In re Divine Ripe, L.L.C.
In re Divine Ripe, L.L.C.
Opinion of the Court
MEMORANDUM OPINION DENYING DEBTOR’S MOTION TO EXTEND STAY TO NON-DEBTOR MARCO JIMENEZ WITH RESPECT TO CERTAIN PRE-PETITION LITI-GATIONS
[Resolving ECF No. 12]
I. Introduction
This Court, reviews whether it is appropriate to extend the same protections afforded to a debtor under Title 11 of the United States Code (the “Bankruptcy Code ” or “Code ”)
II. Procedural Background
On October 16, 2013, Frescos Tomver initiated a lawsuit against the Debtor and Marco Antonio Jimenez (“Jimenez ”), claiming violations under the Perishable Agricultural Commodities Act (“PACA”), 7
III. The Motion To Stay
The Motion filed by the Debtor seeks to have this Court extend the protections of 11 U.S.C. § 362 (“the Automatic Stay ”) to the non-debtor Jimenez. [ECF No. 12, ¶ 11]. The Debtor argues that it is necessary to extend the protections of the Automatic Stay to Jimenez in order to prevent an “adverse, and likely irreconcilable, economic effect on the Debtor’s estate,” if Frescos Tomver were to be permitted to proceed with its lawsuit against Jimenez. Id.
IY. The Legal Standard
Section 362(a)(1) provides for an automatic stay of any judicial “proceeding against the debtor.” 11 U.S.C. § 362(a)(1). “Section 362(a)(3) provides that the filing of a petition ‘operates as a[n] [automatic stay] applicable to all entities, of ... any. act to obtain possession of property of the estate or of property from the estate.’ ” See Matter of S.I. Acquisition, Inc., 817 F.2d 1142, 1148 (5th Cir. 1987) (quoting 11 U.S.C. § 362(a)(3)). Ordinarily, the automatic stay under § 362 does not apply to actions against a non-debtor. See In re TXNB Internal Case, 483 F.3d 292, 301 (5th Cir. 2007). Courts recognize that a § 362 stay may apply to an action against non-debtor defendants depending on their relationship to the debtor. See Reliant Energy Servs., Inc. v. Enron Can. Corp., 349 F.3d 816, 825 (5th Cir. 2003) (“[A] bankruptcy court may invoke § 362 to stay proceedings against nonbankrupt codefen-dants where ‘there is such an identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.’ ” (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986))). The party invoking the stay has the burden to show that it is applicable. See 2 WILLIAM L. NORTON, JR., NORTON BANKRUPTCY LAW AND PRACTICE § 43:4 (3d ed. Supp. 2010) (noting that in bankruptcy court proceedings, “the party seeking to extend the stay will bear the burden to show that ‘unusual circumstances’ exist warranting such an extension of the stay to a nondebtor”); see also Arnold v. Garlock, Inc., 278 F.3d 426, 436 (5th Cir. 2001) (holding that the defendant had “no interest to establish such an identity [of interests] with [the] debtor”). This Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rules of Bankruptcy Procedure 7052, which incorporates Fed.R.Civ.P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.
1. Frescos Tomver filed suit against Debtor and Jimenez on October 16, 2013. The complaint alleged violations of PACA, breach of fiduciary duty, and breach of contract. [Case No. 7:13-cv-0577, ECF No. 1],
2. The Parties attempted to mediate the dispute with a scheduled mediation on June 4, 2014. [Case No. 7:13-cv-0577, ECF No. 35, ¶ 6]. The attorney for the Debtor and Jimenez failed to appear at the scheduled time for the mediation, but the attorney later arrived at approximately 10:30 A.M. [Case No. 7:13-cv-0577, ECF No. 35, ¶ 14]. However, Jimenez did not appear nor was his attorney able to contact him before noon that day. Id. On July 9, 2014, the District Court sanctioned the Defendants for failing to attend the court ordered mediation.
3. Jimenez filed a Motion to Dismiss Plaintiffs Complaint on July 21, 2014 pursuant to Fed.R.Civ.P. 12(b)(1). [Case No. 7:13-cv-0577, ECF No. 37],
4. Frescos Tomver filed a Motion for Summary Judgment on October 22, 2014. [Case No. 7:13-cv-0577, ECF No. 56].
5. The District Court considered ■ the Defendant’s Motion to Dismiss and the Plaintiffs Motion for Summary Judgment on November 17, 2014. The District Court heard oral arguments, denied the Motion to Dismiss, and granted Frescos Tomver’s Motion for Summary Judgment.
6. The Debtor filed a Motion to Reconsider the District Court’s grant of Frescos Tomver’s Motion for Summary Judgment, [Case No. 7:13-cv-0577, ECF No. 68], which was considered at a status conference on February 4, 2015. The District Court denied Debtor’s Motion To Reconsider the Court’s granting of Frescos Tom-ver’s Motion For Summary Judgment and noted that the liability for Jimenez was still at issue. [Case No. 7:13-cv-0577, ECF No. 77, 6:6-12],
7. Frescos Tomver filed a Motion for Final Summary Judgment on March 20, 2015, [Cáse No. 7:13-cv-0577, ECF No. 81], and on April 23, 2015, the Court granted the motion as to the Debtor, but not as to Jimenez.
8. The Debtor filed a voluntary petition for bankruptcy under Title 11, chapter 11 of the United States Code on August 5, 2015. [Case No. 15-70405, ECF No. 1],
9. On August 9, 2015, the Debtor filed a Motion to Use Cash Collateral, [ECF No. 6], and included with the motion a copy of the Debtor’s “August-September Monthly Budget,” [Case No. 15-70405, ECF No. 6-1], that provided a brief description of projected income and expenses.
10. The Debtor filed its Motion to Extend Automatic Stay As To The Nón-Debtor Jimenez, which is the subject of this opinion, on August 13, 2015. [Case No. 15-70405, ECF No. 12],
11. After the partial grant of summary judgment, Frescos Tomver filed a Motion to Sever the Debtor on August 14, 2015. [Case No. 7:13-cv-0577, ECF No. 90],
12. The District Court granted Frescos Tomver’s Motion to Sever on September 1, 2015, leaving only Jimenez as a party to the case. [Case No. 7:13-cv-0577, ECF No. 93],
13. The District Court is considering Frescos Tomver’s Motion for Summary Judgment against Jimenez concurrent with this Court’s consideration of the Debtor’s Motion to Extend the Automatic Stay As To The non-debtor Jimenez. [Case No. 7:13-cv-0577, ECF No. 93],
14. At the September 15, 2015 hearing, the Debtor offered, and the Court admitted the following exhibits relating, among
15. Exhibits P-B: The documents presented were copies of Jimenez’s alleged financial contributions to the Debtor.
a. Exhibit P-B 2-4 purported to be a recitation of all of the transactions between the Debtor and Jimenez from October 2005 to April 2015.
b. Exhibit P-B 1 purported to be a summary of the total contributions from Jimenez to the Debtor that amounted to $10,341,945.51, with $1,622,788.91 designated as “Personal” and the remaining $8,809,156.60 allocated as “Divine Support.”
16. Exhibits P-F: purported to be an explanation of the tomato farming operation by Jimenez in Mexico. However, the only information contained in the explanation was an unsubstantiated estimate for harvest yield, price per box, and total sales.
17. Exhibits P-G and P-H were merely copies of Frescos Tomver’s Motion for Summary Judgment, [Case No. 7:13-cv-0577, ECF No. 56], styled No. 2 and No. 3, which were offered by the Debtor in support of its claim of immediacy of the need for relief from the threat presented by Frescos Tomver. Exhibit P-H corresponded with Fresco Tomver’s Exhibit R-3.
18. Exhibit P-K included the Debtor’s initial petition, [Case No. 15-70405, ECF No. 1], and the accompanying schedules.
19. Frescos Tomver offered and the Court admitted the following exhibits:
a.Exhibit R-l which included the Debtor’s schedules and the Statement of Financial Affairs, [Case No. 15-70405, ECF No. 21];
b. Exhibit R-3 which was the Plaintiffs Motion for Summary Judgment against Jimenez, [Case No. 7:13-cv-00577, ECF No. 91]; and
c. Exhibit R-4 which is the Partial Summary Judgment as to the Debt- or, [Case No. 7:13-cv-00577, ECF No. 85].
d. Frescos Tomver did not offer any live witness testimony.
20.Notably, Jimenez did not appear to testify at the hearing. The Debtor’s only live witness was Saul Zuniga. Mr. Zuniga testified to the following:
a. Mr. Zuniga is presently in charge of the Debtor’s operations in Texas under the direction of Jimenez. However, Mr. Zuniga is neither an officer or a director of the Debtor, nor is he a licensed Certified Public Accountant.
b. The Debtor generates approximately $42,000 in monthly rental income of a warehouse located at 9901 S. Jackson Road, Pharr, TX owned by the Debtor (“Warehouse”), [Case No. 15-70405, ECF No. 21, p. 1], of which approximately $25,000 is used to pay the monthly mortgage to Inter National Bank, a secured creditor of the Debtor.
c. The plan of reorganization, which has yet to be filed, will be funded in part through the sale of produce, sourced from Mexico, which includes personal production to be performed by Jimenez on twenty (20) hectares of land in the Mexican State of Jalis-co. Mr. Zuniga believed that a semiannual crop could yield as much as 6,000-7,000 boxes per hectare, which typically sold at $10-$20 per box but could sell as high as $40 per box. The earliest that this produce*305 might be available is in late 2015, thereafter available twice each year. The total first year production could be 120,000 to 140,000 boxes based on the estimates, but the production costs an average of sixty percent of sales. Jimenez may expand production to additional hectares based on the viability of such an expansion.
d. Mr. Zuniga believed, but could not confirm, that Jimenez is currently in Jalisco, Mexico to work on the tomato farm in order to generate a cash crop that would fund the reorganization plan, which is .vital to the success of the Debtor.
e. Mr. Zuniga further testified that the contributions from Jimenez were made from his personal account to the Debtor based on Jimenez’s operations in Mexico and the sale of a house. Mr. Zuniga also pointed to Exhibit P-C, page 5, which contained accounting entries that indicated that an entry on March 31, 2010, which he believed represented the capitalization of $2,364,214.47 in contributions from Jimenez to the Debtor sometime between 2005 and 2010.
f. Mr. Zuniga further testified that some entries represented the sale of produce related to investments, agreements, or other arrangements by Jimenez personally.
g. On cross examination, however, Mr. Zuniga admitted that (i) he had no personal knowledge of Jimenez’s activities in Mexico and his knowledge was based solely on what Jimenez had told him; (ii) that Jimenez instructed Mr. Zuniga to appear at the September 15, 2015 hearing as a representative of the Debtor, because Jimenez himself would not be able to attend as he was attending to the tomato crop in Mexico; (iii) that he had an incomplete knowledge of Jimenez’s personal financial situation, but that his understanding of the effect of Frescos Tomver acquiring a judgment against Jimenez personally is the potential for the Warehouse changing hands; (iv) that he was aware that Jimenez had personally guaranteed the Debtor’s loan from Inter National Bank on the Warehouse property; (v) that he could not recall Jimenez being physically present at the Debtor’s office in approximately the last two (2) months; (vi) that he believed Jimenez to currently be on a ranch in Mexico and has seldom spoken with him of late; (vii) that he believed that Jimenez had considered growing produce prior to Jimenez’s cur- ' rent undertaking, but did not do so, because he was unable to find credit to fund the undertaking; and (viii) admitted that the outstanding $8,809,156.60 of contributions by Jimenez, as reflected in Exhibits PB and PC, were essentially in limbo, considered neither a loan from nor capital to be paid to or capital contributions from Jimenez.
VI. Conclusions of Law
a. Jurisdiction
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(b)(1) & (2)(A) and 1334(b). See In re Southmark Corp., 163 F.3d 925, 930 (5th Cir. 1999) (“[A] proceeding is core under section 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case.”).
b. Venue
Venue is proper pursuant to 28 U.S.C." §§ 1408(2) and 1409.
This Court also has an independent duty to evaluate whether it has the constitutional authority to sign a final order in matters before it. Stern v. Marshall, - U.S. -, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). The Supreme Court held that a statute authorizing bankruptcy judges to issue final judgments violated Article III to the extent that it authorized such final judgments on certain matters. Stem, 131 S.Ct. at 2616. The Court found that the particular bankruptcy ruling in dispute did not stem from bankruptcy itself, nor would it necessarily be resolved in the claims allowance process, and it only rested in a state law counterclaim by the estate. Id. at 2618. The Court reasoned that bankruptcy judges are not protected by the lifetime tenure attribute of Article III judges, but they were performing Article III judgments by judging on “all matters of fact and law” with finality. Id. at 2618-19. Hence, the Court held that Article III imposes some restrictions against a bankruptcy judge’s power to rule with finality. The Court found that a solely state law based counterclaim, while statutorily within the bankruptcy judge’s purview, escaped a bankruptcy court’s constitutional power. Id. at 2620. This Court reads Stem to authorize final judgments only where the issue is rooted in a right created by federal bankruptcy or the resolution of which relies on the claims allowance process. In other words, this Court may issue final judgments and orders where the issue “arises in” or “arises under” bankruptcy, but not where the issue is merely “related to” bankruptcy. See 28 U.S.C. § 157. However, even where the case does create a “Stern problem,” Article III will be satisfied where the parties to the case knowingly and voluntarily consent to the bankruptcy court’s power to issue final judgments. Wellness Int’l Network v. Sharif, — U.S. -, 135 S.Ct. 1932, 1938-39, 191 L.Ed.2d 911 (2015).
The matter at bar arises from the Debt- or’s Motion to Extend The Automatic Stay to Jimenez, which is a matter that can only arise in bankruptcy. Thus, this Court finds that it has the constitutional authority to grant or deny the Motion pursuant to 28 U.S.C. §§ 157 and 1334(b).
d. Analysis
There is no basis to extend the § 362 stay to the non-debtor defendant Jimenez. Other than the similarity between Frescos Tomver's claims against the Debtor and its claims against the individual defendant Jimenez and the potential application of collateral estoppel, the record provides no basis to conclude that a judgment against the individual defendant Jimenez would in effect be a judgment against the Debtor.
The Automatic Stay provides protection to debtors when they file for bankruptcy. 11 U.S.C. § 362(a). The Automatic Stay applies in different circumstances, but is “applicable to all entities.” Id.; Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983).
“the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other 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*307 claim against the debtor that arose before the commencement of the ease under this title...”
11 U.S.C. •§ 362(a)(1) (emphasis added); see also Arnold v. Garlock, Inc., 278 F.3d 426, 435-6 (5th Cir. 2001) (stating that “[v]irtually any act attempting to enforce a judgment against or obtain property from the estate of the debtor is stayed once the title 11 proceedings are commenced”). The Automatic Stay also provides that “the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate.” § 362(c)(1). The earliest that an entity may continue their action against the debtor is (1) “the time the case is closed;” (2) “the time the case is dismissed;” or (3) “the time a discharge is granted or denied.” § 362(c)(2)(A-C). However, the protections of § 362 for debtors in a single or joint case is qualified. § 362(c)(3)
However, the protections of § 362’s automatic stay are generally not extended beyond the debtor, because § 362 “is rarely ... a valid basis on which to stay actions against non-debtors.” Arnold, 278 F.3d at 436. The Fourth Circuit has recognized an exception to the debtor-only application of § 362 in the circumstances where non-debtors are co-defendants with the debtor and “there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.” A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986). In order to find an identity of interest between bankrupts and nonbankrupts, the A.H. Robins Co. court reasoned that there must be both “unusual circumstances” and “something more than the mere fact that one of the parties to the lawsuit has filed [for bankruptcy] ...” Id. at 999. The A.H. Robins Co. court provided an example of the type of situation that would qualify as one where “a suit, against a third-party who is entitled to absolute indemnity by the debtor on account of any judgment that might result against them in the case.” Id. In the case at bar, Debt- or provided no such evidence to support a claim that Jimenez would be entitled to absolute indemnity by the Debtor. The Fifth Circuit has recognized the A.H. Robins Co. ’s exception to the general rule, but the application has been limited
In TXNB Internal, Edge Petroleum Operating Company, Inc. (“Edge”) sued Duke Energy Trading and Marketing, LLC (“Duke”) for payment of gas sold to a debtor’s subsidiary, among others, who then delivered the gas to Duke to offset an overpayment. Id. at 296. The case was removed to the district court due to the bankruptcy filed by Aurion Technologies, LLC, the majority shareholder of Aurora Natural Gas, LLC (“Aurora”), which had purchased the gas from Edge. Id. However, the United States District Court for the Southern District of Texas ruled that the Duke matter was related to the bankrupt
A sister court similarly applied the standards recited above when reviewing whether the automatic stay should be extended to a non-debtor co-defendant in a civil case. In re Xenon Anesthesia of Texas, PLLC, 510 B.R. 106, 111 (Bankr. S.D.Tex. 2014).
In order to extend the Automatic Stay to a non-debtor, a court must find an identity of interest between the debtor and the non-debtor, and then evaluate whether the circumstances warrant exercising the “general discretionary power ... to stay proceedings in the interest of justice and in control of their dockets.” Wedgeworth, 706 F.2d at 545; In re Atlantic Ambulance Associates, Inc., 166 B.R. 613 (Bankr.E.D.Va. 1994). However, the proper use of this discretionary power requires “weighting] competing interests and maintain[ing] an even balance.” Id. (citing to Landis v. North American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 81 L.Ed. 153 (1936)). The Supreme Court in Landis provided guidance for what is required in order to invoke the discretionary power of a court by placing the burden of justification on the movant. Landis v. North American Co., 299 U.S. 248, 255, 57 S.Ct. 163, 81 L.Ed. 153 (1936);
In considering the relationship between Jimenez and the Debtor, this Court, in addition to the scant evidence and testimony taken at the hearing, first looked to the Debtor’s petition and schedules, but these documents do not include any hints of contributions from Jimenez, as they would be superfluous. Compare Ex. R-l with ECF No. 12, ¶¶ 11 and 28. The Debtor’s Statement of Financial Affairs, [ECF No. 21, p. 24-31], provides that the Debtor’s current business is the leasing of cold storage space in the Warehouse to third party tenants, but noticeably fails to mention the sale or brokerage of produce in line with the testimony of Mr. Zuniga on the expected future operations. Additionally, although Mr. Zuniga testified that he was the Debtor’s accountant, the Debtor’s Statement of Financial Affairs indicates that the books and records are kept by a different firm altogether. [ECF No. 21, p. 19]. The testimony provided by the Debt- or’s “representative,” Mr. Zuniga, did not shed much certainty on Jimenez’s potential contributions to effectuate the Debtor’s reorganization aside from what Mr. Zuniga had heard from Jimenez, but did not have any personal knowledge of, regarding operations in Mexico. Supra Part IV.5. Moreover, the Debtor’s records of Jimenez’s historical contributions were mired by the disheveled state of the Mexican accounting records. Exhibit P-B. The Debtor’s Mexican accounting records provide an incomplete picture of Jimenez’s prior activities regarding operations in Mexico that bore some relationship to the Debtor, albeit more closely resembling that of a broker relationship, where Jimenez, according to Mr. Zuniga, had invested in operations where his return would be in produce rather than currency. The testimony by Mr. Zuniga did demonstrate that Jimenez uses the Debtor as a conduit for his operations, including the payment of certain personal expenses that the Debtor failed to disclose in its Statement of Financial Affairs as a withdrawal, transfer, or distribution to an insider within the prior year. Ex. P-K, p. 26 and 30. The way in which Jimenez used the Debtor for his operations seems contrary to what the Texas legislature intended to qualify as contributions, as the benefit derived from Jimenez’s deals did not inure to the Debt- or, but rather flowed through to Jimenez. Compare Exhibit P-B and Findings of Fact 21.g with Tex. Bus. Orgs.Code Ann. § 1.002(9) (West 2015);
In total, Mr. Zuniga’s testimony gave a glimpse of the disarray present in the Debtor’s financial condition, such that this Court could hardly distinguish the efforts of Jimenez on his own accord from those on behalf of the Debtor. Ex. P-B. The circumstances presented could hardly be a more ripe ground to pierce the corporate veil of the Debtor to Jimenez, but not the inverse, as the operations of the Debtor appear to have been unhampered by the lack of activity by Jimenez in recent years, contrary to the Debtor’s argument of Jimenez’s necessitude to the Debtor to remain a going concern. See generally Part IV; ECF No. 21, p. 24 (providing income for 2013 to present). Surely, the facts present in the instant case are not what the AH. Robins Co. court and this Court would consider “unusual circumstances,” consistent with the Fifth Circuit’s treatment of the matter, presenting such an identity of interest between the debtor and non-debt- or as to warrant exercising the extraordinary powers of 11 U.S.C. § 105 for extending the automatic stay to a non-debtor. Reliant Energy Servs., Inc., 349 F.3d at 825; see also Arnold, 278 F.3d at 435-36, 439-40; In re Zale Corp., 62 F.3d at 761-62; Edwards, 6 F.3d at 316-17; In re S.I. Acquisition, 817 F.2d at 1147-48; In re Xenon Anesthesia of Texas, PLLC, 510 B.R. at 110.
The Debtor attempts to further support its position in the Motion by claiming that the “Movant Debtor is responsible for all acts of its operating member under the principle of Respondeat Superior.” [ECF No. 12, ¶ 22], However, the Debtor did not offer any evidence as to how Jimenez has bound the Debtor under the principle of Respondeat Superior
Accordingly, given the foregoing reasons, this Court finds that the Debtor has not provided evidence of either element of the AH. Robins Co. test for establishing cause to extend the protections of § 362 to a non-debtor party,'as the Debtor has not demonstrated “unusual circumstances” or “something more than the mere fact that one of the parties to a lawsuit has filed a Chapter 11 bankruptcy ...” Thus, absent the justification under the AH. Robins Co.’s test, as discussed and adopted by the Fifth Circuit, this Court cannot stay pro
e. Frescos Tomver’s Request for Recovery of Attorneys’Fees and Costs
Frescos Tomver’s Response included a request for the recovery of .attorneys’ fees and costs based on the belief that the Motion filed by Debtor was frivolous. [Case No. 15-70405, ECF No. 23, ¶40], The Supreme Court recently discussed the issue of the recovery of fees and costs by parties, in an application of the “American Rule”
Furthermore, Frescos Tomver’s request does not comport with the requirements of Fed. R. Bankr.P. 9011. Rule 9011 provides the framework for the consideration of sanctions on the basis of, among other items, a frivolous filing by a party. Fed. R. Bankr.P. 9011(b)(2).
VII. Conclusion
The Debtor moved for this Court to provide extraordinary relief, so that Debt- or’s reorganization would not be allegedly impeded by Frescos Tomver’s lawsuit being permitted to proceed against Jimenez individually. [ECF No. 12]. The rationale offered by the Debtor was that the Automatic Stay was necessary so that Jimenez could contribute to the Debtor’s reorganization efforts, but the Debtor’s evidence, or lack thereof, testimony of its sole witness, and its own petition and schedules do not support this concept. Compare Ex. P-K and Ex. R-l with Ex. P-B. This Court is constrained by the guidance provided by the Fifth Circuit in Arnold and Reliant Energy Services, Inc. in supporting the AH. Robins Co. exception for the extension of the stay to non-debtors that “unusual circumstances” or “something more than the mere facts that one of the parties to the lawsuit has filed a Chapter 11 bankruptcy must be shown in order that proceedings be stayed against non-bankrupt parties.”
The Request for Recovery of Attorneys’ Fees and Costs by Frescos Tomver, [ECF No. 23, ¶ 40], does not comply with the American Rule or the requirements of Fed. R. Bankr.P. 9011 and is therefore denied. '
An Order consistent with this Memorandum Opinion will be entered on the docket simultaneously herewith.
. Any reference to "Code” or "Bankruptcy Code” is a reference to the United States Bankruptcy Code, 11 U.S.C.; or any section (i.e. §) thereof refers to the corresponding section in 11 U.S.C.
. Enacted in 1930, Congress described PACA as "admittedly and intentionally a tough law.” G & T Terminal Packaging Co., Inc. vs. U.S. Dept. of Agriculture, 468 F.3d 86, 88 (2nd Cir. 2006)(citing S.Rep. No. 84-2507, at 3 (1956), as reprinted in 1956 U.S.C.C.A.N. 3699, 3701)). The law was designed primarily for the protection of the producers of perishable agricultural products — most of whom must entrust their products to a buyer or commission merchant who may be thousands of miles away, and depend for their payment upon his business acumen and fair dealing ...“Id.
. Debtor’s Exhibits P-B, P-C, P-D, and P-F were presented in Spanish.
. Qualifying the application of the stay applying to all entities by stating that it applies "in the sense that it stays all entities proceeding against the debtor.’’
. § 362(c)(3) stales that "a single or joint case is filed by or against a debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debt- or on the 30th day after the filing of the later case [and] on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed... ”
. § 362(d) states that "[o]n request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning- such stay ...”
. § 362(e)(1) provides a 30-day reprieve upon a request under § 362(d) absent a hearing by the court and § 362(e)(2) provides 60 days when the debtor is an individual that filed under Chapter 7, 11, or 13 of the Code absent a hearing by the court or the time period is extended by agreed order.
. The Supreme Court stated that "[o]nce the movant under § 362(d)(2) establishes that he is an undersecured creditor, it is the burden of the debtor to establish that the collateral at issue is ‘necessary to an effective reorganization.’ ”
. The Fifth Circuit stated that "[i]n every case where a creditor seeks . relief under § 362(d)(2), the creditor has the burden to establish the lack of equity in the property and the debtor has the burden to establish that the property is necessary for an effective reorganization.
. As of the date of this opinion, the Fifth Circuit has cited the A.H. Robins Co. case a total of fourteen (14) times.
. The Fifth Circuit in Reliant Energy Services, Inc. stated that "[t]his Court recognized the A.H. Robins Co. 's exception in Arnold., but declined to extend it in that case because no claim of a formal tie or contractual indemnification had been made to create an identity of interests between the debtor and nondebtor.”
. Stating that "[i]n order to invoke the automatic stay as to actions against a non-debtor, the party seeking to do so must show that there is such identity between the debtor and the non-debtor that the debtor may be said to be the real party defendant and that a judgment against the non-debtor will in effect be a judgment or findings against the debtor.” Arnold v. Garlock, Inc., 278 F.3d 426, 436 (5th Cir. 2001); GATX Aircraft Corp. v. M/V Courtney *112 Leigh, 768 F.2d 711, 717 (5th Cir. 1985); Reliant Energy Servs., Inc. v. Enron Can. Corp., 349 F.3d 816, 825 (5th Cir. 2003).
. The Supreme Court discussion included that "the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its
. “Contribution” means a tangible or intangible benefit that a person transfers to an entity in consideration for an ownership interest in the entity or otherwise in the person’s capacity as an owner or a member. The benefit includes cash, services rendered, a contract for services to be performed, a promissory note or other obligation of a person to pay cash or transfer property to the entity, or securities or other interests in or obligations
(A) with respect to a promissory note or other obligation to the extent that the agreed value of the note or obligation has previously been included as a contribution; or
(B) that the person intends to be a loan to the entity.
. Respondeat superior, Ballentine’s Law Dictionary (3d ed. 1969).
(1) The doctrine under which liability is imposed upon an employer for the acts of his employees committed in the course and scope of their employment.
(2) The tort liability of a principal for the act of his agent is based, not on the agency relationship, but on the relation of employer and employee, and is expressed by the maxim "respondeat superior.”
. "Texas follows the doctrine of respondeat superior and thus holds private employers liable for the torts committed by their employees in the course and scope of their employment.” Johnson v. Sawyer, 47 F.3d 716, 730 (5th Cir. 1995).
. In discussing liability for breach of contract, "assuming there is a valid contract, if it is executed by an agent of the business, then the business is primarily liable. The business can be sued for damages due to breach of the contract. ... One fundamental point that deserves re-emphasis is that even an LLC will not free the owners of the LLC from liability if file third party insists on individual contractual liability. The classic example would be a contract or lease entered into by the LLC, but as to which a personal guaranty of the LLC’s owner is required. Here, the LLC would have primary liability, but the individual guarantor would have secondary liability.”
. The "American Rule” is where "[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010).
. The Supreme Court relied on precedent in finding that “departures from the American Rule only in specific and explicit provisions for the allowance of attorneys' fees under selected statutes.” Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 260, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) (internal quotations omitted).
. Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
.Fed. R. Bankr. P. 9011(b)(2) provides that "[b]y presenting to the court a petition, pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.”
. A.H. Robins Co., 788 F.2d at 999.
Reference
- Full Case Name
- IN RE: DIVINE RIPE, L.L.C., Debtor(s)
- Cited By
- 5 cases
- Status
- Published