In re City of Stockton

Another twist in chapter 9 municipal debt adjustment cases is the additional automatic stay imposed by 11 U.S.C. § 922 (a). This additional automatic stay supplements the basic automatic stay of 11 U.S.C. § 362 by stopping actions against municipal officers and inhabitants to enforce a claim against the municipality. Here, the § 922(a) stay will not be modified to permit a lawsuit against municipal officers to proceed.

The City of Stockton’s fired Fire Chief is suing the City, the City Manager, and the Deputy City Manager on a variety of federal and state theories to redress his termination. Conceding that the § 362 automatic stay protects the City from his lawsuit, he wants to keep proceeding against the City Manager and Deputy City Manager during the chapter 9 case.

This court holds: (1) that the § 922(a) automatic stay augments the basic § 362 automatic stay specifically to protect the individual defendants during the pendency of this chapter 9 case; and (2) that the City has satisfied its statutory burden of proof to demonstrate the absence of cause for stay relief.

Facts

There is pending in the United States District Court for the Eastern District of California a civil…