Way Architects, P.C. v. Rockrimmon Elderly Housing Ltd. Partnership

140 P.3d 12, 2005 Colo. App. LEXIS 940, 2005 WL 1404923
Colorado Court of Appeals·Decided June 16, 2005·No. No. 04CA0300·Published·Cited by 1 cases

Opinion

ROY, J.

In this breach of contract and mechanic’s lien foreclosure action, defendants, Rockrim-mon Elderly Housing Limited Partnership, Rockrimmon Family Housing Limited Partnership, and Concorde Capital Corporation (collectively owners), appeal the trial court’s entry of default judgment against them and in favor of plaintiff, Way Architects, P.C. (architect), and dismissal of their counterclaims.

Defendant-Appellee Descon Engineers, Inc., d/b/a RMG PC Engineers, appears with interest parallel to architect; and CTL Thompson, Inc., appears and advises that it has settled with owners and that settlement will not be impacted by this appeal. These latter parties will not be mentioned further in the opinion. We stay the proceedings.

At the outset of the trial, architect moved to dismiss owners’ counterclaims on the grounds that owners failed to file a certificate of review, endorse an expert, or participate in discovery. The trial court granted the motion and entered judgment in favor of architect on its claims. The court also granted architect’s motion to dismiss owners’ counterclaims on the ground that they had failed to comply with discovery orders. Owners appealed those rulings.

During the pendency of this appeal,. owners filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Ohio. Soon thereafter, owners filed a Notice of Bankruptcy Filing in which they argued that the appeal should proceed despite the automatic stay imposed pursuant to 11 U.S.C. § 362(a)(1) (2004). Owners relied on In re Lyngholm, 24 F.3d 89 (10th Cir.1994).

Section 362(a)(1) provides that the filing of a bankruptcy petition operates as an automatic stay of proceedings if:

the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title.

According to owners, this appeal is not subject to the automatic stay provision of § 362 because they are “debtors in possession” and may proceed with this appeal pursuant to Bankruptcy Rule 6009, 11 U.S.C. §§ 1101(1) and 1107, and In re Lyngholm, supra. We disagree.

Rule 6009 of the Federal Rules of Bankruptcy Procedure provides: “With or without court approval, the trustee or debtor in possession may prosecute or may enter an appearance and defend any pending action or proceeding by or against the debtor, or commence and prosecute any action or proceeding in behalf of the estate before any tribunal.”

The majority of federal circuit courts hold that the automatic stay provision of § 362 prevents a debtor from proceeding with an appeal where, as here, the original action was commenced against the debtor. See In re Barbier, 943 F.2d 249 (2d Cir.1991); Borman v. Raymark Indus., Inc., 946 F.2d 1031 (3d Cir.1991); Marcus, Stowell & Beye Gov’t Sec., Inc. v. Jefferson Inv. Corp., 797 F.2d 227 (5th Cir.1986); Cathey v. Johns-Manville Sales Corp., 711 F.2d 60 (6th Cir.1983); Sheldon v. Munford, Inc., 902 F.2d 7 (7th Cir.1990); Farley v. Henson, 2 F.3d 273 (8th Cir.1993); Parker v. Bain, 68 F.3d 1131 (9th Cir.1995); Ellison v. Northwest Eng’g Co., 707 F.2d 1310 (11th Cir.1983). The minority position, relying on the plain language of Rule 6009, reaches a contrary conclusion and permits a debtor’s postpetition appeal of a nonbankruptcy decision to proceed despite the stay. In re Lyngholm, supra.

Owners argue that the minority position is more persuasive and urge us to follow In re Lyngholm, supra, and allow them to proceed with this appeal despite the automatic stay. Architect, however, asserts that Col[14] orado law, see McGuire v. Champion Fence & Constr., Inc., 104 P.3d 327 (Colo.App.2004), and the law of the Sixth Circuit where the bankruptcy was filed, see Cathey v. Johns-Manville Sales Corp., supra, require a stay of all contemporaneous claims and proceedings against the debtor. We agree with architect.

We note that neither federal supremacy nor any other federal law principle requires that a state court’s interpretation of federal law yield to that of a federal court other than the United States Supreme Court. Hill v. Thomas, 973 P.2d 1246 (Colo.1999), aff'd, 530 U.S. 703, 120 S.Ct. 2480, 147 L.Ed.2d 597 (2000). We also note that the holdings of two other divisions of this court in McGuire v. Champion Fence & Construction, Inc., supra, and Curragh Queensland Mining Limited v. Dresser Industries, Inc., 55 P.3d 235 (Colo.App.2002), do not address the precise issue before us.

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Way Architects, P.C. v. Rockrimmon Elderly Housing Ltd. Partnership, 140 P.3d 12, 2005 Colo. App. LEXIS 940, 2005 WL 1404923 (Colo. Ct. App. 2005).

140 P.3d 12 (Way Architects, P.C. v. Rockrimmon Elderly Housing Ltd. Partnership) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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