McGuire v. Champion Fence & Construction, Inc.

104 P.3d 327, 2004 Colo. App. LEXIS 1998, 2004 WL 2955064
CourtColorado Court of Appeals
DecidedNovember 4, 2004
DocketNo. 03CA1583
StatusPublished
Cited by5 cases

This text of 104 P.3d 327 (McGuire v. Champion Fence & Construction, Inc.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McGuire v. Champion Fence & Construction, Inc., 104 P.3d 327, 2004 Colo. App. LEXIS 1998, 2004 WL 2955064 (Colo. Ct. App. 2004).

Opinion

PICCONE, J.

In this appeal concerning the automatic stay during bankruptcy proceedings, plaintiff, Charlotte M. McGuire, appeals the trial court's order denying her motion to amend the judgment dismissing her personal injury action against defendant, Champion Fence & Construction, Inc. We reverse and remand with directions.

Plaintiff was injured when a fence gate came off its tracks and pinned her to the ground. She brought suit against defendant and a third party.

Plaintiff reached a settlement with the third party and they prepared a stipulation of dismissal and a proposed order. Although the stipulation of dismissal indicated that it only involved plaintiff and the third party, the proposed order provided: "This action is dismissed with prejudice, each party to pay its own fees and costs."

The stipulation and proposed order were filed with the trial court on August 28, 2002. On the same day, defendant notified plaintiff and the court that it had filed a bankruptcy petition on April 4, 2002. The trial court signed the order of dismissal on August 27, 2002.

Defendant's bankruptcy action was closed on December 30, 2002. On March 13, 2003, plaintiff filed a motion to amend the August 27, 2002, order to reinstate defendant as a party in the action, alleging that the stipulation of dismissal of claims against defendant was a mistake.

The trial court denied plaintiffs motion, finding that it was untimely because plaintiff had waited more than six months to file it. The court also noted that although it had "wide latitude" to extend the fifteen-day deadline in C.R.C.P. 59(2) to file a motion to amend a judgment, it would not exercise that discretion because (1) plaintiff stipulated to the dismissal; and (2) plaintiff's motion was filed more than six months after the stipulated dismissal, which was far beyond the fifteen-day deadline in C.R.C.P. 59(2).

Plaintiff filed a motion arguing that under C.R.C.P. 60, the trial court may set aside a judgment based on mistake, inadvertence, surprise, excusable neglect, fraud, and any other reason the court deems just. Plaintiff also argued that any judgment entered as to defendant was void because it violated 11 U.S.C. § 362, the automatic stay provision of the Bankruptcy Code.

[329]*329The trial court denied plaintiff's motion as untimely and unduly prejudicial to defendant.

I.

Initially, we address defendant's contentions (1) that the appeal must be dismissed as moot because plaintiff's claims against it were discharged in bankruptcy and because it no longer exists as a corporate entity and (2) that the appeal is untimely. We are not persuaded.

Nothing in the record indicates that the bankruptey court discharged plaintiff's claims. Further, liquidating corporations are generally not entitled to a discharge. See 11 U.S.C. §§ 727(a)(1), 1141(d)(@8); In re E & J Underground, Inc., 98 B.R. 580, 581 (Bankr.M.D.Fla.1989)("concept of discharge-ability is not an element of corporate reorganization"). Thus, the mere closure of the bankruptcy estate does not demonstrate that plaintiff's claims were discharged or are otherwise moot. The record does not support defendant's assertion that it has been dissolved and is no longer a viable entity.

We conclude in the following section that the motion. was properly brought under C.R.C.P. 60(b)(8). Because the notice of appeal was filed within forty-five days of the trial court's order denying relief to plaintiff, we also conclude that the appeal is timely.

IL.

Plaintiff contends the trial court erred in denying her motion to set aside that part of the August 27, 2002, judgment dismissing the claims against defendant from this action because the judgment was entered in violation of the automatic stay provision of the Bankruptey Code. We agree.

CRCP. 60(b)(8) provides for relief from a final judgment if the judgment is void. See Mason-Jares, Ltd. v. Peterson, 939 P.2d 522 (Colo.App.1997). A void judgment may be challenged at any time pursuant to C.R.C.P. 60(b)(8) and must be vacated upon request. Rainsberger v. Klein, 5 P.3d 351 (Colo.App.1999).

Review of a proceeding under C.R.C.P. 60(b)(3) to set aside a judgment as void is de novo. First Nat'l Bank v. Fleisher, 2 P.3d 706 (Colo.2000); Werth v. Heritage Int'l Holdings, PTO, 70 P.3d 627, 629 (Colo.App.2003)(the standard of review under C.R.C.P. 60(b)(8) differs from that for other proceedings under that rule).

A bankruptcy petition operates to stay the commencement or continuation of all contemporaneous claims and proceedings against the debtor. 11 U.S.C. § 862(a)(1); Fukutomi v. Siegel, 785 P.2d 147 (Colo.App.1989); Duffy v. Grogan Enerserv Corp., 708 P.2d 809, 811 (Colo.App.1985)(§$ 862(a) by its terms stays proceedings against the debtor). The stay is effective autoraatically and immediately upon the filing of a bankruptey petition. 8 Collier on Bankruptey § 362.02 (14th ed.1988). The automatic stay stops all collection efforts, all harassment, and all foreclosure actions and permits a debtor to attempt a repayment or reorganization plan. It provides ereditors with protection by preventing those who acted first from receiving payment in preference to and to the detriment of other creditors. See Indep. Union of Flight Attendants v. Pan Am. World Airways, Inc., 966 F.2d 457 (9th Cir.1992).

Proceedings that violate the automatic stay are void and of no effect. Kalb v. Feuerstein, 308 U.S. 433, 438, 60 S.Ct. 343, 346, 84 L.Ed. 370 (1940)('the action of the ... [clourt was not merely erroneous but was beyond its power, void, and subject to collateral attack"); Ellis v. Consol. Diesel Elec. Corp., 894 F.2d 371 (10th Cir.1990)(any action taken in violation of automatic stay is void and without effect); In re Marriage of Berkland, 762 P.2d 779 (Colo.App.1988)(notice of attorney's lien filed in violation of automatic stay was void).

Some courts have held that the operation of the stay does not depend on the outcome of the proceedings, and acts that favor the debtor are void if they violate the automatic stay. In re Best Payphones, Inc., 279 B.R. 92 (Bankr.S.D.N.Y.2002)(citing Ellis, supra ). "Whether a specific judicial proceeding falls within the seope of the automatic stay must be determined by looking at the proceeding 'at its inception'" Maritime Elec. Co. v. United Jersey Bank, 959 F.2d [330]*3301194, 1204 (3d Cir.1991)(quoting Ass'n of St. Croix Condo.

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104 P.3d 327, 2004 Colo. App. LEXIS 1998, 2004 WL 2955064, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcguire-v-champion-fence-construction-inc-coloctapp-2004.