Sheet Metal Workers' Union Local #441 Health and Welfare Fund et al v. Ace Fabrication, Inc. et al

Filing 28

Order re: 27 Suggestion of Bankruptcy filed by William F. Stewart, III, Robin C. Stewart. This action is STAYED as to defendants William F. Stewart, III and Robin C. Stewart pending further order of the Court. The Stewarts are ordered to notify th e Court in writing within 7 calendar days of either the issuance of relief from the automatic stay or the dismissal or other cessation of the bankruptcy proceedings. The Stewarts are further ordered to file monthly status reports on the 1st Wednesda y of each month beginning on 12/7/2011. The remaining parties are ordered by 11/16/2011 to file responses regarding their position as to whether the automatic stay should or should not reach plaintiffs' claims against defendant Ace Fabrication. Signed by Chief Judge William H. Steele on 11/2/2011. Copy mailed to Robin Stewart & William Stewart, III. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

SHEET METAL WORKERS’ UNION
LOCAL #441 HEALTH and WELFARE
FUND, et al.,
Plaintiffs,
v.
ACE FABRICATION, INC., et al.,
Defendants.

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CIVIL ACTION 11-0191-WS-M

ORDER
This matter comes before the Court on the Suggestion of Bankruptcy (doc. 27) filed by
defendants William F. Stewart, III and Robin C. Stewart.
That filing reflects that these individual defendants have filed a petition for relief under
Chapter 7 of the Bankruptcy Code. The Stewarts’ bankruptcy proceeding was filed in the U.S.
Bankruptcy Court for the Southern District of Alabama on October 13, 2011, and has been
assigned docket number 11-04223.
Ordinarily, when a debtor files a Chapter 7 petition in Bankruptcy Court, that filing
triggers the Bankruptcy Code’s automatic stay provision, which generally provides that the filing
of such a petition operates as a stay of “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 case under this title ….” 11 U.S.C. § 362(a)(1).
The Complaint in this action was filed on April 20, 2011, well before the Stewarts’ filing of their
petition in Bankruptcy Court; therefore, the automatic stay on its face precludes plaintiffs from
proceeding in this action against the Stewarts at this time. Accordingly, it is hereby ordered that
this action is stayed as to defendants William F. Stewart, III and Robin C. Stewart pending
further order of the Court. The Stewarts are ordered to notify the Court in writing within seven
(7) calendar days of either the issuance of relief from the automatic stay or the dismissal or other
cessation of the bankruptcy proceedings. To keep the Court apprised as to these related

proceedings, the Stewarts are further ordered to file, on or before the first Wednesday of each
month, a written report reflecting the status of the bankruptcy matter, with the first such report to
be due in December 2011.
The obvious question is what should become of plaintiffs’ claims against defendant Ace
Fabrication, Inc., in the interim. Ace Fabrication (which is represented herein by counsel) has
not filed any suggestion of bankruptcy. As a general proposition, the automatic stay provisions
of § 362(a) do not operate to stay claims against non-debtor defendants. See, e.g., American
Prairie Const. Co. v. Hoich, 560 F.3d 780, 789 (8th Cir. 2009) (“It is well-established that stays
pursuant to § 362(a) are limited to debtors and do not encompass non-bankrupt co-defendants.”);
In re TXNB Internal Case, 483 F.3d 292, 301 (5th Cir. 2007) (“Section 362(a) … does not apply,
however, to actions not directed against the debtor or property of the debtor.”). Nonetheless,
there is an “unusual circumstances” exception to this rule which would allow a § 362(a) stay to
extend to claims against non-debtor co-defendants. See generally Gulfmark Offshore, Inc. v.
Bender Shipbuilding & Repair Co., 2009 WL 2413664, *1-2 (S.D. Ala. Aug. 3, 2009)
(discussing and collecting authorities concerning “unusual circumstances” exception). The
remaining parties are ordered, on or before November 16, 2011, to file responses setting forth
their position as to whether the automatic stay should or should not reach plaintiffs’ claims
against defendant Ace Fabrication. Although they are free to address any issue related to the
scope of the stay, those responses should, at a minimum, address plaintiffs’ pending, ripe Motion
for Summary Judgment (doc. 22) against all defendants, to which no defendant filed any
opposition. The Court is particularly interested in the parties’ positions as to the following
question: Because the Rule 56 Motion is pending against all defendants, would concerns such as
intertwining of issues among the defendants, the risk of inconsistent results, and judicial
economy constitute “unusual circumstances” that might warrant extending the stay to Ace
Fabrication? The parties’ responses should be supported by legal authority as appropriate.
DONE and ORDERED this 2nd day of November, 2011.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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