In re: Phillips, No. 11-30646 TEC (Bankr. N.D. Calif., April 22, 2011)
What happens when the court makes an error? According to a recent 9th Circuit decision out of a bankruptcy court in California, nothing, if the outcome would have been no different had there been no mistake.
The debtor in this case, William Phillips, filed a petition for bankruptcy only three days after having a previous bankruptcy case dismissed. In order to prevent repetitive filings that strategically use the automatic stay, a debtor who filed for bankruptcy and had the case dismissed within the previous year must move to extend the automatic stay, or it will end within 30 days of the filing of his petition. Mr. Phillips moved to extend the stay in order to keep his property from being foreclosed on.
The lien-holder bank on the property sought to obtain relief from the automatic stay, which was granted. The debtor sought reconsideration of the order, but the court held that the automatic stay had terminated because the debtor had failed to extend it past the 30 day mark, a mistake of the court.
Despite this, the court held that the factual error was harmless, because the result would have been the same had there been no mistake. Because the debtor's motion was submitted after the property was foreclosed on, the motion was untimely. Therefore, the debtor's motion would have been denied for that reason, had it not been denied for the erroneous reason.
This case stands for the important point that debtors must remain on top of the deadlines in their case, with the help of a qualified attorney. Additionally, even if there is an error in a case, the court is not likely to overturn the error unless it made a difference in the outcome of the case.
