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Stallings v. Spring Meadows Apartment Complex Limited Partnership6/16/1994
CONTRERAS, Judge
David L. Stallings and Barbara J. Stallings ("Stallings") appeal the superior court's dismissal of their personal injury lawsuit in response to defendant's argument that the complaint, filed after defendant's filing of a Chapter 11 bankruptcy petition, violated the automatic stay provision of the bankruptcy statutes. We find that the filing of the complaint was a void, rather than voidable act; that a subsequent bankruptcy court order lifting the automatic stay did not annul the stay and retroactively validate the complaint; and that the superior court did not abuse its discretion in denying the Stallings' request for leave to amend its complaint in an attempt to relate it back to the original filing. Therefore, we affirm the judgment of the superior court in favor of defendant Spring Meadows Apartment Complex Limited Partnership ("Spring Meadows").
FACTS AND PROCEDURAL HISTORY
On January 4, 1991, Spring Meadows, the limited partnership that owned the Spring Meadows apartments, filed a petition for Chapter 11 bankruptcy . By operation of law, the automatic stay of the Bankruptcy Code went into effect the moment Spring Meadows filed its petition. Miller v. National Franchise Services, 167 Ariz. 403, 406, 807 P.2d 1139, 1142 (App. 1991).
The Stallings, unaware of Spring Meadows' bankruptcy , filed a personal injury complaint against Spring Meadows on January 14, 1991. The complaint sought damages for personal injuries that David L. Stallings had sustained on May 13, 1989 while descending a stairway at the Spring Meadows apartment. The Stallings amended their complaint twice and ultimately served it on Spring Meadows on February 26, 1991.
Upon service of the complaint, the Stallings learned of the bankruptcy and realized that the automatic stay had been in effect when they filed their personal injury action. They then filed a proof of claim and a motion to lift the stay with the United States Bankruptcy Court. In their motion, the Stallings cited in support of their request for relief from the stay a single legal authority: Local Rule of Bankruptcy Procedure 4001. They did not ask for relief under 11 U.S.C. section 362(d) nor ask that the bankruptcy stay be annulled.
Spring Meadows did not oppose the Stallings' motion for relief from the automatic stay, and on June 25, 1991, the bankruptcy court granted the Stallings' motion and lifted the stay. The bankruptcy court entered an order prepared by the Stallings' counsel which stated in pertinent part:
NOW, THEREFORE, It is hereby ordered as follows:
1. The automatic stay in this matter is lifted for the Stallings so that the Stallings may proceed in their personal injury claims against the Debtor;
2. The stay is lifted only so that the Stallings 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 the Debtor only;
3. To the extent any such judgment is not collectible from the liability insurance policy or policies, the Stallings shall remain subject to the automatic stay and the further orders of this Court with respect to it, and shall remain a creditor of the Debtor to the extent of the balance of any such judgment remaining.
The order does not state that it "annuls" the stay or that it provides retroactive relief to the Stallings.
The Stallings notified Spring Meadows of the bankruptcy court's order and asked Spring Meadows to answer their complaint. Instead, Spring Meadows filed a motion to dismiss the personal injury action in the supe
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