## Facts

- Imperial Bank held a secured interest in commercial real property in Compton, California, owned by a Kinney family member, and commenced foreclosure after default.
- Over roughly 25 months, members of the Kinney family caused approximately ten bankruptcy petitions to be filed in succession, each triggering the automatic stay under 11 U.S.C. § 362 and delaying foreclosure.
- To facilitate repeated stays, the property owner executed multiple intra-family mortgages (at least eight) in favor of other family members, who then filed bankruptcy petitions based on those interests.
- Many of the filing family members lacked meaningful independent financial distress or a broader creditor body; the filings centered on stopping Imperial Bank’s foreclosure.
- Attorney Julia Coleman represented multiple Kinney family members in the successive filings and advanced a strategy that treated sequential filings by different family members as permissible.
- The bankruptcy court examined whether the filing pattern and counsel’s conduct constituted bad faith, abuse of the bankruptcy process, and sanctionable behavior.

## Issues

1. Whether orchestrated, repeated bankruptcy filings by related parties made primarily to invoke the automatic stay and delay a single secured creditor’s foreclosure constitute bad-faith filings and an abuse of the bankruptcy process.
2. Whether counsel who orchestrates or participates in such filings may be sanctioned despite asserting a sincere good-faith belief that the strategy complied with the Bankruptcy Code.

## Decision

- The court found the Kinney family’s serial petitions, supported by intra-family encumbrances, were filed in bad faith and constituted abuse of the automatic stay and the bankruptcy process.
- The court concluded the filings were not aimed at a realistic reorganization or rehabilitation, but at delaying Imperial Bank’s foreclosure.
- The court held attorney Julia Coleman could be sanctioned for her role in the filing scheme; her asserted good-faith belief did not preclude sanctions where the conduct was objectively improper.
- The court imposed remedial and deterrent measures, including sanctions and steps intended to prevent continued misuse of the automatic stay in connection with the property.

## Legal Principles

- Bankruptcy relief and the automatic stay are subject to an implicit good-faith requirement; petitions filed primarily as a tactic to hinder a creditor, without a realistic reorganization purpose, are abusive.
- Abuse of the automatic stay may be found where a debtor has no intention of effectuating a realistic plan of reorganization and instead uses bankruptcy to delay secured-creditor remedies.
- A bankruptcy court may respond to bad-faith, serial-filing schemes with dismissal or other corrective relief and may sanction counsel who advances objectively unreasonable tactics that frustrate the proper operation of the court.
- An attorney’s claimed subjective good faith does not immunize sanctionable conduct when the strategy is contrary to the purposes of the Bankruptcy Code and constitutes misuse of bankruptcy protections.

## Conclusion

The court treated coordinated serial filings by related family members—engineered through intra-family interests to repeatedly trigger the automatic stay—as bad-faith abuse of bankruptcy, and it sanctioned counsel for objectively improper participation even in the face of a professed good-faith belief in the tactic’s legality.


In re Kinney, 51 B.R. 840 (Bankr. C.D. Cal. 1985)