In re Cloud Nine, Ltd., Bankruptcy No. 79-01160P

Decision Date31 January 1980
Docket NumberBankruptcy No. 79-01160P,Adv. No. 79-0009.
Citation3 B.R. 202
PartiesIn re CLOUD NINE, LTD., Debtor. Ira RUPP et al., Plaintiffs, v. CLOUD NINE, LTD., et al., Defendants.
CourtU.S. Bankruptcy Court — District of New Mexico

Kenneth C. Downes, Albuquerque, N.M., for Cloud Nine, Ltd.

Stanley Sager, Albuquerque, N.M., for Ira Rupp and Waterfall, Inc.

C. LeRoy Hansen and Carl J. Butkus, Albuquerque, N.M., for defendants Jack Stahl, et al.

Patrick Villella, Albuquerque, N.M., for defendants Sky-Hi Development Co., et al.


LOUIS PUCCINI, Jr., Bankruptcy Judge.

This matter having come on for hearing on Wednesday, January 23, 1980, with Cloud Nine, Ltd., appearing by its counsel, Kenneth C. Downes; Plaintiffs appearing by their counsel, Stanley Sager; Defendants Jack Stahl, Phil Raby, Bill Hooten, J.W. McLean, Douglas Bass and Hooten & Stahl, Inc., appearing by their counsel, C. LeRoy Hansen and Carl Butkus; Defendants Sky-Hi Development Co., Daniel E. Conley, Jr., T.A. Bonnell, Maurice Hobson, Kenneth C. Bonnell, Dan W. King, Daniel R. King, David C. King, Mark B. Sloan, Sr., Richard Hackett, Frank L. Sturges, the Estate of William C. Schauer, deceased, Henri O. Plante, William H. Sultemeier, Lawrence C. Harris and John S. Hawkes, appearing by their counsel, Patrick Villella; and none of the other party Defendants having appeared in person or by counsel, and the arguments of all counsel having been considered, and no testimony having been offered, the Court hereby enters the following:


This Complaint is to lift the automatic stay in order to allow Plaintiffs to continue their state court suit, Ira Rupp, et al., vs. Cloud 9, Ltd., et al., Number CV-73-79, which is pending in the Otero County District Court.

Plaintiffs have voluntarily abandoned their request to lift the stay with respect to certain portions of their state court complaint as those claims for relief are in direct opposition to the nature and purpose of these proceedings. These claims include dissolution of the partnership, appointing a special master, liquidating the partnership and a request for an accounting and return of certain assets of Cloud Nine, Ltd. The remaining portion of Plaintiffs' request is directed to allowing the state court proceeding to continue so that the various claims of the parties can be liquidated or to allowing Plaintiffs to continue their suit against other Defendants not protected by the stay. In addition, there is pending in the state court suit several crossclaims and counterclaims by and against the Debtor; and based on representations of counsel, there will be additional claims against Debtor if the suit is allowed to proceed. Although the Court does not attempt to categorize all claims by or against the Debtor and other parties in the state court suit, it appears that the issues are so intertwined that complete litigation may not be possible without the participation of the Debtor. Additionally, although the Court has been advised that the Debtor is an indispensible party to the litigation, that issue belongs properly to the state court and has yet to be determined.

It appears that most, if not all, of the numerous parties in the state court case are claimants against the Debtor in the bankruptcy proceeding. It is no longer necessary for a creditor to file a Proof of Claim in order for a bankruptcy court to acquire jurisdiction. A bankruptcy court now has jurisdiction over "all civil proceedings arising under Title 11 or arising in or related to cases under Title 11." 28 U.S.C. § 1471. However, on December 6, 1979, Plaintiffs Ira Rupp and Waterfall, Inc., filed Proof of Claim # 3, in this Court for $3,340,000.00. Accordingly, the Court has exclusive jurisdiction to determine the validity of this claim or the claims of any other creditor. This Court has no desire to relinquish its proper function to other courts.

Section 362(a)(1) stays the commencement or continuation of a proceeding to recover a claim against the Debtor that arose before the commencement of the bankruptcy proceeding. Plaintiffs' claims obviously arose prior to the present proceeding in bankruptcy. In addition, 11 U.S.C. § 101(4) defines a "claim" as a:

. . . right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, secured or unsecured; or (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment.

Therefore, it appears that the claims of Plaintiffs or any other claimants, even though unliquidated in the state court suit, are proper claims in this Court and any disputes thereon, if any, should be decided in these proceedings, not in the state court. There is no requirement to liquidate the claim before it is brought in this Court.

However, although the Court may have ultimate jurisdiction over the claims, "it will often be more appropriate to...

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24 cases
  • Austin v. Unarco Industries, Inc., 82-1168
    • United States
    • U.S. Court of Appeals — First Circuit
    • March 30, 1983
    ...although the bankruptcy court has authority to lift the stay as to less than all of the defendants); Rupp v. Cloud Nine Ltd. (In Re Cloud Nine, Ltd.), 3 B.R. 202 (Bkrtcy.D.N.M.1980) (relief from stay "will result in at best only a partial resolution of the issues and at worst will further c......
  • Diamond Hill Inv. Co. v. Shelden
    • United States
    • Wyoming Supreme Court
    • January 13, 1989
    ...Lien Against Property of the Debtor." This general principle is recognized in the decision of the bankruptcy court in In re Cloud Nine, Ltd., 3 B.R. 202 (Bankr.N.M.1980), when the court observed that the stay applied to efforts of creditors directed against the assets of the bankruptcy esta......
  • S.I. Acquisition, Inc., Matter of
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • May 29, 1987
    ...In re Earth Life, Inc., 9 B.R. 440, 443 (Bankr.M.D.Fla.1981); In re Smith, 14 B.R. 956, 958 (Bankr.D.C.Conn.1981); In re Cloud Nine, 3 B.R. 202, 205 (Bankr.D.N.Mex.1980); In re Trammel Road Townhouses, Ltd., 5 B.C.C. 314, 316 (N.D.Ga.1977).6 The Bank claimed specifically that Long caused Mo......
  • Lynch v. Johns-Manville Sales Corp.
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • July 1, 1983
    ...(partners of bankrupt partnership); In re Larmar Estates, Inc., 5 B.R. 328 (Bkrtcy.E.D.N.Y.1980) (guarantors of loan); In re Cloud Nine, 3 B.R. 202 (Bkrtcy.D.N.Mex.1980) (co-debtors); In re Trammel Road Townshouses, Ltd., 5 B.C.C. 314 (N.D.Ga.1977); Globe Construction Co. v. Oklahoma City H......
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2 books & journal articles
  • Reframing Arbitration & Bankruptcy.
    • United States
    • American Bankruptcy Law Journal Vol. 96 No. 4, December 2022
    • December 22, 2022 any issue which may affect their interest." See Curtis, 40 B.R. at 800 (citing Rupp v. Cloud Nine Ltd. (In re Cloud Nine Ltd.), 3 B.R. 202, 204 (Bankr. D.N.M. (165) See supra Part III.C. (166) See 11 U.S.C. [section] 323(a) ("The trustee in a case under this title is the representative o......
  • Creditors' Committees: Giving Tort Claimants a Voice in Chapter 11 Bankruptcy Cases
    • United States
    • Emory University School of Law Emory Bankruptcy Developments Journal No. 31-2, June 2015
    • Invalid date
    ...(priority creditors); In re Nova Real Estate Inv. Trust, 10 B.R 90 (S.D. Fla. 1981) (subordinated note holders); In re Cloud Nine, Ltd., 3 B.R. 202 (D.N.M. 1980) (property holders); Peter C. Blain & Diane Harrison O'Gawa, Creditors' Committees Under Chapter 11 of the United States Bankruptc......

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