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United States Bankruptcy Appellate Panel for the Ninth Circuit
December 10, 1998, Argued and Submitted at Las Vegas, Nevada ; December 16, 1998, Filed
BAP No. NV-97-1905-RPMe, NV-97-1916-RPMe, NV-97-1948-RPMe
RUSSELL, Bankruptcy Judge:
The bankruptcy court sanctioned three attorneys for violating the automatic stay provisions of § 362 1 by obtaining dismissal postpetition of the pro se debtor's prepetition state court complaint against their clients. The attorneys 2 appeal. We REVERSE.
[**2] I. FACTS
The material facts are not in dispute. 3 In March 1997, appellee Kenneth R. Way filed a complaint in propria persona in the District Court of Clark County, Nevada, for damages against numerous defendants. Appellant/attorney Paul F. Eisinger 4 represented defendant Western Surety Company; appellant/attorney Bob L. Olson 5 represented defendants Phyllis and William Derasmo, Kozal's Mortgage, and Thomas Kozal; and appellant/attorney Donald Polednak 6 represented defendants Carroll Gagnier and Nevada Trust Deed Services, Inc. The defendants filed answers to the complaint which included requests for attorneys' fees and costs.
[**3] On April 9, 1997, Olson filed a Motion to Dismiss or, Alternatively, Motion for Summary Judgment ("motion to dismiss") on his clients' behalf. Eisinger filed a joinder on Western Surety's behalf on April 22, 1997, which included a request for attorneys' fees and costs for defending a frivolous complaint. Polednak also filed a joinder on his clients' behalf. The hearing on the motion was set for May 6, 1997.
On April 28, 1997, Way (hereinafter the "debtor") filed a voluntary chapter 13 petition. On May 2, 1997, the debtor faxed a letter to Olson, advising him of the bankruptcy filing and asserting that the automatic stay precluded any further proceedings in the state court action. On May 5, 1997, Olson filed supplemental points and authorities in support of the motion to dismiss, countering the debtor's contention regarding the effect of the automatic stay.
At an initial hearing on the motion to dismiss on May 6, 1997, the state court considered the issue of the automatic stay, and concluded that it did not prevent the state court from ruling on the motion. The court continued the hearing to allow the debtor to file a written opposition. The debtor did so on May 13, 1997. Eisinger [**4] and Olson filed replies.
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229 B.R. 11 *; 1998 Bankr. LEXIS 1735 **; 33 Bankr. Ct. Dec. 979; 99 Cal. Daily Op. Service 758; 99 Daily Journal DAR 1001
In re KENNETH R. WAY, Debtor. PAUL F. EISINGER, Esq.; BOB L. OLSON, Esq.; DONALD POLEDNAK, Esq., Appellants, v. KENNETH R. WAY; and ALAN J. LEFEBVRE, Esq., Appellees.
Prior History: [**1] Appeal from the United States Bankruptcy Court for the District of Nevada. Bk. No. 97-23024-LBR. Honorable Linda B. Riegle, Chief Bankruptcy Judge, Presiding.
automatic stay, bankruptcy court, state court, sanctions, lawsuit, postpetition, prepetition, contempt, costs, counterclaim, state court action, motion to dismiss, attorney's fees, joinder
Bankruptcy Law, Judicial Review, Standards of Review, De Novo Standard of Review, Civil Procedure, Appeals, De Novo Review, Administrative Powers, Automatic Stay, General Overview, Bankruptcy, Automatic Stay, Examiners, Officers & Trustees, Duties & Functions, Capacities & Roles, Judicial Review, Scope of Stay, Pleadings, Counterclaims, Relief From Stay, Crossclaims, Entry of Judgments, Stays of Judgments, Automatic Stays, Compulsory Counterclaims, Permissive Counterclaims, Procedural Matters, Professional Responsibility, Case Administration, Notice, Sanctions, Misconduct & Unethical Behavior