Yellow Express, LLC v. Dingley (In re Dingley)
- Citation:
- BAP No. NV-13-1261-KiJuTa (B.A.P. 9th Cir. Aug. 6, 2014)
- Tag(s):
-
- Ruling:
- REVERSING the bankruptcy court's order awarding sanctions, the Bankruptcy Appellate Panel of the Ninth Circuit held that the bankruptcy court erred when it (a) found that appellants had willfully violated the automatic stay and (b) awarded sanctions. Applying Ninth Circuit precedent decided under the Bankruptcy Act of 1898, the panel held that a contempt action for nonpayment of court-ordered sanctions is exempted from the automatic stay unless the proceeding turns on the determination or collection of the underlying judgment. Judge Jury concurred with the panel's decision based on the binding effect of the Ninth Circuit precedent relied upon, but emphasized that court-created exceptions to the automatic stay should not have survived after the enactment of the Bankruptcy Act of 1978.
- Procedural context:
- Appeal from bankruptcy court order awarding sanctions against appellants for willful violation of the automatic stay.
- Facts:
- Prior to the bankruptcy filing, appellants filed suit against debtor and two non-debtor LLCs in state court. State court awarded sanctions against defendants for willful failure to attend deposition. When defendants did not pay sanctions, state court issued order to show cause why defendants should not be held in contempt for nonpayment. After the bankruptcy filing, appellants' counsel declined to ask the state court to vacate the OSC and contempt proceeding. Debtor filed a stay enforcement motion against appellants, seeking sanctions for a willful violation of the automatic stay. The bankruptcy court granted the motion and ordered appellants to pay sanctions. Appellants paid the sanctions and appealed.
- Judge(s):
- KIRSCHER, JURY and TAYLOR
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