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IN RE HASSANALLY

BAP No. CC-96-1403-OBV, Bankruptcy No. LA 92-12667 KL, Adversary No. 95-01685 KL.

208 B.R. 46 (1997)

In re Siraj HASSANALLY and Erika Hassanally, Debtors. Siraj HASSANALLY and Erika Hassanally, Appellants, v. REPUBLIC BANK; Steven Earl Smith, Chapter 7 Trustee, Appellees.

United States Bankruptcy Appellate Panel of the Ninth Circuit.

Decided March 14, 1997.

Attorney(s) appearing for the Case

Al Funada, Schuchman & Funada, Torrance, CA, for Siraj and Erika Hassanally.

Steven L. Bergh, Prenovost, Normandin, Bergh & Dawe, Santa Ana, CA, for Republic Bank.

Before: OLLASON, BRANDT and VOLINN, Bankruptcy Judges.

OPINION

OLLASON, Bankruptcy Judge:

OVERVIEW

In this appeal Siraj and Erika Hassanally ("Debtors") contend that the bankruptcy court erred by holding that a state court action against them for the tort of negligent construction could proceed to the extent it arose under state law postpetition. We Reverse.

STATEMENT OF FACTS

On November 13, 1989, Debtors executed a promissory note in favor of Republic Bank (...

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