Free Order - District Court of Connecticut - Connecticut

Case 3:03-cv-00971-SRU Document 8 Filed 10/29/2003 Page 1 of 3
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F UNITED STATES DISTRICT COURT r - - I
i DISTRICT OF CONNECTICUT /
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l IN RE; : CIVIL ACTION
i RALPHAEL MAZZARIELLO ; 3:03 CV 971 (SRU) f
i RULING ON BANKRUPTCY APPEAL
The debtor, RalphaelMazzarie1lo, appeals from the May 2, 2003 decision of the
Bankruptcy Court (Dabrowski, J.) holding that the automatic stay was not reimposed by the i
debtor’s conversion of his bankruptcy from Chapter 7 to Chapter 11. Having determined that the i
automatic stay was not reimposed, Judge Dabrowski granted the motion by Madison Mini Mart, °
Inc. ("Madison") for conversion to Chapter 7. For the reasons that follow, this court agrees that i
the conversion from Chapter 7 to Chapter ll does not reimpose the automatic stay. Accordingly,
the decision and order of the Bankruptcy Court is affirmed. _
Background
Mazzariello filed a voluntary petition under Chapter 7 of the Bankruptcy Code on
September 30, 2002. The tiling of that petition stayed the running ofthe law days in a pending i
foreclosure action brought by Madison against Mazzariello in state court. Madison’s October 7, I
2002 motion for relief from stay was granted on November 4, 2002. Three days later, Madison
moved to reopen the judgment of strict foreclosure. That motion was granted and new law days _
beginning December 30, 2002 were set by the state court. On December 3, 2002, Mazzariello
moved to convert his Chapter 7 proceeding to a Chapter ll proceeding; that motion was granted
on December 6, 2002. Madison continued to pursue the foreclosure action, and title to the
property at issue in the foreclosure action vested in Madison on January 2, 2003.
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l Case 3:03-cv-00971-SRU Document 8 Filed 10/29/2003 Page 2 of 3
5 On March 3, 2003, Madison iiled a motion to dismiss the debtor’s Chapter ll petition or
convert it to a Chapter 7 proceeding. The property that was the subject ofthe state foreclosure
‘ action was the single asset by which Mazzariello proposed to fund a Chapter ll plan. If title _
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passed to Madison through the foreclosure action, the Chapter ll plan would necessarily fail.
Mazzariello argued that his conversion of this proceeding from a Chapter 7 to a Chapter ll case
reimposed the automatic stay and precluded Madison from obtaining title to the property at issue
through the then-pending foreclosure action. Judge Dabrowski rejected Mazzariello’s argument
and, on May 2, 2003, granted Madison’s motion to convert the petition to a Chapter 7 .
proceeding. Mazzariello then filed this appeal. i
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Discussion i
The sole issue presented on this appeal is whether or not the debtor was entitled to an
automatic stay upon his conversion from Chapter 7 to Chapter 11. The Bankruptcy Court
concluded that the conversion did not reimpose the automatic stay of ll U.S.C. § 362(a). I agree
with that conclusion.
The Eleventh Circuit considered this issue in In re State Airlines Inc., 873 F.2d 264 (1 lth
Cir. 1989) (conversion from Chapter 11 to Chapter 7 does not reimpose automatic stay). In State
Airlines, the Court analyzed the language, purpose and legislative history of sections 348 (“Effect
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of Conversion") and 362 ("Automatic Stay") ofthe Bankruptcy Code. The Eleventh Circuit held,
in pertinent part, that:
Congress considered the automatic stay provision one ofthe most important in the
Bankruptcy Code. Absent any indication of Congressional intent, we will not
assume that Congress meant anything other than what it said. The tiling of a §
petition under section 301, 302, or 303 operates as a stay under section 362. A I
conversion under section 348 does not. i
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I Case 3:03-cv-00971-SRU Document 8 Filed 10/29/2003 Page 3 of 3 2
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I State Airlines, 873 F .2d at 268 (italics in original; footnotes omitted).
I find the reasoning of the State Airlines decision persuasive and follow it here.
I Accordingly, I conclude that the Bankruptcy Court correctly decided that the automatic stay of
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section 362(a) was not reimposed by the conversion of this case to a Chapter ll proceeding. {
The decision ofthe Bankruptcy Court is affirmed. The clerk shall enter judgment and I
close this file.
It is so ordered. I
Dated at Bridgeport, Connecticut this 29th day of October 2003. I
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Z Stefan R. Underhill n V __ `
United States District Judge \
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