Court Opinion

ID: 1041823
Source: CourtListenerOpinion
Date Created: 2013-09-24 10:25:56.342924+00
Date Added: 2024-06-11T10:52:17.450917
License: Public Domain

filed Chapter 11 bankruptcy. The district court stayed the action, finding
                that the 11 U.S.C. § 362 automatic bankruptcy stay applied and that the
                amount of the underlying obligation was uncertain because of the
                bankruptcy litigation.
                            As to the automatic bankruptcy stay, the stay is generally
                applicable to the debtor only, not a guarantor.     See In re PTI Holding
                Corp., 346 B.R. 820, 833-34 (Bankr. D. Nev. 2006); Edwards v. Ghandour,
                123 Nev. 105, 113-14 & n.10, 159 P.3d 1086, 1091-92 & n.10 (2007)
                (explaining that the automatic bankruptcy stay does not apply to co-
                debtors and guarantors), abrogated on other grounds by Five Star Capital
                Corp. v. Ruby, 124 Nev. 1048, 1053-54, 194 P.3d 709, 712-13 (2008); Mfrs.
                & Traders Trust Co. v. Eighth Judicial Dist. Court, 94 Nev. 551, 556, 583
                P.2d 444, 447 (1978) (holding that a guaranty is a contract separate from
                the underlying debt obligation), overruled on unrelated grounds by First
                Interstate Bank of Nev. v. Shields,   102 Nev. 616, 730 P.2d 429 (1986). As
                to the uncertainty of the underlying obligation in the bankruptcy case, the
                discharge or partial payment of the debt in bankruptcy by itself will not
                diminish the amounts owed by the guarantor, the district court has not
                made any findings or conclusions of law that the terms of the guaranty
                contract will be satisfied by payment or discharge through bankruptcy,
                and should the guarantor be required to satisfy the debtor's debt under
                the guaranty contract, the guarantor will be subrogated to the petitioner's
                rights in the bankruptcy.       See In re Harvey Cole Co., 2 B.R. 517, 520
                (Bankr. W.D. Wash. 1980) (noting that "the creditor thus has a right,
                unaffected by bankruptcy, to turn to the guarantor for satisfaction of a
                debt," and the guarantor then becomes subrogated to the rights of the
                creditor against the debtor).

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                             Accordingly, having considered the parties arguments and the
                appendices, we conclude that the district court improperly granted the
                stay, and we
                             ORDER the petition GRANTED AND DIRECT THE CLERK
                OF THIS COURT TO ISSUE A WRIT OF MANDAMUS instructing the
                district court to vacate its order staying the litigation.

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                                                               Saitta

                cc:   Hon. Brent T. Adams, District Judge
                      Dubowsky Law Office, Chtd.
                      Gunderson Law Firm
                      Washoe District Court Clerk

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