Chunn v. Chunn

United States Court of Appeals,

Fifth Circuit.

No. 96-20240.

In the Matter of Wayman Henry CHUNN, Debtor.

Linda Lee CHUNN, Plaintiff-Appellee,

v.

Wayman Henry CHUNN, III, Defendant-Appellant.

March 6, 1997.

Appeal from the United States District Court for the Southern
District of Texas.

Before DUHÉ, BENAVIDES and STEWART, Circuit Judges.

BENAVIDES, Circuit Judge:

This is a bankruptcy appeal challenging the granting of relief

from an automatic stay under 11 U.S.C. § 362.1 We focus on a

question of first impression in this circuit, whether the lifting

of the stay is an appealable order.

I. BACKGROUND AND PROCEDURAL HISTORY

On November 9, 1994, a state district court in Texas signed a

final decree of divorce, dissolving the marriage of Wayman Henry

Chunn, III (Mr. Chunn), the debtor-appellant in this bankruptcy

appeal, and Linda Lee Chunn (Mrs. Chunn), the appellee. Mr. Chunn

filed an appeal from the divorce decree that, according to the

1
11 U.S.C. § 362(a)(1) provides that the automatic stay
applies to, among other things, "the commencement or continuation,
including the issuance or employment of process, of a judicial,
administrative, or other action or proceeding against the debtor."
(emphasis added). It also applies to "the enforcement, against the
debtor or against property of the estate, of a judgment obtained
before the commencement of the case under this title." Id. at
362(a)(2).

1
parties, currently is pending before the Texas appellate courts.

On December 5, 1994, Mr. Chunn voluntarily filed a Chapter 7

petition in the United States Bankruptcy Court for the Southern

District of Texas.

On December 30, 1994, the state district court held an

evidentiary hearing on Mrs. Chunn's motion for temporary orders for

support during pendency of the appeal of the divorce decree. On

January 9, 1995, the state district court ordered Mr. Chunn to pay

the following amounts each month during pendency of the appeal:

$1,560 for the support of the three minor children; $240 spousal

support; and $912 to Nations Bank for the mortgage payment, which

was designated as "additional spousal support." The court found

that Mr. Chunn had the ability to make the aforementioned payments

from his post-bankruptcy-petition earnings.

Mr. Chunn has failed to make the monthly mortgage payments

that were designated as spousal support. Efforts to enforce the

support order by contempt have resulted in Mr. Chunn's

incarceration and subsequent release. After Mrs. Chunn filed an

additional motion for contempt based on Mr. Chunn's continued

noncompliance with the order to pay the mortgage, the state court

requested that Mrs. Chunn seek clarification from the bankruptcy

court regarding the state court's continued ability to enforce the

temporary orders in the face of the automatic stay under 11 U.S.C.

§ 362.2

2
Previously, on March 22, 1995, the bankruptcy court granted
Mrs. Chunn's first motion for relief from stay. Mr. Chunn did not
appeal that lifting of the stay. On the suggestion of the state

2
 On December 12, 1995, Mrs. Chunn filed a motion for relief

from the automatic stay in bankruptcy court. In that motion, she

sought an order "lifting the stay for purposes permitting the

Divorce Court to enforce the currently pending temporary orders

directing the payment by [Mr. Chunn] of the mortgage payments on

the former marital homestead directly to the mortgage company."

Mr. Chunn filed an answer asserting that he was no longer

obligated to pay the mortgage because the mortgage company failed

to timely object to his discharge in bankruptcy. Mr. Chunn further

responded that Mrs. Chunn was "attempting to retroactively validate

a state court order which was obtained in flagrant disregard for

the proper provisions under Title 11." After conducting a hearing,

the bankruptcy court signed an order lifting the stay on January 5,

1996. The order provided that "the stay lifts to permit the court

having jurisdiction over the pending divorce proceeding between

Linda Lee Chunn and Wayman Henry Chunn, III to enter and enforce

temporary orders regarding spousal support, including contempt

orders, in accordance with state law."

On January 12, 1996, Mr. Chunn appealed to the district court.

A little over two weeks later, the district court, without benefit

of briefing, affirmed the bankruptcy court's lifting of the stay.

Mr. Chunn now appeals to this Court.3

judge, Mrs. Chunn then filed the instant motion to lift stay to
ensure that the state judge had specific permission to incarcerate
Chunn for his continued contempt of the temporary order.
3
After the parties filed briefs in this Court, the bankruptcy
court has entered a judgment that provides, among other things,
that the following debts are nondischargeable: all child support

3
II. ANALYSIS

A. WHETHER THE ORDER WAS FINAL AND APPEALABLE

Although the parties do not challenge the appellate

jurisdiction of either the district court or this Court, "we are

obligated to examine the basis for our jurisdiction, sua sponte, if

necessary." Williams v. Chater, 87 F.3d 702, 704 (5th Cir.1996).

We apparently have never squarely addressed the question whether a

bankruptcy court's lifting of an automatic stay is a final and

appealable order under 28 U.S.C. § 158.4

In pertinent part, section 158(a) provides that "[t]he

district courts of the United States shall have jurisdiction to

hear appeals from final judgments, orders, and decrees" of

bankruptcy judges. Section 158(d) provides that "[t]he courts of

appeals shall have jurisdiction of appeals from all final

decisions, judgments, orders, and decrees entered under subsections

(a) and (b) of this section."5

In the context of 28 U.S.C. § 1291, the Supreme Court has

defined a final judgment as a decision that ends the litigation on

the merits and leaves nothing for the court to do except execute

the judgment. Coopers and Lybrand v. Livesay, 437 U.S. 463, 467,

payments; the temporary spousal support in the amount of $240 per
month; and the $912 mortgage payments to the mortgage company.
4
Here, "the district court's order simply affirmed the
bankruptcy court's disposition. Either both were final or neither
was." In re Louisiana World Exposition, Inc., 832 F.2d 1391, 1395
(5th Cir.1987).
5
Subsection 158(b) is not relevant to this case in that it
involves an appellate panel comprised of bankruptcy judges.

4
98 S.Ct. 2454, 2456, 57 L.Ed.2d 351 (1978). In the context of

bankruptcy cases, however, it is well established that finality "is

contingent upon the conclusion of an adversarial proceeding within

the bankruptcy case, rather than the conclusion of the entire

litigation." Matter of England, 975 F.2d 1168, 1172 (5th

Cir.1992). This Court has explained that an order that "ends a

discrete judicial unit in the larger case concludes a bankruptcy

proceeding and is a final judgment for the purposes of section

158(d)." Id.

Although we apparently have never held that a bankruptcy

court's order granting relief from an automatic stay is final and

appealable, we have stated, in dicta, that "[o]rders granting or

denying relief from the automatic stay [pursuant to § 362] are

final and appealable." In the Matter of Lieb, 915 F.2d 180, 185 n.

3 (5th Cir.1990) (citing In re Sun Valley Foods Co., 801 F.2d 186,

190 (6th Cir.1986)). Indeed, our research reveals that our sister

circuits have invariably held that orders granting relief from a §

362 automatic stay are final and appealable. In re Pegasus Agency,

Inc., 101 F.3d 882, 885 (2d Cir.1996); Eddleman v. United States

Dep't of Labor, 923 F.2d 782, 784 (10th Cir.1991), overruled in

part on other grounds, Temex Energy, Inc. v. Underwood, Wilson,

Berry, Stein & Johnson, 968 F.2d 1003 (10th Cir.1992); In re Dixie

Broadcasting, Inc., 871 F.2d 1023, 1026 (11th Cir.), cert. denied,

493 U.S. 853, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989); In re Sun

Valley Foods Company, 801 F.2d 186, 189 (6th Cir.1986); In re

American Mariner Industries, Inc., 734 F.2d 426, 429 (9th

5
Cir.1984); In re Comer, 716 F.2d 168, 172 (3d Cir.1983).

In making this determination, several of the circuits have

relied on the legislative history of the automatic stay in the

Bankruptcy Code, which reveals that Congress perceived the

automatic stay to be similar to a permanent injunction. E.g.,

Eddleman, 923 F.2d at 785 (citing H.R.Rep. No. 595, 95th Cong., 2d

Sess. 344, reprinted in 1978 U.S.Code Cong. & Admin.News 5787,

5963, 6300). Reasoning that a permanent injunction is appealable

as a final order, the courts have concluded that Congress likewise

intended the lifting of a stay to be appealable. Id. (citing

Vicksburg v. Henson, 231 U.S. 259, 34 S.Ct. 95, 58 L.Ed. 209

(1913)).

Moreover, the courts have recognized that if such orders are

not considered final and appealable, they would be, for the most

part, unreviewable by the circuit courts. E.g., Eddleman, 923 F.2d

at 785. We are persuaded by the above reasoning and conclude that

an order granting relief from an automatic stay is a final and

appealable order.

B. WHETHER BANKRUPTCY COURT ERRED IN LIFTING THE STAY

After reviewing the record, briefs, and arguments of counsel,

it is clear that the state court's order that Mr. Chunn pay the

mortgage payments pending appeal of the divorce judgment was

actually in the nature of support. It was designated as such and

can hardly be construed as anything but a support order. It is

without dispute that Texas courts, like the courts of other states,

routinely make temporary support orders regarding the payment of

6
expenses, including mortgage payments. This is especially so in

cases such as the instant case where the party receiving support is

the primary custodian of the minor children of the marriage sought

to be dissolved. Pursuant to § 362(b)(2), which specifically

exempts actions for the collection of maintenance, the automatic

stay did not apply to the support order.6 Therefore, the

bankruptcy court could not have abused its discretion in lifting

the stay to allow enforcement of the order. See Gibraltar Sav. v.

LDBrinkman Corp., 860 F.2d 1275, 1285 (5th Cir.1988), cert. denied,

490 U.S. 1091, 109 S.Ct. 2432, 104 L.Ed.2d 988 (1989). We likewise

find Mr. Chunn's remaining arguments to be without merit.

AFFIRMED.

6
Chunn's circular argument that the temporary order for
support was void because it violated the stay (that was lifted) is
meritless. This Court has held "that actions taken in violation of
an automatic stay are not void, but rather that they are merely
voidable, because the bankruptcy court has the power to annul the
automatic stay pursuant to section 362(d)." Picco v. Global Marine
Drilling Co., 900 F.2d 846, 850 (5th Cir.1990) (emphasis in
opinion) (citing Sikes v. Global Marine, Inc., 881 F.2d 176 (5th
Cir.1989)). The Court further explained that when a bankruptcy
court lifts the automatic stay, any defect in the previous action
is cured. Thus, in the instant case, any alleged defect in the
state court order was cured when the stay was lifted.

7