Memorandum in support of motion for approval of agreement for relief from automatic stay

Under Rule 4001(d)(1) of the Federal Bankruptcy Rules, the court may consider a motion for approval of an agreement to modify or terminate the stay provided for in Section 362 of the United States Bankruptcy Code, Title 11 United States Code. Maine Bankruptcy Rule 4001-1(g) provides that uncontested motions for relief from the automatic stay may be filed if accompanied by a stipulation signed by counsel or the parties which consent to relief from the automatic stay. See also LBR 9019-1(b).

Movant, Robert Doe, was driving a truck proceeding south on Route 33 in Anywhere, Maine on November 12, 1996 when the truck he operated was struck by a vehicle driven by Debtor, John Jones. The collision occurred at the intersection of A and B Streets as Mr. Jones, proceeding west on B Street, struck the Doe vehicle in the left front side. Mr. Doe brought suit in the Maine Superior Court alleging that the debtor was responsible for his injuries. (Cumberland County Superior Court, Docket No. AA-000). By virtue of the debtor’s potential liability on a claim, Robert Doe is a creditor. 11 U.S.C. Section 101. See also In re: Kewanee Boiler Corp., 198 B.R. 519, 528 (Bankr. N.D.Ill.1996). Mr. Jones received notice of the above captioned bankruptcy case and the associated automatic stay after commencing the State court action.

At the time of the accident involving Mr. Doe, Mr. Jones was covered for his liability by accident insurance policies issued by XYZ Insurance Company. Attached to this memorandum as Exhibits A is a copy of a Declarations Page and Certificate of Coverage indicating that the debtor has coverage in the amount of $100,000.00. The debtor is insured under the aforesaid insurance policy for any judgment which may be accessed against him in Maine Superior Court for damages suffered by Robert Doe on November 12, 1996.

In Maine there is no right of direct action against an insurance company for damages caused by an insured. The effect of insurance coverage in cases such as this one has been to permit civil suits to proceed outside the bankruptcy court. See In Re Honosky, 6 B.R. 667 (S.D. W. Va. 1980), citing in Re Adolf Gobel, Inc., 89 F.2d 171 (2d Cir. 1937). It is recognized that fairness permits a civil suit to proceed against one covered by insurance where the bankruptcy estate is in no way harmed. Honosky, supra at 669. The estate is protected when the automatic stay is modified to...