Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-94-04241/USCOURTS-ca10-94-04241-0/pdf.json

Parties Involved:
Gloria K. Gledhill
Appellee
John H. Gledhill
Appellee
State Bank of Southern Utah
Appellant

Document Text:

PUBLISH 

FILED , Unltecl States Court of Appca.a Tenth Circuit 

UNITED STATES COURT OF APPEALS FEB 0 2 1996 

TENTH CIRCUIT 

IN RE: JOHN H. GLEDHILL and 

GLORIA K. GLEDHILL, 

Debtors, 

STATE BANK OF SOUTHERN UTAH, 

Plaintiff-Appellant, 

vs. 

JOHN H. GLEDHILL and GLORIA K. 

GLEDHILL, 

Defendants-Appellees. 

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PATRICK FISHER -- Clerk 

No. 94-4241 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF UTAH. 

(D.C. No. 94-CV-255) 

Steven W. Call (Steven T. Waterman with him on the brief), of Ray, 

Quinney & Nebeker, Salt Lake City, Utah, for Appellant. 

David E. Smoot (Michael N. Zundel with him on the brief), of 

Jardine, Linebaugh, Brown & Dunn, Salt Lake City, Utah, for 

Appellee. 

Before TACHA, BALDOCK, and KELLY, Circuit Judges. 

BALDOCK, Circuit Judge. 

This appeal involves a complex procedural history. Plaintiff 

State Bank of Southern Utah ("State Bank") obtained a bankruptcy 

court order granting it relief from automatic stay to foreclose a 

judgment lien it held in property owned by Debtors John H. and 

Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 1 
Gloria K. Gledhill. Shortly before the foreclosure sale, the 

Chapter 7 Trustee filed, inter alia, a motion under Bankruptcy 

Rule 9024 and Fed. R. Civ. P. 60(b) requesting the bankruptcy 

court to vacate its earlier order granting State Bank relief from 

stay. The Trustee wanted the court to vacate its order lifting 

the stay so that the Trustee could liquidate the property for the 

benefit of all the creditors. State Bank vigorously opposed the 

motion, arguing that the Trustee's motion for relief from the 

order granting relief from the stay sought reimposition of the 

automatic stay, which amounted to a request for injunctive relief 

under Bankruptcy Rule 7001(7). Under Rule 7001(7), a proceeding 

"to obtain an injunction or other equitable relief" must be 

brought as an adversary proceeding. Because the Trustee sought 

relief by motion as a contested matter--and not by initiating an 

adversary proceeding by serving a summons and a complaint--State 

Bank argued that the bankruptcy court lacked jurisdiction to 

consider the Trustee's motion. 

The bankruptcy court rejected State Bank's argument and 

determined that the plain language of Fed. R. Civ. P. 60(b), 

incorporated in bankruptcy proceedings by Rule 9024, authorized 

seeking Rule 60(b) relief by motion. Further, the court ruled 

that under Fed. R. Civ. P. 60(b) (6), the Trustee had demonstrated 

that changed circumstances justified vacating its earlier order 

lifting the stay. Consequently, the bankruptcy court vacated its 

order granting State Bank relief from stay, which effectively 

reimposed the automatic stay and prevented the foreclosure sale. 

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On appeal to the district court, State Bank raised the same 

arguments it asserted in the bankruptcy court. The district court 

affirmed. We have jurisdiction under 28 U.S.C. § 158(d). We 

affirm. 

I. 

The facts of this case are undisputed. Debtors operated a 

business and tourist attraction in Sevier County, Utah known as 

the Big Rock Candy I-1ountain ( "the property") . The property 

consists of a motel, a cafe and curio shop, a vacant building 

previously used as a rock shop, several small cabins, and 

undeveloped real property. In 1984, Debtors filed a voluntary 

petition for relief in the District of Nevada under Chapter 11 of 

the Bankruptcy Code. State Bank filed a proof of claim for a 

secured loan it held on Debtors' property. Following Debtors' 

Nevada bankruptcy filing, Debtors failed to make loan payments to 

State Bank under an amended plan of reorganization. State Bank 

filed a motion to dismiss the case under 11 U.S.C. § 1112. On 

February 10, 1992, the Nevada bankruptcy court granted State 

Bank's motion to dismiss the case. 

After dismissal, State Bank obtained a judgment decree and 

order of foreclosure in Utah state court. The Utah state court 

conducted a judicial sale and sold a portion of the property. 

Because the judicial sale did not retire the full amount of State 

Bank's lien, the court entered a deficiency judgment in favor of 

State Bank and against Debtors. On August 26, 1992, the state 

court issued a writ of execution directing the sheriff to sell the 

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remainder of the property to satisfy State Bank's deficiency 

judgment lien. The court scheduled the judicial sale for 

September 30, 1992. 

On September 28, 1992, two days prior to the judicial sale, 

Debtors filed a second voluntary petition for relief under Chapter 

11 of the Bankruptcy Code in the District of Utah. The Utah 

bankruptcy filing triggered the automatic stay provision, thereby 

preventing State Bank from foreclosing its judgment lien. State 

Bank moved for relief from stay. The U.S. Trustee supported State 

Bank's motion. After an evidentiary hearing, the Utah bankruptcy 

court determined that Debtors had filed their second Chapter 11 

bankruptcy petition in bad faith with the intent to forestall 

foreclosure. Consequently, the court ruled that State Bank had 

established 11 cause 11 for relief from stay under 11 U.S.C. 

§ 362(d) (1), and entered a February 17, 1993 order granting State 

Bank relief from stay to foreclose its judgment lien on Debtors' 

property. State Bank again commenced execution of its deficiency 

judgment lien under state law, and incurred expenses surveying and 

apportioning the property. A foreclosure sale was scheduled for 

December 16, 1993. 

The bankruptcy court converted the case from a Chapter 11 to 

a Chapter 7 on November 10, 1993, and appointed Kenneth A. Rushton 

the Chapter 7 Trustee on November 16, 1993. On December 9, 1993, 

seven days before the December 16, 1993 foreclosure sale, the 

Trustee filed two concurrent motions in the bankruptcy court that 

are the subject of this appeal. The Trustee filed a motion: (1) 

pursuant to Rule 9024 and Fed. R. Civ. P. 60(b) for relief from 

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the order granting State Bank relief from the automatic stay 

("Rule 60(b) motion"), and (2) to reimpose the automatic stay 

under 11 U.S.C. § 105(a) ("§ 105(a) motion") .1 Pursuant to an ex 

parte motion filed by the Trustee, the bankruptcy court scheduled 

the hearing for December 14, 1993. In compliance with the 

bankruptcy court's order, on December 9, 1993, the Trustee hand 

delivered to State Bank's counsel the Trustee's motions, the 

bankruptcy court's order shortening the time for hearing on the 

Trustee's motions, and a notice of hearing. Prior to the hearing, 

State Bank filed an "Objection and Motion to Strike Trustee's 

Motion for Equitable Relief" ("motion to strike"). 

On December 14 and 15, 1993, the bankruptcy court conducted 

an evidentiary hearing on the Trustee's Rule 60(b) and§ 105(a) 

motions. State Bank raised its motion to strike and argued that 

the Trustee's motions sought reimposition of the automatic stay, 

which amounted to a request for injunctive relief under Rule 

7001(7). Because the Trustee sought relief by motion as a 

contested matter--and not by initiating an adversary proceeding by 

serving a summons and a complaint--State Bank argued that the 

bankruptcy court lacked jurisdiction to consider the motions. 

The bankruptcy court rejected State Bank's argument and 

determined that the plain language of Fed. R. Civ. P. 60(b), 

incorporated in bankruptcy proceedings by Rule 9024, authorized 

1 Section 105(a) provides: 

(a) The court may issue any order, process, or 

judgment that is necessary or appropriate to carry out 

the provisions of this title. 

11 U.S.C. § 105 (a). 

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Rule 60(b) relief by motion. Thus, the bankruptcy court denied 

State Bank's motion to strike and ruled that the Trustee properly 

sought Rule 60(b) relief by motion as a contested matter, and not 

by serving a summons and complaint in an adversary proceeding. 

The bankruptcy court, however, did not address whether the Trustee 

correctly sought relief by motion under§ 105(a) of the Bankruptcy 

Code. 

The Trustee and State Bank stipulated at the hearing that the 

amount of State Bank's claim was $148,423.92, and that the sum of 

secured and unsecured claims was $207,601.76.2 Further, the 

Trustee and State Bank introduced expert testimony from real 

estate appraisers regarding the value of the property. Jenny K. 

Hancock appeared for the Trustee and testified that on September 

6, 1993 she appraised the property at $956,000. Eric N. Johnson 

appeared for State Bank and testified that on September 28, 1992 

he appraised the property at $110,000. Mr. Johnson, however, 

raised his appraisal to $170,000 at the evidentiary hearing. 

The Trustee argued that under Rule 60(b) and Rule 9024, the 

circumstances justified the district court in vacating the order 

granting relief from stay. By vacating its order lifting the 

stay, the Trustee maintained the bankruptcy court would prevent 

State Bank from "snatching this asset away from the rest of the 

creditors" in a foreclosure sale. The Trustee argued that based 

2 In addition to State Bank's secured claim for $148,423.92, 

the Trustee established that an Internal Revenue Service priority 

lien in the amount of $14,037.54 and $19,140.30 of delinquent 

state property taxes encumbered the property. Further, the 

Trustee stated that $26,000 of unsecured claims had been filed 

against the estate, yielding $207,601.76 in total secured and 

unsecured claims. 

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on the $956,000 appraisal of the property, there was substantial 

equity in the property in excess of State Bank's $148,423.92 

claim. The Trustee asserted the bankruptcy estate could not 

capitalize on the equity if State Bank sold the property at a 

foreclosure sale. Once the automatic stay was again in place, the 

Trustee argued it could liquidate the property in a commercially 

reasonable manner for the benefit of all the creditors, including 

State Bank. Thus, the Trustee contended that the Chapter 7 policy 

of liquidating the estate for the benefit of all creditors would 

be served if the bankruptcy court vacated its order granting State 

Bank relief from stay. 

State Bank argued that the Trustee had failed to establish 

under Fed. R. Civ. P. 60(b) (6) compelling and extraordinary 

circumstances sufficient to vacate the order lifting the automatic 

stay. Specifically, State Bank asserted that because the value of 

the property was $170,000, and not $956,000, there was not 

sufficient equity in it to merit enjoining the foreclosure sale to 

allow the Trustee to liquidate the property. Further, State Bank 

contended that the bankruptcy court's finding in the order lifting 

the stay that the Debtors acted in bad faith was res judicata in 

the current proceeding, and should preclude the court from 

reimposing the stay. 

The bankruptcy court stated: 

[I]t boils down to a question of value and whether it 

would be fair or proper for the protection of unsecured 

creditors and rights of other creditors, other than the 

bank, to set aside this order. The question of 

determining value is difficult because it seems to me 

that there are some questions of credibility on both 

appraisals. 

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I'm unable to find a specific value. But I do find 

that the value is in excess of $170,000. It may not be 

as high as $956,000, but it does appear that the 

property value is high enough to justify--or high enough 

to protect the interests of the bank if the order 

granting relief from stay were set aside, at least for a 

reasonable period of time. 

It appears to me that the interests of the bank can 

be protected and perhaps something discovered for 

unsecured creditors if the Trustee is given a reasonable 

opportunity. So, with that, the motion to set aside the 

order granting relief from the stay is granted on the 

basis of newly discovered evidence under Rule 60(b) (6). 

Aplee. App. at 279-81. Thus, the bankruptcy court granted the 

Trustee's Rule 60(b) motion to vacate its order lifting the 

automatic stay. Significantly, the bankruptcy court did not grant 

the Trustee's motion to reimpose the automatic stay under 11 

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U.S.C. § 105(a) .3 

On appeal to the district court, State Bank raised the same 

arguments it asserted in the bankruptcy court. The district court 

3 Although the bankruptcy court clearly did not grant the 

Trustee's motion to reimpose the automatic stay under 11 U.S.C. 

§ 105(a), the caption of the form order prepared by the Trustee 

and entered by the bankruptcy court on December 22, 1993 indicated 

that the court granted both the Rule 60(b) motion and the § 105(a) 

motion. The reference in the order to the § 105(a) motion is 

mistaken. State Bank alerted the bankruptcy court to the mistake 

by filing an "Objection to Proposed Order Submitted by Counsel for 

the Trustee" on December 21, 1993. The bankruptcy court did not 

rule on State Bank's objection to the proposed order. 

On appeal, the district court observed, "There is no question 

that the Bankruptcy Court rejected or did not grant the trustee's 

105 request, and possibly because ... the bankruptcy judge 

viewed that relief to be injunctive in nature and would require an 

adversary proceeding." Aplt. App. at 551. In its oral ruling 

affirming the bankruptcy court, the district court affirmed the 

bankruptcy court under Fed. R. Civ. P. 60(b) and Rule 9024. 

Because the bankruptcy court did not grant the Trustee's motion to 

reimpose the stay under§ 105(a), the district court did not reach 

the merits of the§ 105(a) motion. 

The Trustee, however, perpetuated the erroneous appearance 

that the bankruptcy court granted the Trustee's motion to reimpose 

the stay under§ 105(a) of the Bankruptcy Code in the form order 

it prepared for the district court. In its October 14, 1994 order 

affirming the bankruptcy court, the district court "ORDERED that 

the Bankruptcy Court's Order Granting (1) Trustee's Motion 

Pursuant to Rule 9024 for Relief from the Order Granting State 

Bank of Southern Utah Relief from the Automatic Stay and (2) 

Trustee's Motion to Reimpose the Automatic Stay Pursuant to 11 

u.s.c. § 105 is affirmed." (emphasis added). Thus, contrary to 

its oral ruling, the district court entered an order that affirmed 

the bankruptcy court's nonexistent grant of relief to the Trustee 

on its § 105(a) motion. State Bank did not object to the§ 105(a) 

reference in the district court's October 14, 1994 order. 

On appeal, State Bank contends that the bankruptcy court did 

not grant the Trustee's motion to reimpose the automatic stay 

under 11 U.S.C. § 105(a), but vacated its order lifting the stay 

under Rule 60(b) and Rule 9Q24. Consequently, State Bank contends 

that the district court entered an order that erroneously 

indicated the bankruptcy court granted the Trustee's motion to 

reimpose the automatic stay under 11 U.S.C. § 105(a). We agree, 

and conclude the district court should correct its clerical 

mistake. See Fed. R. Civ. P. 60(a) ("Clerical mistakes in 

judgments, orders or other parts of the record and errors therein 

arising from oversight or omission may be corrected by the court 

at any time of its own initiative .... ");American Trucking 

(footnote continued to next page) 

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first concluded that the plain language of Rule 9024 and Fed. R. 

Civ. P. 60(b) authorized Rule 60(b) relief by motion as a 

contested matter. Thus, the district court determined that Rule 

7001(7) did not require the Trustee to initiate an adversary 

proceeding to obtain Rule 60(b) relief. Reaching the merits, the 

district court ruled that the bankruptcy court did not abuse its 

discretion when it granted the Trustee's Rule 60(b) motion. 

So once having made the decision that 60(b) applies 

here, then I need to look and see whether Judge Allen 

abused his discretion. I am finding that Judge Allen 

was presented with new circumstances in a case that had 

recently been placed in a new procedural posture. In 

January of 1993 he was presented with what he found to 

be a bad faith Chapter 11 filing. . . . [G]iven those 

circumstances the bankruptcy judge decided to lift the 

automatic stay and then let the bank go after its money, 

go after the deficiency judgment. 

Then 11 months later, approximately, he was presented in 

the same case with the Chapter 7 liquidation and the 

same secured creditor still seeking its $114,000 and 

evidence from both sides that the property had increased 

in value. Now, under these circumstances the judge 

below decided that allowing the trustee to list and sell 

(footnote continued from previous page) 

Ass'ns v. Frisco Transp. Co., 358 u.s. 133, 145 (1958) ("It is 

axiomatic that courts have the power and the duty to correct 

judgments which contain clerical errors or judgments which have 

issued due to inadvertence or mistake."); Burton v. Johnson, 975 

F.2d 690, 694 (lOth Cir. 1992) ("[A] district court may also 

invoke Rule 60(a) to resolve an ambiguity in its original order to 

more clearly reflect it contemporaneous intent and ensure that the 

court's purpose is fully implemented."), cert. denied 113 S. Ct. 

1879 (1993). Pursuant to Fed. R. Civ. P. 60{a) we remand to the 

district court with directions to amend its October 14, 1995 order 

to accurately depict that it affirmed the bankruptcy court's order 

vacating its order lifting the automatic stay under Rule 60(b) and 

Rule 9024, and not under 11 U.S.C. § lOS(a). See Pratt v. 

Petroleum Prod. Management, Inc. Employee Sav. Plan & Trust, 920 

F.2d 651, 653 n.S (lOth Cir. 1990) (remanding under Rule 60(a) for 

the district court to correct a clerical error and amend the 

judgment); United States v. Kellogg (In re West Texas Marketing 

Corp.), 12 F.3d 497, 503-05 (5th Cir. 1994) (remanding to the 

district court under Rule 60(a) to correct clerical mistakes made 

by parties in preparing a bankruptcy court judgment) . 

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the property on the open market instead of allowing 

[State Bank] to sell the property to the highest bidder 

at a foreclosure auction was in the best interests of 

all involved including the unsecured creditors. [State 

Bank] could still recover its money and hopefully to the 

benefit of other creditors. 

I would be hard pressed under those circumstances to say 

that Judge Allen abused his discretion. . It was 

well within the discretion granted to him under the 

procedural rules. 

Aplt. App. at 552-53 (emphasis added). Consequently, the district 

court affirmed the bankruptcy court. This appeal followed. 

II. 

On appeal, State Bank argues the district court erred in 

affirming the bankruptcy court's order vacating its prior order 

lifting the automatic stay. State Bank asserts the district court 

erred because: (1) the Trustee's Rule 60(b) motion should have 

been brought as an adversary proceeding; (2) the bankruptcy court 

erred under Rule 60(b) (6) in vacating the order granting State 

Bank relief from stay; (3) the doctrine of res judicata prevented 

the Trustee from using Rule 60(b) to ask the bankruptcy court to 

vacate a final order; and (4) the bankruptcy proceedings deprived 

State Bank of its rights under the Due Process Clause of the U.S. 

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Constitution.4 We address State Bank's contentions in turn. 

A. 

State Bank first argues the district court erred because the 

Trustee should have sought Rule 60(b) relief by filing a complaint 

in an adversary proceeding, and not by motion as a contested 

matter. Specifically, State Bank asserts that: (1) the plain 

language of Rules 7001(7), 9024, and 60(b), and (2) settled 

precedent, required the Trustee to seek Rule 60(b) relief from the 

order lifting the stay by filing an adversary proceeding. We 

disagree. 

1. 

State Bank argues that the plain language of Rules 7001(7), 

9024, and 60(b) required the Trustee to pursue Rule 60(b) relief 

by filing an adversary proceeding and not by motion. State Bank 

maintains that the Trustee's Rule 60(b) motion sought reimposition 

of the automatic stay, which amounted to a request for injunctive 

4 State Bank also argues on appeal that the automatic stay 

should not have been reimposed under 11 U.S.C. § 105(a) because: 

(1) § 105(a) should never be used to reimpose a stay that was 

lifted for "cause" under 11 U.S.C. § 362(d) (1), and (2) there was 

no basis for injunctive relief under§ 105(a). As we noted in 

note 3, supra, the caption of the form order prepared by the 

Trustee and entered by the bankruptcy court purports to grant the 

§ 105(a) motion. The record, however, clearly demonstrates that 

the bankruptcy court did not reimpose the stay under 11 U.S.C. 

§ 105(a), but vacated the order lifting the stay pursuant to Rule 

60(b) and Rule 9024. Indeed, State Bank asserts in its brief that 

"the court did not grant respondents' motion under 11 U.S.C. 

§ 105(a) ." Aplt. Br. at 43. Because the bankruptcy court did not 

reimpose the stay under 11 U.S.C. § 105, we do not address State 

Bank's § 105 arguments. 

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relief under Rule 7001(7) .5 Under Rule 7001(7), requests for 

injunctive or equitable relief require the initiation of an 

adversary proceeding. Because the Trustee sought Rule 60(b) 

relief under Rule 9024 by filing a motion as a contested matter, 

and not by initiating an adversary proceeding, State Bank 

maintains the bankruptcy court was without jurisdiction. 

State Bank's argument requires us to interpret Rules 7001, 

9024, and 60(b) using tools of statutory interpretation. See 

Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 113 

S. Ct. 1489, 1494-95 (1993). "In statutory interpretation we look 

to the plain language of the statute and give effect to its 

meaning." Schusterman v. United States, 63 F.3d 986, 989 (lOth 

Cir. 1995) (citing United States v. Ron Pair Enter .. Inc., 489 

U.S. 235, 241 (1989)). "Courts properly assume, absent sufficient 

indication to the contrary, that Congress intends the words in its 

enactments to carry 'their ordinary, contemporary, common 

meaning.'" Pioneer Inv. Servs., 113 S. Ct. at 1495 (quoting 

5 The dissent contends that our characterization of State 

Bank's argument "is inaccurate ... [because] State Bank asserts 

that the Trustee's requested relief constituted injunctive relief, 

not Rule 60(b) relief, and 'should not have [been] made by motion 

but through the filing of an adversary proceeding in accordance 

with Fed. R. Bankr. P. 7001(7) .'" Dissent at 2-3 (quoting Aplt. 

Br. at 34). In its haste to identify purported inaccuracies in 

our opinion, the dissent ignores this section (Part II.A.l) of our 

opinion wherein we set forth State Bank's argument in full. 

Further, the dissent implies that we intentionally and erroneously 

stated that the Trustee requested relief under Rule 60(b) in order 

to reach "the apparent conclusion that such relief may be granted 

by motion without an adversary proceeding." Dissent at 3. The 

record demonstrates that the Trustee designated the motion as a 

reguest for relief under Rule 60(b) (incorporated in bankruptcy 

proceedings by Rule 9024). Aplt. App. at 384. Thus, we do not 

see how we inaccurately depict the record by correctly describing 

it. 

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Perrin v. United States, 444 U.S. 37, 42 (1979)). If the statute 

is clear, our inquiry ends. Schusterman, 63 F.3d at 989. We 

review the district court's interpretation of the Bankruptcy Rules 

de novo. Unioil v. Elledge (In re Unioil, Inc.), 962 F.2d 988, 

990 (lOth Cir. 1992). 

The Federal Rules of Bankruptcy Procedure distinguish between 

adversary proceedings and contested matters. See 9 Collier on 

Bankruptcy ,r,r 7001.01 [1], 9014.03 (Lawrence P. King ed., 15th ed. 

1995). In general, a party who brings an action designated as an 

adversary proceeding under Rule 7001 must file a complaint with 

the bankruptcy court, and serve the adverse party with a summons 

and a copy of the complaint. See Rule 7003; Rule 7004. In 

contrast, in a contested matter, "relief shall be requested by 

motion." Rule 9014. 

Rule 7001 enumerates ten classes of actions or proceedings 

which must be brought as adversary proceedings in bankruptcy 

cases. As relevant to the instant case, Rule 7001(7) provides: 

Rule 7001. Scope of Rules of Part VII. 

An adversary proceeding is governed by the rules of this 

Part VII. It is a proceeding 

(7) to obtain an injunction or other equitable relief. 

Rule 7001(7) (emphasis added). Rule 7001(7), therefore, requires 

an adversary proceeding in order "to obtain an injunction or other 

equitable relief." Id. 

Rule 9024 incorporates Fed. R. Civ. P. 60(b) in bankruptcy 

proceedings with three exceptions not implicated here. Rule 9024 

provides in relevant part: 

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Rule 9024. Relief From Judgment or Order. 

Rule 60 F.R. Civ. P. applies in cases under the 

Rule 9024 (emphasis added) . Rule 9024 therefore incorporates Rule 

60(b) in bankruptcy proceedings. Consequently, Fed. R. Civ. P. 

60(b), as incorporated by Rule 9024, governs requests for relief 

from judgments or orders in bankruptcy court. Rule 60(b) provides 

in pertinent part: 

Rule 60. Relief from Judgment or Order. 

(b) Mlstakes; Inadvertence; Excusable Neglect; Newly 

Discovered Evidence; Fraud, etc. On motion and upon 

such terms as are just, the court may relieve a party or 

a party's legal representative from a final judgment, 

order, or proceeding for the following reasons: ... 

(2) newly discovered evidence which by due diligence 

could not have been discovered in time to move for new 

trial under Rule 59(b); ... (6) any other reason 

justifying relief from the operation of the judgment. 

Fed. R. Civ. P. 60(b) (emphasis added). Under Rule 60(b) a 

bankruptcy court may vacate a final order on the grounds of "newly 

discovered evidence" or for "any other reason justifying relief." 

The plain language of Rules 7001(7), 9024, and 60(b) 

establishes that a party may seek Rule 60(b) relief from an order 

granting relief from stay by motion as a contested matter without 

filing an adversary proceeding. Rule 7001 lists ten classes of 

actions which require the initiation of an adversary proceeding. 

The list does not include requests for relief under Rule 60(b). 

See Rule 7001. The plain language of Rule 60(b) allows a court to 

relieve a party from a final judgment or order upon the filing of 

a motion, not a complaint. See Rule 60(b) ("On motion .... ") 

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(emphasis added). Rule 9024 incorporates Rule 60(b) in bankruptcy 

cases. See Rule 9024 (Rule 60(b) "applies in cases under the 

Code"). Consequently, the plain language of Rule 9024 allows a 

party to request Rule 60(b) relief from a bankruptcy court order 

granting relief from stay by filing a motion. Id. 

Although Rules 9024 and 60(b) authorize relief by motion, 

State Bank asserts that Rule 7001(7) mandates the filing of an 

adversary proceeding because relief from an order lifting the stay 

in effect revives the automatic stay, which amounts to "an 

injunction or other equitable relief." See Rule 7001(7) (An 

adversary proceeding "is a proceeding ... to obtain an 

injunction or other equitable relief."). State Bank's logic is 

flawed. State Bank's interpretation of Rule 7001(7) would always 

require a party proceeding under Rule 9024 in bankruptcy court to 

prepare a complaint and file an adversary proceeding because every 

Rule 60(b) motion by definition seeks "equitable relief" from the 

court. See. e.g., Pierce v. Cook & Co., Inc., 518 F.2d 720, 722 

(lOth Cir. 1975) ("Rule 60(b) gives the court a 'grand reservoir 

of equitable power to do justice in a particular case.'") (en 

bane) (quoting Radack v. Norwegian America Line Agency. Inc., 318 

F.2d 538, 542 (2d Cir. 1963)), cert. denied, 423 U.S. 1079 (1979). 

Thus, State Bank urges us to interpret the general language in 

Rule 7001(7) to negate the specific authorization in Rule 60(b), 

applicable in bankruptcy under Rule 9024, that a party may proceed 

"on motion." We reject State Bank's broad reading of Rule 7001(7) 

because it falls afoul of the fundamental tenet of statutory 

construction that a court should not construe a general statute to 

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eviscerate a statute of specific effect. See Morales v. Trans 

World Airlines. Inc., 504 U.S. 374, 384 (1992) ("[I]t is a 

commonplace of statutory construction that the specific governs 

the general."); Franklin v. United States, 992 F.2d 1492, 1502 

(lOth Cir. 1993) ("[A] specific statute ... should not be deemed 

controlled or nullified by a general statute . . . absent a 

definite contrary intention."); 2A Norman J. Singer, Sutherland 

Statutory Construction, § 46.05, at 105 (5th ed. 1992) ("Where 

there is inescapable conflict between general and specific terms 

or provisions of a statute, the specific will prevail."). Thus, 

examining the plain language of Rules 7001(7), 9024, and 60(b), 

and giving effect to its meaning, Schusterman, 63 F.3d at 993, we 

conclude that a party may seek relief from an order granting 

relief from the automatic stay by filing a motion as a contested 

matter under Rules 9024 and 60(b) without filing an adversary 

proceeding. 

2 . 

Apart from the plain language of Rules 7001(7), 9024, and 

60(b), State Bank contends that settled precedent mandated that 

the Trustee request Rule 60(b) relief by complaint filed in an 

adversary proceeding. We review questions of law regarding the 

interpretation of precedent de novo. See Phillips v. White (In re 

White), 25 F.3d 931, 933 (lOth Cir. 1994). 

State Bank argues that bankruptcy courts have uniformly held 

that requests to reimpose the automatic stay require the filing of 

an adversary proceeding. The cases State Bank cite are 

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inapposite. Significantly, State Bank directs us to cases that do 

not involve motions to vacate orders lifting the automatic stay 

under Rules 60(b) and 9024, but requests to reimpose the automatic 

stay under 11 U.S.C. § 105(a}. The bankruptcy court in the 

instant case, however, did not reimpose the automatic stay under 

11 U.S.C. § 105(a), but vacated its order granting relief from 

stay under Rule 60(b) and Rule 9024. The distinction between a 

Rule 60(b) motion to vacate an order lifting the stay and a 

request to reimpose the automatic stay under 11 u.s.c. § 105(a) 

determines whether the movant may proceed by motion as a contested 

matter under Rule 9014, or must file an adversary proceeding under 

Rule 7001. Courts have uniformly held that a request to reimpose 

the automatic stay under 11 U.S.C. § 105(a) constitutes "a 

proceeding to obtain an injunction or other equitable relief" 

under Rule 7001(7}, which requires the filing of an adversary 

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proceeding.6 In contrast, State Bank cites no authority--nor have 

we found any--that stands for the proposition that a Rule 60(b) 

and Rule 9024 motion requesting a bankruptcy court to vacate an 

order lifting the automatic stay constitutes a request for an 

injunction that requires an adversary proceeding under Rule 

6 See Wedgewood Inv. Fund Ltd. v. Wedgewood Realty Group, Ltd. 

(In re Wedgewood Realty Group. Ltd.), 878 F.2d 693, 701 (3d Cir. 

1989) ("[A] lapsed stay may be reimposed under the equitable 

provisions of section 105(a), provided that the debtor has 

properly applied for such injunctive relief [under Rule 7001] ."); 

Ramirez v. Whelan (In re Ramirez), 188 B.R. 413, 416 (9th Cir. BAP 

1995) ("In order to have a vacated stay 'reimposed,' one must 

ordinarily file an adversary proceeding seeking an injunction 

under 11 U.S.C. § 105.") (Klein, J., concurring); Stacy Fuel & 

Sales, Inc. v. Ira Phillips, Inc. (In re Stacy), 167 B.R. 243, 248 

(N.D. Ala. 1994) ("Under the Federal Rules of Bankruptcy Procedure 

[a motion to reimpose the automatic stay under§ 105(a)] ... could not have been obtained by motion but rather necessitated the 

institution of an adversary proceeding."); In re Parker, 154 B.R. 

240, 243 (Bankr. S. D. Ohio 1993) (holding that court has power to 

reimpose the automatic stay under§ 105(a) but may do so only in 

adversary proceeding); American Indus. Loan Ass'n v. Voron (In re 

Voron), 157 B.R. 251, 252-53 (Bankr. E.D. Va. 1993) (same); Nasco 

P.R., Inc. v. Chemical Bank (In re Nasco P.R., Inc.), 117 B.R. 35, 

38 (Bankr. D. P.R. 1990) ("The bankruptcy court has power under 

Section 105(a) to reimpose a stay . [but a] party wishing to 

invoke the Court's injunctive power under Section 105(a) must file 

an adversary proceeding .... "). 

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7001(7) .7 Instead, in accord with our interpretation of the 

Rules, the courts that have addressed Rule 60(b) in this context 

agree that a party may seek relief from a bankruptcy court order 

lifting the automatic stay by filing a motion pursuant to Rules 

7 The dissent states that "[t]he weight of authority supports 

State Bank['s]" argument that Rule 60(b) relief in the instant 

case "constitutes injunctive relief requiring an adversary 

proceeding in accordance with Bankruptcy Rule 7001(7) ." Dissent 

at 3. The dissent, however, like State Bank, fails to identify a 

single case in support of the proposition that a Rule 60(b) motion 

requesting a bankruptcy court to vacate an order lifting the 

automatic stay constitutes a request for an injunction under § 105 

that requires an adversary proceeding. Instead, the dissent cites 

cases that do not even mention Rule 60(b) to support its argument 

that as a matter of law Rule 60(b) relief in the instant case 

constituted a request for injunctive relief under § 105. Indeed, 

the dissent fails to recognize the determinative distinction 

between a Rule 60(b) motion to vacate an order lifting the stay 

and a request to reimpose the automatic stay under 11 U.S.C. 

§ 105 (a) . 

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9024 and 60(b) without filing an adversary proceeding.8 

Consequently, because the bankruptcy court vacated its order 

lifting the stay under Rule 60(b) as opposed to reimposing the 

stay under § 105, we reject State Bank's argument that settled 

precedent mandated that the Trustee seek Rule 60(b) relief by 

filing an adversary proceeding. 

In sum, we hold that the plain language of Rules 9024 and 

60(b) and settled precedent permitted the Trustee to request Rule 

60(b) (6) relief from the order granting relief from stay by filing 

8 See Metmor Fin., Inc v. Bailey (In re Bailey), 111 B.R. 151, 

152-53 (W.D. Tenn. 1988) (affirming bankruptcy court's order 

granting debtor's Rule 9024 and Rule 60(b) (6) motion to vacate an 

order lifting the automatic stay); Ramirez v. Whelan (In re 

Ramirez), 188 B.R. 413, 416 (9th Cir. BAP Feb. 22, 1995) 

("Occasionally, it might suffice to revive the stay by way of 

motion for reconsideration under Federal Rules of Civil Procedure 

59(e) or 60(b), which are applicable in bankruptcy by virtue of 

Federal Rules of Bankruptcy Procedure 9021 and 9023 [sic].") 

(Klein, J., concurring); In reAL & LP Realty Co., 164 B.R. 231, 

232-34 (Bankr. S.D.N.Y. 1994) (recognizing that under Rules 9024 

and 60(b) (6) debtor properly filed motion seeking relief from 

consent order modifying the automatic stay); In re Fuller, 111 

B.R. 660, 661-63 (Bankr. S.D. Ohio 1989) (holding that a "motion 

to reinstate automatic stay" was properly filed under Rules 9024 

and 60(b) as a motion to vacate a default order lifting the 

automatic stay); In re Keul, 76 B.R. 79, 82 (Bankr. E.D. Pa. 1987) 

("[A]n order granting relief from stay is subject to being altered 

or vacated pursuant to Fed. R. Civ. P. 60(b) (6) and Bankr. Rule 

9024."); In re Kanuika, 76 B.R. 473, 477-78 (Bankr. E.D. Pa. 1987) 

(allowing debtor to file a motion under Rules 9024 and 60(b) for 

relief from an order lifting the automatic stay); Commonwealth of 

Pennsylvania State Employes' Retirement Fund v. Durkalec (In re 

Durkalec), 21 B.R. 618, 619-20 (Bankr. E.D. Pa. 1982) (granting 

Chapter 7 debtor's motion under Rule 60(b) (6) to vacate an order 

lifting the automatic stay due to changed circumstances) . 

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a motion as a contested matter.9 The district court did not err, 

therefore, by concluding that the bankruptcy court properly 

determined that the Bankruptcy Rules authorized the Trustee to 

proceed by motion without filing an adversary proceeding. 

B. 

State Bank next contends the district court erred in 

affirming the bankruptcy court's order granting the Trustee relief 

under Fed. R. Civ. P. 60(b) {6) .10 Specifically, State Bank argues 

that the bankruptcy court erred because: {1) the circumstances did 

not justify relief under Rule 60(b) (6), and (2) the court granted 

Rule 60{b) (6) relief based on a finding of newly discovered 

evidence under Rule 60(b) (2). 

"Federal Rule of Civil Procedure 60(b) provides a procedure 

whereby, in appropriate cases, a party may be relieved of a final 

judgment." Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 

847, 863 (1988). We have observed that Rule 60(b) "gives the 

court a 'grand reservoir of equitable power to do justice in a 

particular case.'" Pierce v. Cook & Co., 518 F.2d 720, 722 (lOth 

Cir. 1975) (en bane) (quoting Radack v. Norwegian America Line 

9 Because we conclude that the Bankruptcy Rules permit a party 

to seek Rule 60(b) relief from an order lifting the automatic 

stay--thereby "reviving" the automatic stay--we reject State 

Bank's argument that the Bankruptcy Code limits temporary 

extensions of the stay to cases arising under 11 U.S.C. § 362(e). 

10 State Bank also argues the district court erred in affirming 

the bankruptcy court on the basis of newly discovered evidence 

under Rule 60(b) (2). Because we conclude that the district court 

correctly determined the bankruptcy court did not abuse its 

discretion in granting the Trustee relief under Rule 60(b) (6), we 

do not address the merits of the district court's Rule 60(b) (2) 

ruling. 

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Agency, Inc., 318 F.2d 538, 542 (2d Cir. 1963)), cert. denied, 423 

u.s. 1079 (1976). Rule 60(b) (6) grants federal courts broad 

authority to relieve a party from a final judgment "upon such 

terms as are just . . . for . . . any other reason justifying 

relief from the operation of the judgment." Fed. R. Civ. P. 

60(b) (6). "District courts may grant a Rule 60(b) (6) motion only 

in 'extraordinary circumstances' and only when such action is 

necessary to accomplish justice." Lyons v. Jefferson Bank & 

Trust, 994 F.2d 716, 729 (lOth Cir. 1993); see also Johnston v. 

Cigna Corp., 14 F.3d 486, 497 (lOth Cir. 1993) ("Relief under Rule 

60(b) (6) ... is warranted only in exceptional circumstances"), 

cert. denied, 115 S. Ct. 1792 (1995). A court may not premise 

Rule 60(b) (6) relief, however, on one of the specific grounds 

enumerated in clauses (b) (1) through (b) (5). Liljeberg, 486 U.S. 

at 863. 

We review a lower court's ruling on a Rule 60(b) (6) motion 

for abuse of discretion. Metz v. Merrill Lynch, Pierce. Fenner & 

Smith, Inc., 39 F.3d 1482, 1491 (lOth Cir. 1994). Because a court 

"has substantial discretion in connection with a Rule 60(b) 

motion," Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (lOth 

Cir. 1990), "[w]e will reverse the district court's determination 

'only if we find a complete absence of a reasonable basis and are 

certain that the district court's decision is wrong.'" Johnston, 

14 F.3d at 497 (quoting Pelican Prod. Corp., 893 F.2d at 1147). 

Applying these principles to the instant case, we believe the 

district court correctly concluded that under the exceptional 

circumstances of this case the bankruptcy court did not abuse its 

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discretion in granting the Trustee's motion for relief from the 

order lifting the stay under Rule 60(b) (6). The bankruptcy court 

emphasized that the circumstances of the case had changed 

significantly since it granted State Bank relief from stay to 

foreclose the property. The bankruptcy court granted State Bank 

relief from stay in part because Debtors had filed a serial 

petition in bad faith to prevent State Bank from foreclosing the 

property. Thus, in the context of the Chapter 11 reorganization, 

the February 17, 1993 order lifting the stay "punished" Debtors 

for seeking bankruptcy protection in bad faith, and allowed State 

Bank to foreclose its judgment lien. By December 1993, however, 

the case had been converted to a Chapter 7 liquidation. A 

foreclosure sale in the Chapter 7 would not punish Debtors, but 

other creditors because the estate would receive less from a 

foreclosure sale to distribute to creditors than it would by 

permitting the Trustee to liquidate the property in a commercially 

reasonable manner. 

At the Rule 60(b) hearing, the Trustee and State Bank 

presented evidence that the value of the property had increased 

since the court lifted the stay. The bankruptcy court found that 

the value of the property exceeded $170,000, although it "may not 

be as high as $956,000." With a property value over $170,000, the 

court observed that there was equity in the property in excess of 

State Bank's $148,423.92 claim. Total secured and unsecured 

claims were $207,601.76. Based on the sharply increased property 

value and the total claims against the estate, the bankruptcy 

court determined the estate could distribute more money to the 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 24 
creditors if the Trustee liquidated the property in a commercially 

reasonable manner than if State Bank sold it at a foreclosure 

sale. 

We believe the conversion of the Chapter 11 case to a Chapter 

7 liquidation case, the increase in the property value, and the 

likelihood that the estate could distribute more money to 

creditors if the Trustee sold the property in the open real estate 

market constituted exceptional circumstances sufficient to merit 

Rule 60(b) (6) relief.11 State Bank, however, argues that the 

bankruptcy court committed reversible error in its Rule 60(b) (6) 

determination because the court used a finding of newly discovered 

evidence under Rule 60(b) (2) to justify Rule 60(b) (6) relief. In 

its oral ruling, the bankruptcy court summarized the circumstances 

underlying its decision to grant Rule 60(b) (6) relief: 

It appears to me that the interests of the bank can 

be protected and perhaps something discovered for 

unsecured creditors if the Trustee is given a reasonable 

opportunity. So, with that, the motion to set aside the 

order granting relief from the stay is granted on the 

basis of newly discovered evidence under Rule 60(b) ((6). 

11 See Metmor Fin., Inc. v. Bailey (In re Bailey), 111 B.R. 151, 

153 (W.D. Tenn. 1988) (holding that bankruptcy court did not abuse 

its discretion in granting debtor's Rule 60(b) (6) motion to vacate 

an order lifting the automatic stay where debtor established 

extenuating circumstances); Commonwealth of Pa. State Employes' 

Retirement Fund v. Durkalec (In re Durkalec), 21 B.R. 618, 619 

(Bankr. E.D. Pa. 1982) (holding that debtor was entitled under 

Rule 60(b) (6) to relief from an order granting relief from stay to 

prevent foreclosure of debtor's home because after stay was 

lifted, debtor became gainfully employed and case was converted 

from Chapter 7 to Chapter 13). But see In reAL & LP Realty Co., 

164 B.R. 231, 234 (Bankr. S.D.N.Y. 1994) ,(holding that Chapter 11 

debtor failed to establish exceptional circumstances necessary 

under Rule 60(b) (6) to obtain relief from a consent order 

modifying the automatic stay) . 

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Aplee. App. at 281 (emphasis added). State Bank thus contends the 

bankruptcy court erred in granting Rule 60(b) (6) relief on the 

basis of newly discovered evidence under Rule 60(b) (2). 

Newly discovered evidence is grounds for relief under Rule 

60(b) (2), not Rule 60(b) (6). Compare Fed. R. Civ. P. 60(b) (2) 

("newly discovered evidence which by due diligence could not have 

been discovered in time to move for new trial under Rule 59(b)") 

with Fed. R. Civ. P. 60(b) (6) ("any other reason justifying relief 

from the operation of the judgment"). Relief under Rule 60(b) (6) 

may not be premised on one of the specific grounds enumerated in 

Rule 60(b) (1)-(5). ~' Liljeberg, 486 U.S. at 863. 

The district court rejected State Bank's argument that the 

bankruptcy court erred by granting Rule 60(b) (6) relief based on a 

Rule 60(b) (2) finding. 

[State Bank's] argument that the Bankruptcy Court used a 

60(b) (2) basis to make a 60(b) (6) finding is making much 

out of not much. Judge Allen spoke from the bench when 

he made his ruling--and if he was in error--I will 

affirm on the basis of either 60(b) (2) or 60(b) (6). The 

Bankruptcy Court's ruling as a whole was that the 

circumstances had sufficiently changed between January 

of 1993 and December of 1993. It is not a circumstance 

specifically addressed in 60(b) 1 through 5 and, 

therefore, I believe was properly dealt with under 

60(b) (6), which says any other reason justifying relief 

from the operation of the judgment. 

Aplt. App. at 555-56. We agree with the district court. The 

Trustee did not argue "newly discovered evidence" at the Rule 

60(b) hearing but founded its claim for relief on extraordinary 

circumstances pursuant to Rule 60(b) (6). See Aplee. App. at 

251-53, 276. The transcript of the December 15, 1993 evidentiary 

hearing demonstrates the bankruptcy court based its Rule 60(b) (6) 

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decision on the exceptional and extraordinary circumstances of the 

case, not on newly discovered evidence under Rule 60(b) (2). We 

believe the bankruptcy court misspoke when it said "newly 

discovered evidence" in its oral ruling. This misstatement, 

however, does not constitute reversible error when the record 

establishes that the court correctly premised the order granting 

Rule 60(b) (6) relief on the Trustee's showing of exceptional and 

compelling circumstances. 

In sum, based on our review of the record we do not "find a 

complete absence of a reasonable basis" nor are we certain that 

the [bankruptcy] court's decision is wrong." Johnston, 14 F.3d at 

497 (quotation omitted). Consequently, we agree with the district 

court's observation that "I would be hard pressed under those 

circumstances to say that Judge Allen abused his discretion." We 

therefore hold that the district court did not err by concluding 

that the bankruptcy court did not abuse its discretion in entering 

an order granting the Trustee relief from the order lifting the 

automatic stay under Rule 60(b) (6) .12 

c. 

Next, State Bank argues that the doctrine of res judicata 

prevented the Trustee from asking the district court to vacate its 

12 State Bank also contends the bankruptcy court erred in 

granting the Trustee Rule 60(b) (6) relief because: (1) Debtor has 

a statutory right of redemption for six months after the 

foreclosure sale under Utah R. Civ. P. 69(f), and (2) cause still 

exists for relief from stay. Because we conclude the bankruptcy 

court's Rule 60(b) (6) determination did not evince an abuse of 

discretion under the circumstances of this case, we reject State 

Bank's redemption and cause for relief from stay arguments. 

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order lifting the stay under Rule 60(b). Specifically, State Bank 

argues that the February 17, 1993 order granting it relief from 

stay based on "cause" under 11 U.S.C. § 362(d) (1) constituted a 

final order which, under the doctrine of res judicata, the Trustee 

could not seek to overturn. Consequently, State Bank argues the 

district court erred by affirming the bankruptcy court's order 

vacating the order lifting the automatic stay. We "review de novo 

a district court's conclusions of law as to the applicability of 

res judicata." Frandsen v. Westinghouse Corp., 46 F.3d 975, 977 

(lOth Cir. 1995). 

The doctrine of res judicata bars a collateral attack on a 

final judgment, but "does not apply to direct attacks on 

judgments." Watts v. Pinckney, 752 F.2d 406, 410 (9th Cir. 1985); 

see also 1B James William Moore & Jo Desha Lucas, Moore's Federal 

Practice,, 0.407 (2d ed. 1995) ("It is elementary, of course, that 

res judicata does not preclude a litigant from making a direct 

attack upon the judgment before the court that renders it."). 

Rule 60(b) provides a procedural avenue whereby, in appropriate 

circumstances, a party may assert a direct attack on a final 

judgment or order. See Fed. R. Civ. P. 60(b); Liljeberg, 486 U.S. 

at 863. Thus, "' [r]es judicata does not preclude a litigant from 

making a direct attack under Rule 60(b) upon the judgment before 

the court which rendered it.'" Weldon v. United States, 70 F.3d 

1, 5 (2d Cir. 1995) (quoting Watts, 752 F.2d at 410) (quotation 

and alteration omitted); see also 1B Moore & Lucas, supra, ,, 0.407 

(stating that res judicata does not bar a litigant from seeking 

Rule 60(b) relief from the court which rendered the judgment). 

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We conclude that State Bank's argument misapprehends the 

nature of Rule 60(b) and the doctrine of res judicata. First, the 

plain language of Rule 60(b) authorizes a litigant to seek relief 

"from a final judgment, order, or proceeding." Fed. R. Civ. P. 

60(b). Thus, the fact that the order lifting the stay constituted 

a final order did not preclude the Trustee from assailing it under 

Rule 60(b). Second, the Trustee directly attacked the order 

lifting the stay by filing a Rule 60(b) motion with the court that 

rendered the order while the case was still pending. Under these 

circumstances, res judicata did not prevent the Trustee from 

seeking Rule 60(b) relief from the bankruptcy court. ~, Watts, 

752 F.2d at 410. We therefore conclude the district court did not 

err_in determining that the doctrine of res judicata did not bar 

the Trustee from asking the bankruptcy court to vacate the order 

lifting the stay under Rule 60(b) (6). 

D. 

Finally, State Bank contends the district court erred in 

affirming the bankruptcy court's order vacating the order lifting 

the stay because it did not receive adequate notice under the Due 

Process Clause of the U.S. Constitution of the December 14, 1993 

bankruptcy hearing. State Bank argues that it did not receive 

adequate notice because: (1) the Trustee waited until December 9, 

1993 to file the Rule 60(b) motion and§ 105 motion, and (2) the 

bankruptcy court entered an ex parte order shortening the time for 

hearing. We review whether bankruptcy court proceedings violated 

a party's due process rights de novo. LangenKamp v. Hackler (In re 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 29 
Republic Trust & Sav. Co.), 897 F.2d 1041, 1043 (lOth Cir.), rev'd 

on other grounds, 498 U.S. 42 (1990). 

1. 

State Bank argues that it did not receive adequate notice of 

the December 14, 1993 hearing because the Trustee waited until 

December 9, 1993--seven days before the December 16, 1993 

foreclosure sale--to file the Rule 60(b) motion and§ 105 motion. 

Consequently, State Bank asserts "the bankruptcy court committed 

reversible error by allowing [the Trustee] to proceed with his 

ambush type tactics in an effort to deny [State Bank] sufficient 

time to prepare for trial in violation of the due process clause 

of the U.S. Constitution." 

"The purpose of notice under the Due Process Clause is to 

apprise the affected individual of, and permit adequate 

preparation for, an impending hearing." Memphis Light. Gas & 

Water Div. v. Craft, 436 U.S. 1, 14 (1978) (quotation omitted). 

"'An elementary and fundamental requirement of due process in any 

proceeding which is to be accorded finality is notice reasonably 

calculated, under all the circumstances, to apprise interested 

parties of the pendency of the action and afford them an 

opportunity to present their objections.'" Id. at 13 (quoting 

Mullane v. Central Hanover Trust Co., 339 U.S. 306, 314 (1950)). 

We reject State Bank's argument that the Trustee 

intentionally ambushed State Bank on the eve of the foreclosure 

sale. The Trustee was appointed on November 16, 1993, one month 

before the foreclosure sale. Prior to the December 16, 1993 

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foreclosure sale, the Trustee decided to move for relief from the 

order lifting the stay. On December 9, 1993, the Trustee filed 

the Rule 60(b) motion and the§ 105 motion. Pursuant to an ex 

parte motion filed by the Trustee, the bankruptcy court entered an 

order on December 9, 1993 shortening the time for hearing on the 

Trustee's motions, and scheduled the hearing for December 14, 

1993. In compliance with the bankruptcy court's order, on 

December 9, 1993 the Trustee hand delivered to State Bank's 

counsel the Trustee's motions, the bankruptcy court's order 

shortening the time for hearing on the Trustee's motions, and a 

notice of hearing. Thus, five days before the December 14, 1993 

hearing, State Bank received written notice of the hearing and the 

substance of the Trustee's motions. The bankruptcy court observed 

at the December 14, 1993 hearing: 

I recognize too that the bank hasn't had a whole 

lot of time to prepare for this case. And I also 

recognize, though, that the Trustee hasn't sat on his 

hands. The Trustee was only appointed on November 16, 

1993, not really knowing until that time he was going to 

be the Trustee . . . . So I think the Trustee moved 

expeditiously. 

So we have a couple of innocent parties it seems to 

me. I don't see that there's been any wrongdoing on 

either party. 

Aplt. App. at 361. We agree with the bankruptcy court. The 

record does not support State Bank's arguments in its brief that 

the Trustee prepared its pleadings, honed its arguments, and 

intentionally waited until the eleventh hour to file the Rule 

60(b) and§ 105 motions. We further note that despite State 

Bank's argument that it was ambushed without sufficient time to 

prepare, State Bank did not request a continuance from the 

bankruptcy court. 

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Because State Bank was apprised of the hearing and permitted 

adequate time to prepare, we conclude that State Bank received 

adequate notice of the December 14, 1993 hearing under the Due 

Process Clause of the U.S. Constitution. ~, Memphis Light, Gas 

& Water Div., 436 U.S. at 14. We therefore reject State Bank's 

argument that it did not receive adequate notice because the 

Trustee filed the Rule 60(b) motion and§ 105 motion on December 

9, 1993. 

2. 

State Bank argues the bankruptcy court deprived it of its 

right to procedural due process because the court entered an ex 

parte order shortening the time for the December 14, 1993 hearing. 

Specifically, State Bank contends that the bankruptcy court 

violated State Bank's right to procedural due process by granting 

the Trustee's ex parte motion to shorten the time for hearing 

without prior notice to State Bank. 

The bankruptcy court granted the Trustee's ex parte motion to 

shorten the time for hearing pursuant to Bankruptcy Rule 9006. 

Rules 9006(c) (1) and (d) authorize a court to reduce the time for 

a hearing, and a party to file an ex parte motion to shorten the 

time for a hearing. Rule 9006(c) (1) provides in relevant part: 

(1) In General. Except as provided in paragraph 

(2) of this subdivision, when an act is required or 

allowed to be done at or within a specified time by 

these rules or by a notice given thereunder or by order 

of court, the court for cause shown may in its 

discretion with or without motion or notice order the 

period reduced. 

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Rule 9006(c) (1) (emphasis added). "Bankruptcy Rule 9006(c) 

permits the bankruptcy court 'for cause shown' in its discretion, 

with or without motion or notice, to reduce the notice period, and 

ex parte motions for material reductions in the notice period are 

routinely granted by bankruptcy courts." Hester v. NCNB Nat'l 

Bank (In re Hester), 899 F.2d 361, 364 n.3 (5th Cir. 1990); see 

also 9 Collier on Bankruptcy ,, 9006.07 (Lawrence P. King ed., 15th 

ed. 1995) . 

Rule 9006(d) provides in pertinent part: 

(d) For Motions--Affidavits. A written motion other 

than one which may be heard ex parte, and notice of any 

hearing shall be served not later than five days before 

the time specified for such hearing, unless a different 

period is fixed by these rules or by order of the court. 

Such an order may for cause shown be made on ex parte 

application. 

Rule 9006(d) (emphasis added). Thus, Rule 9006(d) permits a party 

to file an ex parte motion to shorten the time for hearing "for 

cause shown." Id. "[B]ankruptcy courts should review ex parte 

motions to reduce the notice period carefully to be certain that 

there is, indeed, good cause for the handicap to the respondents 

and to the court's information-gathering capacity that is likely 

to result." In re Hester, 899 F.2d at 364 n.3. We review the 

court's decision to reduce the notice period under Rule 9006 for 

an abuse of discretion. See Trustees of the Centennial State 

Carpenters Pension Trust Fund v. Centric Corp. (In re Centric 

Corp.), 901 F.2d 1514, 1517 (lOth Cir.), cert. denied, 498 U.S. 

852 (1990). However, we review whether bankruptcy court 

proceedings violated a party's right to procedural due process de 

novo. Langenkamp, 897 F.2d at 1043. 

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We conclude the Trustee filed its ex parte motion and the 

bankruptcy court entered the order shortening the time for hearing 

in compliance with Rule 9006. Pursuant to the "for cause shown" 

requirement of Rule 9006(d), the Trustee's ex parte motion set 

forth why the Trustee sought an expedited hearing by ex parte 

application. Specifically, the Trustee argued that "significant 

equity would evaporate from the estate and no longer be available 

for payment to creditors" if the property was liquidated at the 

December 16, 1993 foreclosure sale. The bankruptcy court found 

that the Trustee had established "good cause", granted the 

Trustee's ex parte motion, and entered an order shortening the 

time for hearing under Rule 9006(c) (1). Under these 

circumstances, we do not believe the bankruptcy court abused its 

discretion in granting the Trustee's ex parte motion to shorten 

the time for hearing on the Rule 60(b) and§ 105 motions. 

Further, because the bankruptcy court entered the ex parte order 

in compliance with Rule 9006, we reject State Bank's allegation 

that the bankruptcy court deprived it of its right to procedural 

due process by entering the order without prior notice. 

III. 

In sum, we hold the district court did not err in affirming 

the bankruptcy court's order vacating its order lifting the 

automatic stay. We therefore AFFIRM the district court and REMAND 

to the district court with instructions to amend its October 14, 

1993 order.13 

13 See supra note 3. 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 34 
No. 94-4241, State Bank of Southern Utah v. Gledhill (In re 

Gledhill) 

KELLY, Circuit Judge, dissenting. 

The Court holds that ten months after being lifted for cause 

an automatic stay may be reimposed without an adversary 

proceeding, relying on Bankr. R. 9024 and Fed. R. Civ. P. 60(b). 

For the reasons set forth below, I respectfully dissent. 

11 U.S.C. § 105(a) permits a bankruptcy court to reimpose or 

issue a new stay that has otherwise lapsed or been terminated. 2 

Collier On Bankruptcy ,1,1 105.03-.04 (Lawrence P. King ed., 15th 

ed. 1995); see also In re Wedgewood Realty Group. Ltd., 878 F.2d 

693, 701 (3d Cir. 1989); In re Martin Ex:gloration Co., 731 F.2d 

1210, 1214 (5th Cir. 1984). The reimposition or issuance of a new 

stay under § 105 is considered injunctive relief and therefore 

requires the filing of an adversary proceeding including the 

giving of notice to affected parties. 2 Collier On Bankruptcy ,1,1 

105.03-.04; see also In re Wedgewood, 878 F.2d at 700; In re 

Martin Ex:gloration, 731 F.2d at 1214; In re Stacy, 167 B.R. 243, 

247-48 (N.D. Ala. 1994); Spagnol Enters. v. Atlantic Fin. Fed. 

Sav. Ass'n, 33 B.R. 129, 131 (W.D. Pa. 1983). 

Fed. R. Civ. P. 60(b) (6) "provides a procedure whereby, in 

appropriate cases, a party may be relieved of a final judgment." 

Liljeberg v. Health Serv. Acquisition Corp., 486 U.S. 847, 863 

(1988). Bankruptcy courts, as courts of equity, have the power to 

reconsider, modify or vacate their previous orders pursuant to 

Rule 60(b). In re Lenox, 902 F.2d 737, 739-40 (9th Cir. 1990). 

To successfully invoke Rule 60(b), a party must demonstrate that 

relief is warranted under one of six enumerated provisions. See 

Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 35 
Fed. R. Civ. P. 60(b) (1)-(6). Of primary importance to this case, 

Rule 60(b) (6) "'gives the court a grand reservoir of equitable 

power to do justice in a particular case,'" Lyons v. Jefferson 

Bank & Trust, 994 F.2d 716, 729 (lOth Cir. 1993) (quoting Pierce 

v. Cook & Co., 518 F.2d 720, 722 (lOth Cir. 1975), cert. denied, 

423 U.S. 1079 (1976)) (additional internal quotation marks 

omitted); however, relief should not be granted pursuant to Rule 

60(b) (6) unless the movant shows exceptional or extraordinary 

circumstances, Johnston v. Cigna Corp., 14 F.3d 486, 497 (lOth 

Cir. 1993), cert. denied, 115 S. Ct. 1792 (1995); In re Durkalec, 

21 B.R. 618, 620 (Bankr. E.D. Pa. 1982), and the relief sought is 

not premised upon one of the grounds in Rule 60(b) (1)- (5), Lyons, 

994 F.2d at 729. Relief under Rule 60(b) is not per se injunctive 

and, unlike the reimposition of the automatic stay pursuant to 11 

U.S.C. § 105, does not automatically or necessarily require an 

adversary proceeding pursuant to Bankruptcy Rule 7001(7). See, 

~, In re Lenox, 902 F.2d at 740 ("FRCP 60(b) provides that a 

court may relieve a party from a final order upon motion"). 

The Court characterizes State Bank as arguing that "the plain 

language of Rules 7001(7), 9024, and 60(b) required the Trustee to 

pursue Rule 60(b) relief by filing an adversary proceeding and not 

by motion." Ct. Op. at 12 (emphasis added). The Court's 

characterization is inaccurate. In its brief, State Bank asserts 

that the Trustee's requested relief constituted injunctive relief, 

not Rule 60(b) relief, and "should not have [been] made by motion 

but through the filing of an adversary proceeding in accordance 

with Fed. R. Bankr. P. 7001(7) ." Aplt. Br. at 34. Its 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 36 
characterization of the Trustee's requested relief as Rule 60(b) 

relief leads the Court to the apparent conclusion that such relief 

may be granted by motion without an adversary proceeding. Merely 

because the Trustee sought relief under Rule 60(b), Ct. Op. at 13 

n.5, does not obivate the need to address State Bank's argument 

that the procedure was wholly inadequate given the statutory 

scheme governing reimposition of the automatic stay. 

The bankruptcy court had lifted the automatic stay to enable 

State Bank to foreclose its lien against the debtors' property. 

Aplt. App. 0341, 0491-92. Ten months later, by granting the 

Trustee's motion to reimpose the automatic stay, the bankruptcy 

court prevented State Bank from foreclosing its lien against 

property held by the Trustee. State Bank vehemently argues that 

this relief, granted by the bankruptcy court pursuant to Rule 

60(b), rather than 11 U.S.C. § 105, constitutes injunctive relief 

requiring an adversary proceeding in accordance with Bankruptcy 

Rule 7001(7). Aplt. Br. at 33-35. The weight of authority 

supports State Bank because the Trustee plainly was seeking 

injunctive relief, specifically, to impose a stay, under the guise 

of a Rule 60(b) motion seeking vacation of the order granting 

relief from the automatic stay. See. e.g., In re Wedgewood, 878 

F.2d at 700-701 (reimposition of the automatic stay under § 105 

constitutes injunctive relief requiring adherence to adversarial 

procedures, such as providing notice); In re Veron, 157 B.R. 251, 

252-53 (Bankr. E.D. Va. 1993) (any request to reimpose the 

automatic stay constitutes injunctive relief that must be brought 

by way of an adversary proceeding pursuant to § 105 and Bankruptcy 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 37 
Rule 7001(7)); In re Parker, 154 B.R. 240, 243 (Bankr. S.D. Ohio 

1993) (debtor's motion to reimpose automatic stay pursuant to 

section 105 constituted request for injunctive relief requiring 

adversary proceeding pursuant to Bankruptcy Rule 7001(7)). Given 

the gravity of reimposing an automatic stay, and its potential to 

play havoc with the orderly liquidation of the bankruptcy estate 

and creditors' rights, an end run around 11 U.S.C. § 105(a} should 

not be permitted. 

According to the Court, the "exceptional circumstances" of 

this case, namely the conversion of the case from Chapter 11 to a 

Chapter 7, the increase in the property value, and the disparate 

appraisals of the property, justify relief under Rule 60(b) (6). 

As a matter of law, these factors alone do not constitute the 

"exceptional circumstances" necessary for successful invocation of 

Rule 60(b) (6). For example, the normal rule is that not even a 

change in the law constitutes an extraordinary circumstance which 

would allow relief under Rule 60(b) (6). Pierce, 518 F.2d at 723. 

Because the district court did not assess these circumstances 

against the very high threshold required for Rule 60(b) (6) relief, 

it abused its discretion. Lyons, 994 F.2d at 727 (district court 

necessarily abuses its discretion if it bases its conclusion on an 

erroneous view of the law) . The factors relied upon are the 

unexceptional, ordinary occurrences encountered in the normal 

course of bankruptcy litigation. The parties often disagree about 

valuation of the debtor's property, a failed reorganization often 

is converted to a straight liquidation without substantively 

impacting the procedure, see, e.g., In re M&L Business Mach. Co., 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 38 
Nos. 94-1550, 94-1554, F.3d (lOth Cir. 1996) (conversion of 

bankruptcy proceeding from Chapter 11 to Chapter 7 does not even 

toll the two-year statute of limitations for avoidance actions), 

and creditors' claims usually exceed the value of a debtor's 

property. These are not "exceptional circumstances." See. e.g., 

In re Durkalec, 21 B.R. at 620 (prior to sheriff's sale, debtor's 

finding of employment and submission of viable repayment plan that 

would make creditor whole constituted "exceptional circumstances" 

justifying relief from order granting creditor relief from stay) . 

Furthermore, the Court's conclusion that, ten months after 

termination an injunction may be reimposed under the guise of a 

Rule 60(b) (6) motion eclipses § 105(a), which requires an 

adversary proceeding. In re Wedgewood, 878 F.2d at 700-701; In re 

Twenver, 149 B.R. 950, 953 (D. Colo. 1993). The result will be 

the evasion of § 105(a). No party would seek injunctive relief by 

filing an adversary proceeding under § 105--the more difficult, 

expensive route--if allowed to achieve exactly the same relief by 

simply filing a motion under Rule 60(b) (6). 

Finally, the Court's evisceration of § 105, in the absence of 

truly exceptional circumstances which would justify invocation of 

Rule 60(b) (6), seems to contravene at least the spirit of the 

Supreme Court's recent decision in Vimar Seguros Y Reaseguros. 

S.A. v. M/V Sky Reefer, 115 S. Ct. 2322 (1995), which held that 

"'when two statutes are capable of coexistence ... it is the 

duty of the courts, absent a clearly expressed congressional 

intention to the contrary, to regard each as effective.'" 115 s. 

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Appellate Case: 94-4241 Document: 01019276563 Date Filed: 02/02/1996 Page: 39 
Ct. at 2326 (quoting Morton v. Mancari, 417 U.S. 535, 551 (1974)). 

The Court's opinion fails to do this. 

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