Opinion ID: 2520297
Heading Depth: 2
Heading Rank: 1

Heading: did the district court comply with the bankruptcy automatic stay statutes?

Text: We exercise free review over interpreting a statute's meaning and applying the facts to the law. Martel v. Bulotti, 138 Idaho 451, 453, 65 P.3d 192, 194 (2003). Durkin argues the district court erred in applying the automatic stay provisions of 11 U.S.C. § 362(a)(1). Durkin contends the district court wrongly allowed the trial to proceed with the inclusion of Dakota's claims and further erred when it asked the jury to determine Dakota's claims in the special verdict form and judgment. United States Bankruptcy Code Section 362 (11 U.S.C. § 362) provides, in pertinent part: (a) a petition filed under section 301 ... of this title, ... operates as a stay, applicable to all entities, of  (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; (emphasis added). The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy. In re Related Asbestos Cases, 23 B.R. 523, 527-28 (1982). The automatic stay protects only the bankrupt debtor and does not include actions against related but independent codefendants. Id. at 529-30. The automatic stay does not protect non-debtor parties or their property. Thus section 362(a) does not stay actions against ... non-debtor parties liable on the debts of the debtor. In re Chugach Forest Products, Inc. v. Northern Stevedoring & Handling Corp., 23 F.3d 241, 246 (9th Cir.1994). A petition in bankruptcy does not stay claims, including counterclaims, brought by the debtor. Mid Kansas Federal Savings and Loan Association of Wichita v. Orpheum Theater Company, Ltd., 151 B.R. 560, 563 (1993); accord Seiko Epson Corp. v. Nu-Kote Intern'l, Inc., 190 F.3d 1360, 1364 (Fed.Cir.1999). In the instant case, the district court stayed all proceedings against the bankrupt Dakota. The special verdict form and more importantly the judgment entered do not include any findings of liability against Dakota. The jury found Durkin personally liable for fraud, conversion, and interference with the contracts, not the bankrupt Dakota. Durkin and Dakota opted to proceed against the Respondents for the million dollar bonus counterclaim. The automatic stay provision did not preclude the bankrupt Dakota from pursuing its counterclaim. Therefore, the district court did not err in allowing the jury to consider this counterclaim.