Wilcox v. McGann

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
23-MAY-2025
08:16 AM
Dkt. 185 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

JULIE LYNN WILCOX, as Personal Representative of the
Estate of MARY JACQUELINE SCHEIBEL; MENEHUNE VENTURES, LLC;
WORTHY CLAY SCOTT; and NICK BRABER, Plaintiffs/Counterclaim
Defendants-Appellees,
v.
SHERRY McGANN, Defendant/Counterclaimant-Appellant, and
CELESTIAL PROPERTIES, LLC, Defendant-Appellee, and DOES 1-20,
Defendants

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CASE NO. 2CC181000206)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)

Sherry McGann, representing herself, appeals from the
December 12, 2022 Order Granting Plaintiffs' Motion for
Reimbursement of Reasonable Attorney's Fees and Costs (Fee Order)
entered by the Circuit Court of the Second Circuit.1 We vacate
and remand for further proceedings.
Mary Jacqueline Scheibel,2 Menehune Ventures, LLC,
Worthy Clay Scott, and Nick Braber (collectively, Plaintiffs)
sued McGann and Celestial Properties, LLC on May 9, 2018. The

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The Honorable Peter T. Cahill presided.
2
Scheibel died on May 3, 2021. Julie Lynn Wilcox, the personal
representative of Scheibel's estate, was substituted for Scheibel consistent
with Hawai#i Rules of Appellate Procedure Rule 43(a).
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

complaint alleged that McGann and Celestial Properties were
operating illegal short-term rental and bed-and-breakfast homes
on land zoned for agriculture, and sought to enjoin the uses.
Celestial Properties was defaulted and never appeared.
The circuit court held an eight-day trial. Findings of
fact and conclusions of law were entered on May 30, 2019. An
order granting a permanent injunction against McGann and
Celestial Properties was also entered on May 30, 2019. The Final
Judgment for Plaintiffs and against McGann and Celestial
Properties was entered on August 7, 2019.
Plaintiffs moved for an award of attorneys fees and
costs on August 23, 2019 (Fee Motion). The hearing was set for
October 18, 2019. On October 17, 2019, McGann filed a petition
under Chapter 11 of the Bankruptcy Code, creating In re McGann,
No. 19-18971-EEB (Bankr. D. Colo.) (Chapter 11 Case).3 This
triggered an automatic stay of proceedings against McGann under
11 U.S.C. § 362. The bankruptcy court entered an order granting
Plaintiffs relief from the automatic stay on May 4, 2020. The
Fee Motion was reset for hearing on February 3, 2021. The
bankruptcy court dismissed the Chapter 11 Case on September 1,
2020.
On December 22, 2020, McGann filed a petition under
Chapter 7 of the Bankruptcy Code, creating In re McGann,
No. 20-18118-EEB (Bankr. D. Colo.) (Chapter 7 Case). McGann
received a discharge on March 31, 2021. On July 25, 2022,
Plaintiffs filed in the circuit court a certified copy of the
Chapter 7 Case order granting a motion by Menehune Ventures and
Braber [the Braber Plaintiffs] for relief from the automatic
stay. The order stated:

the relief sought by the Motion for Relief from Stay is
GRANTED and Movants, Menehune Ventures, LLC, and Nick
Braber, are hereby granted relief from stay to proceed with

3
We take judicial notice under Rule 201, Hawaii Rules of Evidence,
Chapter 626, Hawaii Revised Statutes, of the bankruptcy court documents filed
in Volk Pacific Builders, Inc. v. Celestial Properties, LLC, Judiciary
Information Management Systems No. CAAP-XX-XXXXXXX.

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NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

litigation against Sherry Ann McGann and Celestial
Properties in Civil Case Number 18-1-0206(2), Mary J.
Scheibel, Menehune Ventures, LLC, Worthy Clat [sic] Scott,
and Nick Braber v. Celestial Properties, Sherry Ann McGann,
and Does 1-20.

(Emphasis added.)
Scott filed a document in the circuit court on
September 20, 2022. It stated: "I am entitled to reimbursement
of my 1/4 share of the attorney fees and costs in this matter and
request that the Court grant my request. Please be advised that
[Scheibel] is deceased." The record does not contain an order in
the Chapter 7 Case lifting the automatic stay as to Scott or
Scheibel.
The Fee Order was entered on December 12, 2022. It
awarded $154,845.38 in fees and costs, to be paid "to Plaintiffs
within thirty (30) days of the entry of the Order on this
Motion*" and provided:

*From any sum collected by pltfs from defendants 50% is to
be paid to Menehune Ventures, LLC and Nick Braber, 25% to
Worthy Clay Scott and 25% to Mary J. Scheibel.

McGann filed her notice of appeal on December 16, 2022.
We have jurisdiction because the Fee Order was a post-judgment
order that ended proceedings on the Fee Motion, leaving nothing
further to be accomplished. Ditto v. McCurdy, 103 Hawai#i 153,
157, 80 P.3d 974, 978 (2003).
On April 21, 2025, we ordered supplemental briefing on
this issue:

Was the Order Granting Fees entered in violation of the
bankruptcy stay in Case No. 20-18118-EEB to the extent it
awarded attorney fees and costs to Scheibel and Scott and,
if so, what is the legal effect of the violation?

Supplemental briefs were filed by McGann, the Braber
Plaintiffs, and Wilcox.
Without citing legal authority, Wilcox argues that the
bankruptcy court's May 4, 2020 order granting relief from the
automatic stay in the Chapter 11 case applied to the Chapter 7

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NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

case. It did not. Wilcox didn't seek relief from the automatic
stay in the Chapter 7 case on Scheibel's behalf. The circuit
court's Fee Order awarding Scheibel attorneys fees thus violated
the automatic stay.
In the Tenth Circuit, of which Colorado is part, a
debtor's creditors have an affirmative duty to conform their
conduct to the automatic stay. See In re Pulliam, 262 B.R. 539,
543 (Bankr. D. Kan. 2001) (creditor who initiated collection
efforts without knowledge of bankruptcy had affirmative duty to
restore status quo without debtor having to seek relief from
bankruptcy court). The pre-petition Fee Motion, supplement, and
reply memorandum did not specify the respective amounts paid by
Scheibel, Scott, or the Braber Plaintiffs to their common
attorney. Nor did Plaintiffs specify the amount each paid to
reimburse their attorney for costs advanced. After the Braber
Plaintiffs obtained the order terminating the automatic stay as
to them, they should have amended the Fee Motion to specify the
amount of fees and costs they paid — which were encompassed
within the order lifting the automatic stay — as opposed to fees
and costs paid by Scheibel and Scott, which were not. They did
not. The circuit court thus ordered that half the amount
collected from McGann4 under the Fee Order be paid to Scheibel
and Scott, in violation of 11 U.S.C. § 362.
"The law in the Tenth Circuit is clear that actions
taken in violation of the automatic stay are void ab initio; that
is, they are without legal effect." In re C.W. Min. Co., 477
B.R. 176, 191 (B.A.P. 10th Cir. 2012). The Braber Plaintiffs
argue the Fee Order is valid as to them, and "should be revised
to include a fee award in the entire amount to the Braber
Plaintiffs only" (emphasis added). But that would be contrary to
Scott's claim, to which the Braber Plaintiffs did not object,
that he paid 1/4 of the fees being claimed. The Braber

4
McGann and Celestial Properties were jointly and severally liable
under the Fee Order.

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NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Plaintiffs violated the automatic stay by seeking to recover
attorneys fees from McGann that were actually paid by Scott and
Scheibel. They cite no authority for the proposition that an
order in partial violation of the automatic stay is only
partially void.
We vacate the Order Granting Plaintiffs' Motion for
Reimbursement of Reasonable Attorney's Fees and Costs entered by
the circuit court on December 12, 2022, and remand for further
proceedings consistent with this summary disposition order. All
pending motions are denied.
DATED: Honolulu, Hawai#i, May 23, 2025.

On the briefs:
/s/ Keith K. Hiraoka
Sherry McGann, Presiding Judge
Self-represented
Defendant/Counterclaimant- /s/ Clyde J. Wadsworth
Appellant. Associate Judge

Gloria N. Buckingham, /s/ Sonja M.P. McCullen
for Plaintiff/Counterclaim Associate Judge
Defendant-Appellee Julie
Lynn Wilcox, as Personal
Representative of the
Estate of Mary Jacqueline
Scheibel.

Leighton M. Hara,
Kallista N. Hiraoka,
for Plaintiffs/Counterclaim
Defendants-Appellees Nick
Braber and Menehune Ventures,
LLC.

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