In re Receivership Estate of Indian Motorcycle Manufacturing

Full title: In re: Receivership Estate of INDIAN MOTORCYCLE MANUFACTURING, INC., a New…

Court: United States District Court, D. Colorado

Date published: Feb 28, 2002

Civil Action No. 95-Z-777 (D. Colo. Feb. 28, 2002)

Opinion

Civil Action No. 95-Z-777

February 28, 2002

ORDER REGARDING RECEIVER'S OBLIGATIONS

WEINSHIENK, Judge.

On or about November 9, 2001, Bankruptcy Judge Henry J. Boroff entered an Order Enforcing Stay And Injunction (Bankruptcy Order) which appeared to enjoin and restrain the Receiver for this Court, Sterling Consulting Corporation, from filing any motions or papers with this Court. Judge Boroff apparently determined that by filing certain motions or papers with this Court, the Receiver had violated the provisions for automatic stay that are contained at 11 U.S.C. § 362(a)(1), 362(a)(4) and 362(a)(3).

Judge Boroff referred specifically to the Receiver's requests to this Court, which, in Judge Boroffs view, would have the effect of "impeding the IRS's ability to claim administrative taxes against the bankruptcy debtor, Indian Moto[r]cycle Company. . . ." November 9 Order at ¶ 1. Judge Boroff's Order declared that any "such pleadings are void and any ruling of the Colorado Court granting such relief shall be void."Id. Judge Boroff referred to parts of various motions that had been filed with this Court as illustrative of the pleadings and motions that he was banning the Receiver from filing, including the Receiver's Motion To Reconsider Order of August 20, 2001, and the Receiver's Response To IRS's Motion For Partial Reconsideration By Magistrate Judge Schlatter of August 20, 2001 Order Regarding Pending Motions.

The bankruptcy and receivership estates over the various Indian motorcycle entities have been addressed by this Court and by the Bankruptcy Court as combined estates. In the past, this Court has made efforts to coordinate its activities and rulings with those of the Bankruptcy Court. Unhappily, Judge Boroff's Order of November 9, 2001, evidences a lack of reciprocal efforts to coordinate the rulings of the two courts. It must be remembered that the Receiver, Sterling Consulting Corporation, was appointed by the United States District Court for the District of Colorado, and acts under the direction of and pursuant to the orders of this Court.

In Matter of Mahurkar Double Lumen Hemodialysis Catheter Patent Litigation, 140 B.R. 969 (N.D.Ill. 1992), Judge Frank H. Easterbrook, Court of Appeals Judge for the Seventh Circuit, sitting by designation as a district judge, addressed an order that was strikingly similar to the Bankruptcy Order in this case. In Matter of Mahurkar, the Bankruptcy Court entered an Order that stated:

Defendants . . . are hereby ordered and/or restrained from taking any action or doing any act, other than by proper motion or other application before this Court to commence or continue any action against [certain parties] in either the United States District Court for the Northern District of Illinois . . ., the United States District Court for the Central District of Utah, or the United States Bankruptcy Court for the District of Delaware with respect to the matters set out in the Patent Infringement Action, including, but not limited to, filing any reply brief, motions or memorandum of law, or conducting or participating in any type of discovery

Matter of Mahurkar, 140 B.R. at 972. Judge Easterbrook stated: "On learning of this preposterous order . . . I practically fell out of my chair. . . ." Id.

After serious consideration of the November 9, 2001, Order, this Court repeats with approval the words of the order entered by Judge Easterbrook:

No bankruptcy court is authorized to instruct litigants in this court not to obey this court's orders. Any court has jurisdiction to determine its own jurisdiction, and this court unquestionably has the authority to determine what effect the bankruptcy stay has on the litigation.

Id. Judge Easterbrook continued to discuss the lack of authority in the bankruptcy court to enjoin litigation in the district court with these words:

For one federal court to issue an injunction forbidding litigation in another is extraordinary, given principles of comity among coordinate tribunals. [Citations omitted.] For a bankruptcy judge to issue an injunction with the effect of preempting resolution of a pending motion in a district court is unheard of.

Id at 974.

It is settled law that not only the bankruptcy court, but also the court in which other litigation exists, may construe the automatic stay.See Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir. 1990); Brock v. Morysville Body Works, Inc. 829 F.2d 383, 387 (3rd Cir. 1987); In re Baldwin-United Corporation Litigation, 765 F.2d 343, 347 (2nd Cir. 1985).

This Court does not question Judge Boroffs authority to act in respect to the tax issues that have been determined by the appellate courts to be in his court, and has no intention of interfering with the rulings that he makes in regard to taxes. Other issues, however, may or may not relate to matters of taxation. The Receiver's effort to have portions of the $1.2 million declared receivership property does not appear to relate to taxes. The Receiver's effort to have questions with regard to interest income declared in its favor does not, on its face, relate to matters of taxes.

Whether these matters relate to taxes, or relate to the assets of the receivership estate, are not to be determined at this time. These issues will be addressed by this Court in the ordinary course of the litigation that is pending before this Court, and the Court will consider at the appropriate time the arguments of all of the parties with regard to the jurisdiction of this Court and the merits of the various controversies.

This Court has on numerous occasions declared that the Receiver is an arm of this Court, and has instructed the Receiver to take all appropriate measures to preserve or enhance the receivership estate. Those measures involve the filing here of any motions or requests for instruction that the Receiver considers to be appropriate under the circumstances. Judge Boroff lacks authority to interfere with the relationship between the Receiver and this Court, to interfere with this Court's jurisdiction over the receivership, or to declare any rulings of this Court void.

Judge Boroffs implied threat to hold the Receiver in contempt of his Court for doing nothing more than to fulfill its obligations as receiver is inappropriate and intemperate. This Court suggests that Judge Boroff should withdraw or modify his Order of November 9, 2001.

Therefore, it is

ORDERED that the Receiver bring before this Court all matters that it deems to be matters for the consideration and resolution of this Court. If any matter is found to be inappropriate for resolution by this Court, such a decision will be made by this Court, and not by the Bankruptcy Court. It is

FURTHER ORDERED that a copy of this order shall be sent to Bankruptcy Judge Henry J. Boroff.