For Appellant: Jeffrey M. Orenstein, Goren, Wolff & Orenstein, LLC on the brief, Rockville, MD.
For Appellee: Martin S. Protas, Adams Law Center on the brief, Rockville, MD.
Eyler, Deborah S., Reed, Salmon, James P. (Retired, Specially Assigned), JJ.
[222 Md.App. 34] Eyler, Deborah S., J.
In the United States Bankruptcy Court for the District of Maryland, Baljit Kochhar (" Baljit" ) and her daughter Sonia Kochhar (" Sonia" ) filed Chapter 13 bankruptcy petitions on October 2 and 5, 2012, respectively. Pursuant to 11 U.S.C. section 362(a), each bankruptcy petition " operate[d] as a stay, applicable to all entities, of -- (1) the commencement . . . of a judicial . . . action or proceeding against the debtor that was or could have been commenced before the commencement of the [bankruptcy case]." The section 362(a) stay often is referred to as the automatic stay in bankruptcy.
On October 9, 2012, Amar Nath Bansal; Bina Bansal, his wife; Deepak Bansal, their son; and Shashi Jain, Bina's sister (collectively, " the Bansal family members" ), filed in the Circuit Court for Montgomery County a " Complaint to Avoid and Recover Fraudulent Conveyances." The Bansal family members alleged that each of them had extended a loan or loans to Baljit, that Baljit had defaulted on the loans, and that each of them then had obtained judgments against her. They further alleged that Baljit, with knowledge of the judgments against her in their favor and with the intent to avoid her obligations on those judgments, made three conveyances of residential real property to Sonia for no consideration. The deeds evidencing these conveyances were attached to the complaint. [222 Md.App. 35] The Bansal family members asked the court to set aside the three conveyances, permit the sheriff to levy on the properties to satisfy their judgments, order that the properties be retained to satisfy those debts, enter judgment against Baljit and Sonia for compensatory and punitive damages in an unspecified amount, and award attorneys' fees. When they filed suit, the Bansal family members did not know that Baljit and Sonia had filed bankruptcy petitions.
On October 25, 2012, Sonia and Baljit filed suggestions of bankruptcy giving the dates of their bankruptcy filings and the case numbers. From then until December 6, 2012, there was no activity in the circuit court case. The Bansal family members did not serve Sonia or Baljit during this time period or take any other action in the case.
Meanwhile, by order of the bankruptcy court entered on November 19, 2012, Sonia's bankruptcy case was dismissed for " failure to complete required filings" and the automatic stay was terminated as to her case. One week later, on November 26, 2012, Baljit's bankruptcy case was dismissed for the same reason and the automatic stay was terminated as to her case.
On December 7, 2012, the Bansal family members filed in the circuit court a " Motion to Set Aside Bankruptcy Stay of Proceedings." They attached copies of the two orders of the bankruptcy court dismissing the cases and terminating the automatic stay. The circuit court granted the motion on December 19, 2012.
Baljit and Sonia were served on January 4, 2013. Sonia unsuccessfully moved to quash service.
On May 1, 2013, Sonia filed a motion to dismiss, arguing that the circuit court case was a " nullity at the time of filing" because it was commenced in violation of the automatic stay, which had rendered the circuit court without " jurisdiction to [222 Md.App. 36] hear matters involving Debtor or property of Debtor." She acknowledged that her bankruptcy case had since been dismissed and the automatic stay had been terminated, but argued that that did not " cure the jurisdictional defect that existed at the time of [the] filing [of the circuit court case]."
The Bansal family members filed an opposition to the motion to dismiss. They took the position that actions taken in violation of the automatic stay are voidable, not void. They argued that under the facts of this case -- where no action was taken in the circuit court until after the stay was terminated ...