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BANKRUPTCY & APPEALS - GADDY V. S.E. PROPERTY HOLDINGS, LLC

Gaddy v. S.E. Property Holdings, LLC, [Ms. 1140578, 1140722, May 27, 2016] __ So. 3d __ (Ala. 2016). The Court dismisses appeals from judgments against multiple defendants arising from continuing unlimited personal guaranty agreements in a Baldwin County real estate development project. Because one of the guarantors had filed for bankruptcy and thereby triggered the automatic stay provision of 11 U.S.C. § 362(a) (prohibiting the “commencement or continuation ... of a judicial ... action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title”), the Baldwin Circuit Court was without jurisdiction to enter its order dismissing the claims against the debtor as “the automatic-stay provision prohibits the ‘commencement or continuation’ of a judicial proceeding” and the Court holds that a voluntary dismissal is a “continuation” of a judicial proceeding. As an order entered in violation of the automatic bankruptcy is void as to the debtor, the dismissal was ineffectual and thus left the claims pending and rendering the judgment non-final. A non-final judgment will not support an appeal. Accordingly, the appeals were dismissed.

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