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Opinion 596

Case Name: 

Lee v. McCardle (In re Peeples)

Judge: 
Judge Mosier
Date: 
Jul-14-2016
Case Number(s): 
14-2159
Status: 

PUBLISHED

Body: 

Creditor filed a pre-petition state court lawsuit against the trustee of a trust of which the debtor at one time had been a beneficiary. The creditor lost the suit and, after the debtor filed bankruptcy, the trustee obtained a judgment against the creditor. The creditor then filed a declaratory judgment action in bankruptcy court against the trustee, arguing that the automatic stay of § 362(a) had stayed the state court lawsuit because the creditor sued the trustee with the subjective intent to recover against the debtor. On cross-motions for summary judgment, the Court denied the creditor’s motion because the state court lawsuit had not been an action to recover a claim against the debtor. The Court held that the automatic stay does not stay an action whose basis is independent of a claim against the debtor. The Court also held that whether the automatic stay applies to an action is not determined by a party’s subjective intent in undertaking that action. Accordingly, the Court denied the creditor’s request for stay violation damages under § 362(k).

Internal Ref: 
Opinion 596