Opinion
No. 1 CA-SA 12-0203
10-16-2012
PETER J. WORKUM and JOANNE E. WORKUM, husband and wife, Petitioners, v. THE HONORABLE JOHN REA, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Judge, SELECT PORTFOLIO SERVICING, INC.; WASHINGTON MUTUAL BANK, F.A.; ABC ENTITY Real Parties in Interest.
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24
Maricopa County
Superior Court
No. CV2010-010049
DECISION ORDER
This special action was considered by Presiding Judge Ann A. Scott Timmer, and Judges John C. Gemmill and Margaret H. Downie during a regularly scheduled conference held on October 9, 2012. After consideration, and for the reasons that follow,
IT IS ORDERED that the Court of Appeals, in the exercise of its discretion, accepts jurisdiction in this special action. Petitioners Peter J. and Joanne E. Workum have no adequate remedy by appeal to challenge the superior court's order compelling production of the documents in dispute. Ariz. R.P. Spec. Act. 1(a); see Salvation Army v. Bryson, 229 Ariz. 204, 205, ¶ 1, 273 P.3d 656, 657 (App. 2012) ("A special action is the proper means to seek relief when a party believes a trial court has ordered disclosure of material protected by a privilege or work product shield.") (internal quotation marks omitted) (quoting Green v. Nygaard, 213 Ariz. 460, 462, ¶ 6, 143 P.3d 393, 395 (App. 2006)).
IT IS FURTHER ORDERED granting relief by vacating the trial court's rulings set forth in the minute entry filed August 10, 2012. We agree with Petitioners that the court's ruling violated the bankruptcy automatic stay. See 11 U.S.C. § 362(a)(1) (West 2012). The purpose of the stay is to protect the debtor, with the effect that "all legal actions being taken or to be taken against the debtor are halted . . . . Every proceeding of a judicial or quasi-judicial nature is affected." Great Sw. Fire Ins. Co. v. Triple "I" Ins. Servs., Inc., 151 Ariz. 283, 285, 727 P.2d 336, 338 (1986) (quoting In re Joe DeLisi Fruit Co., 11 B.R. 694, 696 (D. Minn. 1981)). Given the counterclaim theory that attorney Paul Conant and Petitioners together created a falsified modification agreement, discovery on the Rule 11 motion, although aimed solely at Mr. Conant, necessarily implicates the allegations made against Petitioners in the counterclaim. Wolgast v. Richards, 463 B.R. 445, 451 (E.D. Mich. 2012) (ruling stay applied because the "Rule 11 Motion is, substantively, simply a means to challenge the merits" of the stayed matter); see also In Re Manown, 213 B.R. 411, 412 (N.D. Ga. 1997) (holding discovery is halted for a party in bankruptcy because it "is considered part of the 'continuation' of a proceeding and is, therefore, subject to the automatic stay."); Action Drug Co. v. Overnite Transp. Co., 724 F. Supp. 269, 278 (D. Del. 1989) (concluding when debtor is the plaintiff and a counterclaim is asserted against the debtor, § 362(a)(1) stays its prosecution).
Petitioners did not raise this issue to the superior court. They did not waive this argument, however, because the superior court's jurisdiction in the face of a bankruptcy stay can be raised for the first time to this court. Ames v. State, 143 Ariz. 548, 552, 694 P.2d 836, 840 (App. 1985) (holding court's jurisdiction can be challenged for first time on appeal); see also Great Sw. Fire Ins. Co. v. Triple "I" Ins. Servs., Inc., 151 Ariz. 283, 285-86, 727 P.2d 336, 338-39 (1986) ("To uphold a state court judgment which was entered in violation of the Bankruptcy Code violates the purpose of the supremacy clause . . . ."); Jinks v. Eastman Enters., Inc., 731 S.E.2d 378, 380 (Ga. Ct. App. 2012) ("During the pendency of the bankruptcy stay, state courts lack the ability to exercise judicial power or discretion or otherwise proceed with the case.").
Absent material revisions after the relevant date, we cite a statute's current version.
For these reasons, we exercise special action jurisdiction and grant relief as described herein.
We amend the caption to include Joanne E. Workum.
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Ann A. Scott Timmer, Presiding Judge
CONCURRING: _______________
John C. Gemmill, Judge
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Margaret H. Downie, Judge