TW Telecom Holdings Inc. v. Carolina Internet Ltd.
661 F.3d 495
10th Cir.2011Background
- TW Telecom sued Carolina Internet; a default judgment against Carolina was entered for over $3 million.
- Carolina Internet filed for Chapter 11 bankruptcy in the Western District of North Carolina during the appeal.
- Automatic stay 11 U.S.C. § 362(a)(1) generally halts proceedings against the debtor that were pending or could have been initiated before filing.
- The panel previously followed a minority interpretation that the stay does not bar appeals brought by a bankruptcy defendant.
- The court overruled that minority position and adopted a majority view that § 362(a)(1) stays all appeals in proceedings originally brought against the debtor.
- Accordingly, the appeal is stayed pending resolution consistent with the Bankruptcy Code.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 362(a)(1) stay this appeal? | TW argues the stay does not bar the appeal. | Carolina contends the appeal may proceed despite the bankruptcy. | Yes; the appeal is stayed under § 362(a)(1). |
| Should the circuit court overrule its prior interpretation of § 362(a)(1)? | N/A (not centrally framed in this issue). | Carolina relies on the circuit’s prior interpretation to argue for continuation of the appeal. | Yes; the circuit overruled its prior interpretation and adopted the majority view. |
Key Cases Cited
- In re Gindi, 642 F.3d 865 (10th Cir.2011) (precedent on stay during appeals against a debtor that was later disapproved)
- Morganroth & Morganroth v. DeLorean, 213 F.3d 1301 (10th Cir.2000) (stay of appeals by debtor in possession)
- Mason v. Okla. Tpk. Auth., 115 F.3d 1442 (10th Cir.1997) (automatic stay and appellate proceedings principles)
- In re Lyngholm, 24 F.3d 89 (10th Cir.1994) (early interpretation of stay effects on appeals)
- Autoskill, Inc. v. Nat'l Educ. Support Sys., Inc., 994 F.2d 1476 (10th Cir.1993) (bankruptcy stay vs. continued actions against debtor)
- Association of St. Croix Condo. Owners v. St. Croix Hotel Corp., 682 F.2d 446 (3d Cir.1982) (principle governing stays applicable across circuits)