549 B.R. 804
Bankr. D. Wyo.2016Background
- Sigma Opportunity Fund II, LLC (Movant) obtained summary judgment in New York state court on a personal-guarantee claim against debtor Dennis M. Danzik prepetition; entry of final judgment was delayed by Debtor’s Chapter 11 filing on January 4, 2016.
- Movant moved in bankruptcy court for relief from the automatic stay under 11 U.S.C. § 362(d)(1) to allow the New York Action to be completed and the money judgment to be entered.
- The bankruptcy court has jurisdiction and treated the Motion as a core proceeding; Movant bore the initial burden to show cause to lift the stay.
- The court applied the twelve Curtis factors (factors used to decide whether to permit litigation to proceed in another forum) to the facts of this case.
- The New York court already substantively ruled against Debtor by summary judgment; only ministerial steps remained to enter final judgment.
- The bankruptcy court concluded lifting the stay to permit entry of judgment (but not collection) would aid estate administration and judicial economy and therefore granted relief limited to entry of judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cause exists to lift the automatic stay to permit completion of state-court litigation | Sigma: New York court already decided the substantive issues; only entry of judgment remains; permitting entry is efficient and will liquidate the claim | Danzik: Stay should remain; potential adequate protection exists from non-filing RDX assets; burden on debtor and estate | Court: Cause exists; lift stay limited to entry of judgment because Curtis factors favor relief |
| How Curtis factors apply | Sigma: Factors (resolution, lack of interference, judicial economy, progress to trial, balance of hurt) favor permitting state-court completion | Danzik: Some Curtis factors weigh against relief; argues adequate protection and prejudice to debtor | Court: Majority of Curtis factors weigh in Movant’s favor; New York Action progressed and relitigation would be wasteful |
| Allocation of burden of proof on stay motion | Sigma: Movant met prima facie case for cause | Danzik: Debtor must show entitlement to continued stay | Court: Movant met prima facie burden; burden shifted to Debtor who failed to sustain it |
| Scope of relief if stay is lifted | Sigma: Requests liquidation of claim via entry of final judgment | Danzik: Opposes collection actions and seeks protection of estate assets | Court: Relief granted only to allow entry of judgment; no collection permitted against Debtor or estate assets |
Key Cases Cited
- In re Curtis, 40 B.R. 795 (Bankr. D. Utah 1984) (articulating twelve-factor test for allowing litigation to proceed in another tribunal)
- Chizzali v. Gindi (In re Gindi), 642 F.3d 865 (10th Cir. 2011) (discussing consideration of likelihood of success when deciding stay relief)
- In re Dampier, 523 B.R. 253 (Bankr. D. Colo. 2015) (affirming application of Curtis factors in stay-relief analysis)
- In re Towner Petroleum Co., 48 B.R. 182 (Bankr. W.D. Okla. 1985) (noting purpose of automatic stay and factors for relief)
- In re O'Connor, 808 F.2d 1393 (10th Cir. 1987) (burden-shifting framework for stay-relief motions)
- In re Carbaugh, 278 B.R. 512 (10th Cir. BAP 2002) (noting courts’ discretion in defining "cause" to modify the stay)