Dugas v. NatelsonDugas v. Natelson
THIS MATTER is before the Court on a motion for summary judgment (the “Summary Judgment Motion” – AP Doc. 46),1 filed by defendant Stephen Natelson, and a joinder (the “Joinder” – AP Doc. 55) filed by defendant Ike Gallegos (together with Mr. Natelson, “Movants“). Movants seek (1) summary judgment in their favor on a claim for damages for violation of the automatic stay because they assert no stay violation occurred and (2) dismissal of all other claims for lack of subject matter jurisdiction. Alternatively, Movants request that the Court permissively abstain from hearing all claims; they further assert that certain requested relief is barred by the Rooker-Feldman doctrine.2
Ms. Dugas‘s primary grievance against Mr. Gallegos and his state court attorney, Mr. Natelson, is that they violated the automatic stay in the Second Bankruptcy Case by filing a motion for ejectment and writ of restitution in the State Court, seeking to eject her from the Property (the “Ejectment Motion“). Ms. Dugas also asserts that additional filings in the State Court against Mr. Young violated the automatic stay, and she asserts additional claims against Mr. Gallegos and Mr. Natelson for violation of her right of due process and violation of procedural requirements in the foreclosure action. The Second Bankruptcy Case has since been dismissed.4
Ms. Dugas filed a response in opposition to the Summary Judgment Motion (AP Doc. 51), and Mr. Natelson filed a reply (AP Doc. 54). After consideration of the Summary Judgment Motion, the evidence submitted in support of the Summary Judgment Motion, the
As explained below, with respect to the stay violation claim, the Court will not abstain from hearing such claim. The Court determines that the automatic stay terminated with respect to Ms. Dugas on the 30th day after commencement of the Second Bankruptcy Case, pursuant to
Thus, the Court will grant summary judgment in the Movants’ favor on (1) the stay violation claim as it relates to the Ejectment Motion and (2) the other claims brought against them, and the Court will deny summary judgment on the stay violation claim as it relates to the additional filings in State Court.
I. SUMMARY JUDGMENT STANDARDS
Summary judgment will be granted when the movant demonstrates that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.
Only if the properly supported material facts entitle the requesting party to judgment as a matter of law is it appropriate for the court to grant summary judgment. Celotex, 477 U.S. at 322. In moving for summary judgment, the party “must support the assertion” that “a fact cannot be . . . genuinely disputed” by: (1) “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials” or (2) “showing that the materials cited [by the opposing party] do not establish the . . . presence of a genuine dispute.”
The court‘s role is not to weigh the evidence, but to assess the threshold issue of whether a genuine issue exists as to material facts requiring a trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). A dispute is “genuine” where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. A fact is “material” if it “might affect the outcome of the suit under the governing law.” Id. In considering a motion for summary judgment, the court must resolve all reasonable inferences and doubts in favor of the non-moving party and construe all evidence in the light most favorable to the non-moving party. See Hunt v. Cromartie, 526 U.S. 541, 552 (1999); Genberg v. Porter, 882 F.3d 1249, 1253 (10th Cir. 2018). Where a rational trier of fact, considering the record as a whole, could not find for the non-moving party, there is no genuine issue for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Thus, summary judgment is appropriate “if the evidence points only one way and no reasonable inferences could support the non-moving party‘s position.” Genberg, 882 F.3d at 1253.
II. PROCEDURAL BACKGROUND
Ms. Dugas commenced her first bankruptcy case on May 10, 2024, with the filing of a voluntary chapter 13 petition, Case No. 24-10472-t13 (the “First Bankruptcy Case“). The First Bankruptcy Case was dismissed on July 10, 2024.
Ms. Dugas commenced her Second Bankruptcy Case on August 14, 2024, with the filing of a second voluntary chapter 13 petition, Case No. 24-10834-j13.
On November 6, 2024, Ms. Dugas filed the complaint in this adversary proceeding, Adv. Proc. No. 24-1029-j (the “Adversary Complaint” – AP Doc. 1). The Adversary Complaint asserts three claims against Mr. Natelson, Mr. Gallegos, and the Law Offices of Stephen Natelson:
- Count 1—Violation of Due Process in the Foreclosure Action,7
- Count 2—Violation of Procedural Guidelines in the Foreclosure Action, and
- Count 3—Violation of the Automatic Stay.8
Among the relief sought, Ms. Dugas requests that the Court dismiss the foreclosure action and return the Property to her.9
On January 7, 2025, Ms. Dugas filed a motion in the Second Bankruptcy Case requesting an extension of the automatic stay beyond thirty (30) days after the commencement of the Second Bankruptcy Case.10 The Court determined that the request was untimely pursuant to
The Second Bankruptcy Case was dismissed on July 8, 2025, but this adversary proceeding remained pending.
Mr. Natelson filed the Summary Judgment Motion in this adversary proceeding on August 8, 2025, and Mr. Gallegos filed the Joinder on September 5, 2025. Ms. Dugas filed her response opposing summary judgment on August 19, 2025, and on September 3, 2025, Mr. Natelson filed a reply.
a. Facts Not Subject to Genuine Dispute
For purposes of this decision, the Court finds that the following facts are not in genuine dispute.
On March 16, 2023, Mr. Gallegos, through his attorney Mr. Natelson, filed a Complaint for Money Due on Promissory Note and for Declaratory Judgment to Accelerate Payment on Promissory Note (the “State Court Complaint“), in Ike Gallegos v. Laura Kelly, D-820-CV-2023-00093 (the “Foreclosure Action“) in the Eighth Judicial District Court for the State of New Mexico.
The State Court Complaint prayed inter alia “[f]or an order determining that as a consequence of the Defendant‘s [Ms. Dugas] substantial default that the Plaintiff [Mr. Gallegos] be allowed to accelerate the remaining principal balance due and to foreclose any interest in the real property that Defendant [Ms. Dugas] may have by judicial sale affording the Defendant [Ms. Dugas] a nine (9) month right of redemption.”13
Laura Kelly, named in the State Court Complaint, is the same as the debtor and plaintiff Laura Dugas in this case.
On April 13, 2023, Laura Dugas appeared pro se in the Foreclosure Action and filed what was in substance an answer.
On July 12, 2023, Laura Dugas filed a brief in opposition to the motion for summary judgment in the Foreclosure Action.
On August 21, 2023, the State Court issued the 2023 Dugas Foreclosure Judgment awarding Mr. Gallegos a money judgment and decreeing inter alia that “Plaintiff [Mr. Gallegos] is restored possession and ownership of the property located at 58 Lower Arroyo Hondo Road, Taos County, New Mexico [and a] Writ of Restitution shall be issued in favor of Ike Gallegos.”14
No appeal was taken from the 2023 Dugas Foreclosure Judgment.
On October 10, 2023, the State Court entered an Order Approving Special Master‘s Report and Confirming Foreclosure Sale.
A Special Master‘s Deed was delivered and recorded.
On October 17, 2023, Laura Dugas filed a notice of appeal of the Order Approving Special Master‘s Report and Confirming Foreclosure Sale.
On the same day, she filed a document in the Foreclosure Action titled “Motion to Set Aside Default and Summary Judgment Rule 60 B” requesting inter alia “[t]o set aside Order Approving Special Master‘s Report and Confirming Foreclosure Sale.”15
Ms. Dugas‘s appeal was dismissed for lack of finality due to the filing of her motion to set aside the judgment.
On April 23, 2024, the State Court withdrew its Order Approving Special Master‘s Report and Confirming Foreclosure Sale.
On August 14, 2024, Ms. Dugas filed the Second Bankruptcy Case.
Ms. Dugas‘s request in the Second Bankruptcy Case to extend the automatic stay was denied.16
In the Second Bankruptcy Case, Kurt Young was not listed as a co-debtor on Ms. Dugas‘s Schedule H.17
Mr. Natelson and Mr. Gallegos undertook no activity in the Foreclosure Action from the time the Second Bankruptcy Case was filed until September 27, 2024, when Mr. Gallegos, through his attorney Mr. Natelson, filed the Ejectment Motion seeking ejectment of Ms. Dugas from the Property and a writ of restitution. The Ejectment Motion was filed more than 30 days after the Second Bankruptcy Case was commenced.
The writ of restitution was issued in the Foreclosure Action on the same day that the Ejectment Motion was filed and was returned in October 2024.
On October 11, 2024, Mr. Gallegos, through his attorney Mr. Natelson, filed a motion for summary judgment in the Foreclosure Action on claims against Mr. Young asserted in a supplemental complaint (the “Motion for Summary Judgment Against Young“). That motion was granted on December 17, 2024 (“2024 Young Partial Summary Judgment“).
The only motion for ejectment that Mr. Gallegos, through his attorney Mr. Natelson, filed in the Foreclosure Action was on September 27, 2024. The only motions for summary judgment that Mr. Gallegos, through his attorney Mr. Natelson, filed in the Foreclosure Action were on June 13, 2023, and on October 11, 2024.
The 2023 Foreclosure Judgment determined that as of February 7, 2023, Ms. Dugas was in default under the Option Money Promissory Note secured by the Property in the amount of $11,410, plus $375 in late fees, plus interest of $945.06 through July 7, 2023, plus default interest thereafter at 18% per year.
Ms. Dugas‘s Second Bankruptcy Case was dismissed on July 8, 2025.
No new foreclosure sale was noticed or took place prior to the dismissal of the Second Bankruptcy Case.
b. The Remaining Asserted Facts
Any other remaining facts asserted by Mr. Natelson in his statement of undisputed material facts, and adopted by Mr. Gallegos in the Joinder, are either legal conclusions or not material to the Court‘s determination of summary judgment. Ms. Dugas also asserted facts,18 but did not submit any evidence in support of her facts. Further, many of Ms. Dugas‘s asserted facts
IV. DISCUSSION
Movants raise several grounds for summary judgment in their favor: first, that the Court lacks subject matter jurisdiction over Counts 1 and 2 because they are non-core claims; second, that the Rooker-Feldman doctrine precludes Ms. Dugas‘s requests for this Court to dismiss the Foreclosure Action in State Court and return the Property to Ms. Dugas; third, to the extent the Court has jurisdiction, that it should permissively abstain from hearing all claims; and fourth, that no violation of the automatic stay occurred.19
As discussed below, the Court determines that Movants are entitled to summary judgment in their favor on Counts 1 and 2, as well as Count 3 with respect to the Ejectment Motion. However, the Court will deny summary judgment on Count 3 with respect to the Motion for Summary Judgment Against Young and related documents.
a. Subject Matter Jurisdiction
The Court first examines whether it has subject matter jurisdiction over the claims asserted in the Adversary Complaint.
Movants assert that the Court lacks subject matter jurisdiction on two bases: (1) that the underlying bankruptcy case has been dismissed, and therefore the Court does not retain jurisdiction over non-core matters and (2) that certain of Ms. Dugas‘s claims and requests for relief are outside of the Court‘s “related to” jurisdiction to begin with.
The bankruptcy courts, through referral from the district courts, have “original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.”
In contrast, “[p]roceedings that fall within the Court‘s ‘related to’ jurisdiction are non core proceedings.” Otero Cnty. Hosp., 617 B.R. at 704. “Related proceedings are civil proceedings that, in the absence of a bankruptcy petition, could have been brought in a district court or state court.” Gardner, 913 F.2d at 1518 (citing Nat‘l Acceptance Co. of America v. Price (In re Colorado Energy Supply, Inc.), 728 F.2d 1283, 1286 (10th Cir. 1984)). “[T]he test for determining whether a civil proceeding is related [to] bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Gardner, 913 F.2d at 1518 (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984), abrogated on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124 (1995)). “[I]f the outcome could alter the debtor‘s rights, liabilities, options, or freedom of action in any way, thereby impacting on the handling and administration of the bankruptcy estate,” the “proceeding is related to the bankruptcy.” Gardner, 913 F.2d at 1518 (citing Pacor, 743 F.2d at 994).
In this adversary proceeding, the claims can be divided into two categories: the stay violation claim (Count 3) and claims arising from violations of due process and procedure in the Foreclosure Action in State Court (Counts 1 and 2).
With respect to the other claims for violations of due process and procedure in the state court foreclosure litigation, even assuming these are independent causes of action, they are non
Taking the above factors into consideration, the Court determines that even if (1) independent causes of action existed for the claims arising out of the Foreclosure Action in State Court and (2) it would have had “related to” jurisdiction over such claims during the pendency of the Second Bankruptcy Case, the Court will not retain jurisdiction over such claims.27 Judicial economy would be best served by the claims being decided by the State Court in which the alleged actions took place, as the State Court has the familiarity with its own record. Fairness and convenience to the litigants is neutral, as the parties have been litigating in both this
b. Rooker-Feldman Doctrine
Movants further assert that Ms. Dugas‘s requests for this Court to dismiss the Foreclosure Action and return the Property to her are barred on the basis of the Rooker-Feldman doctrine as an impermissible collateral attack on the 2023 Dugas Foreclosure Judgment. For the reasons set forth below, the Court determines that the 2023 Dugas Foreclosure Judgment is not a final judgment and therefore the Rooker-Feldman doctrine does not apply to it.28
“The Rooker-Feldman doctrine precludes a losing party in state court who complains of injury caused by the state-court judgment from bringing a case seeking review and rejection of that judgment in federal court.” Miller v. Deutsche Bank Nat‘l Tr. Co. (In re Miller), 666 F.3d 1255, 1261 (10th Cir. 2012) (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291-92 (2005)). Movants argue that Ms. Dugas‘s requests for the return of ownership and possession of the Property and dismissal of the Foreclosure Action in effect seek to overrule the 2023 Dugas Foreclosure Judgment.
The Rooker-Feldman doctrine precludes the Court from reviewing on the merits, modifying, or setting aside a state court judgment. See Mayotte v. U.S. Bank N.A., 880 F.3d 1169, 1174 (10th Cir. 2018) (“What is prohibited under Rooker-Feldman is a federal action that tries to modify or set aside a state-court judgment because the state proceedings should not have
However, ”Rooker-Feldman and its progeny do ‘not deprive a federal court of jurisdiction to hear a claim just because it could result in a judgment inconsistent with a state court judgment.‘” Bednar, 2019 WL 3928844, at *7 (quoting Mayotte, 880 F.3d at 1174). Although Rooker-Feldman prevents federal courts from in effect acting as an appellate court to review the merits of or modify a state court judgment or order, it does not apply to override the authority of bankruptcy courts to apply provisions of the Bankruptcy Code that affect state court judgments. As observed by the Ninth Circuit, “[t]he Rooker-Feldman doctrine has little or no application to bankruptcy proceedings that invoke substantive rights under the Bankruptcy Code, or that, by their nature, could arise only in the context of a federal bankruptcy case.” Sasson v. Sokoloff (In re Sasson), 424 F.3d 864, 871 (9th Cir. 2005). For example, the Rooker-Feldman doctrine does not preclude bankruptcy courts from “modifying contractual obligations that have been reduced to judgment in state court, avoiding liens found to be valid and enforceable in a state court judgment, or discharging debts upon which a state court judgment is based, pursuant to provisions of the Bankruptcy Code.” In re S-Tek 1, LLC, 625 B.R. 519, 525 (Bankr. D.N.M. 2020).
We have held that the district court‘s decree of foreclosure is both final and interlocutory in its operation. The decree serves two functions: first, it determines the rights of the parties in the property; and, second, it fixes the manner and terms of the foreclosure sale. Whereas, the court‘s judgment with respect to the manner and terms of sale is interlocutory, the declaration of the parties’ rights may be construed as a final judgment unless modified under the provisions of
NMSA 1978, Section 39-1-1 (1917).
Grygorwicz v. Trujillo, 2009-NMSC-009, ¶ 8 (internal citations omitted).30,31
In this matter, Movants assert that the 2023 Dugas Foreclosure Judgment is a final judgment with respect to its ruling that “Plaintiff [Mr. Gallegos] is restored possession and
c. Claim Preclusion and Issue Preclusion
Movants did not explicitly assert claim preclusion or issue preclusion, which if applicable would “bar subsequent litigation in bankruptcy court of claims and issues determined in a prior final state court judgment.” In re Lopez, No. 21-10836, 2022 WL 1160607, at *2 (Bankr. D.N.M. Apr. 19, 2022). “Under the Full Faith and Credit statute,
Bankruptcy courts may raise claim preclusion and issue preclusion sua sponte, although they are “advised to be ‘cautious’ in doing so.” Arrieta v. Smith (In re Smith), 673 B.R. 1, 9 (8th Cir. BAP 2025).32 Here, Movants assert that the Court should follow the 2023 Dugas Foreclosure
“Issue preclusion . . . prevents a party who lost on an issue decided in a prior lawsuit from relitigating the same issue in a subsequent suit.” Rael v. Gonzales (In re Gonzales), 667 B.R. 357, 367 (Bankr. D.N.M. 2025) (citing Melnor, Inc. v. Corey (In re Corey), 583 F.3d 1249, 1251 (10th Cir. 2009)). “Issue preclusion may be invoked to bar relitigation of issues of fact determined in a prior state court action resulting in a final judgment[.]” Gonzales, 667 B.R. at 367 (citing Klemens v. Wallace (In re Wallace), 840 F.2d 762, 764 (10th Cir. 1988)). In order for a final judgment to have issue preclusive effect under New Mexico law, there are four requisite elements: “first, the parties in the second suit must be the same or in privity with the parties in the first suit; second, the causes of action must be different; third, the issue or fact must have been actually litigated in the first case; and fourth, the issue must have been necessarily
Further, [w]hether the doctrine [of issue preclusion] should be applied is within the [trial] court’s discretion. Strategic Funding Source, Inc. v. Evans (In re Evans), 667 B.R. 162, 171 (Bankr. D.N.M. 2025) (quoting Shovelin v. Cent. New Mexico Elec. Co-op., Inc., 1993-NMSC-015, ¶ 14). Issue preclusion is not mandated in the Constitution or by statute—it is instead the product of court precedent based on a court’s exercise of its equitable powers. Welch v. Giron (In re Giron), 610 B.R. 670, 677 (Bankr. D.N.M. 2019) (quoting Acacia Villa v. United States, 24 Cl. Ct. 445, 448 (1991)). Therefore, [e]ven when the elements of collateral estoppel are present, the decision whether to apply the doctrine is within the discretion of the trial court. Giron, 610 B.R. at 677 (quoting United States v. Kaytso, 868 F.2d 1020, 1022 (9th Cir. 1988)); see also Arapahoe Cnty. Pub. Airport Auth. v. FAA, 242 F.3d 1213, 1220 (10th Cir. 2001) (favorably citing cases which hold that issue preclusion is an equitable doctrine applied at the court’s discretion).
In this matter, the Court first considers the prerequisite that in order to be entitled to issue preclusion, a judgment must be a final judgment. For the reasons set forth above in Section IV.b., the 2023 Dugas Foreclosure Judgment is not a final judgment. Therefore, it is not entitled to issue preclusive effect. Further, even if the 2023 Dugas Foreclosure Judgment were a final judgment, this Court would exercise its discretion not to give it issue preclusive effect due to the irregularities in the Foreclosure Action.
d. Permissive Abstention
Movants assert that, to the extent the Court has jurisdiction over the claims, the Court should permissively abstain from hearing them. For the reasons set forth below, the Court will
The non-exclusive permissive abstention factors the Court may consider include:
- The effect of abstention and remand on the administration of the bankruptcy estate, including whether claims could be timely adjudicated in state court to meet the needs of the bankruptcy case;
- The extent to which state law issues predominate over bankruptcy issues;
- The difficult or unsettled nature of the applicable law;
- Whether abstention and remand serves principles of judicial economy;
- The presence of a related proceeding commenced in state court or another non bankruptcy court;
- The feasibility of severing non-core state law claims from core bankruptcy claims;
- The jurisdictional basis for the bankruptcy court to hear the claims in the removed proceeding, if any, other than related to jurisdiction;
- Whether the removed proceeding is a core proceeding;
- The likelihood that commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties;
- The existence of a right to jury trial;
- The presence of non-debtor parties;
- The burden the proceeding places on the bankruptcy court’s docket;
- Whether remand lessens the possibility of inconsistent results;
- Whether the court where the action originated has greater expertise;
- The status of the proceeding in the state court prior to removal and the status of the proceeding in bankruptcy court; and
- Whether the nature of the proceeding is better suited for state court or bankruptcy court.
Bright Green Corp. v. Fikany (In re Bright Green Corp.), 671 B.R. 280, 292 (Bankr. D.N.M. 2025) (citing cases). Bankruptcy courts have discretion to determine the relative weight to give each factor. Id.
Reviewing the remaining permissive abstention factors in light of the ability to sever the bankruptcy claim from the state law claims, the Court concludes that even if it has jurisdiction over the non-core state law claims, it is appropriate to permissively abstain from hearing them. Factors (1), (2), (5), (7), (8), and (16) weigh in favor of permissive abstention from the state law claims: factor (1)—the Second Bankruptcy Case has been dismissed, so determination of these claims will have no impact on an ongoing bankruptcy case; factor (2)—these are purely state law issues; factor (5)—the Foreclosure Action is still proceeding; factor (7)—the Court does not have a jurisdictional basis other than related to jurisdiction to hear the state law claims; factor (8)—the state law claims are non-core matters; and factor (16)—the state law claims are better suited for state court. The other abstention factors are either neutral, not relevant, or would be given little weight.
In contrast, reviewing the remaining permissive abstention factors in light of the ability to sever the bankruptcy claim from the state law claims, the Court concludes that it is not appropriate to permissively abstain from hearing the bankruptcy claim regarding stay violation. Factors (2), (3), (7), (8), and (16) weigh against permissive abstention from the stay violation claim: factor (2)—this is purely a matter of bankruptcy law; factor (3)—there is a circuit split on the extent to which the automatic stay was in effect; factor (7)—a stay violation claim arises
Thus, to the extent the Court has jurisdiction over the state law claims, the Court will permissively abstain from hearing such claims. However, the Court will not abstain from determining the stay violation claim.
e. Stay violation claim
1. To what extent did the automatic stay terminate on the 30th day after commencement of the Second Bankruptcy Case?
Having determined that the Court retains jurisdiction over the stay violation claim and that it will not permissively abstain from hearing and determining the claim, the Court considers the merits of the stay violation claim. Movants assert that they are entitled to judgment in their favor as a matter of law on Ms. Dugas’s claim for stay violation because, pursuant to
Both the majority view (that the stay remains in effect with respect to property of the estate) and the significant minority view (that the entire stay terminates on the 30th day after case commencement) begin with recognition that the automatic stay is an important protection in bankruptcy. E.g., Smith v. Maine Bureau of Revenue Servs. (In re Smith), 910 F.3d 576, 580 (1st Cir. 2018) (The automatic stay is a fundamental . . . protection[] provided by the bankruptcy laws.) (quoting Midlantic Nat’l Bank v. N.J. Dep’t of Env’t Prot., 474 U.S. 494, 503 (1986)). Courts then turn to the language of
[I]f a single or joint case is filed by or against a debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b)—
(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case; [and]
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed[.]
The majority view, which has been adopted by the Fifth Circuit Court of Appeals as well as the Tenth Circuit Bankruptcy Appellate Panel (BAP), is that the stay terminates under
The majority view also relies on the proposition that Congress knew how to [eliminate] the entire stay, and in fact did so in the very next section of the statute. Rose, 945 F.3d at 230 (quoting In re Williford, No. 13-31738, 2013 WL 3772840, at *3 (Bankr. N.D. Tex. July 17, 2013)); see also In re McGrath, 621 B.R. 260, 265 (Bankr. D.N.M. 2020) (explaining that Congress knew how to terminate the stay entirely and citing
[I]f a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a case refiled under a chapter other than chapter 7
after dismissal under section 707(b), the stay under subsection (a) shall not go into effect upon filing of the later case.
(emphasis added). Courts in the majority contrast the language providing that the stay shall not go into effect in
The majority view further reasons that its reading of
Regarding the policies behind bankruptcy law, the majority approach emphasizes that [a]t the core of bankruptcy law is the policy of ‘obtaining a maximum and equitable distribution for creditors.’ Holcomb, 380 B.R. at 816 (quoting BFP v. Resolution Trust Corp., 511 U.S. 531, 563 (1994)). Keeping the stay in place with respect to property of the estate prevents the situation where a single creditor, who may be oversecured, [has] full access to property that would otherwise be property of the estate. Id. The majority reasons that [s]uch property may be necessary to implement a debtor’s Chapter 13 plan; or, in a Chapter 7 case, equity in the property above the creditor’s secured interest could be realized by the trustee to pay a dividend to
Finally, the majority approach notes that there is an easy creditor remedy if the limited stay relief of
B. The significant minority view
In contrast, the significant minority view, which has been adopted by the First Circuit Court of Appeals, concludes that under
Courts adopting the minority view have determined that
§ 362(c)(3)(A) is ambiguous
In determining that there is no plain meaning, the First Circuit explains that a primary obstacle to [the majority’s] reading is that the phrase with respect to the debtor would most naturally be read to terminate the stay only for actions against the debtor, and not . . . for actions against both the debtor and the debtor’s property. Smith, 910 F.3d at 582 (citing In re Daniel, 404 B.R. 318, 323 (Bankr. N.D. Ill. 2009) (noting this anomaly); In re Bender, 562 B.R. 578, 583 (Bankr. E.D.N.Y. 2016) (same). Yet [n]o court decision has adopted this narrow interpretation. See Reswick v. Reswick (In re Reswick), 446 B.R. 362, 367-68 (9th Cir. BAP 2011).
Further, the minority approach finds that the majority view gives no force to the first three ‘with respect to’ clauses. Smith, 910 F.3d at 584. As a reminder,
Congress may have used the phrase with respect to a or the debtor in BAPCA to reemphasize that a provision applied to the debtor rather than to add new information about the meaning or scope of a provision. In light of this pattern across BAPCPA . . . it would be odd for Congress to have chosen with respect to the debtor to articulate an important reform, one placing a highly consequential limit on termination of the stay.
ii. The minority view then applies statutory context and congressional purpose to interpret § 362(c)(3)(A) and construes it to terminate the entire stay
Concluding that the use of the phrase with respect to the debtor is ambiguous in
The automatic stay operates differently for first-time, second-time, and subsequent filers. For first-time filers, the stay is automatic and permanent, at least until the bankruptcy case closes or a court acts to modify the stay. See
11 U.S.C. §§ 362(a)(1)-(2) ;id. § 362(d) . And when a debtor has pending in one year three or more petitions for bankruptcy,§ 362(c)(4) provides that the stay under subsection (a) shall not go into effect upon the filing of the [third or subsequent] case.Id. § 362(c)(4) .Section 362(c) seems to establish a system of progressive protections, so protections for second-time filers should fall, as the bankruptcy court put it, [i]n the middle.
[O]n the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed[.]
For purposes of the extension, a case is presumptively filed not in good faith for several categories of filers, including filers like Smith whose previous case was dismissed for failure to perform the terms of a plan confirmed by the court.
§ 362(c)(3)(C) . However, that presumption may be rebutted by clear and convincing evidence.Id. ***
When read alongside
§ 362(c)(3)(B) ’s extension process, [the] interpretation of§ 362(c)(3)(A) [as terminating the entire stay] is consistent with these goals of bankruptcy. A second-time filer with a meritorious bankruptcy case, or a creditor whose self-interest dictates it, may get an extension of the stay on demonstrat[ing] that the filing of the later case is in good faith as to the creditors to be stayed.11 U.S.C. § 362(c)(3)(B) . Notably, courts must act quickly on these requests; Congress provided that any hearing on a request for an extension must be completed before the expiration of the 30-day period.Id. Section 362(c)(3)(B) reflects an attempt by Congress to ensure that certain second-time filers who meet an enhanced burden have an escape route from the termination of the entire automatic stay, including as to actions against estate property.
Finally, the minority view concludes that termination of the entire stay on the 30th day is consistent with congressional intent:
At [t]he heart of [BAPCPA’s] consumer bankruptcy reforms, the House Judiciary Committee report accompanying BAPCPA said, were provisions intended to deter serial and abusive bankruptcy filings. H.R. Rep. No. 109–31(I), at 2 (2005); see also Sara Sternberg Greene, The Failed Reform: Congressional Crackdown on Repeat Chapter 13 Bankruptcy Filers, 89 Am. Bankr. L.J. 241, 242 (2015). Among these reforms was
§ 362(c)(3)(A) . Congress described that provision as an amend[ment to] section 362(c) of the Bankruptcy Code to terminate the automatic stay within 30 days in a chapter 7, 11, or 13 case filed by or against an individual if such individual was a debtor in a previously
dismissed case pending within the preceding one-year period. H.R. Rep. No. 109-31(I), at 69 (2005).
C. This Court will follow the 10th Circuit BAP
Having reviewed the majority and significant minority approaches, the Court will follow the majority approach because it was adopted by the 10th Circuit BAP in a published opinion, this Court is within the Tenth Circuit, and there is no compelling reason to depart from that approach.
Though this Court may not technically be bound by the decisions of the Tenth Circuit Bankruptcy Appellate Panel (the Tenth Circuit BAP), the Court will generally treat published Tenth Circuit BAP decisions as persuasive authority. See In re Wenzel, 415 B.R. 510, 516-17 (Bankr. D. Kan. 2009) (acknowledging that the bankruptcy court might not be bound to follow a BAP decision, but that the Court’s practice is to give appropriate deference to published BAP decisions and treat them as persuasive authority, absent a compelling reason to depart.).
In re Rodriguez, 487 B.R. 275, 288 (Bankr. D.N.M. 2013). In this case, the Court does not weigh in on the merits of the two approaches other than to conclude that there is no compelling reason to depart from the 10th Circuit BAP, and the Court will therefore follow Holcomb, which adopts the majority view. Holcomb v. Hardeman (In re Holcomb), 380 B.R. 813 (10th Cir. BAP 2008).41 Thus, in this instance the automatic stay in the underlying bankruptcy case—the Second Bankruptcy Case—terminated as to actions taken against the debtor on the 30th day but remained in place as to actions taken against property of the estate.
Ms. Dugas asserts that the automatic stay in the Second Bankruptcy Case was violated by the filing of the following documents in the Foreclosure Action: (1) the Ejectment Motion, (2) the Motion for Summary Judgment Against Young, (3) the memorandum in support of the Motion for Summary Judgment Against Young, (4) the reply in support of the Motion for Summary Judgment Against Young, (5) the notice of completion of briefing, and (6) the request for hearing.
There is no dispute that the actions affecting the property to collect a debt took place beyond the 30th day after commencement of the Second Bankruptcy Case. The Second Bankruptcy Case commenced on August 14, 2024. The 30th day after the Second Bankruptcy Case commenced was September 13, 2024. Movants took no action in the Foreclosure Action from the commencement of the Second Bankruptcy Case until September 27, 2024, when they filed the Ejectment Motion seeking ejectment of Ms. Dugas from the Property and a writ of restitution. They filed the Motion for Summary Judgment Against Young and memorandum in support of such motion on October 11, 2024. Therefore, the automatic stay had terminated with respect to Ms. Dugas but remained in place with respect to property of the estate at the time of the relevant actions.
The first issue in determining whether a stay violation occurred where the stay remained in place with respect to property of the estate is what relevant property of the estate existed at the time of the commencement of the Second Bankruptcy Case. In this matter, since the State Court entered the order withdrawing approval of the foreclosure sale, Ms. Dugas may have had an ownership interest in the Property at the time the Second Bankruptcy Case was commenced which became property of the bankruptcy estate. See, e.g., In re Milasinovich, No. 13-12294, 2014 WL 644455, at *5 (Bankr. D.N.M. Feb. 19, 2014) (providing that debtor lost ownership interest in the house, other than redemption right, upon entry of order approving special master’s sale); Plaza Nat’l Bank v. Valdez, 1987-NMSC-105, ¶ 12 (providing that title to foreclosed property transfers upon entry of order approving special master’s sale).
Next, the Court examines the actions which Ms. Dugas assert violated the stay. The Ejectment Motion which sought to eject Ms. Dugas from the Property and obtain a writ of restitution was brought against Ms. Dugas personally. The automatic stay was terminated with respect to Ms. Dugas prior to the filing of the Ejectment Motion, and the Ejectment Motion does not impact any potential bankruptcy estate interest in the Property. Removing Ms. Dugas from the Property did not affect any potential bankruptcy estate interest in the Property, and therefore did not violate the automatic stay. The Court will therefore grant summary judgment in the Movants’ favor on this issue.
The other filings at issue—the Motion for Summary Judgment Against Young, memorandum in support of such motion, reply in support of such motion, notice of completion of briefing, and request for hearing—could have affected the bankruptcy estate’s potential ownership interest in the Property, because they seek to adjudicate ownership of the Property. A determination that Mr. Young had a valid 50% ownership interest in the Property would have meant that the bankruptcy estate’s potential ownership interest was reduced. Therefore, the Court is unable to rule as a matter of law that such filings did not violate the automatic stay. The Court will deny summary judgment on this issue.42
For the reasons set forth in this Memorandum Opinion, the Court will enter an order granting the Summary Judgment Motion in part and denying it in part.
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: May 14, 2026
COPY TO:
Debtor-Plaintiff
Laura Kelly Dugas, pro se
709 Parkland Cir SE
Albuquerque, NM 87108
Via U.S. Mail
Counsel for Defendant Stephen Natelson
Charles R. Hughson
Rodey, Dickason, Sloan, Akin & Robb, P.A
Electronic notice via CM/ECF
Counsel for Defendant Ike Gallegos
Christopher M. Gatton
Marcus Anthony Sedillo
Gatton & Associates
Electronic notice via CM/ECF