Opinion ID: 2517229
Heading Depth: 1
Heading Rank: 4

Heading: Did the automatic stay in Newpoint, LP's bankruptcy deprive the district court of jurisdiction to enter summary judgment in this case?

Text: [¶ 14] With little fanfare, we will dispose of KM's contention that the federal bankruptcy code's automatic stay, found at 11 U.S.C. § 362(a) (2006 & Supp. IV 2010), effective in Newpoint, LP's Oklahoma bankruptcy, should have stayed the entire case facing the district court in Wyoming. Whether we review the district court's decision de novo, as argued by KM, or for an abuse of discretion, as argued by Elkhorn, we come to the same conclusion. [5] The automatic stay does not stay proceedings against solvent co-defendants, such as KM, of an insolvent debtor, such as Newpoint, LP. See, e.g., Fortier v. Dona Anna Plaza Partners, 747 F.2d 1324, 1329-30 (10th Cir.1984); Diamond Hill Inv. Co. v. Shelden, 767 P.2d 1005, 1010 (Wyo.1989); Hamel v. Am. Continental Corp., 713 P.2d 1152, 1154 (Wyo.1986); 2 Howard J. Steinberg, Bankruptcy Litigation § 12:13 (2d ed. 2008); 9B Am.Jur.2d Bankruptcy § 1747 (2006). [¶ 15] It must be remembered that, in the instant case, the district court did stay the proceedings in regard to any claims, cross-claims, or counterclaims that could have resulted in a judgment against Newpoint, allowing only the summary judgment on Elkhorn's in rem mechanic's lien foreclosure to proceed. See True v. Hi-Plains Elevator Mach., Inc., 577 P.2d 991, 1004 (Wyo.1978) and Mawson-Peterson Lumber Co. v. Sprinkle, 59 Wyo. 334, 140 P.2d 588, 591-92 (Wyo.1943). Because the property subject to the lien foreclosure was the property of KM, rather than the property of Newpoint, the entity in bankruptcy, the in rem proceeding to foreclose the lien was not subject to the automatic stay. Fortier, 747 F.2d at 1330. It should be self-evident from the clear language of 11 U.S.C. § 362 (1983) that the automatic stay granted petitioners in bankruptcy is directed at only claims against the debtor, the property of the debtor, and the estate and not acts against others. This is confirmed by courts working regularly in bankruptcy matters and knowledgeable in the field. The automatic stay provisions apply to proceedings or acts against the debtor, the debtor's property, and the property of the estate, but do not apply to acts against property which is neither the debtor's nor the estate's. The automatic stay does not operate to prohibit action against a co-debtor nor affect the liability of a co-debtor not in bankruptcy. Something more than filing a bankruptcy petition must be shown in order that proceedings be stayed against nonbankrupt parties. Where a pending action is not interfering with a bankruptcy, an automatic stay of such action would in no way foster the Bankruptcy Code's policy of preserving the debtor's insolvent estate for the benefit of creditors. Hamel, 713 P.2d at 1154 (internal citations omitted). The bankruptcy stay in Oklahoma did not deprive the district court of jurisdiction to enter summary judgment in the instant case.