Gene Mitchell Myrick and Lucinda Abbott Myrick

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
GENE MYRICK and
LUCINDA MYRICK,
DEBTORS.
CASE NO.
09-08901-8-JRL
Chapter 13
ORDER
This case is before the court on the motion of Udofia Family Partnership (“Movant”) for
relief from the automatic stay. A hearing took place in Raleigh, North Carolina on February 11,
2010.
On October 12, 2009, Movant filed a civil action in Wake County Superior Court against
the male debtor and Myrick Properties, LLC alleging, inter alia, breach of contract, fraud and
unfair and deceptive trade practices arising out of Movant’s investments with the male debtor.
The next day, the debtors filed for protection under Chapter 13 of the Bankruptcy Code. Upon
their filing, an automatic stay immediately went into effect, prohibiting Movant from further
pursuing its civil action. See 11 U.S.C. § 362(a) (providing that an automatic stay goes into
effect immediately upon the filing of a bankruptcy petition and prohibits all entities from
litigation, lien enforcement, and other attempts to enforce or collect prepetition claims).
Section 362(d) of the Bankruptcy Code provides that the bankruptcy court may lift the
SO ORDERED.
SIGNED this 25 day of February, 2010.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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stay “for cause,” but does not provide a definition of what constitutes “cause.” In re Robbins,
964 F.2d 342, 345 (4th Cir. 1992). Thus, courts must determine when discretionary relief is
appropriate on a case-by-case basis. Id. In deciding whether to lift the stay as to litigation
pending in another forum, the court must balance potential prejudice to the debtor and the
debtor’s estate if the stay is lifted and litigation is permitted to proceed in another forum against
the hardships that will be experienced by the moving party if relief is denied and the moving
party is required to pursue the litigation in the bankruptcy court. In re Joyner, 416 B.R. 190, 192
(M.D.N.C. 2009). In making this determination, courts have focused primarily upon the
following factors:
(1) whether the issues in the pending litigation involve only state law, so that the
expertise of the bankruptcy court is unnecessary; (2) whether modifying the stay will
promote judicial economy and whether there would be greater interference with the
bankruptcy case if the stay were not lifted because matters would have to be litigated in
bankruptcy court; and (3) whether the estate can be protected properly by a requirement
that creditors seek enforcement of any judgment through the bankruptcy court.
Id.
The court finds that the goals of judicial economy and administration of the estate are
best served by denying the requested relief. Pursuant to 11 U.S.C. § 501 and Rule 3002(a), an
unsecured creditor that wishes to participate in the distribution process in a Chapter 13 case must
timely file a proof of claim with the bankruptcy court. After the passage of the claims bar date,
the claimant cannot participate in the reorganization process unless sufficient grounds for failure
to file a proof of claim are established. In re Spiegel, Inc., 337 B.R. 816, 819 (S.D.N.Y. 2006).
Movant failed to file a proof of claim prior to the claims bar date and has not established
sufficient grounds for its failure to do so. As such, the claim Movant seeks to litigate in state
court will be discharged in bankruptcy court upon the debtors’ completion of the payments
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required under the plan. See 11 U.S.C. § 1328(a). The court finds that the administration of the
estate would be hampered by deferring to state court under such circumstances.
Further, allowing all of the claims to be determined in one proceeding promotes judicial
economy and avoids the hardship on the debtors that would result if they were required to litigate
some of the claims in state court and some of them in this court. See Joyner, 416 B.R. at 193.
Based on the foregoing, the motion for relief from the automatic stay is DENIED.
“END OF DOCUMENT”
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