Summary
holding that automatic stay protected nondebtor wife of bankrupt debtor, even though debtor himself was not sued
Summary of this case from Brashear v. Victoria Grdn. McKinneyOpinion
No. 01-02-01019-CV
Opinion issued January 20, 2005.
On Appeal from the County Civil Court at Law No. 1, Harris County, Texas, Trial Court Cause No. 768774.
Panel consists of Justices NUCHIA, HANKS, and HIGLEY.
MEMORANDUM OPINION
This is an appeal of a judgment in favor of appellee, Gow-Ming Chao, and against appellant, Lizzie Lovall, in a forcible detainer action brought by appellee to regain possession of premises occupied by appellant. Appellant raises four issues on appeal: (1) whether the trial court had jurisdiction to hear appellee's forcible detainer action, (2) whether appellee's petition stated a cause of action for forcible detainer, (3) whether the evidence was sufficient to support the trial court's judgment, and (4) whether the judgment is enforceable when no findings of fact and conclusions of law were produced by the trial court.
We dismiss for lack of jurisdiction.
Factual and Procedural History
On December 5, 2001, Webster W. Lovall, appellant's husband, filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code. At the time Webster filed for bankruptcy, he and appellant were residing in a house owned by appellee.
The nature of appellant's tenancy is not clear. Appellant claims that she and her husband had a leasehold interest in the property. Appellee, however, contends that appellant's lease had expired by its own terms and that appellant and her husband were hold-over tenants who neglected to pay rent ( i.e., tenants at sufferance).
On January 18, 2002, appellee initiated a forcible detainer action against appellant in the justice of the peace court, asserting that appellant had failed to pay rent on the house in which she and her husband were residing. The justice of the peace court ruled in favor of appellee and issued a writ of possession.
Appellant appealed the justice of the peace court ruling to the county court. On June 24, 2002, a trial was held before the court and judgment was again rendered in appellee's favor.
Appeals of justice of the peace court rulings in regards to forcible detainer actions are heard, de novo, by county courts at law. TEX. R. CIV. P. 749.
Appellant then appealed to this Court. After receiving notice from appellant of the pending bankruptcy action, we abated the appeal. Appellee filed a motion to reinstate the appeal. Attached to the motion was a certified copy of an order of the bankruptcy court, allowing the appeal to proceed. We granted appellee's motion and reinstated the appeal.
See TEX. R. APP. P. 8.1.
See TEX. R. APP. P. 8.3.
Applicability of Bankruptcy Stay
On appeal, appellant contends that the justice of the peace and the county court lacked jurisdiction to enter a judgment of possession in favor of appellee because appellee's claims were subject to an automatic stay under the Bankruptcy Code. We agree.
When a defendant files a bankruptcy petition, an automatic stay goes into effect and abates judicial proceedings against that party. In re Southwestern Bell Tel. Co., 35 S.W.3d 602, 604 (Tex. 2000). Specifically, the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay of the following:
the commencement or continuation, including the issuance or employment of process, of a judicial administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title.
11 U.S.C. § 362(a)(1) (2003). This stay takes effect regardless of whether the other parties to the stayed action are cognizant of the bankruptcy proceedings. Marroquin v. D N Funding, Inc., 943 S.W.2d 112, 115 (Tex.App. 1997, no writ).
The bankruptcy stay deprives state courts of jurisdiction over the debtor and his property until the stay is lifted or modified. Baytown State Bank v. Nimmons, 904 S.W.2d 902, 905 (Tex.App. 1995, writ denied). Therefore, any subsequent judicial proceedings taken against the debtor that are in violation of the automatic stay are void, not merely voidable. Continental Casing Corp. v. Samedan Oil, 751 S.W.2d 499, 501 (Tex. 1988).
The stay applies to any action taken against the debtor to obtain possession of property of the debtor's bankruptcy estate or of property from the bankruptcy estate or to exercise control over property of the bankruptcy estate. 11 U.S.C. § 362(a)(3). The debtor's bankruptcy estate is comprised of all the debtor's legal or equitable interest in property as of the commencement of the bankruptcy action. In re MortgageAmerica, 714 F.2d 1266, 1273-74 (5th Cir. 1983); Audio Data Corp. v. Monus, 789 S.W.2d 281, 286 (Tex.App. 1990, no writ); see also 11 U.S.C. § 541(a)(1).
Whether a proceeding is "against the debtor" within the meaning of section 362(a)(1) is determined from an examination of the posture of the case at the initial proceeding. Marroquin, 943 S.W.2d at 115. While the general rule is that the automatic stay is not available to non-bankrupt co-defendants, in some very limited situations, it may be available. In re S.I. Acquisition, Inc., 817 F.2d 1142, 1147 (5th Cir. 1987). Such a situation exists when the debtor and non-bankrupt co-defendant are closely related or "when there is such an identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor." Id. Thus, when one spouse is in bankruptcy proceedings and a forcible detainer action is filed against the non-bankrupt spouse, the stay would apply to both spouses. See Marroquin, 943 S.W.2d at 115.
Because appeals are continuations of judicial proceedings, the automatic stay applies at both the trial and appellate level. Davis v. Baker, 29 S.W.3d 921, 923 (Tex.App. 2000, no pet.). Thus, in an action initiated against the debtor, no party to the action may appeal absent relief by the bankruptcy court from the automatic stay. Id. at 924.
In the instant case, appellant and her husband were in possession of the premises at issue when her husband's bankruptcy petition was filed. Although the nature of their tenancy is not clear, at the very least, appellant and her husband's possessory interest was a tenancy at sufferance, which is an equitable interest under section 541 of the bankruptcy code, and, therefore, protected by the automatic stay. See Trang v. Trang, 58 B.R. 183, 188 (Bankr. S.D. Tex. 1985); see also 11 U.S.C. § 541. Furthermore, although only appellant — the non-bankrupt spouse — was named as a defendant in appellee's forcible detainer action, the interests of appellant and her husband (as to the forcible detainer action) were such that the stay applied to both parties. Therefore, we conclude that the bankruptcy court's automatic stay deprived the justice of the peace court of jurisdiction over appellee's forcible detainer action.
Because the automatic bankruptcy stay applied to appellee's forcible detainer action, neither the justice of the peace nor the county court had jurisdiction over the forcible detainer action. See Nimmons, 904 S.W.2d at 905. Thus, we hold that the county court's judgment is void. See Samedan Oil, 751 S.W.2d at 501.
Though it is wholly unnecessary to appeal from a void judgment, it is settled law that an appeal may be taken and the appellate court may declare the judgment void. See State ex rel. Latty v. Owens, 907 S.W.2d 484, 486 (Tex. 1995); see also Moore Landry, L.L.P. v. Hirsch Westheimer, P.C., 126 S.W.3d 536, 543 (Tex.App. 2003, no pet.). Because appellant has attempted to appeal, we are authorized to declare the county court's judgment void. See State ex rel. Latty, 907 S.W.2d at 486; Moore Landry, 126 S.W.3d at 543.
Conclusion
We declare the county court's judgment void and dismiss the appeal for want of jurisdiction. See State ex rel. Latty v. Owens, 907 S.W.2d 484, 486 (Tex. 1995); Moore Landry, L.L.P. v. Hirsch Westheimer, P.C., 126 S.W.3d 536, 543 (Tex.App. 2003, no pet.).
All pending motions are dismissed as moot.