Hardy v. Spaith

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
(Greenbelt Division)
In re: 	*
CLAUDETTE A. HARDY, 	* 	Case No. 06-10415-WIL
(Chapter 13)
Debtor. 	*
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
CLAUDETTE A. HARDY, 	*
Plaintiff, 	*
v. 	* 	Adversary No. 06-01439-WIL
JAMES A. SPAITH, 	*
Defendant. 	*
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
MEMORANDUM OF DECISION IN SUPPORT OF ORDER GRANTING PLAINTIFF’S
MOTION [18] FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S
MOTION [19] FOR SUMMARY JUDGMENT
On May 26, 2006, the Plaintiff filed a Complaint against the Defendant, seeking a
declaratory judgment that a judgment entered in state court is void as a violation of the automatic
stay pursuant to 11 U.S.C. § 362(a). Trial is currently scheduled for December 5, 2006. At the
final pretrial conference held on October 23, 2006, this Court permitted the parties to submit
Signed: November 30, 2006
SO ORDERED
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motions for summary judgment within 15 days thereof. On November 3, 2006, the Plaintiff filed
her Motion [18] for Summary Judgment. The Defendant filed an Opposition [21] on November
21, 2006. The Defendant filed his Motion [19] for Summary Judgment on November 7, 2006.
The Plaintiff did not file a response, however, the Court notes that she addressed the issues
raised therein in her own Motion. The Court has reviewed the pleadings and the record in this
case and finds that the Plaintiff’s Motion will be granted and the Defendant’s Motion will be
denied.
Standard for Granting Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure (made applicable to this adversary
proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure) provides:
“The judgment sought shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law.”
Fed. R. Civ. Proc. 56(c).
The Rule further provides:
“When a motion for summary judgment is made and supported as
provided in this rule, an adverse party may not rest upon the mere allegations
or denials of the adverse party’s pleading, but the adverse party’s response,
by affidavits or as otherwise provided in this rule, must set forth specific facts
showing that there is a genuine issue for trial. If the adverse party does not so
respond, summary judgment if appropriate, shall be entered against the adverse
party.”
Fed. R. Civ. Proc. 56(e) (emphasis added).
One of the principal purposes of summary judgment is to isolate and dispose of all
factually unsupported claims or defenses. Celotex v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548
(1986). To that end, the Court considers all evidence in a light most favorable to the nonmoving
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party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505 (1986) (all
justifiable inferences are drawn in the nonmovant’s favor). The mere existence of an alleged
factual dispute does not defeat a motion for summary judgment; rather the standard requires that
there be no genuine issue of material fact. Id. at 247-48. Only disputes over the facts that might
affect the outcome of the lawsuit under applicable law will preclude entry of summary judgment.
Id. Therefore, once a motion for summary judgment is made and supported as provided in the
Rule, the nonmoving party must set forth specific facts showing that there is a genuine issue for
trial. Fed. R. Civ. Proc. 56(e). The nonmovant may rely on any evidentiary materials listed in
Rule 56(c), except the motions themselves. Celotex, 477 U.S. at 325. If reasonable minds could
differ as to the import of the evidence, summary judgment should not be granted. Liberty Lobby,
Inc., 477 U.S. at 248.
Discussion
The parties, neighbors, have been engaged in a dispute over their respective interests to a
certain portion of land and the location of the property line between them. The Defendant filed
an action to quiet title and recover damages against the Plaintiff and her husband in the Circuit
Court of Maryland for Montgomery County on or about August 2, 2005.
On January 27, 2006, the Plaintiff filed her voluntary petition and commenced this
Chapter 13 case. On January 30, 2006, the Circuit Court entered judgment in favor of the
Defendant and against the Plaintiff and her husband in the amount of $40,660.52 (plus additional
attorneys’ fees and costs in the amount of $38,905.22).
These are the facts pertinent to the issue presented here: whether the state court judgment
entered three days after the petition date is void as a violation of the automatic stay. There is no
question that the automatic stay prevents the commencement or continuation of a judicial
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proceeding against the debtor. 	See 11 U.S.C. §362(a)(1). There is no question that the state
court judgment was entered after the petition date. The state court judgment was therefore
entered in violation of the automatic stay.
There is a split among the circuits as to whether an action taken in violation of the
automatic stay is void or voidable. See In re Lampkin, 116 B.R. 450, 451-52 (Bankr. D. Md.
1990) (identifying which way the circuits have ruled). The Fourth Circuit has not weighed in on
this issue. However, this Court notes that other bankruptcy courts in Maryland have ruled that
such actions are void. See Ford Motor Credit Co. v. Hemsley (In re Bennett), 317 B.R. 313, 316
(Bankr. D. Md. 2004) (Mannes, J., noting that the Fourth Circuit has not ruled on the “void” or
voidable” question and ruling that actions taken in violation of the automatic stay are void);
Thompson-Mendez v. St. Charles at Olde Court Partnership, LLC (In re Thompson-Mendez),
321 B.R. 814, 820 (Bankr. D. Md. 2005) (Keir, J., citing In re Bennett and In re Lampkin).
Accordingly, this Court holds that the state court judgment, entered three days after the
Plaintiff filed her bankruptcy petition, violated the automatic stay and is therefore void. The
Plaintiff is entitled to judgment as a matter of law. An Order will be entered contemporaneously
with this Memorandum.
cc: 	Plaintiff
Plaintiff’s counsel - Jonathan Morgan, Esq.
Defendant
Defendant’s counsel - Eugene Policastri, Esq.
U.S. Trustee
Chapter 13 Trustee
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