McCarthy, Johnson & Miller v. North Bay Plumbing, Inc.

Appellants Elmar Lee Pettit, his spouse Audrey Jean Pettit, and North Bay Plumbing, a corporation wholly owned by the Pettits (collectively “Pettits” or “Appellants”), appeal from a decision of the district court. The court reversed the bankruptcy court’s determination that ap-pellees- — Bay Area Pipe Trades Health & Welfare Trust Fund, Bay Area Trades Pension Trust Fund, Northern California Pipe Trades Health & Welfare Trust Fund, Northern California Pipe Trades Pension Trust Fun, U.A. Local 343 Health & Welfare Trust Fund, and U.A. Local 343 Pension Trust Fund; and counsel for these funds, the law firm of McCarthy, Johnson & Miller (“McCarthy, Johnson”), and two of its individual attorneys, John Davis, Jr. and Diane Sidd-Champion (collectively “Trust Funds”) — violated the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362 (a), by obtaining and retaining registry funds held by the court in connection with a lawsuit filed by the Trust Funds against Appellants.

The district court concluded that, at the time the Pettits filed for bankruptcy, the *1075 registry funds were no longer property of their estate and, thus, were not subject to the automatic stay. On appeal,…