Court Opinion

ID: 6372374
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:47:56.464284+00
Date Added: 2024-06-11T15:50:00.230786
License: Public Domain

Dissenting Opinion by
Senior Judge Kalish:
I respectfully dissent.
I agree with the contention of United Refining Co. that neither the trial court nor this court on appeal has jurisdiction concerning the sale of the subject property.
A bankruptcy case is an in rem proceeding, and upon the filing of a petition in bankruptcy the estate of the debtor is deemed to be in custodia legis. Pursuant to 28 U.S.C. §§1334(a) and 1334(d), the district court has original and exclusive jurisdiction of all cases under Title 11 (Bankruptcy) and the property of the estate of the debtor. The estate of the debtor is comprised of all legal or equitable interests of the debtor in property, wherever located as of the commencement of the case. 11 U.S.C. §541(a)(l). The trustee in bankruptcy takes possession of the bankrupt estate. A petition in bankruptcy operates as a stay. 11 U.S.C. §362(a).
In United Northwest Federal Credit Union v. Arens, 664 P.2d 811, 813 (1983), the court discussed the effect of section 362(a):
The automatic stay of section 362(a) is in force from the moment the bankruptcy petition is filed. The feet a creditor has not received notice of the filing is irrelevant. Further, formal service is not required to effectuate the stay. . . . The import of section 362(a)(1) is that all le*271gal actions pending or to be taken against the debtor are halted. As such, no new lawsuit can be commenced. . . . The filing of appellees foreclosure action on September 9, 1980, was thus in violation of the automatic stay. It is settled that acts done in violation of the stay are Void and without effect’ (citations omitted).
Thus, the subject premises continues to be in possession of the trustee, and subject to the exclusive jurisdiction of the district court supervising United’s Chapter 11 case. The trial court was without jurisdiction to enter its order.
It is contended that 11 U.S.C. §549(c) limits the debtor’s protection and gives the state court jurisdiction to void the sale. Section 549(c) provides that in post-petition transactions, the trustee may not avoid a transfer of property as to a purchaser at a judicial sale for property located other than in the county where the petition was filed, where the transfer was to a good faith purchaser without knowledge of the commencement of the case, and for present fair equivalent value, unless a copy of notice of the petition was filed before such transfer was perfected. The trial court held that it was the recording of the deed in Pennsylvania that operated as a stay of the proceedings, and that no further action be taken to confirm the sale.
Section 549 does not vitiate the exclusive jurisdiction of the district court. It is the trustee who solely has the avoiding power, and for the benefit of the estate which is in custodia legis, i.e., the bankruptcy court as part of the debtor’s estate. A creditor (Bureau) who is not a trustee is not entitled to relief under this section. In re P&Z Island Farms, Inc., 478 F. Supp. 529 (S.D.N.Y. 1979); In re Teal, 35 Bankr. 360 (1984); In re Lang, 5 Bankr. 371 (1980). Acts done in violation of the stay are void and without effect.