement of a party to arbitration, or to an appraisal under an insurance policy;

• Workers’ compensation immunity;

• The certification of a class;

• Immunity in a civil rights claim arising under federal law;

• Whether a governmental entity has taken action that has inordinately burdened real property;

• The appointment of a receiver.

A stay during the appeal of a nonfinal order may be necessary because “[i]n the absence of a stay, the trial court may proceed with all matters, including trial or final hearing,” provided that no final order may be entered until the appellate proceedings are concluded, pursuant to Rule 9.130(f). Finally, Rule 9.310 empowers the trial court to stay its nonfinal orders that are immediately reviewable by way of a petition for writ of certiorari, prohibition, or mandamus. If the circumstances of your case warrant the filing of such a petition, then they likely would justify the entry of a stay of the challenged order pending appellate review.

Asking the Trial Court for a Stay Pending Appellate Review
If your client’s situation requires a stay of the order while the appellate court reviews it, then you need to fashion a motion for stay and file it with the trial court. The trial court’s order or judgment is not stayed by the mere filing of a notice of appeal or petition for writ of certiorari,4 and, except for money judgments, a stay pending appeal is a matter entrusted to the trial court’s discretion.5 The trial court has the continuing jurisdiction to grant your stay, to lift it, or to modify it. The trial court may impose conditions, and it may alter those conditions in its discretion for the duration of the appellate proceedings.6

There are limits to the trial court’s discretion. The trial court cannot require, as a condition of the stay, the payment of the judgment holder’s attorneys’ fees.7 Only when fees are otherwise recoverable by contract or statute may the trial court condition a stay on the payment of attorneys’ fees in the event the appellant fails to prevail on appeal.

When to Move for a Stay — Timing Is Important

Rule 9.310(a) requires you to file a motion, and the language implies the motion be in writing. In practice, however, strict compliance with the rule may be unworkable. The trial court may issue an order granting relief to your opponent within a time frame shorter than would accommodate the filing and setting of a motion to stay. If you find yourself at a hearing and the judge rules against your client, and you conclude the ruling would cause substantial, irreparable injury to your client, then move ore tenus for a stay. Be sure to get a ruling on the record. Promptly get a written order.

Better yet, be prepared. If you know the hearing may result in an order that your client would appeal, file a conditional motion for stay. Notice it for hearing. Bring alternative proposed orders granting and denying your motion for stay. Head to court and argue for the best outcome, but be prepared to deal with the worst. If the trial court grants immediate relief against your client, then argue your motion for stay then and there. If the trial court denies your motion to stay, make sure you get the ruling on the record and a written order from the court. This will perfect your right to apply to the appellate court for a stay.

Remember, the rule provides for a stay only if you seek appellate review of the order. If you obtain a stay order, but you do not ultimately pursue an appellate remedy, then the authority supporting the stay provided by Rule 9.310 would end. Your opponent would have a very good argument to dissolve the stay that you have obtained because the court’s authority to do so, under this rule, ended on the last day you had to file your notice of appeal or your petition. An order from the lower tribunal staying the effect of its judgment or order is a nullity unless a notice of appeal or petition is actually filed.8

What Justifies Stay of Order Pending Appellate Review

The trial court’s wide discretion in crafting a stay is an invitation to be creative in your request for a stay. The remedy you request must suit your client’s needs, of course. The trial court anticipates that you will suggest a stay that does so. But it will more readily grant your request if the conditions in your proposed stay do no harm to your opponent and do not unduly delay the proceedings. Reasonable conditions may include that you file your notice of appeal or petition promptly, perhaps faster than permitted by the appellate rules; that other aspects of the litigation proceed unabated; or that you protect property, documents, or evidence in your possession from spoliation.

To obtain a stay from the appellate court, you should demonstrate that your client will likely prevail on appeal, and your client will suffer some substantial injury if the order is not stayed.

The appellate court applies this standard when deciding whether to issue a stay order.9 Following this outline makes for a strong argument in the trial court as well. The checklist for your motion to stay should include:

• Informing the trial court that it is empowered by Rule 9.310 to stay the order it has just entered;

• Notice to the court that you intend to file a notice of appeal or petition and the date you intend to file;

• A summary of the legal and factual grounds for the appeal;

• A discussion of the harm that will befall your client should the stay not be granted;

• Evidentiary support in the form of affidavits from your client attesting to any facts justifying the stay;

• A discussion of the effect of the stay on the progress of the case and specific proposals to keep other parts of the case moving forward;

• A demonstration that the stay will not harm your opponent.

A stay motion with these elements would be compelling. The affidavit can be used to authenticate papers, letters, emails, or other documents that you submit in support of your motion. Documents that are unauthenticated are generally not admissible, and the court may find they have no evidentiary weight.10

Finally, move for relief promptly and get a ruling as soon as possible. Although there is no time frame for making a motion to stay set within Rule 9.310, time does matter, and earlier is better than later. Waiting for weeks to ask for a stay undercuts your argument that the order imposes a substantial burden or injury on your client.

If Trial Court Denies Request for a Stay, Ask the Appellate Court

Rule 9.310 gives the trial court the power to issue or deny stays, but it also gives the appellate court the power to review those rulings. You must apply to the trial court first, though.11 If the lower tribunal refuses to grant the motion to stay, then review is sought in the appellate action by motion.12 The appellate court will review the lower tribunal’s order for an abuse of discretion.13 The trial court is presumed to know the case well, and the question to stay usually involves a mixture of fact and legal questions that the trial court is well-suited to decide.

Your appellate motion for stay should be filed as soon as possible, preferably as soon as your appellate case is commenced. To determine what should be included in your motion to the appellate court, consider what would convince the appellate judges that your client deserves a stay. First, they will need to see your trial court motion and the order denying it. They will need a succinct statement of the facts that apprises them of the nature of the appellate case and a discussion of the course of proceedings. They will need to know the legal question that you will ask them to resolve. To warrant issuance of a stay, for the purpose of preserving the status quo during the appellate proceeding, the movant must demonstrate a likelihood of success on the merits and the likelihood that harm would result if the stay were not granted.14

You will need to provide the appellate court an appendix of documents from the trial court file that includes the order on appeal, the pertinent hearing transcripts, and the moving and opposition papers related to the stay order. Include a progress docket report from the trial court. Take care to bind the documents with tabs or, better yet, number the pages. Mind the specific court’s requirements for submissions of appendices. You’ll find each district court’s requirements set out on their websites. If you have a question, call the clerk’s office at the appellate court.

Watch your timing. An appellate court cannot consider a motion if no appellate case has yet been commenced. Therefore, the notice of appeal or the filing of the petition must coincide with or precede your filing of the appellate motion to stay. Only once the appellate court establishes its own case are you free to file your motion. Filing a motion in the appellate court does not automatically suspend any order of the trial court, so be aware of your time limitations. If the motion is time-sensitive, say so in the motion, and inform the appellate court of the deadline by which you must act.

When Does the Stay End?

If the order is a final judgment, your stay will remain in effect until the conclusion of all appellate proceedings. Appellate proceedings typically conclude when the appellate court issues its mandate. The appellate clerk issues the mandate 15 days after the court issues its decision or “as may be directed by the [appellate] court.”15 So, if you intend to try an appeal to the Supreme Court, then you must consider whether to ask the appellate court to withhold issuance of its mandate until the Supreme Court either rejects your jurisdictional papers, or takes jurisdiction of the case and completes its review.16 Alternatively, you may ask the trial court to issue a new stay pending completion of Supreme Court proceedings.

Stays Not Involving Appellate Review

A trial court is invested with the power to stay the effect of any of its interlocutory orders, even if they are not appealable.17 But that power is not established by Rule 9.310. Rather, it is part of its inherent power to manage the case. The trial court may grant or deny a stay, and it can craft unique conditions for the stay and modify them as a case management tool. Whether it does so, and what conditions it imposes, is a matter for its broad discretion.18 If your client is on the receiving end of such a stay and objects to it, you may seek appellate review of that stay. But the jurisdiction of the appellate court to do so is not established by Rule 9.310(f), and review is not by motion. Instead, the appellate court reviews the trial court’s stay order by means of a petition for writ of certiorari. By demonstrating to the appellate court that the trial court’s stay has substantially curtailed some important right of your client, you can establish the appellate court’s jurisdiction to review the order. You’ll need to show the order departs from the essential requirements of law (meaning the order lacks a legal or factual basis), and you’ll need to show the stay causes a serious, irreparable injury to your client, one that cannot be remedied on appeal from the final judgment.19

What to Do with a Judgment Solely for Payment of Money

Trial courts have the power to stay execution of money judgments on a showing of “good cause” pursuant to Fla. R. Civ. P. 1.550(a). This is a discretionary decision, of course. But an automatic stay of a money judgment can be obtained under Fla. R. App. P. 9.310(b). This appellate rule requires the filing of a “good and sufficient bond” issued by a surety company authorized to do so in Florida. Rule 9.310(b) sets the amount of the bond as the principal amount of the judgment, plus two years of interest calculated at the statutory rate.20 Filing the bond dispenses with the need for filing a motion or obtaining a court order.21

Pursuant to Rule 9.310(b)(2), the state, or a public officer in their official capacity, or a board, commission, or other public body seeking review, is entitled to a stay without bond in most circumstances. The right is not absolute, but if you represent a government entity or official, you must keep this valuable right in mind.

A “good and sufficient bond” is one that is issued by an insurer authorized by the Office of Insurance Regulation to do so in Florida. A bond is commonly obtained through a commercial insurance broker. Brokers can be useful intermediaries to guide you through this process. The Office of Insurance Regulation maintains a website listing the scores of sureties authorized to conduct such business in Florida.22 Beware that unless you represent a substantial, established corporation, surety companies generally require posting 100 percent collateral in the form of an irrevocable letter of credit or a cash deposit.

A proper bond will contain the following elements: It will identify the surety, the principal, and the judgment holder, who is the obligee. The face of the bond will recite the surety’s undertaking to be bound to the court for the amount of the judgment, plus the two years of statutory interest up to the amount of the bond. The usual condition stated by the surety on the face of the bond is that if the judgment is satisfied or reversed on appeal, then the bond becomes void. The bond will be signed by both the principal and the surety.

The original bond is filed with the trial court under a notice of filing bond prepared by the lawyer. It is upon the filing of the bond that the automatic stay takes effect. If execution proceedings have already commenced, the filing of the bond does not act to undo the orders or negate the motions already filed or adjudicated. The filing of the bond at that late point only stays further execution.23

This procedure secures the judgment holder’s ability to collect its principal and interest, and it preserves the judgment creditor’s right to appeal. Beware that an automatic stay under this rule may, under certain conditions, be dissolved.24 In general, though, the discretion of the court to modify the terms of a bond is extremely limited. The lower tribunal may not increase or decrease the amount of the bond as set out in the rule or otherwise prejudice the creditor’s realistic chances of recovery at the conclusion of the appeal.25 When the appellate proceedings are concluded and the judgment is paid or reversed, be sure to obtain a written order from the trial court declaring that the bond is void, and the surety’s obligation is released.

Conclusion

The effective litigator will know how to use stays to the client’s advantage. Stays can be used to limit the effect of an order or stop the execution of a judgment. Trial courts have wide discretion in whether to grant or deny a stay and what conditions to put on a stay. Your client needs you to know how to obtain stays from the trial and appellate courts when their judgment day comes.

1 Fla. R. Jud. Admin. 2.130.

2 Holman v. Ford Motor Co., 239 So. 2d 40, 43 (Fla. 1st D.C.A. 1970) (“It seems well settled that interlocutory judgments or orders made during the progress of a case are always under the control of the court until final disposition of the suit, and they may be modified or rescinded upon sufficient grounds at any time before final judgment.”).

3 Fitzgerald v. Addison, 287 So. 2d 151 (Fla. 2d D.C.A. 1973).

4 Thames v. Melvin, 370 So. 2d 439 (Fla. 1st D.C.A. 1979).

5 Eicoff v. Denson, 896 So. 2d 795, 799 (Fla. 5th D.C.A. 2005) (affirming decision of trial court to deny motion to stay a judgment that restrained homeowner from violating restrictive deeds pending appeal).

6 Fla. R. App. P. 9.310(a).

7 City of Coral Gables v. Geary, 398 So. 2d 479 (Fla. 3d D.C.A. 1981).

8 State v. Budina, 879 So. 2d 16 (Fla. 2d D.C.A. 2004).

9 Perez v. Perez, 769 So. 2d 389 (Fla. 3d D.C.A. 1999).

10 Fla. Stat. §90.901 (“Authentication or identification of evidence is required as a condition precedent to its admissibility.”).

11 Mitchell v. Leon County School Board, 591 So. 2d 1032 (Fla. 1st D.C.A. 1991).

12 So. Fla. Apartment Ass’n v. Dansyear, 347 So. 2d 710 (Fla. 3d D.C.A. 1977).

13 Fla. R. App. P. 9.310(a). The lower tribunal has “continuing jurisdiction, in its discretion, to grant, modify, or deny such relief.”

14 Perez v. Perez, 769 So. 2d 389 (Fla. 3d D.C.A. 1999).

15 Fla. R. App. P. 9.340(a).

16 Fla. R. App. P. 9.310(e).

17 Holman v. Ford Motor Co., 239 So. 2d 40, 43 (Fla. 1st D.C.A. 1970) (“It seems well settled that interlocutory judgments or orders made during the progress of a case are always under the control of the court until final disposition of the suit, and they may be modified or rescinded upon sufficient grounds at any time before final judgment.”).

18 REWJB Gas Invs. v. Land O’ Sun Realty, Ltd., 643 So. 2d 1107, 1108 (Fla. 4th D.C.A. 1994) (granting stay of eviction proceedings pending determination of declaratory judgment action on terms of lease).

19 Verlingo v. Telsey, 801 So. 2d 1009, 1010 (Fla. 4th D.C.A. 2001).

20 Fla. Stat. §55.03; Florida Department of Financial Services, Statutory Interest Rates, http://www.myfloridacfo.com/aadir/interest.htm (statutory rate of interest).

21 Wintter & Cummings v. Len-Hal Realty, Inc., 679 So. 2d 1224 (Fla. 4th D.C.A. 1996) (entry of court order is not necessary for bond to become effective as supersedeas bond); Fla. Coast Bank of Pompano Beach v. Mayes, 433 So. 2d 1033 (Fla. 4th D.C.A. 1983), petition for review dismissed, 453 So. 2d 43 (rule applies when the only relief granted is for payment of money).

22 Florida Office of Insurance Regulation, Company Directory, http://www.floir.com/companysearch (search the list of authorized lines of business for sureties).

23 Freedom Insurors, Inc. v. M.D. Moody & Sons, Inc., 869 So. 2d 1283 (Fla. 4th D.C.A. 2004).

24 Mitchell v. State, 911 So. 2d 1211 (Fla. 2005).

25Platt v. Russek, 921 So. 2d 5 (Fla. 2d D.C.A. 2004); see also PS Capital, LLC v. Palm Springs Townhomes, LLC, 9 So. 3d 643 (Fla. 3d D.C.A. 2009) (bond must be in the amount set forth in the rule).

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What Maryland Homeowners Needs to Know About Withdrawal Of The Reference Of Bankruptcy Matters From The United States Bankruptcy Court To The United States District Court In Maryland

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This post is intended to be a useful guide to the procedures and practice involved in withdrawal of the reference of bankruptcy matters from the United States Bankruptcy Court to the United States District Court in Maryland. It is, however, not intended to be an exhaustive treatment of the subject and should not be used as a substitute for Pro se Homeowners or attorneys doing their own research and reviewing carefully all applicable statutes, rules and case law.

                                                Background
Congress vested all original jurisdiction over bankruptcy cases in the United States District Court. 28 U.S.C. § 1334(a). Congress further provided that the District Court could refer all cases in bankruptcy and any and all proceedings arising under, in, or related to cases in bankruptcy, to the Bankruptcy Court. 28 U.S.C. § 157(a). The United States District Court for the District of Maryland has referred all cases under the Bankruptcy Code and all proceedings arising under the Bankruptcy Code or arising in or related to cases under the Bankruptcy Code to the United States Bankruptcy Court. Rule 402, Rules of the United States District Court (Maryland) (hereinafter referred to as “District Court Local Rule”). Accordingly, until and unless the reference of jurisdiction to the Bankruptcy Court is withdrawn by an Order of the District Court, all jurisdiction over bankruptcy
matters resides with the Bankruptcy Court.

Statutory and Rule Provisions With
Respect to Withdrawal of Reference

28 U.S.C. § 157(d) provides as follows:

(d) The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown.
The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.

As set forth in § 157(d), the District Court has the authority to
withdraw the entire bankruptcy case, or any part thereof, or any proceeding in the bankruptcy case or part thereof. The District Court can exercise its authority to withdraw cases or proceedings on its own motion or on timely motion of any party, for cause shown. This authority is sometimes referred to as discretionary withdrawal of the reference.

28 U.S.C. § 157(d) also provides for what is often called mandatory
withdrawal of the reference. Pursuant to the second sentence of § 157(d), the District Court shall, on timely motion of a party, withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both the Bankruptcy Code and other federal laws regulating organizations or activities affecting interstate commerce. Note that the mandatory withdrawal of reference is only applicable to proceedings in the bankruptcy case and only on timely motion of a party, not on the District Court’s own motion.

Bankruptcy Rule 5011 (“Withdrawal and Abstention from Hearing a
Proceeding”) provides in pertinent part as follows:

(a) Withdrawal. A motion for withdrawal of a case or proceeding shall be heard by a district judge.

(c) Effect of Filing of Motion for Withdrawal or Abstention.
The filing of a motion for withdrawal of a case or proceeding or for abstention pursuant to 28 U.S.C. §1334(c) shall not stay the administration of the case or any proceeding therein before the bankruptcy judge except that the bankruptcy judge may stay, on such terms and conditions as are proper, proceedings pending disposition of the motion. A motion for a stay ordinarily shall be presented first to the bankruptcy judge. A motion for a stay or relief from a stay filed in the district court shall state why it has not been presented to or obtained from the bankruptcy judge. Relief granted by the district judge shall be on such terms and conditions as the judge deems proper.

District Court Local Rule 405 (“Rules of procedure for withdrawal of reference”) provides as follows:

1. General rule. When a case or proceeding has been referred by this Court to the Bankruptcy Court, all documents and pleadings in or related to such case or proceeding shall be filed with the Clerk in the Bankruptcy Court.

2. Withdrawal of reference of bankruptcy case or proceeding.

a. Filing of motion for withdrawal of reference with bankruptcy clerk. A motion pursuant to 28 U.S.C. § 157(d) and Bankruptcy Rule 5011 to withdraw the reference of any bankruptcy case, contested matter or adversary proceeding referred to the Bankruptcy Court pursuant to 28 U.S.C. § 157(a) and Local Rule 402 shall be filed with the Clerk in the Bankruptcy Court. If the motion requests withdrawal of only a portion of the case, a contested matter, or a portion of an adversary proceeding, the motion shall be accompanied by the filing of a designation of the documents and pleadings filed in the case or proceeding to which the motion relates.

b. Withdrawal of reference of bankruptcy cases. A motion to withdraw the reference of a case to the Bankruptcy Court must be timely filed, and in any event, before the case is closed.

c. Withdrawal of reference of adversary proceeding or contested matter. A motion to withdraw an adversary proceeding or a contested matter in a case which has been referred to the Bankruptcy Court must be filed by the earlier of eleven (11) days before the date scheduled for the first hearing on the merits; and

i. in the case of an adversary proceeding, within twenty (20) days after the last pleading is permitted to be filed pursuant to Bankruptcy Rule 7012; or
ii. in the case of a contested matter, within twenty

(20) days after the last responsive pleading or memorandum in opposition is permitted to be filed pursuant to Local Bankruptcy Rule 9013-1(b)(3).

3. Filing of pleadings after reference withdrawn.

a. If the reference of an entire case has been withdrawn from the Bankruptcy Court to the District Court, all pleadings and documents in or related to such case shall be thereafter filed with the Clerk in the District Court.

b. Where the reference of only a portion of an entire case has been withdrawn, pleadings and documents with respect to the case (including any parts thereof that have been withdrawn or transferred) shall continue to be filed with the Clerk in the Bankruptcy Court. Any pleadings and documents which relate to any parts of the case which have been withdrawn or transferred to the District Court shall also be filed with the Clerk of the District Court. The Clerk of the Bankruptcy Court
shall keep a separate docket sheet of those pleadings and documents filed in the portion of the case that has been transferred to the District Court.

c. Upon withdrawal or transfer of any complaint to the District Court, the plaintiff may forward to the defendant a notice and request to waive service of summons or the Clerk shall issue a District Court summons pursuant to Fed. R. Civ. 4(d) unless either of the aforementioned has already occurred pursuant to the Bankruptcy Rules.

d. This subsection (d) governs personal injury tort and wrongful death claims which must be tried in the District Court pursuant to 28 U.S.C. § 157(b)(5). Except for the procedures contained within this subsection, personal injury tort and wrongful death proceedings shall be filed with the Clerk in the Bankruptcy Court. However, beneath the bankruptcy number, the pleading or other document shall designate the pleading or document as a “SECTION 157(b)(5) MATTER.” When filing a complaint a completed District Court civil cover sheet (A.O. Form JS-44c) should be submitted beneath the Bankruptcy Court cover sheet required by Local Bankruptcy Rule 7003-1. No summons shall be issued until the proceeding
is transferred to the District Court. Upon filing the complaint, the Clerk in the Bankruptcy Court shall immediately transfer the proceeding to the District Court and plaintiff may send to the defendant(s) a notice and request to waive service of summons pursuant to Fed. R. Civ. P. 4(d) or the Clerk of the District Court shall issue a summons.

4. Motions concerning venue in bankruptcy cases and proceedings. All motions concerning venue in cases arising under Title 11 or arising in or related to cases under Title 11 shall be determined by the Bankruptcy Court, except in those cases to be tried in the District Court pursuant to 28 U.S.C. § 157(b)(5).

See also Local Bankruptcy Rule 5011-2, which provides in pertinent part as
follows:

A motion for withdrawal of reference is governed by Local Rule 405.2 of the United States District Court for the District of Maryland.

Filing of Pleadings Before Withdrawal of Reference

In accordance with District Court Local Rules 402 and 405.1, all papers and pleadings in, or related to a bankruptcy case or proceeding, shall be filed with the Clerk of the Bankruptcy Court. Until an Order is entered by the District Court removing the reference from the Bankruptcy Court for all or part of a matter, the Clerk of the District Court will not accept the filing of any pleadings or papers in any bankruptcy-related matter. Unless the party filing a paper or pleading in the Bankruptcy Court is exempt from electronic filing,1 all papers and pleadings should be filed in the Bankruptcy Court electronically through the CM/ECF system.

Filing of a Motion to Withdraw Reference

A party on timely motion or the District Court upon its own motion may withdraw, in whole or in part, any case or proceeding pending in the Bankruptcy Court for cause shown. The party’s motion to withdraw the reference must be filed in the Bankruptcy Court. If the motion requests withdrawal of only a portion of the case, contested matter or adversary proceeding, the motion shall be accompanied by the filing of a designation of the documents and pleadings filed in the case or proceeding to which the motion relates. After the filing of a response or the expiration of the response time period, if no response is filed, the Bankruptcy Clerk shall transmit the motion to the District Clerk’s office. The transmittal shall include copies of the motion and any response thereto and the transmittal form for a motion for withdrawal of reference. As set forth in Bankruptcy Rule 5011(a), the motion for withdrawal of reference will be decided by the District Court.

_____________________________

1 Parties who are representing themselves (pro se), other than those who are members of the Bar of the Bankruptcy Court, are exempt from the electronic filing requirements and should file their papers and pleadings with the Clerk of the Bankruptcy Court in paper format.

Unless and until the motion for withdrawal of reference is granted by Order of the District Court, the only matter over which the District Court will exercise jurisdiction is the motion for withdrawal of reference. Until the reference is actually withdrawn, the original referral of jurisdiction (District Court Local Rule 402) remains in place. Accordingly, while the motion for withdrawal of reference is pending, pleadings and papers in or related to the bankruptcy case shall continue to be filed with the Bankruptcy Court. After the motion to withdraw reference has been transmitted to the District Clerk, the Bankruptcy Clerk shall send copies of any additional filings concerning the motion to withdraw reference to the District Clerk. Until the reference is withdrawn, the Bankruptcy Court shall continue to handle all matters in the bankruptcy case including adversary proceedings and contested matters in such case.

Timeliness of Motion to Withdraw Reference

As set forth in 28 U.S.C. §157(d) and District Court Local Rule 405.2.b, a party’s motion to withdraw the reference must be timely filed. With respect to motions to withdraw the reference of the bankruptcy case itself, the District Court Local Rule further provides that the motion must be filed before the case is closed. With respect to motions to withdraw the reference of adversary proceedings or contested matters, District Court Local Rule 405.2.c provides that such motion must be filed by the earlier of eleven (11) days before the date scheduled for the first hearing on the merits and, in the case of an adversary proceeding, within twenty (20) days after the last pleading is permitted to be filed pursuant to Bankruptcy Rule 7012, or, in the case of a contested matter, within twenty (20) days after the last responsive pleading or memorandum in opposition is permitted to be filed pursuant to Local Bankruptcy Rule 9013-1(b)(3).

Mandatory and Discretionary Withdrawal of Reference

As noted above, pursuant to 28 U.S.C. § 157(d), the authority for a District Court to withdraw the reference is divided into two parts, mandatory withdrawal of the reference (“if the court determines that resolution of the proceeding requires consideration of both title 11 [the Bankruptcy Code] and other laws of the United States regulating organizations or activities affecting interstate commerce”) and discretionary withdrawal of the reference (“for cause shown”).

With respect to mandatory withdrawal of the reference, the statutory language appears to be quite broad. Nevertheless, it has been observed that “[t]he great weight of the case law interpreting § 157(d) holds that this seemingly broad language concerning mandatory withdrawal should be narrowly read. . . . The fact that resolution of the matters in question calls merely for consideration or application of both bankruptcy law and other federal laws is plainly insufficient, in that mandatory withdrawal should only be made where substantial and material consideration of non-bankruptcy statutes is necessary in the case.” In re Merryweather Importers, Inc., 179 B.R. 61, 62 (D. Md. 1995). Thus, mandatory withdrawal has been denied in cases involving “straightforward application of federal statutes to a particular set of facts. . . . By contrast, cases involving federal questions that are complex or are of first impression must be withdrawn from reference.” Id. at 62.

With respect to discretionary withdrawal of the reference (sometimes called permissive withdrawal), the statutory test is “for cause shown.” Cases have recognized that the District Court has broad discretion in deciding whether the reference should be withdrawn for cause shown. See In re Millennium Studios, Inc., 286 B.R. 300, 303 (D. Md. 2002). Among the factors to be considered by the court are whether the matter at issue between the parties is “core” within the meaning of 28 U.S.C. § 157(b)(2) and “the uniformity of bankruptcy administration, forum shopping and confusion of fora, conservation of creditor and debtor resources, expediency of the bankruptcy proceeding, and the fact that only equitable issues are posed, not requiring a jury trial but falling within the traditional equitable powers of the bankruptcy judge as chancellor.” In re Millennium Studios, Inc., 286 B.R. at 303; In re EquiMed, Inc., 259 B.R. 269, 273 (D. Md. 2001); In re Merryweather Importers, Inc., 179 B.R. at 63. Additional factors identified also include whether withdrawal “would promote judicial economy and the economic use of the parties’ resources.” In re EquiMed, Inc., 254 B.R. 347, 351 (D. Md. 2000). Finally, it has been stated that it is the movant’s burden to show cause for discretionary withdrawal of the reference. See In re Millennium Studios, Inc., 286 B.R. at 303-304.

Procedure in the Event that Entire Matter is Withdrawn

If the District Court grants the motion for withdrawal of reference, it shall enter an order providing for the same. A copy of said order shall immediately be transmitted to the Clerk of the Bankruptcy Court. If the reference of jurisdiction for the entire bankruptcy case or adversary proceeding is withdrawn by the District Court’s Order, all pleadings and papers in or related to such case or adversary proceeding shall thereafter be filed exclusively with the Clerk of the District Court. District Court Local Rule 405.3.a.

Procedure in the Event that Part of a Matter is Withdrawn

If the Order of the District Court withdraws the reference for less than the entire case or less than an entire adversary proceeding (for example, resolution of a contested matter), all pleadings and papers with respect to that bankruptcy case or adversary proceeding (specifically including those pleadings relating to the withdrawn matter) must continue to be filed with the Clerk of the Bankruptcy Court. In addition, counsel shall electronically file copies of all pleadings and documents relating to any parts of the case which have been withdrawn with the Clerk of the District Court through the CM/ECF system.2 Local District Court Rule 405.3.b.

Personal Injury and Wrongful Death Claims

Any personal injury or wrongful death claim filed in a bankruptcy case, or related to a bankruptcy case, shall be filed in the Bankruptcy Court. Local District Court Rule 405.3.d. The pleading shall contain a designation: “SECTION 157(b)(5) MATTER” and, if such pleading is a complaint, shall be accompanied by both a Bankruptcy Cover Sheet and a District Court Civil Cover Sheet. After docketing the initial pleading, the Clerk of the Bankruptcy Court shall forthwith transmit the matter to the Clerk of the District Court including a copy of the pleading, the District Court Civil Cover Sheet and a transmittal form. The Clerk of the District Court shall issue any necessary summons and the matter shall thereafter proceed in the District Court.

Final Orders of the District Court

If the District Court denies the motion to withdraw the reference, the Clerk of the District Court shall docket such order and forthwith transmit a copy of the docketed order to the Clerk of the Bankruptcy Court, after which the District Court file shall be closed. The Clerk of the Bankruptcy Court shall docket the order upon receipt from the Clerk of the District Court in the bankruptcy case or adversary proceeding in which the motion was filed.

With respect to a matter where reference has been withdrawn by the District Court, at such time as the District Court by final order decides such matter, the Clerk of the District Court shall docket the order of the District Court and forthwith transmit a copy of the docketed order to the Clerk of the Bankruptcy Court. The Clerk of the Bankruptcy Court shall docket the order in the case or adversary proceeding in which the motion to withdraw reference was filed.

__________________________________

2 The District Court also requires counsel to submit a paper courtesy copy of any document which, including attachments, is fifteen pages or longer.

Jury Adversary Proceedings That Must be
Tried by the District Court

With respect to jury trials, 28 U.S.C. § 157(e) provides as follows:

(e) if the right to a jury trial applies in a proceeding that may be heard under this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if specially designated to exercise such jurisdiction by the district court and with the express consent of all the parties.

In addition, 28 U.S.C. § 1411 (Jury trials) provides as follows:

(a) Except as provided in subsection (b) of this section, this chapter and title 11 do not affect any right to trial by jury that an individual has under applicable nonbankruptcy law with regard to a personal injury or wrongful death tort claim.

(b) The district court may order the issues arising under section 303 of title 11 to be tried without a jury.

A discussion of the circumstances in which a right to a jury trial exists in a
particular adversary proceeding or other matter is beyond the scope of this
Memorandum.

With respect to the procedure applicable to jury trials, Bankruptcy Rule 9015(b) provides as follows:

(b) Consent to Have Trial Conducted by Bankruptcy Judge. If the right to a jury trial applies, a timely demand has been filed pursuant to Rule 38(b) F.R.Civ. P., and the bankruptcy judge has been specially designated to conduct the jury trial, the parties may consent to have a jury trial conducted by a bankruptcy judge under 28 U.S.C. § 157(e) by jointly or separately filing a statement of consent within any applicable time limits specified by local rule.

Local Bankruptcy Rule 9015-1 provides as follows:

A statement of consent to have a jury trial conducted by a bankruptcy judge under 28 U.S.C. § 157(e) must be filed before the conclusion of the initial pretrial conference.

With respect to the procedure for requesting a jury trial in a
bankruptcy proceeding, Local District Court Rule 406 (Jury trial) provides as follows:

1. Demand. In any bankruptcy proceeding any party may demand a trial by jury of any issue triable of right by jury by (1) serving upon the other parties a demand therefor in writing at any time after the commencement of the action and not later than ten days after the service of the last pleading directed to such issue, and (2) filing the demand as required by Bankruptcy Rule 9015. Such demand may be indorsed upon a pleading of the party. If the adversary proceeding is one that has been removed from another court, any demand previously made under the rules of that court shall constitute a demand for trial by jury under this rule.

2. Specification of issues. In the demand a party may specify the issues which the party wishes so tried; otherwise the party shall be deemed to have demanded trial by jury for all the issues so triable. If the party has demanded trial by jury for only some of the issues, any other party within ten days after service of the demand or such lesser time as the Court may order, may serve a demand for trial by jury of any other or all of the issues of fact in the action.

3. Waiver. The failure of a party to serve and file a demand as required by this rule constitutes a waiver by the party of trial by jury. A demand for trial by jury made as herein provided may not be withdrawn without the consent of the parties.

4. Consent to jury trial before the United States Bankruptcy Judge. Pursuant to 28 U.S.C. 157(e), with the consent of the parties, a District Judge may designate a Bankruptcy Judge to conduct a jury trial.

A. No Motion to Withdraw Filed.

When an adversary proceeding is filed in which a party rightfully claims a right to trial by jury and the bankruptcy judge is not designated, or the parties have not consented to have the jury trial conducted by the Bankruptcy Judge, unless the complaint is accompanied by a motion to withdraw the reference, all jurisdiction over the adversary proceeding remains with the Bankruptcy Court until the reference is later withdrawn.

Accordingly, all pleadings must continue to be filed with the Clerk of the
Bankruptcy Court and all matters to be resolved within the adversary
proceeding, short of trial, remain before the Bankruptcy Judge. Included in
such matters to be resolved by the Bankruptcy Court, are disputes between
the parties as to the right to trial by jury.

B. Motion to Withdraw Reference Filed, but Denied at Outset of
Adversary Proceeding.

If the complaint or answer is accompanied by a timely filed motion to
withdraw reference under District Court Local Rule 405.2.c, the procedures
discussed above shall be followed for the disposition of the motion to
withdraw reference. An early motion to withdraw the reference may be
denied without prejudice to refiling the motion when the case is trial ready.
See In re Stansbury Poplar Place, Inc., 13 F.3d 122 (4th Cir. 1993); Furniture Rentors of America v. NYNex Information Resources Co., 162 B.R. 728 (D. Md. 1994). If the motion for withdrawal of the reference is denied at an early stage in the adversary proceeding and therefore the adversary
proceeding remains for pre-trial purposes with the Bankruptcy Court, all
jurisdiction over the adversary proceeding remains with the Bankruptcy
Court until a motion is granted withdrawing the reference of the adversary
proceeding.

C. Pre-Trial Phase.

The pre-trial phase of the adversary proceeding shall encompass the
period of time allowed for discovery and the filing of and decision on all
dispositive motions. At the time that discovery has been completed, any
dispositive motions ruled upon, and the adversary proceeding is otherwise
ready to be scheduled for trial, the pre-trial phase of the adversary
proceeding is completed.

D. Withdrawal of Reference for Trial

If the reference has not been withdrawn by Order of the District Court
prior to the completion of the pre-trial phase of the adversary proceeding, at the end of the pre-trial phase of the adversary proceeding the Bankruptcy Court shall issue a summary report and recommendation to the District Court, recommending that the reference be withdrawn so that the trial by jury may go forward in the District Court. This report and recommendation shall be docketed in the adversary proceeding by the Clerk of the Bankruptcy Court and a copy transmitted to the Clerk of the District Court for action by the District Court upon the report and recommendation. If the District Court agrees that the reference should be withdrawn at that time, the District Court will enter an Order withdrawing the reference and transmit a copy of the Order to the Clerk of the Bankruptcy Court. Upon entry of an Order withdrawing the reference, all jurisdiction over the adversary proceeding shall be in the District Court and the Bankruptcy Court shall have no further authority to act in the adversary proceeding. All pleadings thereafter shall be filed with the Clerk of the District Court.

                                             Miscellaneous

The transmission of a motion for withdrawal of the reference should not be delayed by the Clerk of the Bankruptcy Court pending the issuance of any report and recommendation by the Bankruptcy Court. Where it deems it appropriate, the Bankruptcy Court may provide such a report and recommendation to the District Court, or the District Court may request such a report and recommendation from the Bankruptcy Court, for any motion for withdrawal of the reference.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

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How Homeowners Can Effectively Use Automatic Stay Provisions of the Bankruptcy Code

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I. Introduction.

A. Scope.

1. Section 362(a) of the Bankruptcy Code (the “Code”) contains a broad
statutory stay of litigation and lien enforcement, effective automatically on the commencement of a bankruptcy case. 11 U.S.C. § 362(a) (“. . . a petition [commencing a case] . . . operates as a stay, applicable to all entities . . .”.).

2. Purpose – Time to Reorganize. This automatic stay gives a trustee or
chapter 11 debtor-in-possession1 a breathing spell from creditors by stopping all collection efforts, harassment, and all foreclosure actions, allowing a debtor to attempt a reorganization plan. See, e.g., In re Siciliano, 13 F.3d 748, 750 (3d Cir. 1994) (“[t]he purpose of the automatic stay provision is to afford the debtor a ‘breathing spell’ by halting the collection process. It enables the debtor to attempt a repayment or reorganization plan with an aim toward satisfying existing debt.”);
Maritime Electric Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1204 (3d Cir. 1991) (“automatic stay allows debtor breathing spell from creditors and stops collection efforts”); In re Peregrine Systems, Inc., 314 B.R. 31, 44 (Bankr. D. Del. 2004) aff’d in part, rev’d in part on other grounds, 2005 WL 2401955 (D. Del. Sept. 29, 2005) (automatic stay is a “fundamental protection provided to a debtor for the purpose of stopping all creditor collection efforts and harassment of the debtor and to provide … a fresh start.”); Shaw v. Ehrlich, 294 B.R. 260, 267 (W.D. Va. 2003), aff’d, 99 Fed. Appx. 466 (4th Cir. 2004) (“stay protects debtors, as well as creditors, by providing debtors a breathing spell from collection efforts”).

3. Policy Rationale – Debtor Asset Protection. Behind the stay is a clear
policy rationale: “to grant complete, immediate, albeit temporary relief to the debtor from creditors, and also to prevent dissipation of the debtor’s assets before orderly distribution to creditors can be effected.” S.E.C. v. Brennan, 230 F.3d 65, 70 (2d Cir. 2000) (quoting Penn Terra Ltd. v. Department of Envtl. Resources, 733 F.2d 267, 271 (3d Cir. 1984)). See also Reliant Energy Services, Inc. v. Enron Canada Corp., 349 F.3d 816, 825 (5th Cir. 2003) (“purposes of the bankruptcy stay under 11 U.S.C. § 362 ‘are to protect the debtor’s assets, provide temporary relief from creditors, and further equity of distribution among the creditors by forestalling a race to the courthouse.'”) (quoting GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711, 716 (5th Cir. 1985)); Mann v. Chase Manhattan Mortgage Corp., 316 F.3d 1, 3 (1st Cir. 2003) (“automatic stay provision is designed to forfend against the disorderly, piecemeal dismemberment of the debtor’s estate outside the bankruptcy proceedings”).

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1 Code § 1107(a) gives a chapter 11 debtor-in-possession the “rights,” “duties” and “powers” of a trustee.
See NLRB v. Bildisco & Bildisco, 465 U.S. 513, 517 n. 2 (1984). See also Fed. R. Bankr. P. 9001(10) (“‘Trustee’ includes a debtor in possession in a Chapter 11 case.”).

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4. Procedural Safeguards for Secured Creditors. The Code still imposes
procedural safeguards for the benefit of the secured creditor (e.g., “adequate protection” against erosion of collateral value; time limits on stay modification requests; limits on counterclaims against secured lender seeking stay modification). As shown below, it attempts to reconcile the rights of the secured creditor with the needs of the debtor and its unsecured creditors. See United Savings Assn. of Texas v. Timbers of Inwood Forest Associates, Ltd. (In re Timbers of Inwood Forest Associates, Ltd.), 484 U.S. 365, 376 (1988) (“ . . . lack of any realistic prospect of effective reorganization will require” modification of stay of lien enforcement”).

II. The Automatic Stay.

A. When Effective.

1. The stay is automatic upon filing of the petition commencing a case under Code chapters 7 (liquidation), 9 (municipal debt adjustment), 11 (reorganization),13 (individual debt adjustment), or chapter 15 (cross-border cases) with respect to foreign main proceedings. See e.g. Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1214 (9th Cir. 2002) (“the automatic stay requires an immediate freeze of the status quo by precluding and nullifying post-petition actions”); Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2d Cir. 1994) (“[a]utomatic stay is effective immediately upon filing of bankruptcy petition”) (citing Shimer v. Fugazy (In re Fugazy Express, Inc., 982 F.2d 769, 776 (2d Cir. 1992));

2. The stay acts as a specific and definite court order to restrain creditors
from continuing the judicial process or collection efforts against debtor. See e.g. In re San Angelo Pro Hockey Club, Inc., 292 B.R. 118 (Bankr. N.D. Tex. 2003) (automatic stay is self-executing injunction, constituting an order issuing from bankruptcy court); In re Bottone, 226 B.R. 290, 297 (Bankr. D. Mass. 1998) (“as long as the Chapter 13 case is pending . . . the automatic stay … restrains postpetition creditors from taking action against property of the estate”) (quoting In re Woodall, 81 B.R. 17, 18 (Bankr. E.D. Ark. 1987)).

3. Unless modified by the court, the stay is effective for the duration of a
bankruptcy case, and generally cannot be waived by the debtor. Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194 (3d Cir. 1991) (held, because automatic stay serves interests of both debtors and creditors, it may not be waived and its scope may not be limited by debtor); In re Atrium High Point Ltd. Partnership, 189 B.R. 599 (Bankr. M.D.N.C. 1995) (before enforcing a debtor’s prepetition waiver of automatic stay bankruptcy court must look at circumstancesunder which prepetition waiver arose); but see In re Excelsior Henderson Motorcycle Mfg. Co., Inc., 273 B.R. 920 (Bankr. S.D. Fla. 2002) (court enforced prepetition agreement under which chapter 11 debtor waived automatic stay).

B. Jurisdictional Basis of Injunctive Power.

1. The district court has “exclusive jurisdiction of all of the property,
wherever located, of the debtor as of the commencement of [the] case.” 28 U.S.C. § 1334(d). A bankruptcy court is a “unit of the district court.” 28 U.S.C. § 151. Section 362 implements this jurisdiction and is supplemented by § 105(a), which authorizes a court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of the Code.

2. The broad jurisdictional base of Section 362 confirms the court’s inherent power to protect property within its jurisdiction and to prevent any divestiture of that jurisdiction. Isaacs v. Hobbs Tie & Timber Co., 51 S. Ct. 270, 282 (1931) (held, jurisdiction of bankruptcy court respecting property of debtor’s estate having attached, actions brought in other courts could not affect it). See In re Mohawk Greenfield Motel Corp., 239 B.R. 15 (Bankr. D. Mass. 1999) (“the automatic stay protects the bankruptcy court’s exclusive jurisdiction over the debtor and its property”) (citing In re Soares, 107 F.3d 969, 975 (1st Cir. Mass. 1997)).

3. Section 362(a) stays, among other things:

a. a secured creditor from collecting accounts receivable of debtor.
Matter of Pernie Bailey Drilling Co., Inc., 993 F.2d 67 (5th Cir. 1993)
(account receivables were property of the estate; court must lift stay for
creditors to gain access to receivables);

b. a creditor’s dissolution of a debtor corporation. 11 U.S.C.
§ 362(a)(3); Hillis Motors, Inc. v. Hawaii Automobile Dealers’ Assoc.,
997 F.2d 581 (9th Cir. 1993) (held, dissolution proceeding constituted
exercise of control over debtor’s property);

c. foreclosure proceedings in other courts instituted against debtor’s
property prior to commencement of bankruptcy case. 11 U.S.C.
§ 362(a)(1); see In re Vierkant, 240 B.R. 317, 322 (B.A.P. 8th Cir. 1999)
(citing Kalb v. Feuerstein, 308 U.S. 433 (1940); In re Soares, 107 F.3d
969 (1st Cir. 1997)) (post-petition state court default order signed by judge
two weeks after bankruptcy filing violated automatic stay);

d. a landlord’s proceeding to recover possession of leased premises.
11 U.S.C. § 363(a)(5); 48th St. Steakhouse, Inc. v. Rockefeller Group, Inc.
(In re 48th St. Steakhouse, Inc.), 835 F.2d 427 (2d Cir. 1987) (serving
notice of termination on assignee of restaurant lease rather than on debtor, which still had interest in the property, violated automatic stay); and

e. an IRS sale of property seized prior to commencement of case.
11 U.S.C. § 362(a)(8); United States v. Whiting Pools, Inc., 462 U.S. 198
(1983) (IRS may also be compelled to turn over levied property under
Code § 542).

f. arbitration proceedings that not only concern claims asserted
against the debtor, but also concern the debtor’s claims against a third
party. ACandS, Inc. v. Travelers Casualty and Surety Co., 425 F.3d 252
(3d Cir. 2006), cert. denied, 126 S. Ct. 2291 (2006). (although arbitration
was commenced by debtor, continuation of arbitration proceedings
violated automatic stay because, unlike trial, it is impossible in arbitration
to definitely classify arguments presented (i.e., claims and counterclaims);
arbitration award, which effectively terminated debtor’s insurance
coverage, is invalid because it diminishes estate property); In re Edwin
Epstein Jr. Operating Co., Inc., 314 B.R. 591 (Bankr. S.D. Tex. 2004)
(held, automatic stay applied, not only to prevent non-debtor party to
arbitration proceedings from asserting claims against debtor for tortious
interference and slander of title, but also to prevent arbitrators from
hearing debtor’s claims to replace this non-debtor party as operator of oil
and gas wells based on debtor’s asserted ownership interests therein).

III. Scope and Duration of Stay.

A. Scope of Section 362.

1. Property of Estate. The bankruptcy court’s injunctive power is ordinarily
limited to protecting property belonging to a debtor. Property of the estate is defined in Code § 541(a)(1) (“. . . all legal or equitable interests of the debtor in property as of the commencement of the case.”). See In re Lankford, 305 B.R. 297, 301 (Bankr. N.D. Iowa 2004) (“All recognizable interests of the debtors or the estate are afforded the protection of § 362(a)…This includes a mere possessory interest in real property without any accompanying legal interest.”). See also In re Moffett, 356 F.3d 518 (4th Cir. 2004) (held, chapter 13 debtor’s statutory right of redemption was sufficient interest in automobile that was repossessed prepetition to be included in estate property). But see In re Jasper, 325 B.R. 50, 55 (Bankr. D. Me. 2005) (credit union’s policy of revoking membership benefits of members who caused credit union a loss does not violate automatic stay); In re Santangelo, 325 B.R. 874 (Bankr. M.D. Fla. March 22, 2005) (district court did not violate automatic stay by approving class action
settlement for claims against mortgage lender; rather, court gave prospective class members, including debtor choice of remaining class members or opting out of class); In re Medex Regional Laboratories, LLC, 314 B.R. 716 (Bankr. E.D. Tenn. 2004) (proceeds of debtor’s directors’ and officers’ liability insurance policies were not property of estate and were not protected by automatic stay, even though policies also provided coverage to debtor for indemnification claims, because the debtor had not provided any indemnification to non-debtor insiders and such indemnification claims were merely hypothetical). Compare In re Arter &
Hadden, L.L.P., 335 B.R. 666 (Bankr. N.D. Ohio 2005) (proceeds of debtor’s
directors’ and officers’ liability insurance policies are property of estate because policies also provided coverage to debtor and there was no reason why direct suit against debtor is either practically or procedurally untenable).

a. Property Outside the Scope. The stay is not applicable to actions
against property that is neither the debtor’s nor the estate’s. Rodger v.
County of Munroe (In re Rodgers), 333 F.3d 64 (2d Cir. 2003) (debtor’s
mere possession of title to real property is not sufficient to find property to
be property of estate or to bar delivery of deed to purchaser by operation
of stay); Chugach Timber Corp. v. Northern Stevedoring & Handling
Corp. (In re Chugach Forest Prods., Inc.), 23 F.3d 241 (9th Cir. 1994)
(court refused to extend stay to boat that was not property of debtor’s
estate but on which assets of debtor had been transferred) (11 U.S.C.
§ 541(b)); In re Howell, 311 B.R. 173, 179 (Bankr. D. N.J. 2004)
(automatic stay does not preclude estranged spouse from seeking equitable distribution of non-estate property such as exempt property, postpetition earnings, property excluded from the estate, property abandoned by the trustee or debtor surplus); NLRB v. McDermott, 300 B.R. 40 (D. Col. 2003) (automatic stay did not protect property of debtor’s wife’s). Examples of property outside the stay’s scope are:

(i) Foreclosure. If a lender completes foreclosure before the bankruptcy filing, neither the debtor nor the estate has any interest in the property and the automatic stay does not apply. In re Theoclis, 213 B.R. 880 (Bankr. D. Mass. 1997) (held, foreclosure sale had terminated debtor’s interest in property.); In re Williams, 247 B.R. 449 (Bankr. E.D. Tenn. 2000) (when foreclosure sale of debtor’s residence became final prior to commencement of chapter 13 case, residence did not become property of estate and was not protected by automatic stay);

(ii) Abandonment. Abandonment terminates the stay as to abandoned property. In re Holly’s, Inc., 140 B.R. 643 (Bankr. W.D. Mich. 1992) (once abandonment of debtor’s property is effectuated, or foreclosure of real and personal property is completed, taxing entity is entitled to enforce its
statutory in rem rights against property.). But see In re Thompson-Mendez, 321 B.R. 814, 819 (Bankr. D. Md. 2005) (trustee’s deemed rejection of debtor’s residential lease by failure to timely assume it did constitute
abandonment such that lease was no longer protected by automatic stay).

2. Entities Affected by the Stay. Section 362(a) applies “to all entities,”
including any “person, estate, trust, governmental unit.” 11 U.S.C. § 101(15). This broad definition of “entity” eliminates the need to define who is a “creditor,” “secured creditor” or other person affected by the stay.

B. Duration of the Stay. Unless the court orders otherwise (i.e., unless creditor gets automatic stay modified), the stay “continues until such property is no longer property of the estate.” 11 U.S.C. § 362(c)(1). The stay of all other acts continues until case is closed or dismissed, or, if debtor is an individual, until debtor is granted or denied a discharge. 11 U.S.C. §§ 362(c)(2)(A), (B) and (C). See also In re Allen, 300 F.3d 1055, 1059 (9th Cir. 2002) (automatic stay “prohibits action against the bankruptcy estate only until the bankruptcy court confirms a plan reorganizing the debtor’s property”); Middle Tennessee News Co., Inc. v. Charnel of Cincinnati, Inc., 250 F.3d 1077 (7th Cir. 2001) (automatic stay remains in effect until bankruptcy court disposes of case or grants relief from stay); In re Spirtos, 221 F.3d 1079, 1081 (9th Cir. 2000) (“So long as there are assets in the estate, then, the stay remains in effect”); Eastern Refractories Co. Inc. v. Forty Eight Insulations Inc., 157 F.3d 169 (2d Cir. 1998) (order “terminating” automatic stay operates from date of order’s entry); Lomagno v. Salomon Brothers Realty Corp., 320 B.R. 473, 481 (B.A.P. 1st Cir. 2005), aff’d, 429 F.3d 16 (1st Cir. 2005) (automatic stay not retroactively imposed when dismissal order set aside on due process grounds); In re Peregrine Systems, Inc., 314 B.R. 31, 44 (Bankr. D. Del. 2004), aff’d in part, rev’d in part on other grounds, 2005 WL 2401955 (D. Del. Sept. 29, 2005) (automatic stay “continues until the bankruptcy case is closed, dismissed, or discharge is granted or denied, or until the bankruptcy court grants some relief from the stay.”) (citing Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.3d 1194, 1206 (3d Cir. 1991)); U.S. v. White, 466 F.3d 1241 (11th Cir. 2006) (debtor discharged and automatic stay terminates on date of confirmation of debtor’s reorganization plan even when plan contains a later effective date). If a case is filed by or against a debtor who is an individual and a case of the debtor was pending within the preceding one year period but was dismissed, the automatic stay “with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case.” 11 U.S.C. § 362(c)(3)(A). See Jumpp v. Chase Home Finance, LLC (In re Jumpp), 356 B.R. 789 (B.A.P. 1st Cir. 2006) (interpreting § 362(c)(3)(A) automatic stay terminates only in regard to debtor; stay continues, though, in regard to property of estate).

  • As of October 17, 2005, automatic stay terminates 60 days after a request for relief from stay unless final decision on request is rendered by court within the 60-day period or period is extended by agreement or by court for specific period of time found necessary for good cause.2

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2 The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted on April 20, 2005, and many of its provisions became effective on October 17, 2005.

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IV. Acts Stayed. Section 362(a) is broad in scope, but specifically lists eight categories that are subject to its injunctive power.

1. “Commencement or continuation . . . of a judicial, administrative, or other proceeding against the debtor . . . to recover on a prepetition claim against a debtor.”3 Code § 362(a)(l) (emphasis added):

a. Appeals: stay covers all proceedings originally brought against the
debtor, regardless of whether the debtor is appellant or appellee.4 Halmar
Robicon Group, Inc. v. Toshiba Int’l Corp., 127 Fed. Appx. 501, 503 (Fed.
Cir. 2005) (automatic stay only operates as against actions in which debtor
is in defensive posture); Nielson v. Price, 17 F.3d 1276, 1277 (10th Cir.
1994) (“[t]he 362(a)(1) stay applies to actions that are ‘against the debtor’
at their inception, regardless of the subsequent appellate posture of the
case”); Ellis v. Consolidated Diesel Elec. Corp., 894 F.2d 371, 373 (10th
Cir. 1990) (operation of stay should not depend upon whether district
court finds for or against the debtor). But see In re Mid-City Parking,
Inc., 322 B.R. 798 (Bankr. N.D. Ill. 2005) (debtor may unilaterally waive
protections of automatic stay by pursuing appeal without first obtaining
bankruptcy court order lifting stay; debtor could not be held liable for
damages to creditor-appellee arising from debtor’s alleged “willful stay
violation).

b. Administrative proceedings: See In re Krystal Cadillac Oldsmobile
GMC Truck, Inc., 142 F.3d 631 (3d Cir. 1998) (postpetition
determinations by Pennsylvania’s Board of Vehicle Manufacturers,
Dealers and Salespersons, ordering termination of franchise agreement
violated automatic stay); In re Best Payphones, Inc., 279 B.R. 92 (Bankr.
S.D.N.Y. 2002) (administrative law judge’s post-petition decision in
proceeding commenced pre-petition ‘but concluded after debtor’s chapter
11 filing’ was void and without effect because it violated automatic stay).
But see Board of Governors of Federal Reserve System v. MCorp
Financial, Inc., 502 U.S. 32 (1991) (Section 362(a) does not apply to
ongoing, nonfinal administrative/regulatory proceedings, and action of
Board of Governors was excepted from the stay under Section 362(b)(4)
of the Code (the “governmental unit” exception)).

c. Partnerships. Actions against partners and their property are not
protected in first instance by the filing of a partnership petition. Bankers
Trust (Delaware) v. 236 Beltway Inv., 865 F. Supp. 1186 (E.D. Va. 1994)
(automatic stay does not protect partnership debtor’s individual general
partners); O’Neill v. Boden-Wert Real Estate USA Funds I, Ltd., 599
So.2d 1045 (Fla. App. 2d Dist. 1992) (held, automatic stay did not stop action against general partner in partnership debtor or against general
partner’s general partner).

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3 “‘[C]laim against the debtor’ includes claim against property of the debtor.” 11 U.S.C. § 102(2).
4 Actions against non-debtors and against co-defendants are not stayed. See sub-section (e) infra.

d. Shareholders of corporate debtor. Bankruptcy court has no jurisdiction
over stock of corporate debtor that belongs to third party shareholders.
See e.g. In re Marvel Entertainment Group, Inc., 209 B.R. 832, 838 (D.
Del. 1997) (“automatic stay provisions of the Bankruptcy Code are not
implicated by the exercise of shareholders’ corporate governance rights.”).

e. Actions against surety, co-debtor, or guarantor are not stayed.5 See
e.g. Reliant Energy Services, Inc. v. Enron Canada Corp., 349 F.3d 816,
825 (5th Cir. 2003) (“[by its terms the automatic stay applies only to the
debtor, not to co-debtors under Chapter 7 or Chapter 11”); In re Third
Eighty-Ninth Associates, 138 B.R. 144 (S.D.N.Y. 1992) (suit against
guarantors of chapter 11 debtor was not a “back-door” attempt to acquire
assets of debtor); In re Rohnert Park Auto Parts, Inc., 113 B.R. 610
(B.A.P. 9th Cir. 1991) (automatic stay does not prevent creditors from
suing co-debtors).

f. Actions are not stayed against non-debtor co-defendants.6 See e.g.
Queenie, Ltd. v. Nygard Intl., 321 F.3d 282, 287 (2d Cir. 2003) (debtor’s
filing of bankruptcy petition stayed his appeal and that of his wholly owned corporation7, but not that of co-defendants); 555 M Mfg., Inc. v.
Calvin Klein, Inc., 13 F. Supp. 2d 719 (N.D. Ill. 1998) (automatic stay
protection not available to debtor’s solvent co-defendant in breach of
contract case). But see Woodell v. Ormet Primary Aluminum Corp., 808
N.E.2d 402, 407 (Ohio Ct. App. 2004) (automatic stay applies to claims
against debtor’s employee co-defendants only to the extent that the causes of action against them arise from their status as employees of the debtor).

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5 In limited circumstances, courts have asserted their equitable powers under 11 U.S.C. § 105(a) to enjoin the continuation of litigation against non-debtors when the debtor’s trustee demonstrates that continuation of litigation against non-debtors imminently and irreparably threatens the debtor’s reorganization prospects. E.g. In re United Health Care Org., 210 B.R. 228, 233 (S.D.N.Y. 1997) (staying action against non-debtor principals and officers of debtor when enforcement of judgment imminently and irreparably threatened non-debtors’ ability to fund debtor’s plan); North Star Contracting Corp. v. McSpeedon (In re North Star Contracting Corp.), 125 B.R. 368, 370-71 (S.D.N.Y.1991) (staying action against non-debtor president of debtor when, among other things, continuation of action would distract vital non-debtor and there was no distinct cause of action against him, but merely an action commenced solely to circumvent the stay).

6 Courts may stay actions against a non-debtor third-party defendant under “unusual circumstances” when “there is such identity between the debtor and third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment … against the debtor.” A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986). See also In re Nat’l Century Fin. Enter., 423 F.3d 567 (6th Cir. 2005) (commencement of civil action to recover accounts receivable held in collection account in debtor’s name violated automatic stay even though debtor was not named as defendant because action sought to recover estate property); Global Industrial Technologies, Inc. v. Ace Prop. & Cas. Ins. Co. (In re Global Industrial
Technologies), 303 B.R. 753 (W.D. Pa. 2004), vacated in part, modified in part on other grounds, 2004 WL 555418 (Bankr. W.D.Pa. Mar. 19, 2004) (held, state court action brought by insurers for declaratory judgment regarding non-debtor’s rights in insurance policies it shared with debtor violated automatic stay even though debtor was not named as defendant in state court action because outcome of state action could affect debtor’s rights in shared insurance); Teachers Ins. & Annuity Assoc. of America v. Butler, 803 F.2d 61, 65 (2d Cir. 1986) (referred to A.H. Robins decision as case with “unusual circumstances”). Compare In re Transervice Logistics, Inc., 304 B.R. 805 (Bankr. S.D. Ohio 2004) (declining to extend automatic stay to non-debtor co-defendants because, unlike situation
in A.H. Robins, defendant-debtor only faced one suit, not thousands, and thus would not be barraged by discovery and litigation).

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g. Proceedings or claims arising post-petition are not subject to automatic
stay, although successful plaintiff must obtain relief from stay if it seeks to enforce judgment against estate.8 Bellini Imports, Ltd. v. Mason & Dixon Lines, Inc., 944 F.2d 199 (4th Cir. 1991) (automatic stay did not bar
institution of action arising out of alleged postpetition breach of contract);
Erickson v. Polk, 921 F.2d 200 (8th Cir. 1990) (lessor of farmland did not
violate automatic stay when it retook possession of property following
postpetition expiration of lease); In re Dominguez, 312 B.R. 499 (Bankr.
S.D.N.Y. 2004) (prepetition lapse of debtor-taxpayer’s redemption period
may constitute “cause” for lifting stay to allow tax authority to exercise its
rights in debtor’s real property; it did not relieve taxing authority’s
obligation to move first for modification of stay).

h. Automatic stay does not apply to post-petition defensive actions in a
prepetition lawsuit brought by a debtor. Stanwyck v. Beilinson, 104 Fed.
Appx. 616 (9th Cir. 2004).

2. Enforcement of prepetition judgment against debtor or its property (11
U.S.C. § 362(a)(2)). See generally Delpit v. Commissioner, 18 F.3d 768 (9th Cir. 1994) (held, appeal to enforce pre-petition judgment was subject to the automatic stay).

3. “[A]ny act” to obtain possession of debtor’s property, or to exercise
control over such property. 11 U.S.C. § 362(a)(3).

__________________________________

7 The court ignored its own precedent in coming to this bizarre result, but justified it by reasoning that adjudication of a claim against the wholly-owned corporation would have an “immediate adverse economic impact” on the debtor. But see Feldman v. Trustees of Beck Ind., Inc. (In re Beck Ind., Inc.), 725 F.2d 880 (2d Cir. 1973) (court cannot enjoin suit against solvent independent subsidiary of debtor merely because stock is held by debtor in reorganization); In re Unishops, Inc., 374 F.Supp. 424 (S.D.N.Y. 1974) (bankruptcy court lacks jurisdiction to grant
a stay of court proceedings against subsidiaries).

8 Judiciary Code, 28 U.S.C. § 959(a), provides relief to holders of postpetition claims against a debtor from having to obtain leave from bankruptcy court to pursue claims arising from “acts or transactions in carrying on business connected with [estate] property.” 28 U.S.C. § 959. Section 959’s exception to the automatic stay is limited to postpetition claims arising from operation of the debtor’s business, and does not include acts associated with liquidation or administration of the bankruptcy estate. See In re Crown Vantage, Inc., 421 F.3d 963, 971-72 (9th Cir. 2005) (postpetition claim against trustee arising from liquidation of estate not subject to § 959 because not related to business operation); Carter v. Rogers, 220 F.3d 1249, 1254 (11th Cir. 2000); In re DeLorean Motor Co., 991 F.2d 1236 (6th Cir. 1993) (malicious prosecution claims against trustee arising from avoidance actions are not based on acts arising from business operation and thus not subject to § 959).

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a. A credit union that accepts and retains postpetition deductions from
chapter 13 debtor’s salary violates automatic stay. See, e.g., Town of
Hempstead Employees Federal Credit Union v. Wicks, 215 B.R. 316
(E.D.N.Y. 1997) (credit union’s four-month-long administrative hold on
chapter 13 debtors’ savings accounts violated automatic stay).

b. Letters of Credit. See, e.g., In re Kmart Corp., 297 B.R. 525 (N.D. Ill.
2003) (letters of credit are not property of debtor’s estate subject to
automatic stay; beneficiary not prevented from drawing on letter of credit
when account party is in bankruptcy); In re A.J. Lane & Co., Inc., 115
B.R. 738 (Bankr. D. Mass. 1990) (held, payment by third party on letter of
credit not stayed because it did not involve a transfer of debtor’s assets).

c. Creditors’ actions against debtor to obtain property fraudulently
transferred by debtor prior to bankruptcy are barred by the automatic stay.
See, e.g. Constitution Bank v. Tubbs, 68 F.3d 685 (3d Cir. 1995) (bank’s
action against guarantors for fraudulent conduct triggered automatic stay
when each guarantor filed a bankruptcy petition during fraud action).

d. Mortgagees’ postpetition foreclosure against real property subject to
deed naming debtor’s spouse a sole owner violated automatic stay because, although debtor only had arguable interest in the property, the
determination should be made by bankruptcy court before mortgagees
foreclosed. In re Chesnut, 422 F.3d 298 (5th Cir. 2005).

e. Debtor’s Tax Benefits. Circuits apparently are split regarding whether
a debtor’s tax benefits (e.g., net operating losses) are property of the estate, thus subject to the automatic stay. See In re UAL Corp., 412 F.3d 775
(7th Cir. 2005) (finding bankruptcy court’s injunction restricting trading in
debtor’s securities to protect tax benefits to be “problematic on the merits,” and questioning court’s reliance on Bankruptcy Code §§ 105(a) and 362 as basis for trading procedures order). Compare In Prudential Lines, Inc., 928 F.2d 565 (2d Cir. 1991) (finding debtor’s tax benefits to be estate property, and that automatic stay thus enjoined debtor’s parent from taking worthless stock deduction on parent’s tax return).

4. Any act to create, perfect, or enforce any lien against debtor’s property
(but not the perfection of mechanic’s lien9 — §§ 362(b)(3) and 546(b) — or when perfection occurs within the 10-day period after the time of effective transfer of the property, under §§ 362(b)(3), and 547(e)(2)(A)). 11 U.S.C. § 362(a)(4). See In re Fuller, 134 B.R. 945 (B.A.P. 9th Cir. 1992) (held, automatic stay prevents creation or perfection of lien, even by operation of law).

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9 The mechanic’s lienor will ordinarily be able to perfect its lien after bankruptcy for work performed prior to bankruptcy. See generally, In re Yobe Electric, Inc., 728 F.2d 207, 208 (3d Cir. 1984) (per curiam) (service of notice of intent to file mechanic’s lien did not violate stay since under state statute “perfection of mechanic’s lien ‘relates back’ to the installation of the first material”); In re Lionel Corp., 29 F.3d 88 (2d Cir. 1994) (held, no automatic stay violation resulted from mechanics’ lienors’ post-petition serving notice of lien upon lessors and
chapter 11 debtor lessee, when New York law permitted perfection of filed mechanics’ lien after another entity had acquired rights to the property).

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a. Sections 362(b)(3) and 546(b)(1)(A), read together, set the
boundaries of this exception.

(i) Section 362(b)(3) subjects a creditor’s right to “perfect, or
to maintain or continue the perfection of, an interest in property” to
Section 546(b) of Code. 11 U.S.C. §362(b)(3).

(ii) In turn, Section 546(b) limits the trustee’s powers to avoid statutory liens by providing that they “are subject to any generally applicable law that permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection.” 11 U.S.C. §546(b)(1)(A) (emphasis added); see, e.g., In re AR Accessories Group, Inc., 345 F.3d 454, 458 (7th Cir. 2003) (held, priming statute need not contain language expressly providing for retroactive perfection in order to trigger exception provided in 11 U.S.C. §546(b)(1)(A)); In re
Hayden, 308 B.R. 428 (B.A.P. 9th Cir. 2004) (held, towing operator did not violate automatic stay in refusing to surrender possession of debtor’s vehicle, which was towed prepetition, unless debtor first paid towing charges because towing operator was merely acting to maintain or continue possession of its lien, not to enforce it).

5. Any act to create, perfect, or enforce a lien against debtor’s property for
prepetition claims. 11 U.S.C. § 362(a)(5). See, e.g., In re Birney, 200 F.3d 225
227 (4th Cir. 1999) (Section 362(a)(5) prohibits “any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title”).

6. “Any act to collect, assess, or recover a prepetition claim against the
debtor.” 11 U.S.C. § 362(a)(6). Pertuso v. Ford Motor Credit Co., 233 F.3d 417,
423 (6th Cir. 2000) (a course of conduct violates § 362(a)(6) if it “(1) could
reasonably be expected to have a significant impact on the debtor’s determination as to whether to repay, and (2) is contrary to what a reasonable person would consider to be fair under the circumstances”) (quoting In re Briggs, 143 B.R. 438 453 (Bankr. E.D. Mich. 1992)); see also In re Diamond, 346 F.3d 224, 227-28 (1st Cir. 2003) (settlement negotiations challenging Chapter 7 debtor’s discharge do not violate the automatic stay per se, but creditor’s threat to seek revocation of debtor’s real estate license during negotiations was coercive, thus dismissal of debtor’s complaint proper); In re Optel, Inc., 60 Fed.Appx. 390 (3d Cir. March 25,
2003) (sale agreement between creditor and debtor provided that debtor either pay $6 million lump sum payment or, if creditor requested, $10 million over time; held, automatic stay prohibited creditor from requesting the $10 million deferred payment, therefore creditor was only entitled to distribution on $6 million claim); In re Jamo, 283 F.3d 392, 399 (1st Cir. 2002) (“a creditor may engage in post petition negotiations pertaining to a bankruptcy-related reaffirmation agreement so long as the creditor does not engage in coercive or harassing tactics”).

7. Setoffs of any prepetition debt owing to the debtor. 11 U.S.C. § 362(a)(7).
See Newbery Corp. v. Fireman’s Fund Ins. Co., 95 F.3d 1392 (9th Cir. 1996)
(right of setoff is subject to automatic stay provisions of chapter 11); Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995) (temporary administrative freeze by bank not a stay violation or setoff; intent to settle accounts permanently is required for setoff within meaning of automatic stay provisions). Compare Jimenez v. Wells Fargo Bank, N.A., 335 B.R. 450 (Bankr. D. N.M. Dec. 21, 2005) (temporary administrative freeze by bank, without right of setoff, violated automatic stay); In re Calvin, 329 B.R. 589 (Bankr. S.D. Tex. 2005) (bank’s administrative freeze of debtor’s account violated automatic stay when bank was not creditor of debtor and thus had no right of setoff); In re Cullen, 329 BR. 52 (Bankr. N.D. Iowa 2005) (bank’s administrative freeze of account jointly held by debtor and debtor’s father violated automatic stay because freeze was intended to continue indefinitely until bankruptcy case was closed; bank did not have valid
right of setoff because funds in account were property of debtor’s father and mutuality requirement for setoff thus was lacking).

a. N.B.: The automatic stay, however, does not prevent a creditor
from exercising its right of recoupment.10 See, e.g., In re Slater Health
Center, Inc., 398 F.3d 98 (1st Cir. 2005) (right of recoupment entitled
government to recoup prepetition overpayments to debtor-health care
provider by reducing postpetition payments to debtor); In re Holyoke
Nursing Home, 372 F.3d 1 (1st Cir. 2004) (same); In re Anes, 195 F.3d
177 (3d Cir. 1999) (held, doctrine of recoupment did not apply so as to
permit pension plans to deduct loan payments from debtors’ postpetition
paychecks because the payments were not part of the same transaction); In
re Delicruz, 300 B.R. 669 (Bankr. E.D. Mich. 2003) (“recoupment reduces
or extinguish[es] a debt arising from the same transaction, and is not
stayed by the bankruptcy”). But see York Linings Int’l, Inc. v. Harbison-
Walker Refractories Co., 839 N.E.2d 766 (Ind. App. 2005) (although
automatic stay does not bar creditor from exercising right of recoupment,
stay does prevent creditor from asserting counterclaim for recoupment in
litigation because such a counterclaim seeks affirmative relief).

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10 “Recoupment” has been defined as follows: “. . . so long as the creditor’s claim arises out of the identical transaction as the debtor’s, that claim may be offset against the debt owed to the debtor, without concern” for the Code’s setoff limitations. In re University Medical Center, 973 F.2d 1065, 1080 (3d Cir. 1992). Recoupment in bankruptcy has been narrowly construed by courts because it violates the basic bankruptcy principle of equal distribution. In re B & L Oil Co., 782 F.2d 155, 158 (10th Cir. 1986) (“[a] fundamental tenet of bankruptcy law is that . . . [once] a petition is filed, debts that arose before the petition may not be satisfied through post-petition transactions. This is seen in bankruptcy restrictions on setoffs [and recoupment].”); In re McMahon, 129 F.3d 93,
97 (2d Cir. 1997) (“in light of the Bankruptcy Code’s strong policy favoring equal treatment of creditors, recoupment . . . should be narrowly construed”).

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8. Commencement or continuation of a proceeding before the United States Tax Court concerning the debtor. 11 U.S.C. § 362(a)(8). See, e.g., Halpern v. C.I., 96 T.C. 895 (U.S. Tax Ct. 1991) (held, automatic stay bars commencement or continuation of any proceeding in Tax Court, regardless of whether claim relates to prepetition or postpetition tax year deficiencies).

  • As of October 17, 2005, § 362(a)(8) is limited to proceedings
    concerning corporate debtor’s tax liability for taxable period the
    bankruptcy court may determine or, if debtor is individual, to tax
    for taxable period ending before date of order for relief.

9. Only affirmative acts are stayed. Section 362 applies only to affirmative
acts against the debtor or its estate.

a. The automatic stay does not affect, and the court may not exercise
its equitable powers to stay or toll, the automatic transfer of rights such as
that occurring by the expiration of a statutory period of redemption.
Canney v. Merchants Bank (In re Frazer), 284 F.3d 362 (2d Cir. 2002)
(did not stay mortgagee’s act of recording a certificate of non-redemption;
held, expiration of statutory period is not an “affirmative act” and
automatic stay did not apply).

b. Omissions and waivers are not stayed by the Code because they
are not affirmative acts. See e.g. Mann v. Chase Manhattan Mortg. Corp.,
316 F.3d 1, 6 (1st Cir. 2003) (mortgagee’s failure to submit
preconfirmation request, pursuant to bankruptcy statute governing rights
of oversecured creditors, to have its postpetition attorney fees included in
its allowed secured claim was not sort of overt, affirmative act that
violates stay).

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