From Casetext: Smarter Legal Research

In re Nemee

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA MODESTO DIVISION
Apr 19, 2012
Case No. 09-93249-E-11 (Bankr. E.D. Cal. Apr. 19, 2012)

Opinion


In re MICHAEL KENNETH NEMEE and MICHELLE SEOBHAN McKEE NEMEE, Debtor(s). No. 09-93249-E-11 Docket Control No. MDG-19 United States Bankruptcy Court, Eastern District of California April 19, 2012

         NOT FOR PUBLICATION

          MEMORANDUM OPINION AND DECISION

          RONALD H. SARGIS, Judge.

         In this voluntary Chapter 11 bankruptcy case commenced by Michael and Michelle Nemee ("Nemees"), for which they are serving as the Debtors-in-Possession, the court issued an order terminating the automatic stay on February 14, 2012. With this order, Community Bank of San Joaquin (the "Bank") was no longer stayed from exercising its rights to nonjudicially foreclose on two parcels of real property on which the Nemees constructed a golf course (the "Real Property") and a power of sale for specified personal property (the "Personal Property") which secures the Bank's claims in this case. The court's findings of fact and conclusions of law in determining that relief from the stay was proper are set forth in the 23-page Civil Minutes for the February 9, 2012 hearing. Dckt. 545. The court's analysis included the operation of the bankruptcy estate by the Nemees as the debtors-in-possession; the operation of the golf course by Trinitas Enterprises, LLC ("Trinitas"), the Nemees' limited liability company which is property of the bankruptcy estate, the financial condition of the bankruptcy estate after more than two years bankruptcy protection, the value of the Real Property and Personal Property, whether the Real Property and Personal Property were necessary to an effective reorganization, the monthly operating reports filed by the Nemees, and whether the interests of the Bank were adequately protected.

         The Nemees appealed the order terminating the automatic stay to the district court. Notice of Appeal, Dckt. 556. On March 6, 2012, the Nemees filed a Notice of Withdrawal, abandoning the appeal of the order granting relief from the automatic stay. The order granting relief from the stay is a final order.

         The Nemees are currently prosecuting an appeal of a judgment entered by this court in an adversary proceeding determining that the construction and operation of a commercial golf course on the Real Property were and are in violation of the Calaveras County Zoning Ordinances. ("Land Use Judgment") The district court issued a stay pending appeal on the injunctive relief portion of this court's judgment. In its decision for the issuance of the stay, the district court noted that the Nemees could well lose the property which was the subject of the appeal through foreclosure by the Bank. Nemee v. County of Calaveras, E.D. Case CV F 12-0002 LJO JLT, Dckt. 19.

         MOTION TO REINSTATE STAY

         The Nemees have filed the present Motion, which is titled "Motion to Reinstate Automatic Stay Until a Final Judgment is Issued by the District Court in the Appeal of Adversary No. 09-09088." From its title, it appears that the Nemees are seeking the equivalent of a stay pending appeal pursuant to the Land Use Judgment which the Bank is not a party. No request has been made for this court to vacate that order pursuant to Federal Rule of Civil Procedure 60 and Federal Rule of Bankruptcy Procedure 9024.

         The Motion requests the court to "Impose the Automatic Stay" to prevent the Bank from foreclosing on the golf course property "until the parties can reach an agreement on compensation to the bank in the interim or until the District Court issues its ruling on the appeal of the Adversary case No. 09-09088." From this description the court understands the relief request is for this court to fashion a new "automatic stay" (to replace the one which was terminated) so that the Nemees may use it to induce (or compel) the Bank to "agree" not to foreclose on the Real Property until, years down the road, the appeals of this court's Land Use Judgment are exhausted.

         The grounds pled with particularity for the relief requested (as required by Federal Rule of Bankruptcy Procedure 9013) are:

1. On February 14, 2012, the bankruptcy court issued an order granting relief from the automatic stay to the Community Bank of San Joaquin.

2. On February 17, 2012, the district court entered a stay pending appeal of the judgment in Adversary Proceeding No. 09-09088.

3. The Nemees have attempted to negotiate a resolution of the defaults on the obligations owing to the Bank which are secured by the Real Property and Personal Property that are the subject of the nonjudicial foreclosure sales and the Personal Property sale.

4. Community Bank of San Joaquin has the nonjudicial foreclosure sales set for April 17, 2012.

5. The district court in the appeal of this court's judgment in the Adversary Proceeding "indicated an intent to dismiss the appeal if the Bank forecloses on the debtor's real property."

6. The Nemees propose to service the full interest on the obligation secured by the Bank's deed of trust on the 160-acre parcel in the amount of $2, 100.00, in addition to the $6, 300.00 a month payment to the Bank previously required by the court. (The $6, 300.00 was ordered by the court to protect the erosion of the Bank's second lien position on the 120-acre parcel due to the accruing of interest at 10% per annum and interest on delinquent property taxes. Civil Minutes, Dckt. 341.)

7. It is alleged that the Rishwain Creditors are willing to waive "the interest accumulation on the 120-acre parcel during the pendency of the appeal."

         Legal Authorities Presented by Nemees

In filing the present motion, counsel for the Nemees has chosen to ignore the requirements of Local Bankruptcy Rule 9014-1 and the Revised Guidelines for Preparation of Documents by combining his points and authorities with the motion. The rules of the court apply to all parties in this district and counsel before this court. No party should consider the court not dismissing this motion out of hand for failure of experienced counsel to comply with the Local Bankruptcy Rules a warrant for counsel not to comply with the rules in this District or that this counsel or his clients are entitled to special treatment in any proceedings before the court. Given the significance of the issues presented, the court considers the Motion.

         The Nemees direct the court to consider the holding of the Ninth Circuit Court of Appeals in Solidus Networks, Inc. V. Excel Innovations, Inc. (In re Excel Innovations, 502 F.3d 1086 (9th Cir. 2007) as the authority for the proposition that the court may Impose an Automatic Stay. It is asserted by the Nemees that pursuant to 11 U.S.C. § 105(a) there is a free floating authority for the court to Impose an Automatic Stay without regard to the provisions of 11 U.S.C. § 362(d)(1), (2), (3), and (4) for termination of the automatic stay created by Congress in 11 U.S.C. § 362(a). The Nemees also direct the court to a 1993 district court case from the District of Colorado for the proposition that this court may reinstate the automatic stay notwithstanding a previous order terminating the stay. In re Twenver, Inc., 149 B.R. 950 (D. Colo. 1993).

         It is further contended that an order "Imposing an Automatic Stay" pursuant to 11 U.S.C. § 105(a) does not require the court to consider the normal grounds for injunctive relief and the court does not need to determine that there is an inadequate remedy at law or irreparable harm. The Nemees assert that even if the normal injunctive relief standards are applied, because the district court concluded that there would be significant hardship in connection with the appeal of the Land Use Judgment, the Nemees are entitled to a stay against the Bank.

         The Nemees argue that if this court does not Impose an Automatic Stay then the Land Use Judgment appeal may well be meaningless because the estate will lose the real property to foreclosure. They now assert that the district court has indicated that it may dismiss the appeal if the foreclosure occurs. Further, the Nemees allege that the creditors will be harmed it the real property is lost to foreclosure, because if the appeal is dismissed, the estate may lose the right to prosecute a claim for damages against various former employees of Calaveras County. As pointed out by counsel for Calavaras County, the district court requested that the parties brief this issue, and has not stated it will dismiss the appeal in the event of a foreclosure Scheduling Order, E.D. Cal. Case No. 12-0002 LJO JLT Dckt. 22.

         Injunctive Relief is Properly Requested Through an Adversary Proceeding

         Federal Rule of Bankruptcy Procedure 7001(7) requires that injunctive relief be obtained through an adversary proceedings. This provides the parties with all of the normal litigation protections and procedure, including Federal Rule of Civil Procedure 65, which is incorporated into Federal Rule of Bankruptcy Procedure 7065. As stated in 2 Collier on Bankruptcy, 16th Edition, ¶ 105.03[4], "Courts have been near universal in reversing injunctions which have been issued without compliance with Rule 7001." State Bank of S. Utah v. Glenhill (In re Glenhill), 76 F.3d 1070, 1080 (10th Cir. 1996); Feld v. Zale Corp. (In re Zale Corp.), 62 F.3d 746 (5th Cir. 1995); Wedgewood Inv. Fund, Ltd. v. Wedgewood Realty Group, Ltd (In re Wedgewood Realty Group, Ltd.), 878 F.2d 693, 701 (3rd Cir. 1989); In re Martin, 268 B.R. 168 (Bkcy. E.D. Ark. 2001), affd 271 B.R. 333 (B.A.P. 8th Cir. 2002); Ramirez v. Whelan (In re Ramirez), 188 B.R. 413, 416 (B.A.P. 9th Cir. 1995) (Klein, J, concurring); Tighe v. Mora (In re Nieves), 290 B.R. 370 (Bkcy C.D. Cal. 2003).

         No adversary proceeding has been filed seeking the imposition of a stay as to the Bank exercising its rights under the deeds of trust. Instead, the Nemees have merely filed a motion in the bankruptcy court and requested that injunctive relief be issued. No injunctive relief may properly be granted pursuant to the motion now before the court.

         Notwithstanding the Nemees having failed to properly request the relief and the issuance of an order which would be all but sure to be reversed, the court considers the merits of the request.

         Scope of 11 U.S.C. § 105 Power

         The foundation upon which the request for this court to Impose an Automatic Stay presented by the Nemees is In re Excel Innovations. It is asserted that in the Ninth Circuit (1) under § 105(a) the court may issue an injunction to protect property of the estate, (2) that the Nemees do not need to comply with the usual standard for the issuance of a preliminary injunction does not apply when issued pursuant to § 105(a), and (3) the Nemees do not need to demonstrate an inadequate remedy at law or irreparable harm. Nemees combined Motion and Points and Authorities, p. 2:34, 3:1-7. This is a misstatement of that holding.

         The actual ruling of the Ninth Circuit Court of Appeals in In re Excel Innovations is limited to when the bankruptcy court issues injunctive relief to protect a non-debtor who is not afforded protection by the automatic stay.

Under 11 U.S.C. § 105(a), a bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." Section 105(a) gives the bankruptcy courts the power to stay actions that are not subject to the 11 U.S.C. § 362(a) automatic stay but "threaten the integrity of a bankrupt's estate." Canter v. Canter (In re Canter), 299 F.3d 1150, 1155 (9th Cir. 2002) (citation and quotation marks omitted); Ingersoll-Rand Fin. Corp. v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir. 1987).

In re Excel Innovations, 502 F.3d at 1093 (emphasis added). On its face, the authority presented by the Nemees states that it does not apply to the present situation - where the automatic stay did apply to the property of the estate but the court terminated the stay pursuant to the terms of 11 U.S.C. § 362(d)(1) and (2).

         The Nemees also misstate the holding in Excel Innovations with the representation that the usual standards for the issuance of a preliminary injunction do not apply if it is based on § 105(a). The express language in Excel Innovations is clearly to the contrary, "We hold that the usual preliminary injunction standard applies to stays of proceedings against non-debtors under § 105(a)." Id., 1094. The court finds no basis for the contention that the Ninth Circuit Court of Appeals has ruled that the normal standards for issuance of a preliminary injunction do not apply even when considering such relief to protect a non-debtor who did not have the benefit of the automatic stay. As stated by the Ninth Circuit Panel, the failure of a trial court to properly apply the standard for the issuance of a preliminary injunction when considering granting injunctive relief for a non-debtor constitutes reversible error. Id., 1096.

There is also the issue of whether the court can create a new "automatic stay" when the automatic stay established by Congress has been terminated. By its very nature a new stay created by the court is not "automatic." In an earlier decision, the Ninth Circuit Court of Appeals noted that once the "automatic stay" has been terminated, the automatic stay cannot be reinstated as an "automatic stay."

         The 11 U.S.C. § 105 Power is Not Exercised in Contravention of The Bankruptcy Code

         The Nemees have requested this relief in a manner to suggest they believe that the 11 U.S.C. § 105(a) power is a free floating authorization to do whatever the judge believes appropriate on an ad hoc basis irrespective of other provisions of the Bankruptcy Code. Such a contention has long been rejected by the courts. In re Lloyd, 37 F.3d 271 (7th Cir. 1994) (not grant the court "free floating discretion" to create rights outside of the Bankruptcy Code); In re Fesco Plastics Corp, 996 F.2d 152 (7th Cir. 1993) (court may not employ its equitable powers to achieve result not contemplated by the Code); United States v Sutton, 786 F.2d 1305 (5th Cir. 1986) (must be exercised consistent with the provisions of the Bankruptcy Code).

         Congress created the automatic stay provisions of 11 U.S.C. § 362(a) to protect the estate, debtor, and creditors.

The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.

The automatic stay also provides creditor protection. Without it, certain creditors would be able to pursue their own remedies against the debtor's property. Those who acted first would obtain payment of the claims in preference to and to the detriment of other creditors. Bankruptcy is designed to provide an orderly liquidation procedure under which all creditors are treated equally. A race of diligence by creditors for the debtor's assets prevents that.

H. Rpt. No. 95-595, at 340 (1977), reprinted in Vol. C Collier on Bankruptcy App. Pt. 4(d)(i), at App. Pt. 4-1472 (Alan N. Resnick & Henry J. Sommer eds. 16th ed.).

         Congress also created the grounds upon which the automatic stay would cease or when a creditor had the right to have the automatic stay terminated, vacated, modified, conditioned or annulled. 11 U.S.C. § 362(c) and (d). Previously the court conditioned the continuation of the automatic stay on the Nemees paying the Bank an amount equal to the interest accruing at 10% per annum on the debt secured by a senior lien held by Mark and Michelle Rishwain ("Rishwain Creditors") to secure their $666, 479.45 claim and accrual of interest for past due property taxes. April 4, 2011 Order, Dckt. 342; Civil Minutes, Dckt. 341. On February 14, 2012, this court entered its order terminating the automatic stay to allow the Bank to exercise its rights to conduct nonjudicial foreclosure sales against the two parcels of real property and certain Personal Property. Dckt. 546. In its findings of fact and conclusions of law the court determined that grounds existed for so terminating the automatic stay pursuant to 11 U.S.C. § 362(d)(1) and (2). Civil Minutes, Dckt. 545.

         In granting relief from the automatic stay the court determined that there was no equity in the Real Property and Personal Property for either the Nemees or the bankruptcy estate and that this property was not necessary for an effective reorganization. 11 U.S.C. § 362(d)(2) grounds. As part of its analysis, the court reviewed the Schedules filed by the Nemees; balance sheets for the Trinitas, which were attached to the Schedules; Statement of Financial Affairs; and 27 monthly operating reports filed by the Nemees during the pendency of this bankruptcy case. The court considered how Trinitas failed to pay rent or fees to the estate until the adequate protection payments were ordered by the court, there was no golf course operation as part of the bankruptcy, and all business operations and revenues relating to the golf course were outside of the estate. The court also noted that as any revenues increased for the estate, the Nemees' personal expenses increased, exhausting all cash flow. The court considered the actual financial conduct of the Nemees, how they operated the bankruptcy estate as fiduciaries, and the efforts they made to proceed with any type of effective reorganization.

         The court also determined that relief from the automatic stay was proper for cause, there being a lack of adequate protection. 11 U.S.C. § 362(d)(1) grounds. The court considered the interests of the estate, the Bank, and creditors. This included a review of the hardships imposed on the various parties. The Civil Minutes for that hearing reflect that the Rishwain Creditors appeared and stated that they had discussed with the Nemees that they would forebear the further accrual of interest so monies could be used to pay taxes. When the court ordered the adequate protection payments in April 2011, the Nemees argued that they were negotiating with the Rishwain Creditors to cease the accrual of interest on their claim. The Rishwain Creditors were not present at that hearing. Between April 2011 and February 2012 it appeared that nothing was done by the Nemees with respect to the Rishwain Creditors accrual of interest at 10% per annum.

         The Requested Injunctive Relief is Inconsistent With the Bankruptcy Code On the Facts Before the Court

         The Nemees have not requested that the court vacate its prior order pursuant to Federal Rule of Civil Procedure 60(b) and Federal Rule of Bankruptcy Procedure 9023. The Nemees have not appealed the order granting relief from the stay on its merits or obtained a stay of that order pending an appeal. The order terminating the stay is a final order of this court.

         What the Nemees request is that the court impose a new injunction. The Motion does not address what has changed, if anything, as to the merits of the order granting relief from the stay or the debtor-creditor relationship with the Bank. Rather, it is asserted that the Bank should be stayed to assist the Nemees based on what is occurring in the Land Use Judgment appeal.

         At oral argument the Nemees and the Rishwain Creditors contended that it was unfair to let the Bank foreclose, as the only way they saw to pay creditors which unsecured claims was through the successful litigation on appeal and the further development of the golf course. They believed that it was inappropriate to let one creditor resort to its collateral if the effect was to preclude the Nemees from achieving their goal of having a commercial golf course (irrespective of whether the Nemees could demonstrate that there was the potential for an effective reorganization) since that was perceived as the only potential reorganization.

         To impose a stay on the grounds requested by the Nemees is directly in conflict with the creation, grounds for termination, and purpose of the automatic stay. The stay in a bankruptcy case is not to indefinitely preclude a creditor with a secured claim from resorting its collateral to be paid something while the debtors and creditors with unsecured claims exhaust every scheme and remote possibility to make something for their unsecured claims.

         It was argued, unrealistically, that the Nemees were not seeking an indefinite stay, but only four or five months while the briefing for the pending appeal was prepared. No reason was given as to why such a stay would be requested solely for the briefing of the appeal to the district court. Further, the Nemees ignore that it is highly likely the decision of the district court, whenever that may be issued after the briefs were filed, would then be appealed to the Ninth Circuit Court of Appeals (which the Nemees would have to appeal if they lost and the County would likely appeal if they lost). For any injunction to have a meaningful effect it would have to be most likely at least two years in duration.

         The Nemees did not demonstrate to the court that the Real Property and Personal Property were necessary to any effective reorganization. The Nemees did not demonstrate to the court that the interests of the Bank were adequately protected. In determining the motion for relief from the automatic stay, the Nemees had the burden of proof of these issues 11 U.S.C. § 362(g). They did not carry the day. In connection with the present motion, the Nemees have not presented the court with substantial evidence of any change in that situation. A new stay under these circumstances would be in derogation of the provisions of 11 U.S.C. § 362(d).

         Even if Properly Before the Court, The Nemees Have Not Show Grounds for Issuance of Preliminary Injunction

         The Nemees have failed to show proper grounds for the issuance of injunctive relief (even if they had commenced the necessary adversary proceeding). As stated by the Ninth Circuit in Excel, preliminary injunctive relief is granted based on two alternative tests. The first requires a showing of (1) a strong likelihood of success on the merits, (2) the possibility of irreparable injury to plaintiff if preliminary relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) advancement of the public interest. Under an alternative test, a court may grant the injunction if the plaintiff demonstrates either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor. A bankruptcy debtor is seeking a stay pursuant to 11 U.S.C. § 105(a) must also show a reasonable likelihood of a successful reorganization In re Excell Innovations, Inc., 502 F.3d at 1095.

         With respect to a reasonable likelihood of a successful reorganization, the court has previously determined that the Real Property and Personal Property subject to the Bank's lien was not necessary to an effective reorganization. Further, that the Bank's interests were not adequately protected during further delays (after more than two years in bankruptcy) in restraining it from foreclosing on the Real Property. Nothing has been presented to the court which alters that determination. At best, it has been argued that the foreclosure needs to be stayed so that the Nemees can retain the Real Property and try to operate a golf course if they ultimately prevail over Calaveras County on the appeal. Merely because a debtor wants property for a perceived reorganization does not mean that the property is necessary for an effective reorganization.

         The Nemees offer little, if any, analysis of the injunctive relief factors. The limited discussion of the preliminary injunction standards relates to the Land Use Judgment appeal by the Nemees of the judgment obtained by Calaveras County (to which the Bank is not a party). The balancing of equities is between the Nemees and Calaveras County, and the hardship to the Nemees if Calaveras County was not stayed from enforcing the judgment against the Nemees to stop the operation of the golf course. However, this does not adequately address the merits of any injunction against the Bank.

         Possibly as part of the balancing of the hardships, the Nemees make several allegations. First, that they have attempted to make proposals to the Bank, but contend that they have not received responses. The Bank argues that it has communicated its position as to what amount is necessary to obtain its consent - which was asserted to be a number which the Nemees and some vaguely referenced group of investors apparently do not like. No evidence of such offers and counter-offers has been presented to the court.

         The Nemees repeated their argument that the Bank should be treated as a joint venturer for having loaned the money when it knew (and Nemees knew) that no permits were obtained for constructing the golf course. The Nemees go so far as to argue that the Bank somehow acted wrongfully in lending the money that the Nemees requested and used to construct the golf course they desired. In making this argument, the Nemees appear to disavow any responsibility for obtaining the loans when they knew that they did not have the permits or then existing zoning and gambled on being able to change the zoning on the Real Property in time to borrow more money from another lender to pay off the debt to the Bank. (The history of the Nemees' transactions with the Bank and development of the golf course are reviewed in detail in this court's Memorandum Opinion and Decision in Bankr. E.D. Cal. Adv. No. 09-9088, Dckt. 235.) As the Bank argues, while contending that the Bank should be treated as a joint venturer and be enjoined from foreclosing on the Real Property and Personal Property, the Nemees have never asserted that the Bank is a co-owner of the golf course or entitled to the profits from its operation.

         Further, the Nemees present the court with a situation that if they win on appeal, the Nemees win and then at best try to figure out how to pay the Bank at its contract rate of interest years later. However, if the Nemees lose on appeal, the Bank is left to its collateral which the Nemees have used for years without making substantial payments to the Bank. In this gamble the Nemees use the Bank's collateral and have nothing at risk if they lose.

         The Nemees suggest that they make two new payments, neither of which were supported by any evidence of ability to pay. First, they propose a payment of $2, 100.00 to be applied to interest to the Bank for its loan secured by the deed of trust against the 160-acre parcel. This is to be in addition to the $6, 300.00 a month payment under the adequate protection order for the interest accrual on the Rishwain Creditor's senior lien on the 120-acre parcel and accrual of interest on the delinquent taxes. No evidence is given as to how and why the Nemees can now generate that money. As discussed in the findings of fact and conclusions of law for the order granting relief from the stay, the monthly operating reports demonstrate that the Nemees are not able to generate any additional monies beyond their living expenses and paying the existing adequate protection payments.

         The second proposed payment is to make $5, 000.00 a month payments on the taxes. No explanation is provided as to why now, more than two years later, some thought is given to making the tax payments. No evidence is provided as to the ability to make $5, 000.00 a month payments or the source of those monies.

         At oral argument counsel for the Nemees made vague references to investors who would be willing to make the payments. These shadowy "investors" were not presented to the court and no explanation was given as to whether this was to be post-petition credit obtained by the Nemees, sale of assets of the estate, sale of assets of Trinitas, or gifts to the estate.

         CONCLUSION

         The court cannot properly grant the injunctive relief requested on this motion filed in the bankruptcy case. Even if the Nemees properly filed an adversary proceeding and sought the requested injunctive relief as provided under Federal Rule of Civil Procedure 65 and Federal Rule of Bankruptcy Procedure 65, such relief is not proper in this case. Exercise of the 11 U.S.C. § 105(a) power as requested to impose a new stay conflicts with the Bankruptcy Code under the facts before the court. It has been determined by final order, for which no appeal is pending and the time to appeal has expired, that the automatic stay is terminated pursuant to 11 U.S.C. § 362(d)(1) and (2). The stay as requested would override the provisions of 11 U.S.C. § 362(d) and create a shadow automatic stay to exist on grounds outside of what Congress provided under the Bankruptcy Code.

         Even if the motion was properly before the court and was not in conflict with the Bankruptcy Code, the Nemees have not established that a preliminary injunction is proper against the Bank. Their arguments and contentions go to the dispute they have with the County of Calaveras in other litigation. The Nemees do not address the hardships to the Bank, the impact of more than two years of the automatic stay, and the effect of further delaying the Bank for years of appeals.

         The Ninth Circuit Court of Appeals has also been clear that it must be shown in this type of situation that the property is necessary to an effective reorganization. The court has determined that the Real Property and Personal Property are not necessary to an effective reorganization in this case. Nothing has been presented to the court to change that determination. That the Nemees' desired reorganization includes the Real Property does not make it an effective reorganization.

         The Motion to Reinstated the Automatic Stay is denied. This memorandum opinion and decision constitutes the court's findings of fact and conclusions of law. The court shall issue a separate order consistent with this ruling.

The district court could not have been activating an automatic stay. The automatic stay is "self-executing, effective upon the filing of the bankruptcy petition." In re Gruntz, 202 F.3d 1074, 1081 (9th Cir. 2000); see 11 U.S.C. § 362(a). Because the stay under § 362 is "automatic" and "self-executing" only upon the filing of a bankruptcy petition, no authority exists for "reinstating" an automatic stay that has been lifted. We have expressly recognized that "the bankruptcy automatic stay is differentiated from a bankruptcy court-ordered injunction, which issues under 11 U.S.C. § 105." Andreiu v. Reno, 223 F.3d 1111, 1121 n.4 (9th Cir. 2000).

Canter v. Canter (In re Canter), 299 F.3d 1150, 1155 fn. 1 (9th Cir. 2002).


Summaries of

In re Nemee

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA MODESTO DIVISION
Apr 19, 2012
Case No. 09-93249-E-11 (Bankr. E.D. Cal. Apr. 19, 2012)
Case details for

In re Nemee

Case Details

Full title:In re MICHAEL KENNETH NEMEE and MICHELLE SEOBHAN McKEE NEMEE, Debtor(s).

Court:UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA MODESTO DIVISION

Date published: Apr 19, 2012

Citations

Case No. 09-93249-E-11 (Bankr. E.D. Cal. Apr. 19, 2012)