Court Opinion

ID: 9703991
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:16:38.368178+00
Date Added: 2024-06-11T18:21:54.012240
License: Public Domain

JONES, Bankruptcy Judge,
dissenting:
Although I agree with the premise that dismissal of the underlying bankruptcy does not automatically moot a § 362(h) action for damages, I feel that a dismissal can moot the issue, and generally does. In this ease, there are sufficient reasons to affirm the bankruptcy court’s finding that the issue was moot. First, title to the property involved was not held in the debtor’s name, and therefore was arguably not property of the estate nor subject to the automatic stay. Second, even if we assume that there was a stay violation, bankruptcy courts have authority to make terminations of the stay retroactive. In re Carroll, 903 F.2d 1266, 1272 n. 6 (9th Cir.1990); In re Omoto, 85 B.R. 98, 99 (9th Cir. BAP 1988); see also 11 U.S.C. § 362(c) (1994). Finally, the main purpose of dismissal is to “undo the bankruptcy case, as far as practicable, and to restore all property rights to the position in which they were found at the commencement of the case.” In re Income Property Builders, Inc., 699 F.2d 963, 965 n. 1 (9th Cir.1982) (per curiam) (quoting H.R.Rep. No. 595, 95th Cong., 2d Sess. 338 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 6294).
I also disagree with the majority’s analysis of subject-matter jurisdiction. The majority states that the debtor’s state law claims arose out of the same common nucleus of operative fact as the debtor’s claim for § 362(h) damages, concluding that the bankruptcy court therefore has supplemental jurisdiction over the state law claims. The facts simply do not support this conclusion. The debtor initially filed a complaint alleging five state law claims in state court on June 24, 1992, six weeks before she filed bankruptcy. Clearly, the state law claims did not “arise out of the same controversy” as the alleged stay violations, since the state law claims arose before the bankruptcy petition was filed. As a result, the bankruptcy court does *914not have subject matter jurisdiction to hear the state law claims after dismissal of the automatic stay violation claim.
For the foregoing reasons, I respectfully dissent.