Court Opinion

ID: 9703276
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:48:24.71315+00
Date Added: 2024-06-11T18:21:47.029473
License: Public Domain

MEYERS, Bankruptcy Judge,
dissenting:
I respectfully DISSENT.
The Bankruptcy Code (“Code”) has as one of its key provisions an injunction known as the automatic stay. The automatic stay provision of Section 362(a) of the Code is one of the fundamental protections provided to a debtor. Matter of M. Frenville Co., Inc., 744 F.2d 332, 334 (3d Cir.1984). With the filing of a bankruptcy petition the automatic stay provides the debtor with a broad temporary injunction against most actions by creditors. In re Bialac, 712 F.2d 426, 431 (9th Cir.1983); In re Aldrich, 34 B.R. 776, 779 (9th Cir. BAP 1983). Under Section 362(a)(6) the automatic stay restrains actions to recover post-petition funds of Chapter 7 debtors to satisfy prepetition debts. Matter of Hellums, 772 F.2d 379, 381 (7th Cir.1985).
The automatic stay is not all encompassing, for Section 362(b) contains a list of exemptions from the stay. Matter of M. Frenville Co., Inc., supra, 744 F.2d at 335. Further, the automatic stay is dissolved upon the earliest of the closing of the case, the dismissal of the case or at the time a discharge is granted or denied. 11 U.S.C. § 362(c); Browning v. Navarro, 743 F.2d 1069, 1083 (5th Cir.1984). Then, if a discharge is granted, the automatic stay is replaced by the permanent injunction of Section 524, which does not enjoin actions of creditors who have successfully invoked Section 523 by receiving a judgment declaring their debts to be nondischargeable. See In re Aldrich, supra, 34 B.R. at 779.
These injunctive provisions form a comprehensive scheme to protect the debtor and estate assets from precipitous creditor actions which might frustrate the purposes of the bankruptcy proceedings. If a creditor perceives that continued imposition of the automatic stay as to its actions would work a hardship and result in an inequity, it may seek relief from the stay in the bankruptcy court. 11 U.SC. § 362(d); In re Arnold, 806 F.2d 937, 939 (9th Cir.1986). Motions for relief are handled expeditiously with the burden of proof generally being on the party opposing relief. 11 U.S.C. § 362(e) and (g). Such relief can even be obtained on an ex parte basis in appropriate circumstances under Section 362(f). See In re American Mariner Industries, Inc., 734 F.2d 426, 433 (9th Cir.1984). Thus, these injunctive provisions serve to forward the goals of the Code and yet provide for the necessary procedures to ensure that no creditor is unduly burdened by the unnecessary continuation of the automatic stay.
*236The problem encountered in this case is that the automatic stay has unnecessarily remained in place far too long. This is a direct result of an apparent failure of the Bankruptcy Court for the Central District of California to perform the duty mandated by Bankruptcy Rule 4004(c). That rule requires that the discharge be granted “forthwith” upon expiration of the time fixed for filing a complaint objecting to discharge unless a complaint objecting thereto has been filed. In re Lane, 37 B.R. 410, 412 (E.Va.1984) (“First opportunity offered”).
Here the deadline for filing complaints objecting to granting the debtor a discharge expired on September 1, 1984, without any such complaints being filed. Shortly thereafter the Appellant, City National Bank (“Bank”), received a default judgment against the Debtor declaring that $30,360.33 owed to the Bank be excepted from the discharge pursuant to Section 523. This judgment was entered on October 11, 1984, with the Bank seeking to satisfy it by executing on the Debtor’s postpetition assets on two occasions in 1986. These actions have been called into question by the fact that as late as the date of oral argument on his appeal, the automatic stay still remained in place as the discharge had still not been granted. At no time has the Bank filed a proper motion to seek relief from the automatic stay.
The scenario we face in evaluating this appeal is that the Debtors have been able to take unfair advantage of the failure of the bankruptcy court to perform the ministerial function of granting the discharge. There appears to be no reason to further delay the discharge and thereby implement the permanent injunction of Section 524, which would allow the Bank to proceed. This situation makes it very tempting to carve out another exception to the coverage of the automatic stay as expressed in Section 362(a). Towards this end the majority finds, after recognizing that on its face Section 362(a) would appear to bar any postpetition actions by creditors, that creditors holding bankruptcy court judgments declaring debts to be nondischargeable are not so restrained.1
I recognize that technically even the filing of a complaint seeking relief under Sections 523 or 727 of the Code also appears to run afoul of the precise restrictions of Section 362(a). Yet, the requirement calling for the setting of bar dates pursuant to Bankruptcy Rules 4004(a) and 4007(c) does inherently support the conclusion that such complaints may be filed in the bankruptcy court even without having received relief from the automatic stay. See In re American Spinning Mills, Inc., 43 B.R. 365, 367 (E.Pa.1984). However, to broaden this exception to also include the right to execute on the Debtor’s postpetition assets does not appear to be dictated by the Code or the Rules.2 The Code has a well crafted program restraining creditor actions, with certain expressed exceptions, which provides for dissolving the restraint on collection efforts on Section 523 judgments upon the grant or denial of the discharge or upon specific order of the bankruptcy court.
The carte blanche that the majority would grant to holders of Section 523 judgments would apprarently have universal application. This is of concern since we cannot envision the various situations to which this might be applied to the detriment of the goals of the Code. I fear that the majority decision will encourage other parties to resort to self-help on the false hope that the equities of their situation will be thought enough to likewise carve out yet another exemption to the dictates of Section 362(a). This will do little to protect the integrity of the stay provisions of the Code. The complications that this decision *237might create seems a poor substitute to the obvious course of requiring creditors who desire to proceed to such satisfaction of their judgment, such as the Bank here, to petition for relief from stay. I would affirm the trial court’s grant of an injunction and allow the trial court proceedings on this complaint to run the course.

. The majority grants this redress to the Bank even where it has made no effort to take advantage of the relief provisions of Section 362(d).

. I note that the majority finds reference to certain legislative history in support of Section 362(b)(2), which specifically allows actions against the debtor to collect family support obligations, to be persuasive reasoning in support of the exclusion they find in this case. Such statements made in support of provisions actually enacted appear to be of little value in determining to create yet another exception — one never specified by Congress.