Lucas v. INTEGRATED HEALTH SERVICES OF LESTER, INC.
| Decision Date | 02 June 2004 |
| Docket Number | No. A04A0401.,A04A0401. |
| Parties | LUCAS v. INTEGRATED HEALTH SERVICES OF LESTER, INC. et al. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
David Betts, Betts & Katz, Stephen Katz, Atlanta, for Appellant.
Perry Phillips, Marietta, for Appellee.
Appellant Barbara Lucas, as Administratrix of the Estate of Annette Austin, filed suit in the State Court of Fulton County against appellee Integrated Health Services of Lester, Inc. d/b/a Integrated Health Services of Atlanta @ Buckhead, ("IHS") and others on January 27, 2000. After it had been served with the complaint but before its answer was due, IHS filed a Chapter 11 bankruptcy petition, and notified the state court of the imposition of the stay pursuant to 11 U.S.C. § 362.
On August 22, 2002, the bankruptcy court entered an order modifying and lifting the stay as to the claims being asserted against IHS by Lucas. On September 24, 2002, IHS filed its unverified answer to the complaint. Counsel for IHS made several attempts to contact Lucas's counsel concerning whether Lucas was going to challenge the answer as untimely, and on October 4, 2002, Lucas's counsel responded with a letter stating he considered the answer to be untimely. On October 25, 2002, IHS sent a check for costs to the trial court and subsequently filed a motion seeking a declaration that it was not in default or, in the alternative, a motion to open default.
On January 8, 2003, the trial court entered an order finding that IHS's answer was not untimely. The court further noted that even if the answer were deemed to be untimely, then the default should be opened based on either excusable neglect or because a proper case had been presented for opening the default. The court reasoned:
Pretermitting whether [11 U.S.C. § 108(c)] governs the time for filing [a]nswers in state court actions, the 30 day period begins to run after notice of the expiration of the stay. In this case, a Notice of Stay was filed in this Court on February 23, 2000. While a Notice of Stay Modification was filed in the United States Bankruptcy Court on August 22, 2002, no such notice was filed in this Court so that, the Notice of Stay, previously filed, governs the time periods in this case. The Notice of Stay Modification filed in the bankruptcy court merely permits certain claims against IHS to proceed. It does not, as a matter of law, lift the stay in place in this case, but arguably, would allow the stay to be lifted by either agreement or Court Order. The original stay in this case remains in effect and shall remain in effect until such time as the parties either: (1) stipulate to an order lifting the stay; or (2) one party files a motion with this Court asking that the stay be lifted based upon a proper and competent showing that the bankruptcy court has authorized such a lifting of the stay for the claims that are pending in this Court. Once the Court has made a determination as to the lifting of the stay in this case, the time for filing [a]nswers and other pleadings will like wise be determined.
The trial court also found that although the attorney representing IHS in this case did not have actual notice that the stay had been lifted until August 26, 2002, IHS had notice at the time of the issuance of the modification because its bankruptcy counsel signed the notice.
1. Lucas first argues that the trial court erred in concluding that the stay remained in effect in the state court until some action was taken in that court to lift the stay. We agree that the trial court erred in reaching this conclusion. The imposition of the stay under 11 U.S.C. § 362 is automatic upon filing of the bankruptcy petition, and the protections afforded to the debtor attach immediately. In our view it follows that the protections afforded by the stay should end on the date the stay is lifted, modified or terminated by order entered in the bankruptcy court, and no other action need be taken in any other forum to recommence the clock ticking.
Moreover, although no statute prescribes the time period for filing an answer under these circumstances and this Court has not considered this exact issue, this Court has considered the analogous question of when suit must be filed when the applicable statute of limitation has expired on the claim during the pendency of the stay. In J.T. Industrial Contractors v. Hargis Railcar, 217 Ga.App. 679, 680, 458 S.E.2d 702 (1995) we concluded, based on the interplay between the applicable state statute of limitation fixing the time for bringing suit and 11 U.S.C. § 108(c),1 "that the period for filing suit against the debtor is extended notwithstanding the running of the limitation period, until 30 days after the stay is lifted." (Emphasis supplied.) J.T. Contractors v. Hargis, 217 Ga.App. at 680, 458 S.E.2d 702. Thus, in that case, we found the trial court correctly determined that the suit was time-barred, since the action against the debtor had been filed more than 30 days after the stay was lifted. Id. See also Breeze v. Columbus Bank & Trust Co., 214 Ga.App. 534, 535, 448 S.E.2d 276 (1994) (); State Farm etc., Ins. Co. v. Harris, 207 Ga.App. 8, 9, 427 S.E.2d 1 (1992) ().
We are not persuaded that there should be a different time limit for filing an answer in a suit once the stay has been lifted or modified.
If an action against a debtor who has enjoyed the protections from suit during the pendency of the automatic stay must be filed or commenced within 30 days of the lifting of the stay if the statute of limitation for filing suit has expired during the pendency of the stay, then the debtor who has been relieved from filing an answer by the imposition of the stay after service has been made must respond to those claims within 30 days after the stay is lifted. And this is true whether the question is considered under 11 U.S.C. § 108(c) or applicable state law which gives 30 days to file an answer once service is perfected.
IHS argues, however, that the 30-day time limit under 11 U.S.C. § 108 starts upon "notice" and although notice was received by its bankruptcy counsel at the time the stay was modified, notice...
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