Judge: John C. Gastelum, Case: 18-01002754, Date: 2023-08-01 Tentative Ruling

(1) Motion for Attorney Fees (2) Motion to Strike or Tax Costs

Ruling:  Off Calendar– no hearing will be held.   Defendant, Cape Canyon Homeowners’ Association’s Motion for Attorney Fees and Costs (ROA 507), and Plaintiff, Irina R. Morris’s Motion to Strike and/or Tax Costs (ROA 496) is CONTINUED to 9-26-2023, C11, at 2 pm.

On July 24, 2023, Plaintiff, Irina R. Morris filed a Notice of Stay of Proceedings as to all parties, attaching a Notice of Bankruptcy Case Filing, indicating a Chapter 7 bankruptcy case was entered on July 20, 2023 by Irina R. Morris, and was assigned case number 8:23-bk-11469. (See ROA 557.)

At the time of the Notice of Stay was filed, the Association had this pending Motion for Attorney Fees, and Plaintiff had a pending Motion to Strike and/or Tax Costs.

No proof of service indicating service of the Notice of Stay of Proceedings on the all parties to the action appears in the Court’s file. A notice of stay of a proceeding must be served on all parties who have appeared in the case and filed, attaching a copy of the order or other document showing that the proceeding is stayed. (California Rules of Court, rule 3.650(a).)

Plaintiff to file proof of service of the Notice of Stay of Proceedings on all parties forthwith.

A petition in bankruptcy creates an automatic stay of all judicial proceedings against the debtor. (11 U.S.C. § 362(a), emphasis added.)  “Upon the filing of a bankruptcy proceeding, federal bankruptcy law imposes an automatic stay on all state and federal proceedings outside the bankruptcy court against the debtor and the debtor's property.” (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1196, citing 11 U.S.C. § 362(a)(1) & (a)(2); In re Schwartz (9th Cir. 1992) 954 F.2d 569, 570–572.) “The automatic stay is self-executing and is effective upon filing the bankruptcy petition. (Id., citing 11 U.S.C. § 362(a).)

“ ‘The automatic stay has two broad purposes. First, it provides debtors with protection from hungry creditors by giving them a “breathing spell” against all harassment, collection efforts and foreclosure actions. Second it protects the debtor’s creditors by preventing a race for the debtor’s assets. [Citation.]’ (Grant v. Clampitt (1997) 56 Cal.App.4th 586, 590, 65 Cal.Rptr.2d 727.) The automatic stay prevents ‘piecemeal diminution of the debtor’s estate.’ (Cavanagh v. California Unemployment Ins. Appeals Bd. (2004) 118 Cal.App.4th 83, 90, 13 Cal.Rptr.3d 7.)” (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1196.)

“The 11 U.S.C. § 362 automatic stay only stays lawsuits against the debtor and the debtor's bankruptcy estate. The Section 362 stay does not apply where, as here, the debtor is the plaintiff in a lawsuit. 11 U.S.C. § 362(a) (1)–(8).” (In re Mitchell (Bankr. C.D. Cal. 1997) 206 B.R. 204, 212.) “Although the scope of the automatic stay is broad, it does not stay all proceedings. Courts have recognized the automatic stay does not apply to actions against the debtor in the debtor's home bankruptcy court. . . . Additionally, the automatic stay has been found inapplicable to lawsuits initiated by the debtor. . . . Alternatively, a defendant in an action brought by a plaintiff/debtor may defend itself in that action without violating the automatic stay.” (In re Palmdale Hills Property, supra, 423 B.R. at p. 663.)

The parties to submit supplemental briefs no later than nine (9) court days before the continued hearing date addressing the issue of whether the Court has jurisdiction to determine whether the automatic stay applies, and if so, whether the automatic stay applies under the circumstances of this case.

Clerk to give notice to all parties.