Opinion · Court of Appeals for the Ninth Circuit
In Re Michael J. Kissinger, Debtor. Thomas Mataya, Creditor-Appellee v. Michael J. Kissinger, Debtor-Appellant
72 F.3d 107
- Type
- Opinion
- Court
- Court of Appeals for the Ninth Circuit
- Jurisdiction
- Federal
- Date
- 1995-12-15
- Topic
- bankruptcy
holding cause exist to retroactively annul the automatic stay because not doing so would “impose unwarranted hardship on the creditors, since retrial would be costly.” | finding that decision to file for bankruptcy just before state trial was to go to jury was in bad faith | stating that courts should indulge retroactive annulment only in extreme circumstances | affirming retroactive relief for trial that proceeded against pro se debtor 15 despite knowledge of bankruptcy | bankruptcy court did not abuse its discretion in annulling stay where petition was filed in bad faith | a decision to lift an automatic stay under section 362 is within the 12 | discretion of the bankruptcy court | creditors immediately sought nunc pro tunc relief
Citator
- Cited by
- 28 opinions
IN RE KISSINGER,72 F.3d 107(9th Cir. 1995)
In re: Michael J. KISSINGER, Debtor.
Thomas MATAYA, Creditor-Appellee, v. Michael J. KISSINGER, Debtor-Appellant.
No. 94-16086.
United States Court of Appeals, Ninth Circuit.
Submitted December 5, 1995.1San Francisco, California
Decided December 15, 1995.
Christopher Lee, San Francisco, California, for appellee.
D.C. No. CV-94-00179-MHP
Before: Harry PREGERSON, Melvin BRUNETTI, and T.G. NELSON, Circuit Judges.
[1]OPINION
[3] When the proceedings reconvened on June 28, 1993, the judge ordered the immediate completion of the trial, despite the pendency of the bankruptcy petition and the corresponding automatic stay provided by11 U.S.C. § 362(a). The following day, the jury returned a verdict for the Matayas in the amount of $90,000. Because the jury also found that Kissinger acted with "oppression, fraud, or malice," the trial judge put the matter over to August 6, 1993, for a trial on punitive damages.
[4] The Matayas then filed a motion in the bankruptcy court seeking relief from the automatic stay,nunc pro tuncto June 28, 1993. The bankruptcy court granted retroactive relief, so that the judgment would be valid in the state court action, as well as prospective relief, so that the punitive damages trial could proceed. The district court affirmed the bankruptcy court's decision. Kissinger appeals that portion of the bankruptcy court's order granting retroactive annulment of the automatic stay. We have jurisdiction pursuant to28 U.S.C. § 158(d) and affirm the order of the bankruptcy court.
[5] Kissinger contends that the bankruptcy court did not have the power to grant retroactive annulment of the stay, and, even if it did, that there was not sufficient cause to grant such relief. The first contention presents an issue of law reviewed de novo.In re Weisman,5 F.3d 417,419(9th Cir. 1993). Because a decision to lift the automatic stay under11 U.S.C. § 362is within the discretion of the bankruptcy court, the second contention is reviewed under the abuse of discretion standard.Inre MacDonald,755 F.2d 715,716(9th Cir. 1985). We reject both of Kissinger's contentions.
[6] Despite the importance of the automatic stay as a vital protection of the bankruptcy debtor,see In re Schwartz,954 F.2d 569,571(9th Cir. 1992),11 U.S.C. § 362(d)(1) allows a bankruptcy court to grant relief from the automatic stay "for cause." SuchPage 109relief may include "terminating, annulling, modifying, or conditioning such stay."Id.§ 362(d). Thus, as we have previously noted, "section 362 gives the bankruptcy court wide latitude in crafting relief from the automatic stay, including the power to grant retroactive relief from the stay."Schwartz,954 F.2d at 572(citing 2Collier onBankruptcy,§ 362.07 (15th ed. 1984)). Retroactive annulment, however, should be "applied only in extreme circumstances."In reShamblin,890 F.2d 123,126(9th Cir. 1989).
[7] [1] The bankruptcy court did not abuse its discretion in finding that retroactive relief was warranted. The court first found that there would have been cause to lift the stay prospectively at the time of the Chapter 11 filing because: the state court claim was sufficiently large such that it would have to be resolved before Kissinger could complete a reorganization; Kissinger was able to defend himself in the state court action; and Kissinger's decision to file a Chapter 11 petition just before the state court action was to go to the jury appeared to be in bad faith. Additionally, the bankruptcy court found that there was additional cause to annul the stay retroactively to the time of the filing because: the failure to obey the stay was caused by the state court judge, not the creditor; and not annulling the stay would either lead to nonsensical results, by submitting the same case to the same jury that had just rendered a decision, or impose an unwarranted hardship on the creditors, since retrial would be costly. The bankruptcy court did not abuse its discretion in finding that these circumstances warranted retroactive annulment of the automatic stay.
[8] AFFIRMED.