In Re Lohnes

26 B.R. 593, 1983 Bankr. LEXIS 6928
CourtUnited States Bankruptcy Court, D. Connecticut
DecidedJanuary 29, 1983
Docket19-20166
StatusPublished
Cited by9 cases

This text of 26 B.R. 593 (In Re Lohnes) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Lohnes, 26 B.R. 593, 1983 Bankr. LEXIS 6928 (Conn. 1983).

Opinion

MEMORANDUM AND ORDER ON CONTEMPT FOR VIOLATION OF AUTOMATIC STAY

ALAN H.W. SHIFF, Bankruptcy Judge.

On October 29, 1982, the debtor (Lohnes) filed a petition seeking relief under chapter 7 of the Bankruptcy Reform Act of 1978. On October 30, 1982, Joseph Dimyan (Dimyan) as the Committee of the Connecticut Superior Court for the Judicial District of Danbury, held a foreclosure sale of Lohnes’s residence, located in Ridgefield, Connecticut. This matter comes before the court on Lohnes’s motion for an order requiring Dimyan to show cause why he should not be found in contempt of court for having violated the provisions of 11 U.S.C. § 362(a). 1

I.

BACKGROUND

A brief summary of the salient events leading to this proceeding will provide the necessary background for the analysis and resolution of the issue presented.

On August 30, 1982, the Superior Court for the Judicial District of Danbury entered a default against Lohnes in a foreclosure action instituted by Constitution Federal Savings and Loan Association. On the same date, Lohnes’s motion for foreclosure by sale was granted, and Dimyan was appointed as Committee of the court to sell Lohnes’s residential property. Dimyan thereafter made arrangements for an October 30, 1982 foreclosure sale.

On October 29, 1982, Lohnes filed a petition for relief under Chapter 7 of the Bank *595 ruptcy Code. On the same day, counsel for Lohnes advised Dimyan that the petition had been filed, and any foreclosure sale would be in violation of the automatic stay and subject Dimyan to contempt sanctions for violation of that court order.

On October 30, 1982, Dimyan conducted the foreclosure sale after advising all interested bidders that a bankruptcy petition had been filed by Lohnes, the bankruptcy court might declare the sale null and void, and they were bidding at their own risk.

In this proceeding, Dimyan filed a pleading which raised a variety of “special defenses,” including a claim that Lohnes’s prepetition request in state court for a foreclosure sale estopped him from instituting the present proceedings because “the rights of the Bankruptcy Estate are no greater than the rights of the Debtor.” 2 Dimyan further claimed that at all relevant times he was “acting as Committee of the Superi- or Court ... and as such all his actions are protected by Judicial immunity,” 3 the “Trustee of the Debtor’s Estate is the only party who can cite in a State Court Committee for contempt, 4 and this court lacks jurisdiction. 5

During the hearing on this matter, Dimyan abandoned essentially all of his claims 6 except that he was an agent of the superior court and his actions were not intended to thwart this court’s order.

II.

ISSUE

Does a postpetition foreclosure sale by a committee of the Connecticut Superior Court, in violation of the automatic stay provided by 11 U.S.C. § 362(a), constitute civil contempt?

III.

DISCUSSION

Dimyan’s claim that he was cloaked with judicial immunity as the duly authorized agent of the state court in conducting the foreclosure sale is without merit. Judicial immunity does not extend to court personnel or to persons appointed by the court to accomplish ministerial tasks. 7 Clearly the scope of any agency as asserted by Dimyan would not include the violation of federal law.

As noted above, Dimyan next argues that since he did not intend to violate the automatic stay but rather to obey the state court’s prepetition order, his actions in conducting a postpetition foreclosure sale, without first obtaining relief from the automatic stay, 8 did not constitute contempt of this court’s order. I do not agree.

*596 As the legislative history and innumerable courts and commentators have pointed out, the automatic stay is a principal foundation upon which debtor relief and to some extent creditor protection rests.

The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.
The automatic stay also provides creditor protection. Without it, certain creditors would be able to pursue their own remedies against the debtor’s property. Those who acted first would obtain payment of the claims in preference to and to the detriment of other creditors. Bankruptcy is designed to provide an orderly liquidation procedure under which all creditors are treated equally. A race of diligence by creditors for the debtor’s assets prevents that.

H.R.Rep. No. 595, 95th Cong., 2d Sess. 340-42 (1977), reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5963, 6296-97, (emphasis added).

In the instant proceeding, there is no question but that the automatic stay was violated by the foreclosure sale. Dimyan seeks to excuse his action by claiming that he did not intend to violate federal law. Since, however, civil contempt serves a remedial purpose by either coercing a respondent into compliance with the court’s order or compensating the complainant for losses sustained, willfulness in the offending party need not be shown for a finding of contempt. Malcomb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1948); In re Worthing, 24 B.R. 774, 9 B.C.D. 1135 (Bkrtcy.D.Conn.1982). It is sufficient that the “court order violated ‘[is] specific and definite’ ” and that the offending party has knowledge of the court’s order. Fidelity Mortgage Investors v. Camelia Builders, Inc., 550 F.2d 47, 51 (2d Cir.) (citations omitted), cert. denied, 429 U.S. 1093, 97 S.Ct. 1107, 51 L.Ed.2d 540 (1976), reh. denied, 430 U.S. 976, 97 S.Ct. 1670, 52 L.Ed.2d 372 (1977).

The court order violated in this instance was the automatic stay provided by 11 U.S.C. § 362(a) which, as noted above, is specific and definite.

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Bluebook (online)
26 B.R. 593, 1983 Bankr. LEXIS 6928, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-lohnes-ctb-1983.