Andrus v. Afco Dev. Corp (In re Afco Dev. Corp.)Utah Firstbank v. Andrus
UNPUBLISHED
Andrus filed a complaint in debtor Afco's bankruptcy case, naming Afco, Firstbank, and Grant Affleck as defendants. Shortly thereafter, Andrus removed a state court action, brought against him by Firstbank, to the bankruptcy court. Andrus almost immediately moved to consolidate the removed lawsuit and the pending adversary proceeding. Counsel for Afco and Affleck filed a motion to dismiss the adversary, asserting that it violated the automatic stay. Shortly thereafter, Affleck filed his own bankruptcy petition. The court had previously ruled that a postpetition lawsuit against the debtor, based on a prepetition claim, violates the automatic stay when it is filed in bankruptcy court without first securing relief from the automatic stay. However, in this case, Affleck was not protected by a bankruptcy stay when the adversary was filed, only Afco was, and the court found that Afco had waived protection of the stay by accepting service of the complaint and filing an entry of appearance of counsel. In addition, Afco did not raise any objection to the adversary until after the objection period had run. Finally, the court determined that the automatic stay attached to Affleck's bankruptcy did not prevent the court from ruling on the motion for consolidation, which was ready for decision when the stay took effect. Consolidation of the two cases was granted.