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In re Collett

United States Bankruptcy Appellate Panel of the Sixth Circuit

May 21, 2014


Appeal from the United States Bankruptcy Court for the Eastern District of Kentucky at London. Bankruptcy Case No. 12-61190.


Marcia A. Smith, Corbin, Kentucky, for Appellant.

Travis A. Rossman, JEWELL & ROSSMAN LAW OFFICE, PLLC, Barbourville, Kentucky, for Appellee.

Before: EMERSON, HARRISON, and LLOYD, Bankruptcy Appellate Panel Judges.


MARIAN F. HARRISON, Bankruptcy Appellate Panel Judge.

Debtor[1] Grace Collett appeals the decision of the bankruptcy court denying her motion for sanctions against Lee Oil Company for allegedly violating the automatic stay by cooperating in a criminal investigation after her bankruptcy petition was filed. The bankruptcy court held that pursuant to 11 U.S.C. § 362(b)(1), the automatic stay did not apply to Lee Oil Company's actions. For the reasons stated below, the decision of the bankruptcy court is AFFIRMED.


The issues raised in this appeal are whether the bankruptcy court: (1) applied the proper legal standard in determining that Lee Oil Company did not violate the automatic stay by assisting in a criminal prosecution of the Debtor after the Debtor filed her bankruptcy petition; (2) erred in its application of that standard to the facts of the instant case; and (3) erred in holding that Lee Oil Company could pursue collection from a third party insurance company without violating the automatic stay.


The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Eastern District of Kentucky has authorized appeals to the Panel, and none of the parties have timely elected to have these appeals heard by the district court. 28 U.S.C. §§ 158(b)(6), (c)(1). A bankruptcy court's final order may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Asphalt Corp. v U.S., 489 U.S. 794, 798 (1989) (citation and quotation marks omitted). An order denying a party's motion for sanctions for violating the automatic stay is a final appealable order. In re Glaspie, 410 B.R. 261, 266 (E.D. Mich. 2007) ("'The order in this case denied [the] motion for contempt. This ended the particular controversy regarding violation of the automatic stay. . . .'") (citing Anastasia Cruises, Inc. v. Exxon Mobil Corp. (In re Commodore Holdings, Inc.), 331 F.3d 1257, 1259 (11th Cir. 2003)). See also 10 Collier on Bankruptcy ¶ 9020.04 (16th ed. rev. 2013) ("Contempt orders, like other orders resulting from contested matters, are final orders subject to appeal."); Lindsey v. O'Brien, Tanski, & Young Health Care Providers (In re Dow Corning Corp.), 86 F.3d 482, 488 (6th Cir. 1996) (citations omitted) ("[The] finality requirement is considered 'in a more pragmatic and less technical way in bankruptcy cases than in other situations.' "). See also TranSouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 679 (B.A.P. 6th Cir. 1999) (Order granting sanctions for violation of stay is a final order.).

The bankruptcy court's legal conclusions are reviewed de novo. Caradon Doors & Windows, Inc. v. Eagle-Picher Indus., Inc. (In re Eagle-Picher Indus., Inc.), 447 F.3d 461, 463 (6th Cir. 2006). "De novo means that the appellate court determines the law independently of the trial court's determination." Treinish v. Norwest Bank Minn., N.A. (In re Periandri), 266 B.R. 651, 653 (B.A.P. 6th Cir. 2001) (internal quotation marks and citations omitted). "No deference is given to the trial court's conclusions of law." Mktg. & Creative Solutions, Inc. v. Scripps Howard Broad. Co. (In re Mktg. & Creative Solutions, Inc.), 338 B.R. 300, 302 (B.A.P. 6th Cir. 2006) (citations omitted).

The bankruptcy court's factual conclusions are reviewed under a clearly erroneous standard. Fed.R.Bankr.P. 8013. A finding of fact is deemed clearly erroneous "when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir. 2007) (citations omitted). " 'Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.' " Thurman v. Yellow Freight Sys., Inc., 90 F.3d 1160, 1166 (6th Cir. 1996) (quoting Anderson v. Bessemer City, 470 U.S. 564, 574 (1985)). Moreover, "due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Fed.R.Bankr.P. 8013. As explained by the United States Supreme Court:

When findings are based on determinations regarding the credibility of witnesses, [Fed. R. Civ. P.] 52(a) demands even greater deference to the trial court's findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding of and belief in what is said. . . . [W]hen a trial judge's finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story ...

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