Opinion ID: 2338745
Heading Depth: 1
Heading Rank: 4

Heading: Automatic bankruptcy stay

Text: Corto's threshold issue is whether the trial held on January 13, 1992, should have been stayed in light of the pending involuntary bankruptcy petition filed against her by her mother and son. After reviewing the involuntary petition filed by Corto's mother and son on the day of trial and the bankruptcy court's October 4, 1991, order dismissing Corto's Chapter 13 petition which prohibited Corto from becoming a debtor in bankruptcy for a period of 180 days, the trial court concluded that a stay resulting from the involuntary petition was inapplicable. Corto argues that the trial court did not have authority to proceed in the face of the automatic stay created by the involuntary bankruptcy petition or to determine the petition's validity. The filing of a bankruptcy petition acts as an automatic stay of all judicial proceedings pending against the debtor. 11 U.S.C. § 362(a) (1994). Although the trial court is not free to ignore the automatic stay provisions of the Bankruptcy Code, or to evaluate the validity of a bankruptcy petition that would trigger a stay, [8] we conclude that Corto is estopped from making these arguments. As the bankruptcy court found, Corto's bankruptcy petitions were filed for the sole purpose of preventing trial from going forward in the present case and the involuntary petition filed by her mother and son was collusive and in bad faith. Corto correctly notes that the trial court did not have the benefit of these findings when it decided to proceed to trial; but we do in considering this appeal. Therefore, even though Corto also correctly asserts that the trial court violated the automatic stay, Corto's bad faith abuse of the bankruptcy process estops her from asserting on appeal the automatic stay provisions of the Bankruptcy Code. See Williams v. Gerstenfeld, 514 A.2d 1172, 1178-79 (D.C.1986) (recognizing that bankruptcy courts have held that the filing of successive petitions with the clear intent of forestalling [a proceeding] constitutes bad faith.) (citations omitted). Furthermore, the bankruptcy court subsequently lifted, as to National, the automatic stay created by the involuntary bankruptcy petition against Corto nunc pro tunc to January 13, 1992, and declared that any actions taken by the trial court since October 4, 1991, were unaffected by any bankruptcy stay. See Wisconsin Ave. Assocs. v. 2720 Wisconsin Ave., Co-op. Ass'n, 441 A.2d 956, 962 (D.C.1982) (noting facts similar to this case, court entered order and final judgment after litigant filed bankruptcy petition. Bankruptcy Court subsequently lifted stay because petition had been filed for purpose of delaying court proceeding), cert. denied, 459 U.S. 827, 103 S.Ct. 62, 74 L.Ed.2d 64 (1982). The bankruptcy court's order was affirmed by the United States District Court for the Western District of New York and Corto's appeal was dismissed by the United States Court of Appeals for the Second Circuit.