Circuit split is widening on whether inaction can be a violation of the automatic stay.

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Case Type:
Case Status:
17-3247 (10th Circuit, Oct 17,2018) Not Published
The Chapter 13 Trustee argued that Cowen was wrongly decided. Citing the rule that absent en banc review or intervening Supreme Court precedent, one panel of the 10th Circuit cannot overturn the work of another, the panel affirmed. While Cowen concerned 11 U.S.C. 362(a)(3) and this case concerned 11 U.S.C. 362(a)(4), the same statutory term -- the meaning of the word "act" -- was at issue in both cases. Bound by the ruling in the prior case, the panel held that an "act" for purposes of section 362(a)(4) is likewise limited to affirmative conduct.
Procedural context:
The Chapter 13 Trustee sought to have the lien invalidated as a violation of the automatic stay, pursuant to 11 U.S.C. 362(a)(4). The bankruptcy court concluded that the lien was valid and enforceable, relying on the 10th Circuit's prior decision in WD Equip., LLC v. Cowen (In re: Cowen), 849 F.3d 943 (10th Cir. 2017), which held that the word "act" in 11 U.S.C. 362(a)(3) requires affirmative conduct. Here, the Appellee had engaged in no affirmative conduct creating the lien, which arose by operation of law. The Trustee appealed.
A post-bankruptcy, "subrogation lien" arose in favor of Appellee Tyson Prepared Foods, Inc. by operation of law while the automatic stay in the debtors' Chapter 13 bankruptcy case was in effect.
Tymkovich, Chief Judge, Holmes, and Phillips, Circuit Judges

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