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In re Shawne Merriman

Did the Supreme Court’s Acevedo opinion preclude annulling the stay? The Ninth Circuit BAP says ‘no.’

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Case Type:
Consumer
Case Status:
Affirmed
Citation:
BAP No. CC-19-1245-LTaF (9th Circuit, Jul 13,2020) Published
Tag(s):
Ruling:
The Supreme Court's opinion in Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S. Ct. 696 (2020), does not prohibit a bankruptcy court from fashioning nunc pro tunc (retroactive) relief when the relief applies to an action that has actually occurred before the bankruptcy court has had an opportunity to approve the action. Here, the appellants had commenced litigation in state court against the debtor without knowledge of the bankruptcy. Acevedo, by its own language, does not prohibit nunc pro tunc relief in these circumstances.
Procedural context:
The debtor, Merriman, timely appealed the bankruptcy court's order that lifted the automatic stay retroactively to allow holders of state-law tort claims to litigate and liquidate their claims against the debtor in state court and then to bring the state court judgment to the bankruptcy court in a nondischargeability action.
Facts:
The debtor, Shawn Merriman, filed a Chapter 13 bankruptcy petition in November 2018. Notice of the bankruptcy was not served on the appellants, the Fattorinis. The Fattorinis, without knowledge of Merriman's bankruptcy, filed a lawsuit in state court against Merriman and others for wrongful death and other damages arising from the 2017 death of their daughter. Promptly after learning of Merriman's bankruptcy, the Fattorinis filed a motion seeking relief from the automatic stay. Merriman objected. The bankruptcy court found that cause existed to grant the Fattorinis relief from the automatic stay so that they could sue Merriman in state court. The stay was lifted retroactively so that the the state court findings and conclusions of law could be applied preclusively in a nondischargeability proceeding.
Judge(s):
LAFFERTY, TAYLOR, and FARIS, Bankruptcy Judges

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