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Summarizing by Amir Shachmurove

Rael v. Wells Fargo Bank (In re Rael)

Rael v. Wells Fargo Bank (In re Rael), BAP No. WY-14-035 (10th Cir. BAP February 27, 2015)
Creditor did not violate the stay or the terms of the individual debtors' confirmed chapter 11 plan when it sought to enforce its preserved lien rights in state court rather than returning to the bankruptcy court.
Procedural context:
Debtors appealed a bankruptcy court ruling denying their motion for contempt against a secured creditor for alleged violations of the automatic stay. The bankruptcy court ruled that because the individual chapter 11 debtors' bankruptcy case had been closed after confirmation of their plan, the automatic stay had terminated as to all remaining property of the estate prior to the creditor's alleged violations. The bankruptcy court also concluded that enforcement of plan provisions was not subject to exclusive jurisdiction. On appeal, the Tenth Circuit Bankruptcy Appellate Panel affirmed.
Individual debtors filed chapter 11 and obtained a confirmed plan. The debtors' case was subsequently closed prior to issuance of a discharge. A secured creditor then filed a state court action to enforce the terms of the confirmed plan, and another action to determine lien priorities. The debtors reopened their chapter 11 case and filed a motion for contempt against the creditor, arguing that the creditor had violated the automatic stay by seeking to enforce its claims against property of the estate and that the creditor had violated the terms of their confirmed plan by proceeding in state court rather than bankruptcy court. The bankruptcy court denied the motion. On appeal, the Bankruptcy Appellate Panel affirmed. Under 11 U.S.C. Section 362(c)(1) and (2), the stay terminated against property of the estate when it was no longer property of the estate, and against all other acts at the time the case was closed. Under Section 1141, property of the estate vested in the debtor as of confirmation, and the case was subsequently closed. Therefore, the stay had terminated as to all pre-petition property interests of the debtor prior to the alleged stay violations. In addition, the plan language that the court "shall retain jurisdiction" did not afford the court with jurisdiction to issue sanctions in non-core post-confirmation actions involving alleged violations of the plan for state court enforcement of its terms. Affirmed.
Karlin, Somers, and Jacobvitz

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