The Tenth Circuit Court of Appeals published its opinion in Miller v. Deutsche Bank National Trust Co. on Wednesday, February 1, 2012.
The Tenth Circuit reversed the bankruptcy court’s decision. Respondent Bank brought a foreclosure action against the home owned by Petitioners and obtained an Order Authorizing Sale (OAS). Petitioners then filed a Chapter 13 bankruptcy petition. Upon the filing of their petition, an automatic stay entered, halting the foreclosure proceedings. Respondent Bank obtained an order from the bankruptcy court relieving it from the stay to permit the foreclosure to continue. The Tenth Circuit Bankruptcy Appellate Panel affirmed the bankruptcy court’s order granting Respondent Bank relief from the automatic stay and Petitioners appealed.
“The Bankruptcy Code provides that ‘[o]n request of a party in interest and after notice and a hearing, the court shall grant relief from the stay’ if the party in interest has made the appropriate showing to obtain such relief. . . . The Bankruptcy Code does not define the term ‘party in interest’ for purposes of this subsection. Courts have concluded, however, that in order to invoke the court’s power to award relief under § 362(d), a party must be either a creditor or a debtor of the bankruptcy estate. . . . The question, then, is whether [Respondent] Bank has established its status as a creditor of the [Petitioners]’ bankruptcy estate.” The Court concluded that “the evidence is insufficient as it currently stands to establish that [Respondent] Bank is a ‘party in interest’ entitled to seek relief from stay. The bankruptcy court therefore abused its discretion by granting [Respondent] Bank relief from stay.”