The Mill Steel Company et al v. Southeastern Stud & Component, Inc. et al (JOINT ASSIGN)

Filing 61

ORDER granting 54 Motion to Lift Stay; ORDERED that the stay imposed by Order dated November, 26, 2014, is LIFTED as to all parties, with the exception of Southeastern Stud & Components, Inc. It is further ORDERED, that Plaintiffs file a Third Amen ded Complaint on or before February 25, 2015, to reflect the current status of the litigation. Defendants are DIRECTED to answer, counterclaim, or otherwise respond to Plaintiffs' Third Amended Complaint on or before March 9, 2015. Signed by Chief Judge William Keith Watkins on 2/19/2015. (kh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
THE MILL STEEL COMPANY,
et al.,
Plaintiffs,
v.
SOUTHEASTERN STUD &
COMPONENT, INC., et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)

CASE NO. 2:14-CV-1023-WKW
[WO]

ORDER
Upon consideration of Plaintiffs’ Motion to Lift Stay (Doc. # 54), and for good
cause shown, it is ORDERED that the motion is GRANTED. On October 27, 2014,
Defendant Southeastern Stud and Components, Inc. (“Southeastern Stud”) provided
notice that it had filed a voluntary petition under Chapter 11 of the Bankruptcy
Code.1 (Doc. # 26.) When Southeastern Stud filed for bankruptcy – regardless of
precipitating events – an automatic stay was triggered, prohibiting “the
commencement or continuation . . . of a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced before the
commencement of the [bankruptcy petition].” U.S.C. § 362(a)(1). In light of the
The events that led to Southeastern Stud’s Chapter 11 bankruptcy petition remain fiercely
contested.
1

automatic stay’s shield of Southeastern Stud’s estate, and upon the motion of
Plaintiffs, a stay over the entirety of this litigation was ordered in the hopes that a
controlled and efficient bankruptcy proceeding would preserve the debtor-estate
while presenting all parties with an opportunity for judicial resolution of the
competing claims. (Doc. # 52.)
As the bankruptcy proceeding has moved forward, however, Plaintiffs no
longer wish to refrain from pursuing their claims against the non-debtor Defendants2
and have requested that the stay be lifted as to all Defendants except Southeastern
Defendants counter with allegations of Plaintiffs’ bad faith and good

Stud.3

engineering (alleging that Plaintiffs wish to “capitalize on the default which Mill
Steel itself engineered.” (Doc. # 56, at 2.)) The cure for the ills of all parties
(excluding the debtor in bankruptcy, Southeastern Stud) is litigation, which will
proceed in this court. Because Mr. Whaley is a party, the court concludes that, at
least on the information currently available, his presence in the litigation gives a
potential avenue of relief as an equity owner of Southeastern Stud and most of the
non-debtor Defendants for the alleged wrongful conduct of Plaintiffs.

“Non-debtor Defendants” refers to all Defendants in this action who are not in
bankruptcy. Of course, it is alleged that they are debtors to Plaintiffs.
2

3

The stay was initially extended to encompass the non-debtor Defendants in light of this
court’s authority to orderly and expeditiously manage its docket. See Equity Lifestyle Props. Inc.
v. Fla. Mowing and Landscape Serv., Inc., 556 F.3d 1232, 1240 (11th Cir. 2009).
2

Therefore, after thoroughly reviewing the Trustee Report submitted to the
Bankruptcy Court on January 2, 2015, the arguments of the parties, and the record,
it is apparent that the continuation of the present litigation is warranted as to the
claims of Plaintiffs and all non-debtor Defendants.4
Accordingly, it is ORDERED that the stay imposed by Order dated
November, 26, 2014, is LIFTED as to all parties, with the exception of Southeastern
Stud & Components, Inc. It is further ORDERED, that Plaintiffs file a Third
Amended Complaint on or before February 25, 2015, to reflect the current status of
the litigation. Defendants are DIRECTED to answer, counterclaim, or otherwise
respond to Plaintiffs’ Third Amended Complaint on or before March 9, 2015.
DONE this 19th day of February, 2015.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

4

It is not likely the court would appoint Mr. Alexander, trustee in bankruptcy for
Southeastern Stud, as receiver of non-debtor Defendants, should appointment of a receiver be
appropriate. This is due to a potential conflict of interest in the event it is determined by the
bankruptcy court that preferences may have been paid to some or all of the non-debtor Defendants,
or allegations here or there that Mr. Whaley is the alter ego of one or more of all the entities.
3