In re 360 Networks (USA) Inc.

MEMORANDUM OF DECISION AND ORDER

ALLAN L. GROPPER, Bankruptcy Judge.

The Fishel Company (“Fishel”) has moved for relief from the automatic stay of § 362 of the Bankruptcy Code to file lawsuits in California and Oregon against one or more of the Debtors. Fishel asserts that it has already obtained construction and mechanic’s hens (“Liens”) on leasehold interests of the Debtors by virtue of its supply of labor, materials and equipment for the installation of an innerduct from Sacramento, California to Portland, Oregon. It further alleges that it has recorded such liens but that under California and Oregon law it is necessary to file suit within 90 and 120 days, respectively, in order for the encumbrances to continue. Fishel says it seeks only to file complaints in the required lawsuits, called hereafter “Continuation Actions,” and that the Continuation Actions should thereafter remain stayed pursuant to § 362.

These Debtors have many creditors who similarly claim to hold mechanic’s and/or construction hens and who are faced with State statutes that require the filing of a Continuation Action within a specified period after the recordation of the hen. Last week this Court heard the motion of Manuel Brothers Incorporated (MBI), another creditor claiming to hold a mechanic’s hen on property in California, who sought relief from the stay to file a similar Continuation Action to continue and/or enforce its alleged hen. In response to MBI’s motion, the Debtors pointed out that MBI’s concern was misplaced as a consequence of §§ 546(b) and 108(c) of the Bankruptcy Code. These sections, the Debtors argued, *762compel creditors to perfect and maintain liens that relate back in time through notice instead of filing enforcement actions that would otherwise be in violation of the automatic stay. Section 546(b)(1)(B) subjects the rights and powers of a trustee or debtor in possession to any generally applicable law that “provides for the maintenance or continuation of perfection of an interest in property to be effective against an entity that acquires rights in such property before the date on which action is taken to effect such maintenance or continuation.” Section 546(b)(2) then provides that if such law:

(A) requires seizure of such property or commencement of an action to accomplish such perfection, or maintenance or continuation of perfection of an interest in property; and
(B) such property has not been seized or such an action has not been commenced before the date of the filing of the petition;
such interest in such property shall be perfected, or perfection of such interest shall be maintained or continued, by giving notice within the time fixed by such law for such seizure or such commencement.

Section 362(b)(3) permits action under § 546(b) by providing that it is not a violation of the automatic stay for a creditor to “maintain or continue the perfection of, an interest in property to the extent that the trustee’s rights and powers are subject to such perfection under section 546(b).” No relief from the stay would be necessary as MBI and other creditors could preserve their claims through the filing of notice.

In addition to the protections of §§ 546(b)(2) and 362(b)(3), § 108(c) further tolls the period under applicable nonbank-ruptcy law for “commencing or continuing' a civil action in a court other than a bankruptcy court on a claim against the debtor” until the later of (i) the end of such period, including any suspension thereof occurring on or after the commencement of the case, or (ii) 30 days after notice of the termination or expiration of the automatic stay.

Based on these statutory provisions and relevant case law, the Court agreed with the Debtors that the claims of MBI and other holders of alleged mechanic’s and/or construction liens on property of the Debtors would be protected and preserved without the need to seek or obtain relief from the automatic stay to file Continuation Actions. To the extent the filing of a Continuation Action would constitute an act “for the maintenance or continuation of perfection of an interest in property,” within the meaning of §§ 546(b) and 362(b)(3), preservation of the claims could be accomplished by the transmittal of a notice.1 Indeed, the purpose of § 546(b) is to “protect, in spite of the surprise intervention of a bankruptcy petition, those whom State law protects by allowing them to perfect their liens or interests,” through post-petition notice on liens recorded prior to the bankruptcy petition.2 To the extent that a filing of a Continuation Action was something more that the “maintenance or continuation of perfection,” and constituted *763the “enforcement” of a lien — and therefore might not be within the purview of §§ 546(b) and 362(b)(3) — it was stayed by virtue of § 362(a) and the time period for commencement of such action was tolled under § 108(c).3

It appears to this Court that the requirement of the filing of a Continuation Action is within the purview of § 546(b), and that holders of alleged mechanic’s liens can preserve their rights by notice without putting debtors to the burden and expense of litigation and motions for relief from the automatic stay. The word “perfection” as used in § 546(b) is not defined in the Bankruptcy Code (or in the Uniform Commercial Code, for that matter), and it would give the term “perfection” a narrow reading to hold that the filing of a Continuation Action is not an act intended to continue the “perfection” of an interest in property. There is ample precedent for the proposition that where the filing of an enforcement action is required to preserve a lien under State law, § 546(b) allows, and indeed compels, creditors to give notice to a debtor instead of filing suit.4 As for the Continuation Action itself, an alleged Hen-holder, who provided § 546(b) notice, would be fully protected by virtue of the fact that § 108(c) tolls the time for prosecuting the suit.5

In order to resolve the MBI motion and to forestall other applications seeking relief from the stay for the same reason, this Court suggested that the Debtors submit an order, acceptable to MBI and of general applicability, to set a precedent that would apply to all holders of alleged mechanic’s and/or construction liens. Such an order has been entered, and it reiterates that § 546(b) preserves the claims of creditors who provide notice of their Hens and that § 108(c) tolls the time for prosecuting an enforcement action for such creditors. Its provisions seem to provide full protection to Fishel, except for one caveat.

Fishel at the return of this motion argued that, unHke MBI, it asserts Hens on property leased by the Debtors rather than owned by them, and that its Continuation Actions would have to be brought against third-party property owners, as well as the Debtors. Accordingly, Fishel contended that it would not be protected by bringing actions against the owners alone, because a State Court judge might find that the Debtors are necessary parties and that the third-party actions are insufficient because of the absence of the Debtors. Second, Fishel argued that an order permitting the filing of an action and then staying that action could not prejudice the Debtors and that similar orders have been entered in other bankruptcy cases.

Fishel’s second reason for seeking relief from the automatic stay has no validity. The “similar” orders that Fishel presented to the Court at oral argument modified the stay in those eases upon consent and stipulation of aH the parties.6 It may indeed *764have been practical for debtors in those cases to consent to relief from the stay to permit the filing of an action but not its prosecution. A debtor can rarely, if ever, be faulted for choosing the most economical way of resolving a dispute. But where, as here, a debtor is faced with multiple lienholders and dozens of alleged liens, it is not necessarily economical for a debtor simply to consent to the relief sought by the creditor and, perhaps, be prejudiced by the cost of unnecessary motion practice.

Fishel’s other argument is that its rights against the third-party owners of the property encumbered by the alleged liens might be impaired by virtue of the fact that a State court might find that a suit against the owners alone was insufficient and lacked a necessary party (one of the Debtors), thereby finding cause to dismiss the claims. At oral argument it was alleged that such a situation had occurred. This Court has been unable to find any support in the Declaration of Patrick W. Wade, dated October 22, 2001, that a State Court had ignored Federal law or the Supremacy Clause of the Constitution in such manner.7

On the other hand, Fishel’s rights against the owners do not appear to be protected by § 546(b). Moreover, there is some uncertainty as to whether Fishel could sue the owners. In Valley Transit Mix of Ruidoso, Inc. v. Miller, the Tenth Circuit held that § 362(a) applied to stay a mechanics’ lien foreclosure claim against the owners of property leased by a debt- or.8 The court further found that § 108(c) tolled such claims against the nondebtor parties as well as the debtor, where the debtor was a necessary party to the action.9 Although such a holding would fully protect Fishel, Valley Transit is not necessarily the law of this circuit and the owners are not before this Court at this point and are not bound by the results of this motion. This creates some uncertainty for Fishel.

Any decision on a motion for relief from the stay includes a balancing of the harm to the debtor against the harm to the creditor from a continuation of the stay.10 The only apparent disadvantages to the Debtors from affording Fishel the limited relief it seeks are the costs of this motion and the burden created by the filing of suits in State courts that will name one or more of the Debtors, require some attention, and by their very existence raise the possibility of a bifurcation of issues among different courts. These harms can be offset, first, by permitting the Debtors to move for payment by Fishel of their costs in connection with the instant motion and State court litigation that is highly likely to *765be unnecessary. In other words, although this Court will not prejudge the results of such motion and Fishel can argue against the imposition of costs, to the extent Fishel obtains only a comfort order, Fishel, in fairness to the Debtors and their other creditors, should pay for it.

The harm to the Debtors can be secondarily compensated by holding Fishel strictly to its representations on this motion. It states that it seeks only a modification of the automatic stay that would give it the opportunity to file a lawsuit and then leave it stayed. Joinder of one or more of the Debtors would permit Fishel to file its action against the nondebtor owners without greatly prejudicing the Debtors.11

For the reasons stated above, Fishel is granted limited relief from the automatic stay, pursuant to § 362(d)(1) of the Bankruptcy Code, solely in order to file one or more actions in State court in order to continue and/or enforce its alleged liens against one or more of the Debtors as well as one or more third parties, and to cause process to be served on all defendants named in such suit(s), including the Debtors, but absent further order of this Court, neither Fishel nor any other party to such suit(s) may proceed further, and the automatic stay of § 362(a) of the Bankruptcy Code remains in full force and effect as to any such further action. In light of the time periods said to be applicable under State law, to the extent of the limited relief from the stay granted to Fishel herein, the 10-day stay period under Rule 4001(a)(3) of the Federal Rules of Bankruptcy Procedure is hereby waived, and this order is effective immediately. Without prejudging the issue, the Debtors have leave to move the Court for an order requiring Fishel to pay their costs, including reasonable attorneys fees, in connection with this motion and any proceedings resulting from the modification of the stay provided for herein. Notice of this order shall be provided by Fishel to all parties to the suit(s) authorized above.

IT IS SO ORDERED.

. Village Nurseries v. David Gould (In re Baldwin Builders), 232 B.R. 406, 410-411 (9th Cir. BAP 1999); Roofing Concepts, Inc. v. Kenyon Industries, Inc. (In re Coated Sales, Inc.), 147 B.R. 842, 846 (S.D.N.Y.1992); Christopher Ryan v. Grayson Service, Inc. (In re Rincon Island Limited Partnership), 253 B.R. 880, 889 (Bankr.C.D.Cal.2000); In re Sampson, 57 B.R. 304, 307 (Bankr.E.D.Tenn.1986).

. H.R.Rep. No. 595, 95th Cong. 1st Session 371-372 (1977), U.S.Code Cong. & Admin.News 1978, 5963, 6327-6328, reprinted in 3 Collier on Bankruptcy ¶546.03[1], at 546-20 (Lawrence P. King, ed., 15th ed. rev. 2000).

. In re Baldwin Builders, 232 B.R. at 412-413; Morton v. National Bank of New York City (In re Joan Morton), 866 F.2d 561, 564 (2nd Cir.1989); In re Rincon Island, 253 B.R. at 884; Robert H. Bowmar, Mechanic’s Liens: Creation, Perfection or Enforcement in the Face of a Stay, 1993 Hofstra Prop. L.J., 153, 180-183 (1993); see Skywark v. Isaacson, 202 B.R. 557, 563 (S.D.N.Y.1996) (citing Morton, 866 F.2d at 564).

. In re Baldwin Builders, 232 B.R. at 412; In re Coated Sales, 147 B.R. at 845-846; In re Rincon Island, 253 B.R. at 884.

. In re Petroleum Piping Contractors Inc., 211 B.R. 290, 307 (Bankr.N.D.Ind.1997); see Bowmar, Mechanic’s Liens, at 183.

. Wade Decl., Ex. C, (Order on Motion for Relief from Stay by North Coast Electric Company, In re Hood Lumber Company, No. *764397-36565 (Bankr.D. Or. filed Aug. 27, 1997) (entered upon stipulation of the parties)) and Ex. D, (Order on Motion for Relief By Specialty Constructors, Inc., In re Springfield Forest Products, L.P. No. 697-65993 (Bankr.D. Or. filed Nov. 18, 1997) (entered upon consent)).

.Wade Deck ¶ 4, 7 (stating in both cases that all parties consented to the entry of an order granting limited relief from the stay); see id. Ex. C, (Order on Motion for Relief from Stay by North Coast Electric Company, In re Hood Lumber Company, No. 397-36565 (Bankr.D. Or. filed Aug. 27, 1997)); id. Ex. D, (Order on Motion for Relief By Specialty Constructors, Inc., In re Springfield Forest Products, L.P. No. 697-65993 (Bankr.D. Or. filed Nov. 18, 1997)).

. 928 F.2d 354, 356 (10th Cir.1991) (holding that § 362 precludes foreclosure actions against the owner of property "when a debtor has a 'leasehold' or 'possessory' interest in the property and the debt sought to be satisfied out of the property is that of the debtor”).

. Id.

. 3 Collier on Bankruptcy ¶ 362.07[3][f], at 362-95 (Lawrence P. King, ed., 15th ed. rev. 2000).

. See In re Petroleum Piping, 211 B.R. at 309 (finding that a modification of the stay to join the debtor as nominal party causes little prejudice to the debtor when compared with the hardship continuing the stay might cause the lien holder).