# Opinion

> District Court, E.D. California · February 24, 2026

URL: https://www.frixlaw.com/law-library/cases/11375090

## Case

- **Full name:** INTERSTATE FIRE & CASUALTY COMPANY AND NATIONAL SURETY CORPORATION, et al. v. THE ROMAN CATHOLIC BISHOP OF SACRAMENTO
- **Court:** District Court, E.D. California
- **Decided:** February 24, 2026
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11375090

## Opinion text

1
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 EASTERN DISTRICT OF CALIFORNIA
10 ----oo0oo----
11
12 INTERSTATE FIRE & CASUALTY No. 2:25-cv-02262 WBS
COMPANY AND NATIONAL SURETY (Lead Case)
13 CORPORATION, et al.,
2:25-cv-02288 WBS
14 Appellants,

15 v.
MEMORANDUM AND ORDER RE:
16 THE ROMAN CATHOLIC BISHOP OF
APPELLANTS’ APPEAL OF THE
SACRAMENTO,
BANKRUPTCY COURT’S ORDER
17
Appellee.
18

19
----oo0oo----
20
Appellants Interstate Fire & Casualty Company and
21
Certain Underwriters at Lloyd’s, London, and Certain London
22
Market Insurance Companies (together, “Insurers”) have appealed
23
the bankruptcy court’s order modifying an automatic stay in
24
connection with the bankruptcy of appellee, the Roman Catholic
25
Bishop of Sacramento (“RCBS”). (Docket Nos. 60, 62.) RCBS and
26
the Committee of Unsecured Creditors (“the Committee”) have filed
27
28
1 opposing briefs. (Docket Nos. 64, 67.)1
2 The court previously denied the Committee’s motion to
3 dismiss Insurers’ appeal, concluding that Insurers were “persons
4 aggrieved” for purposes of bankruptcy appellate standing.
5 (Docket No. 51.) The court then set a briefing schedule.
6 (Docket No. 56.) Insurers timely submitted briefs, in which they
7 argue that the bankruptcy court’s Order is deficient with respect
8 to factual findings, legal analysis, and adequate weighing of
9 their interests. (See Docket Nos. 64, 67.)
10 I. RCBS’ Bankruptcy Proceedings
11 This bankruptcy proceeding is one of several involving
12 Roman Catholic Dioceses in Northern California following passage
13 of the California Victims Act, A.B. 218, which allows previously
14 time-barred sexual assault claims to proceed in state court.
15 (Docket No. 60 at 13); see also Century Indemnity Co. v. Roman
16 Catholic Archbishop of San Francisco, No. 25-cv-08563 WHO, 2025
17 WL 3124083 (N.D. Cal. Nov. 7, 2025) (discussing the circumstances
18 of a similar Diocese bankruptcy case). In the wake of that
19 legislation, over 200 tort actions were brought against RCBS and
20 its affiliates in state court. (Id.) RCBS filed for bankruptcy
21 in April 2024, and the Committee -- comprised of nine survivors
22 representing the interests of the hundreds of other tort
23 claimants -- was formed “to reach a global settlement with the
24 Diocese in the form of a plan of reorganization that can be
25 confirmed by the Bankruptcy Court as soon as possible.” (Docket
26
1 Pursuant to Local Rule 230, because the court concludes
27 it would not benefit from oral argument on this appeal, the
matter is decided on the papers, and the scheduled March 2, 2026
28 hearing on the appeal is vacated.
1 No. 67 at 16.)
2 Pursuant to Section 362(a)(1) of the Bankruptcy Code,
3 “a wide-ranging stay on collection and enforcement activities
4 against the debtor” was automatically imposed on the pending tort
5 actions. In re Budd, No. BAP 11-cc-1015 MKKID, 2011 WL 4485190,
6 at *2 (B.A.P. 9th Cir. July 11, 2011). RCBS then initiated an
7 adversary proceeding against approximately 229 plaintiffs, in
8 which it moved to extend the effects of the automatic stay to its
9 affiliates. (Docket No. 60 at 16.) Many objections were filed
10 by the Committee and survivor claimants; however, on the brink of
11 the motion hearing, the parties reached an agreement in the form
12 of a stipulation allowing, among other things, four cases to
13 proceed in state court (“the Released State Court Actions”).
14 (Id. at 17.) The stipulation was approved in the adversary
15 proceeding, whereafter RCBS moved to have the same stipulation
16 approved in the main bankruptcy proceeding. (Id. at 18-19.)
17 Insurers objected, and a hearing was held in which the bankruptcy
18 judge orally approved the stipulation. (Id. at 19-21) The
19 bankruptcy court then issued an Order approving the stipulation
20 modifying the automatic stay. (Id.)
21 In its Order, the bankruptcy court determined, based on
22 “the legal and factual bases set forth in the Motion” and “all
23 the proceedings had before the Court,” that “just cause” existed
24 for the stay modification. (Docket No. 61 at 223.) The court
25 also found that “the relief requested . . . [was] in the best
26 interests of the Debtor, its estate, creditors, and all parties
27 in interest.” (Id.)
28 Insurers appeal the Order on three grounds: (1) the
1 Order failed to discuss and apply the appropriate legal standard;
2 (2) the Order failed to weigh evidence or make explicit findings
3 of fact; and (3) the Order did not sufficiently weigh Insurers’
4 interests.
5 The bankruptcy court’s decision to grant relief from an
6 automatic stay is reviewed for an abuse of discretion. See In re
7 Budd, No. BAP 11-cc-1015 MKKID, 2011 WL 4485190, at *2 (B.A.P.
8 9th Cir. July 11, 2011) (“We review an order granting relief from
9 stay for abuse of discretion.”); In re Merriman, 616 B.R. 381,
10 387 (B.A.P. 9th Cir. 2020) (same); In re Kronemyer, 405 B.R. 915,
11 919 (B.A.P. 9th Cir. 2009) (same). “A bankruptcy court abuses
12 its discretion if its decision is based on the wrong legal
13 standard or its findings of fact were illogical, implausible, or
14 without support on the record.” In re Merriman, 616 B.R. at 387.
15 A district court “may affirm the bankruptcy court’s
16 order on any basis supported by the record.” In re Wojcik, 560
17 B.R. 763, 768 (9th Cir. 2016).
18 II. Review of Bankruptcy Court Order
19 A bankruptcy court may grant relief from an automatic
20 stay under Section 362(d)(1) “upon a showing of cause.” In re
21 Merriman, 616 B.R. at 387 (citing 11 U.S.C. § 362(d)(1)).
22 “Cause” has been recognized as a “broad and flexible concept,”
23 and its definition is determined on a case-by-case basis. In re
24 Everton Aloysius Sterling, 543 B.R. 385, 393 (Bankr. S.D.N.Y.
25 2015); see also In re Merriman, 616 B.R. at 394 (“Congress left .
26 . . the concept of ‘cause’ purposefully undefined and flexible.”
27 (citation modified)).
28 a. Applicable Legal Standard
1 The Insurers argue at the threshold of their appeal
2 that the Order “failed to identify or apply the correct legal
3 rules governing the relief it granted.” (Docket No. 60 at 26.)
4 They contend that assessment of cause for stay relief “involves,
5 typically, an evaluation of certain factors, called the Curtis
6 factors,” which were not explicitly discussed by the bankruptcy
7 court. (Id. (citing In re Curtis, 40 B.R. 795, 799-800 (Bankr.
8 D. Utah 1984).) Insurers further argue that the Order should
9 have assessed the stay modification under Federal Rule of
10 Bankruptcy 9019. (Id.) Neither argument is persuasive.
11 The Curtis factors -- as Insurers acknowledge with the
12 qualifier “typically” -- have been recognized as discretionary
13 considerations a bankruptcy court may employ when determining
14 cause. See In re Plumberex Specialty Products, Inc., 311 B.R.
15 551, 559 (Bkrtcy. C.D. Cal. 2004) (describing the Curtis factors
16 “as issues a bankruptcy court might weigh in determining whether
17 to lift the stay to permit pending litigation to continue”
18 (emphasis added)); In re Fjeldsted, 293 B.R. 12, 24-25 (9th Cir.
19 BAP 2003) (“[The Curtis factors] may be considered as an aid to
20 the court in weighing the equities.” (emphasis added)); In re
21 Altman, 2018 WL 3133164, at *7 (9th Cir. B.A.P. 2018) (“Although
22 the [Curtis] factors may be considered by the bankruptcy court,
23 ‘cause’ is a generic concept without a specific definition.”).
24 Insurers cite no authority requiring explicit articulation and
25 consideration of the Curtis factors in an order granting stay
26 relief, and the court is not convinced that failure to do so
27 constitutes an abuse of discretion. Cf. In re Roger, 539 B.R.
28 837, 845 (C.D. Cal. 2015) (“[S]ome cases involving the automatic
1 stay provision do not mention the Curtis factors at all.”).
2 The court further notes that RCBS’ motion in the
3 bankruptcy court, which was incorporated into the court’s Order,
4 references the Curtis factors in its discussion of the basis for
5 requested relief. (Docket No. 61 at 14-15 n.2.) And as set
6 forth below, the tenth factor, “the interest of judicial economy
7 and the expeditious and economical determination of litigation
8 for the parties,” weighs heavily in favor of finding cause in
9 this case, which has been recognized as sufficient for purposes
10 of granting stay relief. See In re Merriman, 616 B.R. at 389
11 (“[The appellate panel] based its affirmance of the bankruptcy
12 court’s order primarily on the grounds that judicial economy
13 weighed in favor of stay relief.”); In re Sterling, 2018 WL
14 313085, at *5 (Bankr. S.D.N.Y. Jan. 5, 2018) (“Most importantly,
15 the interests of judicial economy will be met by granting relief
16 from the stay and moving forward in the state court.”).
17 Insurers’ argument that Bankruptcy Rule 9019 applies to
18 the Order is also unavailing. That rule provides that “[o]n
19 motion by the trustee and after notice and hearing, the court may
20 approve a compromise or settlement.” Fed. R. Bankr. P. 9019(a).
21 Nothing in the statute, or any of Insurers’ cited cases, suggests
22 that “compromise or settlement” includes motions for stay relief,
23 which are specifically discussed in Rule 4001. Fed. R. Bankr. P.
24 4001(a) (“Relief from the Automatic Stay”).
25 The bankruptcy court thus did not commit an abuse of
26 discretion in not articulating analyses pursuant to the Curtis
27 factors or Rule 9019. The relevant standard for the bankruptcy
28 court was whether there was “cause” for granting relief from the
1 stay pursuant to Section 362(d), and that is the standard it
2 applied. (Docket No. 61 at 198 (specifying the Order is issued
3 under “authority pursuant to 11 U.S.C. § 362(d) to order relief
4 from the automatic stay”).)
5 b. Evidentiary Requirements
6 Much of Insurers’ challenge to the bankruptcy court’s
7 “cause” determination pertains to the handling of evidence.
8 Insurers allege that the Order had no evidentiary basis, that the
9 bankruptcy court was required to hold an evidentiary hearing, and
10 that the court failed to make explicit findings of fact. (See
11 Docket Nos. 60, 64.) With these arguments, Insurers misconstrue
12 the limited scope of stay relief proceedings.
13 It is well-established that “[a] motion for stay relief
14 is a summary proceeding,” in which “the [bankruptcy] court’s
15 discretion is broad.” In re Santa Clara County Fair Ass’n, Inc.,
16 180 B.R. 564, 566 (B.A.P. 9th Cir. 1995); see also, e.g., Grella
17 v. Salem Five Cent Sav. Bank, 42 F.3d 26, 31 (1st Cir. 1994)
18 (“[T]he hearing on a motion for relief from stay is meant to be a
19 summary proceeding, and the statute requires the bankruptcy
20 court’s action to be quick.”); Lucore v. Specialized Loan
21 Servicing LLC for Wells Fargo Bank, N.A., No. 17-cv-308 JLS
22 (MDD), 2018 WL 1418022, at *2 (S.D. Cal. Mar. 22, 2018) (“The
23 proceedings to decide motions for relief from the automatic stay
24 are very limited.” (internal citation omitted)). Bankruptcy
25 courts do not adjudicate “the merits underlying substantive
26 claims,” in stay relief proceedings, but only determine “whether
27 the movant creditor has a colorable claim.” Grella, 42 F. 3d at
28 32 (collecting cases).
1 The abbreviated nature of stay relief proceedings has
2 led courts to conclude that evidentiary hearings are not
3 mandated, particularly where the “core facts are not disputed.”
4 In re Brown, 606 B.R. 40, 51 (B.A.P. 9th Cir. 2019); see In re
5 Everton Aloysius Sterling, 543 B.R. 385, 392 (Bankr. S.D.N.Y.
6 2015) (“[T]he Court is not required to hold a full-blown
7 evidentiary hearing on a motion to lift the automatic stay where
8 it is unnecessary to do so.”); In re Buczek, No. 22-2045, 2023 WL
9 7180644, at *3 (2d Cir. Nov. 1, 2023); Russo v Wilmington Sav.
10 Fund Soc’y, FSB, No. 23-cv-08275 (OEM), 2025 WL 788932, at *7
11 (E.D.N.Y. Mar. 12, 2025) (“[A] bankruptcy court is not required
12 to hold any hearing – much less a full evidentiary hearing – on a
13 motion for relief from automatic stay.”).
14 Nor does the failure to explicitly detail findings of
15 fact serve as grounds for reversal when the record provides
16 sufficient support for an inference of cause. See, e.g., In re
17 Meruelo Maddux Props., Inc., No. BAP CC-12-1304, 2013 WL 1890634,
18 at *5 (B.A.P. 9th Cir. May 6, 2013) (“Even if the bankruptcy
19 court rules without articulating . . . findings, there is no
20 reversible error where the record provides the reviewing court
21 with a full . . . view of the issues on appeal.”); In re Power
22 Equip. Co., LLC, 309 B.R. 552, 559 (B.A.P. 8th Cir. 2004)
23 (“[E]ven though the bankruptcy court did not make detailed
24 factual findings, an appellate court may affirm on any basis
25 support by the record.”). The absences of an evidentiary hearing
26 or detailed findings thus do not, in and of themselves, establish
27 abuse of discretion. Once more, the relevant question is whether
28 the record supported a plausible determination that cause existed
1 under Section 362(d)(1).2
2 The court finds that the record supports the bankruptcy
3 court’s determination that cause existed to modify the stay. The
4 central factual predicate underlying that determination -- the
5 existence of more than two hundred pending state court actions
6 permeated with state law issues -- is undisputed. (Docket Nos.
7 62 at 14; 70 at 8 n.2.) Those proceedings formed the backdrop
8 for the negotiated stipulation permitting four representative
9 cases to proceed while enjoining the remainder.
10 Bankruptcy courts routinely find cause to grant stay
11 relief in similar circumstances, because doing so promotes
12 judicial economy and allows for resolution of state law issues in
13 the proper forum. See, e.g., In re Calsol, Inc., 419 F. App’x
14 753, 754 (9th Cir. 2011) (“[A] desire to permit a state action to
15 proceed in a state tribunal has been recognized as a proper cause
16 to grant relief from the automatic stay.”); In re Castlerock
17 Props., 781 F. 2d 159, 163 (9th Cir. 1986) (affirming stay relief
18 allowing state law claimants to proceed in state court); In re
19 Wade, 1992 WL 332098, at *2 ("Cause may exist where the party
20 requesting relief from the automatic stay seeks to litigate state
21 law claims in state court.”); Pursifull v. Eakin, 814 F.2d 1501,
22

23 2 Insurers’ reliance on Federal Rule of Civil Procedure
52 is not persuasive. Although Rule 52 applies in contested
24 matters through Bankruptcy Rules 7052 and 9014, Rule 52(a)(3)
expressly provides that findings and conclusions are not required
25
when ruling on a motion. Fed. R. Civ. P. 52(a)(3). The
bankruptcy court did not conduct a bench trial on disputed facts;
26
it ruled on a motion based on the record and argument. Insurers
27 cite no authority suggesting that Rule 52(a)(3)’s motion
exemption is inapplicable in the stay-relief context, and the
28 court declines to read such a qualification into the rule.
1 1506 (10th Cir. 1987) (cause existed where “the issues involved
2 were matters of state law best decided by the state courts”);
3 Winding Creek Solar LLC v. P. Gas and Electric Co., 2021 WL
4 2987409, at *4 (N.D. Cal. July 15, 2021) (“The Ninth Circuit has
5 recognized that allowing a state action to proceed in a state
6 tribunal can be proper cause to grant relief from the automatic
7 stay.”).
8 RCBS’ motion, which referenced 137 pages of evidence
9 submitted in connection with their injunction motion in the
10 adversary case, specifically discussed the justification of
11 judicial economy: “Modifying the stay to allow only four (4)
12 State Court Actions to go forward dramatically alleviates the
13 burden of litigation, and allows . . . more focused attention on
14 the mediation.” (Docket No. 61 at 15.) Moreover, approval of
15 the stipulation carried the added benefit of resolving the
16 adversary proceeding. The bankruptcy court was thus presented
17 with a record showing hundreds of pending state law actions and a
18 negotiated stipulation that would narrow active litigation while
19 preserving the stay for the remainder to facilitate mediation and
20 resolve a cumbersome dispute. Given these circumstances, it was
21 well within the bankruptcy court’s discretion to determine that
22 this measured modification of the stay appropriately balanced the
23 burdens of the debtor with the objectives of efficient case
24 administration and reorganization.
25 c. Consideration of Insurers’ Interests
26 Finally, Insurers argue that they are injured by the
27 Order because it allows for judgments in the Released State Court
28 Actions to attach to their policies. (Docket Nos. 60 at 28, 62
1 at 30-32.) That provision, the Insurers argue, re-allocates
2 risk, “causes a fundamental alteration of the Policies,” and
3 effectively “weaponizes the stay” against them. (Id.)
4 Insurers’ contention that the bankruptcy court was
5 required to balance their interests with those of RCBS and the
6 Committee is undermined by the design of Section 362’s automatic
7 stay, which is meant “to protect . . . the debtor and his
8 creditors.” In re Canejo, 96 F. 3d 346, 351 (9th Cir. 1996)
9 (internal citation omitted); In re Grace Industries, Inc., 341
10 B.R. 399, 405 (Bkrtcy. E.D.N.Y. 2006) (“[W]here a plaintiff seeks
11 relief from a stay to pursue a claim in another forum, the
12 interests or desires of the insurance company which provides
13 coverage of the claim are not considered in determining whether
14 the stay should be lifted.”)
15 Moreover, even if the bankruptcy court were required to
16 consider Insurers’ interests, the court sees no reason to
17 conclude that it did not do so; in fact, the bankruptcy judge
18 expressly determined that relief “[was] in the best interests of
19 . . . all parties in interest.” (Docket No. 60 at 16.) Insurers
20 have maintained all along that they are “parties in interest” for
21 purposes of this appeal, and both this court and the bankruptcy
22 court have designated them as such. (Docket Nos. 51 at 7; 67-1
23 at 48 (a prior bankruptcy court scheduling order for “part[ies]
24 in interest, including any Insurer”).) That categorization is
25 further supported by the very definition of “party in interest,”
26 which “is broad enough to include anyone whose financial interest
27 may be affected by the outcome of a bankruptcy case.” In re
28 Barnes, 275 B.R. 889, 892 (Bankr. E.D. Cal. 2002) (citing 11
1 U.S.C. § 1109(b)).
2 It is also common practice for bankruptcy courts to
3 approve stay relief that allows for attachment to insurance
4 policies, in line with Section 362(d)’s definition of “cause,”
5 which includes “lack of adequate protection.” 11 U.S.C. §
6 362(d)(1); In re Calsol, 419 Fed. App’x. at 754 (affirming order
7 granting relief from stay that “limit[ed] Appellee's recovery to
8 proceeds of insurance”); New Hampshire Ins. Co. v. Hill, 516 Fed.
9 App’x. 803, 804 (11th Cir. 2013) (affirming order modifying stay
10 to “allow Appellants to collect their claims to the extent of . .
11 . [debtor's] insurance coverage”); In re Glunk, 342 B.R. 717, 740
12 (Bankr. E.D. Pa. 2006) (“Under § 362(d)(1), bankruptcy courts
13 have routinely granted relief to permit personal injury
14 plaintiffs to . . . limit their collection efforts to the
15 available insurance benefits.”).
16 Insurers point to this court’s prior observation, made
17 in denying the Committee’s motion to dismiss the appeal, that the
18 bankruptcy court’s Order “creates a new set of risks . . .
19 stemming from impending litigation.” (Docket No. 60 at 42.)
20 Insurers contend this language confirms that the stay unduly
21 injures them by “caus[ing] a fundamental alteration of [their]
22 policies.” (Docket No. 62 at 30.)
23 Insurers misconstrue the court’s language in its
24 earlier order. The term “new set of risks” was used solely in
25 assessing whether Insurers were “persons aggrieved” for
26 bankruptcy appellate standing purposes. (Docket No. 51 at 3
27 (citing Matter of Point Center Financial, Inc., 890 F. 3d 1188,
28 1191 (9th Cir. 2018)).) The court concluded that lifting the
nee enn eee ene en NO EE OI OI EE ED eee

1 stay exposed Insurers to the risk that judgments could be
2 enforced against available policy proceeds, a consequence
3 sufficient to establish pecuniary interest. The court did not
4 suggest that the Order substantively altered the terms, scope, or
5 obligations of the policies.
6 The bankruptcy court’s Order removed the injunction
7 imposed by Section 362, and the existence of litigation risk
8 following the lifting of the stay does not amount to a
9 contractual modification. As the committee points out, Insurers
10 remain free to assert whatever coverage defenses and policy
11 limitations exist to contest a “Survivor's ability to encumber
12 policy proceeds in a non-bankruptcy forum or the validity of any
13 such lien.” (Docket No. 67 at 47.) The Order thus did not
14 rewrite the policies or expand coverage.
15 For the above reasons, the court finds that the
16 | bankruptcy court did not abuse its discretion in approving the
17 stipulation modifying the automatic stay to permit continuation
18 of state court litigation.
19 IT IS THEREFORE ORDERED that the decision of the
20 bankruptcy court be, and the same hereby is, AFFIRMED.
21 | Dated: February 23, 2026 he bloom HK Ad. bE
22 WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE
23
24
25
26
27
28
13

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11375090. Public record. Not legal advice.