Vision Bank v. White et al

Filing 25

Order re 24 Status Report. The stay of this action is lifted and this action is dismissed with prejudice with each party to bear their own costs. Signed by Judge Kristi K. DuBose on 7/24/2012. (sdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

VISION BANK, a Florida Banking
Corporation,
Plaintiff,
vs.
BRUCE Q. WHITE and
JACQUELINE L. WHITE,
Defendants.

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Civil Action No. 10-0324-KD-C

ORDER
This action is before the Court on the status report filed by plaintiff SE Property
Holdings, LLC as successor by merger to Vision Bank (Doc. 24). Plaintiff reports that
the Whites’ Chapter 7 bankruptcy case is now closed and distribution has been made to
plaintiff with respect to its Proof of Claim. Plaintiff states that this action may now be
closed because the bankruptcy has concluded. Upon consideration, and for the reasons
set forth herein, the stay of this action is lifted and this action is dismissed with
prejudice. The Clerk of the Court is directed to close this action.
The docket indicates that the Whites did not file or serve an answer. Plaintiff
applied for entry of default and the Clerk entered default (docs. 9, 10). Therefore, the
Court construes the status report as a notice of voluntary dismissal with prejudice
pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure which provides
for voluntary dismissal of an action by the plaintiff before the defendant serves an answer
or a motion for summary judgment.

After the entry of default, the Whites filed their suggestion of bankruptcy and this
Court stayed the action pursuant to the automatic stay provision of 11 U.S.C. §362 (doc.
12). Although the automatic stay has issued, Acourts retain jurisdiction >to determine the
applicability of the stay to litigation pending before them, and to enter orders not
inconsistent with the terms of the stay.=@ Robert v. Bell Helicopter Textron, Inc., 2002
WL 1268030, 2 (N.D. Tex. May 31, 2002) (quoting Picco v. Global Marine Drilling Co.,
900 F.2d 846, 850 (5th Cir. 1990)).
The automatic stay, in relevant part, operates to stay the continuation of judicial
proceeding against the debtor. 11 U.S.C. ' 362(a)(1). Also, the automatic stay serves two
primary purposes: To relieve the debtor from the financial expense of litigation during
the bankruptcy proceedings and to protect creditors by preserving the debtor=s estate.
Carver v. Carver, 954 F.2d 1573, 1576 (11th Cir.1992). However, “courts have held
that the automatic stay does not prevent a court from dismissing a case against the debtor
on the motion of the plaintiff pursuant to rule 41(a) of the Federal Rules of Civil
Procedure”, so long as the dismissal is not inconsistent with the purpose of the automatic
stay. Settles v. Commissioner of Internal Revenue, 138 T.C., No. 19, 2012 WL 1605350,
*3 (U.S. Tax Ct. May 8, 2012) (citing Arnold v. Garlock Inc., 288 F.3d 234 (5th
Cir.2002); Slay v. Living Ctrs. E., Inc., 249 B.R. 807 ( S.D.Ala. 2000)1; Chase Manhattan
Bank, N.A. v. Celotex Corp., 852 F.Supp. 226 (S.D.N.Y. 1994)).2

1

In Slay, the district court found that a voluntary dismissal under Rule 41(a)(1)(i)
does not violate the automatic stay and that Athe purposes of the Bankruptcy Code [a]re in
no way infringed by the dismissal by a plaintiff of a case against the bankrupt without
any additional cost or risk to the bankrupt or its creditors.@) (quoting Chase Manhattan
Bank, N.A. v. Celotex Corp., 852 F. Supp. 226, 228 (S.D.N.Y. 1994)) (brackets in
original).
2

See also Independent Union of Flight Attendants v. Pan American World
Airways, Inc., 966 F.2d 457, 459 (9th Cir. 1992) (finding automatic stay did not preclude
(Continued)
2

Dismissal of this action would relieve the Whites from the expense of litigation.
Also, since the bankruptcy action has closed, the creditors have been protected by that
proceeding. Therefore, dismissal of this litigation against the Whites is not inconsistent
with the purposes of the automatic stay. Accordingly, this action is due to be dismissed
with prejudice with each party to bear their own costs.
DONE and ORDERED this the 24th day of July, 2012.

s / Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

disposing of a motion to dismiss a bankruptcy appeal); Dennis v. A.H. Robins Co., Inc.,
860 F.2d 871, 872 (8th Cir. 1988) (holding that the § 362(a) stay does not “preclude
another court from dismissing a case on its docket or ... affect the handling of a case in a
manner not inconsistent with the purpose of the automatic stay.”); Gallagher v. Sports
Publishing, LLC, 2009 WL 294400 (C.D. Ill. February 4, 2009) (AA Rule 41 dismissal
does not violate the automatic stay because the purposes of the Bankruptcy Code are in
no way infringed by dismissal of the action against the bankrupt party without any
additional cost or risk to the bankruptcy party or its creditors@) (citations omitted).

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