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Stallings v. Spring Meadows Apartment Complex Limited Partnership

3/26/1996

En Banc


CORCORAN, Justice (Retired)


David Stallings and Barbara Stallings (plaintiffs) appealed the trial court's grant of summary judgment for defendant, The Spring Meadows Apartment Complex Limited Partnership (Spring Meadows). The court of appeals affirmed the summary judgment. Stallings v. Spring Meadows Apartment Complex Ltd. Partnership, 180 Ariz. 617, 624, 886 P.2d 1373, 1380 (App. 1994). We granted review to decide whether the plaintiffs are entitled to proceed with their personal injury claim against Spring Meadows. We hold that they are. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3).


FACTS AND PROCEDURAL HISTORY


The procedural history of this case includes two separate superior court actions, the first of which is the subject of this review, a federal bankruptcy court action, ancillary federal bankruptcy court proceedings occurring after the Arizona Court of Appeals rendered its decision, and numerous motions for this court to take judicial notice, or, in the alternative, to supplement the record with the pleadings and bankruptcy court orders in the ancillary proceedings. Because of the case's procedural complexity and prolixity, the parallel litigation of issues in federal and Arizona fora, and the highly technical nature of some of the arguments, we recount the facts and procedural history in detail.


On May 13, 1989, David Stallings suffered serious injuries when he fell while walking down a stairway at the Spring Meadows Apartment Complex in Glendale, Arizona. Spring Meadows carried a liability insurance policy. On January 14, 1991, within the applicable two-year statute of limitations period, see A.R.S. § 12-542, plaintiffs filed a personal injury action against Spring Meadows in Maricopa County Superior Court (first action). This is the only action at issue here. Unbeknownst to plaintiffs, Spring Meadows had filed for Chapter 11 bankruptcy protection on January 4, 1991, which under federal law triggered an automatic stay. See 11 U.S.C. § 362(a). Plaintiffs filed an amended complaint on February 12, 1991, and a second amended complaint on February 26. When plaintiffs served the second amended complaint, they learned of Spring Meadows' earlier bankruptcy filing.


Plaintiffs filed a proof of claim with the United States Bankruptcy Court and later moved for relief from the automatic stay in the same court. Spring Meadows, acting through its bankruptcy counsel, did not object to plaintiffs' motion for relief from the stay. The bankruptcy court granted plaintiffs' motion on June 25, 1991, with an order (lift stay order) stating:


1. The automatic stay in this matter is lifted for [plaintiffs] so that [plaintiffs] may proceed in their personal injury claims against [Spring Meadows];


2. The stay is lifted only so that [plaintiffs] may proceed to secure their judgment, and then collect any judgment they may secure based on their personal injury claims from the insurance carrier or carriers for [Spring Meadows] only;


3. To the extent any such judgment is not collectible from the liability insurance policy or policies, [plaintiffs] shall remain subject to the automatic stay and the further orders of this Court with respect to it, and shall remain a creditor of [Spring Meadows] to the extent of the balance of any such judgment remaining.


See Stallings, 180 Ariz. at 619, 886 P.2d at 1375 (emphasis added).


By operation of federal law, a 30-day extension of the state statute of limitations begins when a bankruptcy court lifts an automatic stay. See 11 U.S.C. § 108(c). After the bankruptcy court lifted the stay, plaintiffs did not refile their first a

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