Court Opinion

ID: 2964618
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:28:22.828091+00
Date Added: 2024-06-11T11:42:58.610548
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USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                              _________________________

          No. 96-2110

                             IN RE:  NAPOLEON G. SOARES,

                                       Debtor.

                              _________________________

                                 NAPOLEON G. SOARES,

                                      Appellant,

                                          v.

                                BROCKTON CREDIT UNION,

                                      Appellee.

                              _________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Joseph L. Tauro, U.S. District Judge]
                                            ___________________

                              _________________________

                                        Before

                                Selya, Circuit Judge,
                                       _____________

                            Aldrich, Senior Circuit Judge,
                                     ____________________

                              and Boudin, Circuit Judge.
                                          _____________

                              _________________________

               Michael P. Cashman for appellant.
               __________________
               Gary W. Cruickshank for appellee.
               ___________________

                              _________________________

                                    March 10, 1997

                              _________________________

                    SELYA,  Circuit  Judge.    "[T]he dead  tree  gives  no
                    SELYA,  Circuit  Judge.
                            ______________

          shelter."   T.S. Eliot, The Waste Land, I, The Burial of the Dead
                                  ______________     ______________________

          (1922).  Like a shade tree, the automatic  stay which attends the

          initiation of bankruptcy proceedings,  11 U.S.C.   362(a) (1994),

          must be nurtured if it  is to retain its vitality.   This appeal,

          which pits a Chapter 13 debtor  bent on saving his home against a

          creditor bent on  enforcing its rights  under a mortgage,  raises

          issues  which touch upon  the degree of  judicial protection that

          the  automatic  stay  invites.   These  issues  are  whether  the

          automatic  stay  precludes   a  state   court  from   undertaking

          ministerial acts after a bankruptcy filing; if not, what acts are

          exempt under  that rubric; whether  a bankruptcy court  may grant

          retroactive relief from the automatic stay; and if so, what legal

          standard it should apply in prescribing such an anodyne.

          I.  LAYING THE FOUNDATION
          I.  LAYING THE FOUNDATION

                    We   begin  by  retracing  the  labyrinthine  corridors

          through  which this litigation has  passed.  In  1990 the debtor,

          Napoleon G. Soares, purchased  a home in Brockton, Massachusetts.

          He executed  a $70,000  promissory  note to  the Brockton  Credit

          Union (BCU)  and secured the note by a first mortgage on the real

          estate.   After  sustaining  injuries in  a motorcycle  accident,

          Soares  lagged in  his monthly  payments.   BCU grew  restive and

          commenced foreclosure  proceedings in  the state  superior court.

          Soares did  not file an  answer.  On  March 22, 1995,  BCU sent a

          letter to  the clerk of court  seeking an order of  default and a

          judgment  authorizing foreclosure.  Two days later Soares filed a

                                          2

          bankruptcy  petition, thus  triggering  the automatic  stay.   He

          immediately gave  notice to  BCU, but  neither party  alerted the

          state court.  On April 10, with the stay still firmly in place, a

          judge of that court issued the requested default order.  One week

          later, she authorized the entry of a foreclosure judgment.

                    Soares missed some post-petition mortgage payments.  On

          June 14, 1995, BCU, without apprising the bankruptcy court of the

          orders  previously obtained  in  the state  proceedings, filed  a

          motion  seeking relief  from the  automatic stay.   The  debtor's

          then-counsel,   Gerard  Williamson,  neglected  to  oppose  BCU's

          motion.   The bankruptcy  court granted  the unopposed  motion on

          June 29  (the same day, coincidentally,  that Soares, unbeknownst

          to  the  judge, paid  the  post-petition arrearage).    The court

          subsequently refused  to entertain  a belated objection  filed by

          Williamson.

                    When Soares missed his  November payment, BCU activated

          the  state court judgment.  At the ensuing foreclosure sale, held

          on November 29, BCU itself bid in the mortgaged premises and paid

          approximately  $14,200 in  overdue municipal  taxes to  clear the

          title.  Soares thereafter sought relief in the state court on the

          ground  that   the  foreclosure  judgment  had   been  issued  in

          contravention of  the  automatic  stay.   The  court  denied  the

          motion,   saying  that   its  post-petition   actions  had   been

          "ministerial" and that any error was harmless.1
                              
          ____________________

               1Although Soares  did not appeal  from this ruling,  BCU has
          never  urged it  as  a  basis  for  res  judicata  or  collateral
          estoppel.  Hence, we deem any such asseveration waived.

                                          3

                    Soares'  unsuccessful  foray  apparently  rang  warning

          bells  for  BCU, which  asked  the  bankruptcy court  to  clarify

          whether  the June 29 order (lifting  the automatic stay) ratified

          the  earlier state  court judgment.   BCU  served  this so-called

          clarification  motion on  the  attorney, Williamson,  but not  on

          Soares.2   In a margin  order entered on February  9, 1996, Judge

          Kenner addressed the question of retroactivity for the first time

          and vacated  the automatic  stay retroactive to  March 24,  1995,

          "such that  the [state]  judgment and movant's  foreclosure shall

          not be deemed to have violated the automatic stay."

                    Less  than  three  weeks  later  Soares, through  newly

          retained counsel, filed a motion to reconsider both  the February

          9 order and the original grant of relief from the automatic stay.

          Judge Kenner denied the reconsideration motion on the merits3 and

          also denied a companion motion to void the foreclosure sale.  The

          judge advanced three reasons for having lifted the automatic stay

                              
          ____________________

               2The title  "clarification motion"  is a misnomer.   Neither
          the June 29 order nor  the motion leading up to it  mentioned the
          state court judgment, and the order clearly had not been meant to
          ratify the judgment.

               3The  judge was  wise to  reach the  merits.   The so-called
          clarification motion had been served in derogation of  a standing
          order promulgated  by the  bankruptcy judges in  the District  of
          Massachusetts, which provides in pertinent part:

                    (a) All motions and  requests for orders must
                    be  served  on the  Chapter  13 trustee,  the
                    debtor,  the  debtor's attorney,  persons who
                    have requested  notice, and all creditors . .
                    . .

          Joint  Procedural Order    13.5  (Sept. 1,  1994).   Despite this
          order, BCU had not served the motion on the debtor.

                                          4

          retroactively  on February  9.    First,  because BCU  "had  done

          everything  right,"   it  would  be  inequitable   to  upset  its

          expectations.   Second,  because  the foreclosure  had wiped  out

          junior lienholders,  it would  be too complicated  to "unscramble

          the  egg."  Third, because Soares could not immediately repay the

          funds  that BCU had expended to  clear title to the property, the

          economic realities favored ratification of the foreclosure.

                    Soares appealed.  The district court temporarily stayed

          further  proceedings  (blocking both  a  planned  eviction and  a

          possible  resale  of the  property).    Eventually, however,  the

          district  court    although finding  that BCU  had neglected  its

          responsibility  to   apprise  the  state   tribunal  of   Soares'

          bankruptcy  (an error  which it  termed "harmless")    determined

          that  the  retroactive  lifting  of the  automatic  stay  did not

          constitute an abuse of discretion.

                    Soares again appealed.  We enlarged the earlier stay on

          condition  that Soares make monthly  payments to BCU  for use and

          occupancy of  the premises (to  be credited against  the mortgage

          indebtedness, should Soares prevail on appeal).

          II.  DISCUSSION
          II.  DISCUSSION

                    To the extent that the threshold inquiries in this case

          involve   questions  of  statutory  interpretation,  we  exercise

          plenary review.4   See In re  Jarvis, 53 F.3d 416,  419 (1st Cir.
                             ___ _____________
                              
          ____________________

               4A different  standard of  review applies to  the bankruptcy
          court's  discretionary  decision  to  lift  the   automatic  stay
          retroactively.   See Part II(B)(4), infra.  We review that ruling
                           ___                _____
          for abuse of discretion.  See Tringali v. Hathaway Mach. Co., 796
                                    ___ ________    __________________
          F.2d 553, 561 (1st Cir. 1986).

                                          5

          1995).   From this vantage  point we first  address the purported

          exemption  for "ministerial  acts," as  it is  only necessary  to

          reach the retroactivity question if a violation of  the automatic

          stay in fact occurred.

                     A.  The Nature of the State Court's Actions.
                     A.  The Nature of the State Court's Actions.
                         _______________________________________

                    The  parties clash head-on in respect to classification

          of the state court's actions.   The debtor claims that  the state

          court  order and judgment  transgressed the automatic  stay.  The

          creditor  claims  that  these  entries,  though  occurring  post-

          petition, were purely ministerial and, thus, not offensive to the

          stay.  The debtor has the better argument.

                    Section 362(a)(1) of the Bankruptcy Code provides  that

          the filing  of a  bankruptcy petition  stays the commencement  or

          continuation  of all  nonbankruptcy judicial  proceedings against

          the debtor.5  Here, the state court default order eventuated more

          than  two  weeks  after  Soares  filed  for  bankruptcy  and  the
                            _____
                              
          ____________________

               5Leaving to one side exceptions inapplicable to this appeal,
          the statute provides that a filed bankruptcy petition

                    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; . . . .

          11 U.S.C.   362(a)(1).

                                          6

          foreclosure judgment one week later.  The issue, then, is whether

          these entries contravened the mandate  of section 362(a)(1).  BCU

          asserts that they did not because the stay was not in effect when

          the creditor requested  the state  court to act  and because  the

          state court's actions, when taken, constituted ministerial acts.

                    The  creditor's first  assertion  is mere  buzznacking.

          The focus  here is whether or not the state court's actions, when

          effected, transgressed the automatic stay.  The date on which the

          creditor  asked  the state  court to  act,  while material  to an

          assessment of  the creditor's good faith (which  is not seriously

          questioned  here),  does  not  bear  on  whether  the  activities

          themselves constituted  the forbidden continuation  of a judicial

          proceeding.

                    BCU's   second   assertion    is   more    substantial.

          Ministerial  acts,  even  if   undertaken  in  a  state  judicial

          proceeding subsequent to a bankruptcy filing,  do not fall within

          the  proscription of the  automatic stay.   See Rexnord Holdings,
                                                      ___ _________________

          Inc. v. Bidermann, 21 F.3d  522, 527 (2d Cir. 1994);  Savers Fed.
          ____    _________                                     ___________

          Sav.  & Loan Ass'n v.  McCarthy Constr. Co.  (In re Knightsbridge
          __________________     ____________________   ___________________

          Dev. Co.),  884 F.2d 145,  148 (4th  Cir. 1989).   But the  state
          ________

          court's actions in this case cannot properly be  characterized as

          ministerial.

                    A ministerial  act is one that  is essentially clerical

          in nature.  See Black's Law Dictionary 996 (6th ed. 1990).  Thus,
                      ___ ______________________

          when an  official's  duty is  delineated  by,  say, a  law  or  a

          judicial  decree with  such crystalline  clarity that  nothing is

                                          7

          left to the  exercise of the  official's discretion or  judgment,

          the  resultant act  is ministerial.   See  United States  ex rel.
                                                ___  ______________________

          McLennan v. Wilbur, 283  U.S. 414, 420 (1931) (indicating  that a
          ________    ______

          duty is ministerial  if "the obligation  to act [is]  peremptory,

          and plainly defined");  Neal v.  Regan, 587 F.  Supp. 1558,  1562
                                  ____     _____

          (N.D. Ind. 1984) (describing a ministerial act as "one which `the

          law prescribes and defines . . . with such precision  as to leave

          nothing to  the exercise  of discretion or  judgment'") (citation

          omitted).  Such acts can usefully be visualized as the antithesis

          of judicial acts,  inasmuch as the essence  of a judicial  act is

          the  exercise  of  discretion  or  judgment.    See  Black's  Law
                                                          ___  ____________

          Dictionary, supra, at 846.
          __________  _____

                    Virtually by definition, a judicial proceeding does not

          conclude until the judicial function is completed, that is, until

          the  judicial decision is made.  See, e.g., Bidermann, 21 F.3d at
                                           ___  ____  _________

          528  (holding  that the  judicial function  is completed  "at the

          moment  the judge  direct[s]  entry of  judgment").   Frequently,

          routine scrivening, such  as recordation or entry  on the docket,

          follows on  the heels  of a  judicial decision.   Such  actions  

          taken  in obedience  to  the judge's  peremptory instructions  or

          otherwise   precisely   defined   and  nondiscretionary       are

          ministerial  and, consequently,  do  not  themselves violate  the

          automatic stay even if undertaken  after an affected party  files

          for bankruptcy.  See,  e.g., Knightsbridge Dev., 884 F.2d  at 148
                           ___   ____  __________________

          (suggesting that  merely  recording a  previously  decided  award

          would be a  "clerical act"  and therefore would  not infract  the

                                          8

          automatic stay); In re Capgro Leasing Assocs., 169 B.R. 305, 315-
                           ____________________________

          16 (Bankr. E.D.N.Y. 1994) (stating that "entry of a judgment will

          constitute a  `ministerial act'  where the judicial  function has

          been  completed  and the  clerk has  merely  to perform  the rote

          function  of entering the judgment upon the court's docket").  By

          the  same token,  however,  acts  undertaken  in  the  course  of

          carrying out the core judicial function  are not ministerial and,

          if essayed after bankruptcy filing, will be deemed to violate the

          automatic stay.

                    Bidermann   captures  this  distinction.    There,  the
                    _________

          district judge ruled  ora sponte and endorsed  the motion papers.
                                ___ ______

          The  defendant then  sought  refuge in  bankruptcy.   The  Second

          Circuit held  the clerk's subsequent, post-petition  entry of the

          judgment  on  the  docket  to  be  ministerial  (and,  therefore,

          unaffected by the automatic stay).   21 F.3d at 528.  Other cases

          are  to the same effect.  See  Heikkila v. Carver (In re Carver),
                                    ___  ________    ______  ____________

          828  F.2d 463,  464  (8th Cir.  1987)  (holding that  a  "routine

          certification"  by  the  clerk,  entered  post-petition, did  not

          transgress the automatic stay); Capgro Leasing, 169 B.R. at  315-
                                          ______________

          16 (holding the  clerk's entry of  judgment on the  docket to  be

          ministerial  when, prior to the bankruptcy  filing, the court had

          ordered  summary judgment).  A  parallel line of cases reinforces

          the notion that the compendium of ministerial acts excludes those

          involving  deliberation,  discretion,  or  judicial  involvement.

          See, e.g., Ellis  v. Consolidated  Diesel Elec.  Corp., 894  F.2d
          ___  ____  _____     _________________________________

          371, 372-73  (10th Cir.  1990) (invalidating a  judicial decision

                                          9

          that  granted  summary  judgment  two weeks  after  a  bankruptcy

          filing);  Knightsbridge  Dev.,  884   F.2d  at  148  (voiding  an
                    ___________________

          arbitration award  because the bulk of  the panel's deliberations

          occurred  after the stay arose);  Ellison v. Northwest Eng'g Co.,
                                            _______    ___________________

          707  F.2d 1310,  1311 (11th  Cir. 1983)  (holding that  while the

          automatic stay was in effect a court could not  render a decision

          in a case which had been briefed and argued pre-petition).

                    This line  of demarcation  makes perfectly  good sense.

          The statutory proviso which gives rise to the automatic stay says

          what it means and means what it says.  See ICC v. Holmes Transp.,
                                                 ___ ___    _______________

          Inc., 931 F.2d 984, 987 (1st Cir. 1991).  Confining the exemption
          ____

          for  ministerial  acts to  those  actions  which are  essentially

          clerical, as  opposed to judicial, honors  this principle because

          such  an  interpretation  comports  precisely with  the  text  of

          section  362(a)(1).   In  the bargain,  this interpretation  also

          facilitates the statute's due administration.

                    Silhouetted against this legal landscape, it is readily

          apparent that the state court's actions in ordering a default and

          directing the entry of a judgment possess a distinctly  judicial,

          rather  than a  ministerial, character.   The  record is  totally

          barren  of any  evidence that  the state  court judge  decided to

          grant BCU's request prior  to the date of the  bankruptcy filing,

          and all visible signs point in the opposite direction.  The judge

          did  not enter the default order until  more than two weeks after

          Soares  sought the protection of the bankruptcy court and she did

          not  direct the entry of a judgment authorizing foreclosure until

                                          10

          another week had  elapsed.  Moreover,  the judge indicated  after

          the fact  that she waited  to confirm Soares'  nonmilitary status

          before  directing   the  entry  of  judgment.     This  indicates

          deliberativeness   and  a  concomitant  willingness  to  exercise

          discretion.

                    Nor does  the fact  that the judge  later characterized

          her entry of the foreclosure judgment  as "ministerial" require a

          different result.   An appellate  court is  not bound by  a trial

          judge's unsupported  description, see,  e.g., Estate of  Soler v.
                                            ___   ____  ________________

          Rodriguez, 63  F.3d 45,  47 n.1  (1st Cir.  1995);  In re  G.S.F.
          _________                                           _____________

          Corp., 938 F.2d 1467,  1473-74 (1st Cir. 1991), and we  are aware
          _____

          of no reason  why that  salutary principle would  not apply  with

          equal vigor to our assessment of a state court's actions when the

          underlying question relates to the effect of  those actions under
                                                                      _____

          federal law.  Hence, we decline to adopt the label that the state
          _______ ___

          court judge chose in hindsight to affix to her activities.

                    We summarize succinctly.   Because  the decision  which

          animated the entry of  the order and judgment occurred  after the

          stay  was in  force, those actions  continued the  state judicial

          proceeding    within   the   meaning    of   section   362(a)(1).

          Consequently,  the actions  violated the  automatic stay.   Given

          this  infraction,  we now  must  assess  the  availability  of  a

          retroactive cure.

                       B.  The Operation of the Automatic Stay.
                       B.  The Operation of the Automatic Stay.
                           ___________________________________

                    We  subdivide this  part  of our  discussion into  four

          segments.   In each  segment, our comments  reflect our awareness

                                          11

          that  bankruptcy  courts  traditionally  pay  heed  to  equitable

          principles.   See  Bank of  Marin v.  England, 385  U.S.  99, 103
                        ___  ______________     _______

          (1966); Jarvis, 53 F.3d at 419.
                  ______

                    1.   The  Nature of  the Stay.   The automatic  stay is
                    1.   The  Nature of  the Stay.
                         ________________________

          among the most basic of debtor protections  under bankruptcy law.

          See  Midlantic  Nat'l  Bank   v.  New  Jersey  Dep't  of   Envtl.
          ___  ______________________       _______________________________

          Protection, 474  U.S. 494, 503 (1986);  see also S.  Rep. No. 95-
          __________                              ___ ____

          989, at 54 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840.  It
                             _________ __

          is  intended to give the debtor breathing room by "stop[ping] all

          collection efforts, all harassment, and all foreclosure actions."

          H.R.  Rep.  No.   95-595,  at  340  (1977),   reprinted  in  1978
                                                        _________  __

          U.S.C.C.A.N. 5963, 6296-97; see also Holmes Transp., 931  F.2d at
                                      ___ ____ ______________

          987; In re Smith Corset Shops, Inc., 696 F.2d 971,  977 (1st Cir.
               ______________________________

          1982).

                    The stay springs into being immediately upon the filing

          of  a  bankruptcy petition:    "[b]ecause the  automatic  stay is

          exactly what the name implies   `automatic'   it operates without

          the necessity for judicial intervention."  Sunshine Dev., Inc. v.
                                                     ___________________

          FDIC,  33 F.3d  106, 113 (1st  Cir. 1994).   It  remains in force
          ____

          until a federal court either disposes of the case, see  11 U.S.C.
                                                             ___

            362(c)(2),  or lifts  the stay,  see id.     362(d)-(f).   This
                                             ___ ___

          respite  enables debtors to resolve their debts in a more orderly

          fashion, see In re  Siciliano, 13 F.3d  748, 750 (3d Cir.  1994),
                   ___ ________________

          and  at the  same time  safeguards their creditors  by preventing

          "different  creditors  from  bringing  different  proceedings  in

          different  courts, thereby  setting in  motion a  free-for-all in

                                          12

          which opposing interests maneuver to capture the lion's share  of

          the  debtor's  assets."   Sunshine  Dev.,  33  F.3d  at 114;  see
                                    ______________                      ___

          generally 3 Collier on Bankruptcy   362.03 (15th rev. ed. 1996).
          _________   _____________________

                    In order to secure these important  protections, courts

          must display a  certain rigor  in reacting to  violations of  the

          automatic stay.   See Kalb  v. Feuerstein, 308  U.S. 433,  438-39
                            ___ ____     __________

          (1940); Holmes Transp., 931  F.2d at 987-88; Smith  Corset Shops,
                  ______________                       ___________________

          696 F.2d at 976.  The circuits are split on whether actions taken

          in derogation  of the  automatic stay  are merely  "voidable" or,

          more accurately, "void."   Some courts characterize  unauthorized

          post-petition  proceedings as  "voidable."   See, e.g.,  Jones v.
                                                       ___  ____   _____

          Garcia (In  re Jones), 63  F.3d 411, 412  & n.3 (5th  Cir. 1995),
          ______  ____________

          cert. denied, 116 S.  Ct. 1566 (1996); Bronson v.  United States,
          _____ ______                           _______     _____________

          46 F.3d 1573, 1578-79 (Fed. Cir. 1995); Easley v. Pettibone Mich.
                                                  ______    _______________

          Corp.,  990 F.2d  905, 911  (6th Cir.  1993).   Other courts    a
          _____

          majority, insofar as we can tell    call such actions "void," but

          recognize that equitable considerations may  alter some outcomes.

          See, e.g.,  Siciliano, 13 F.3d at  751; In re  Schwartz, 954 F.2d
          ___  ____   _________                   _______________

          569, 571 (9th Cir. 1992); Job v. Calder (In re  Calder), 907 F.2d
                                    ___    ______  _____________

          953, 956 (10th Cir. 1990) (per curiam); 48th St. Steakhouse, Inc.
                                                  _________________________

          v. Rockefeller Group, Inc. (In re 48th St. Steakhouse, Inc.), 835
             _______________________  _______________________________

          F.2d 427, 431 (2d Cir. 1987), cert. denied, 485 U.S. 1035 (1989);
                                        _____ ______

          Albany Partners Ltd. v. Westbrook (In re  Albany Partners, Ltd.),
          ____________________    _________  ____________________________

          749 F.2d 670, 675 (11th Cir. 1984).

                    Our earlier opinions   which we  today reaffirm   align

          us with  the majority view.  See Holmes Transp., 931 F.2d at 987-
                                       ___ ______________

                                          13

          88;  Smith  Corset  Shops,  696  F.2d  at  976.    This  semantic
               ____________________

          difference    has    practical    consequences     because    the

          characterization of an infringing  action as "void" or "voidable"

          influences the burden of going forward.  Treating an action taken

          in  contravention of the automatic stay as void places the burden

          of validating the action after the fact squarely on the shoulders

          of the offending creditor.  In contrast, treating an action taken

          in contravention  of the  automatic stay as  voidable places  the

          burden  of challenging  the action  on the  offended debtor.   We

          think that  the former  paradigm,  rather than  the latter,  best

          harmonizes  with  the  nature  of  the  automatic  stay  and  the

          important  purposes that it serves.   See generally  3 Collier on
                                                ___ _________    __________

          Bankruptcy, supra,    362.11[1] & n.1 (observing that most courts
          __________  _____

          hold violations void and terming this the better view).

                    2.   The Availability of Retroactive Relief.  While the
                    2.   The Availability of Retroactive Relief.
                         ______________________________________

          automatic  stay is significant, it is not an immutable article of

          faith.    Indeed,  the  Bankruptcy  Code,  11  U.S.C.     362(d),

          expressly authorizes courts to  lift it in particular situations.

          Whether  this  statutory  authorization  encompasses  retroactive

          relief is not entirely clear.  We previously hinted that  a court

          may set aside the automatic stay retroactively in  an appropriate

          case.   See Smith  Corset  Shops, 696  F.2d at  976-77.   We  now
                  ___ ____________________

          confirm  Smith's adumbration,  holding  that 11  U.S.C.    362(d)
                   _____

          permits   bankruptcy   courts   to   lift  the   automatic   stay

          retroactively and thereby validate actions which  otherwise would

          be void.

                                          14

                    Section  362(d) confers upon courts discretionary power

          in certain  circumstances to  terminate, annul, modify,  or place

          conditions upon  the  automatic  stay.6   In  drafting  the  law,

          Congress  chose to include both  the power to  terminate the stay

          and the  power to annul  it.   When construing this  language, we

          must try  to give independent  meaning to each word.   See United
                                                                 ___ ______

          States Dep't of Treasury v.  Fabe, 508 U.S. 491, 504  n.6 (1993);
          ________________________     ____

          United States v. Ven-Fuel,  Inc., 758 F.2d 741, 751-52  (1st Cir.
          _____________    _______________

          1985).  The only  plausible distinction between the two  verbs in

          this   context   is  that   terminating   the   stay  blunts   it

          prospectively, from the moment  the court's order enters, whereas

          annulling the  stay erases it  retrospectively, as  of some  date

          prior to the entry of the court's order (reaching as  far back as

          the  date when the debtor  filed the bankruptcy  petition, if the

          court so elects).

                    Seen from this perspective,  Congress' grant of a power

          of annulment is meaningful only if the court may thereby validate

          actions taken before  the date on which the court  rules.  On any
                        ______

          other construction, annulment lacks any independent significance;
                              
          ____________________

               6The statute provides in pertinent part:

                    On request  of a party in  interest and after
                    notice and  a hearing, the court  shall grant
                    relief  from  the stay  .  .  ., such  as  by
                    terminating,    annulling,   modifying,    or
                    conditioning such stay  
                         (1) for cause,  including the  lack
                         of   adequate   protection  of   an
                         interest in property of  such party
                         in interest; . . . .

          11 U.S.C.   362(d).

                                          15

          it merely  replicates termination.   It follows,  therefore, that

          section 362(d)  authorizes retroactive relief from  the automatic

          stay.  Accord  Siciliano, 13  F.3d at 751;  Albany Partners,  749
                 ______  _________                    _______________

          F.2d at  675; see also  Franklin Sav. Ass'n  v. Office of  Thrift
                        ___ ____  ___________________     _________________

          Supervision, 31 F.3d 1020, 1023 (10th Cir. 1994) (recognizing the
          ___________

          authority  to  annul  the  stay  and  thereby  grant  retroactive

          relief);  Sikes v. Global Marine, Inc., 881 F.2d 176, 178-79 (5th
                    _____    ___________________

          Cir.  1989) (same); see generally 3 Collier on Bankruptcy, supra,
                              ___ _________   _____________________  _____

            362.11[1].

                    3.      The  Limiting   Principle.     Recognizing  the
                    3.      The  Limiting   Principle.
                            _________________________

          discretionary authority of bankruptcy courts to relieve creditors

          and other interested parties  retroactively from the operation of

          the  automatic stay tells us nothing about the yardstick by which

          attempts to secure such relief should be measured.   We turn next

          to this inquiry.

                    Once again,  the overarching  purpose of  the automatic

          stay informs our  analysis.   Because the stay  is a  fundamental

          protection for all parties  affected by the filing of  a petition

          in bankruptcy,  it should not be dismantled  without good reason.

          See, e.g., Little  Creek Dev. Co. v.  Commonwealth Mortgage Corp.
          ___  ____  ______________________     ___________________________

          (In  re Little  Creek Dev.  Co.), 779  F.2d 1068, 1072  (5th Cir.
           ______________________________

          1986).     Undoing  the  stay  retroactively   should  require  a

          measurably greater showing.  Congress intended the stay to afford

          debtors  breathing  room and  to  assure  creditors of  equitable

          distribution.   See  H.R. Rep.  No. 95-595,  supra, at  340, 1978
                          ___                          _____

          U.S.C.C.A.N.  at   6296-97.    If   retroactive  relief   becomes

                                          16

          commonplace,  creditors    anticipating post  facto validation   
                                                  ____  _____

          will be  tempted to pursue  claims against bankrupts  heedless of

          the stay, leaving debtors with  no choice but to defend for  fear

          that   post-petition   default   judgments   routinely   may   be

          resuscitated.

                    We believe that Congress  created the automatic stay to

          ward off scenarios of  this sort.  Thus, if  congressional intent

          is  to be  honored  and  the  integrity  of  the  automatic  stay

          preserved, retroactive relief should  be the long-odds exception,

          not  the general rule.  In our  view, only a strict standard will

          ensure  the  accomplishment  of  these objectives.    See  Albany
                                                                ___  ______

          Partners,  749  F.2d  at  675  (explaining  that  "the  important
          ________

          congressional policy  behind  the  automatic  stay  demands  that

          courts be  especially hesitant to validate  acts committed during

          the  pendency of  the  stay").    We  conclude,  therefore,  that

          although courts possess a limited discretion to grant retroactive

          relief from the  automatic stay, instances in which  the exercise

          of that  discretion is  justified are  likely to be  few and  far

          between.

                    We do not  suggest that  we can write  a standard  that

          lends itself to mechanical application.  Each case is sui generis

          and must be judged  accordingly.  But, while it is  not practical

          to  anticipate and  catalogue the  varied circumstances  in which

          retroactive relief from the automatic stay may be warranted, some

          examples may be helpful.

                    When  a creditor  inadvertently violates  the automatic

                                          17

          stay in ignorance of a pending bankruptcy, courts sometimes  have

          afforded retroactive relief.  See, e.g., Jones, 63 F.3d at 412-13
                                        ___  ____  _____

          (affirming retroactive validation of a foreclosure sale where the

          mortgagee had no notice of the bankruptcy filing); Mutual Benefit
                                                             ______________

          Life Ins. Co. v. Pinetree, Ltd.  (In re Pinetree, Ltd.), 876 F.2d
          _____________    ______________   ____________________

          34, 37 (5th Cir. 1989) (similar).  By like token, debtors who act

          in  bad faith may create situations that are ripe for retroactive

          relief.   See, e.g., Calder, 907 F.2d at 956; Easley, 990 F.2d at
                    ___  ____  ______                   ______

          911; Albany Partners, 749 F.2d at 675-76.
               _______________

                    These  examples    a  creditor's  lack of  notice  or a

          debtor's bad  faith   clearly  do not exhaust  the possibilities.

          But  they   illustrate  that  a  rarely   dispensed  remedy  like

          retroactive relief from the  automatic stay must rest on a set of

          facts  that is both unusual  and unusually compelling.   The case

          law  echoes  this conclusion.   See  Mataya  v. Kissinger  (In re
                                          ___  ______     _________   _____

          Kissinger), 72 F.3d 107, 109 (9th Cir. 1995) (stating that courts
          _________

          should   indulge   retroactive   annulment   only    in   extreme

          circumstances); In re Pulley, 196 B.R. 502, 504 (Bankr. W.D. Ark.
                          ____________

          1996) (similar).

                    4.   Applying  the  Standard.   Having constructed  the
                    4.   Applying  the  Standard.
                         _______________________

          limiting principle, we now  consider whether the bankruptcy court

          erred  in  validating the  foreclosure  judgment  which had  been

          obtained in violation of the automatic stay.  We conclude that no

          proper  predicate existed  for doing  so and that  the bankruptcy

          court therefore  abused  its discretion  in ordering  retroactive

          relief.   See Anderson v.  Beatrice Foods Co.,  900 F.2d 388, 394
                    ___ ________     __________________

                                          18

          (1st Cir.) (equating abuse of discretion with a meaningful  error

          in judgment), cert. denied, 498 U.S. 891 (1990).
                        _____ ______

                    Contrary to BCU's  importunings, it  is the  creditor's

          knowledge,  not the state court's  nescience, that is relevant to

          the question  at  hand.   Bankruptcy law  forbids creditors  from

          continuing  judicial proceedings against bankrupts, see 11 U.S.C.
                                                              ___

            362(a)(1), and, accordingly, it is the creditor's obligation to

          inform other courts  of the situation, see In re  Timbs, 178 B.R.
                                                 ___ ____________

          989, 991 (Bankr. E.D. Tenn. 1989) (collecting cases).  Here, both

          BCU's knowledge and its failure to act are undisputed; the debtor

          immediately notified BCU  of the bankruptcy filing,  but BCU kept

          quiet and permitted the superior court to proceed in ignorance of

          the  stay.   We are  reluctant to  reward creditors  who, despite

          notice  of a bankruptcy filing, fail for no discernible reason to

          notify  courts in  which they  have initiated proceedings  of the

          changed circumstances.

                    The other facts  are no more conducive to  the bestowal

          of retroactive relief.   The creditor was  represented by counsel

          throughout and  does not claim that it  misapprehended the effect

          of the filing.  The bankruptcy court made no finding  that Soares

          acted in bad faith, and, at any rate, the record does not contain

          any basis for such a finding.  The procedural errors committed by

          both parties, such as BCU's failure to serve Soares with the  so-

          called clarification  motion and Soares' failure  to lodge timely

          objections at various points in the proceedings, seemingly cancel

          each  other  out.   And BCU's  entreaty  that the  equities favor

                                          19

          retroactive relief rings unmistakably hollow; though BCU expended

          funds to clear title and maintain the property after foreclosing,

          this financial  hardship is the  natural consequence  of its  own

          failure to abide by the terms of the automatic stay.  Thus, it is

          unredressable.   See K-Mart  Corp. v.  Oriental Plaza,  Inc., 875
                           ___ _____________     _____________________

          F.2d  907,  916  (1st Cir.  1989)  (declining  to  deny permanent

          injunctive relief which would  require substantial demolition  of

          an  expensive  structure where  "appellant's  wound,  deep as  it

          appears,  was self-inflicted").  In the last analysis, BCU is the

          author of its own misfortune.

          III.  CONCLUSION
          III.  CONCLUSION

                    To sum up, we hold that the state court's post-petition

          issuance of  a foreclosure judgment violated  the automatic stay;

          that bankruptcy courts ordinarily must hold those  who defile the

          automatic stay  to the predictable consequences  of their actions

          and can grant retroactive relief only sparingly and in compelling

          circumstances;   and   that,  because   this  case   involves  no

          sufficiently unusual  circumstances, the bankruptcy  court abused

          its discretion in granting  retroactive relief from the automatic

          stay.7

                    In  an abundance of caution, we note that our review is

          confined to the order granting the so-called clarification motion

          and the retroactive relief awarded therein.   Although Soares may
                              
          ____________________

               7We recognize  the difficulties  that attend the  undoing of
          the  foreclosure sale  and  the restoration  of the  pre-petition
          status  quo, but  that problem  cannot in  and of  itself justify
          overlooking BCU's unexcused violation of the automatic stay.  Cf.
                                                                        ___
          K-Mart, 875 F.2d at 916.
          ______

                                          20

          ask the bankruptcy court  to reconsider its decision to  lift the

          automatic stay, BCU can request a new foreclosure judgment in the

          state court unless and until the bankruptcy court  reinstates the

          stay.  For our part, we need go no further.

          Reversed and remanded.
          Reversed and remanded.
          _____________________

                                          21