UL LLC v. Sturgeon Services International, Inc. et al

Filing 32

ORDER signed by District Judge Troy L. Nunley on 1/4/17 ORDERING that the instant action is STAYED only as to the cross-complaint against Rynders filed by Defendants Surgeon Services International, Inc. and Engineered Well Services International, Inc. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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UL LLC,

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No. 1:16-cv-01389-TLN-SAB
Plaintiff,

v.

ORDER

STURGEON SERVICES
INTERNATIONAL, INC., a California
corporation, ENGINEERED WELL
SERVICES INTERNATIONAL, INC., a
California corporation, JOHN POWELL,
an individual, AND DOES 1-20,
individuals,
Defendants.

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AND RELATED CROSS-ACTIONS

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Plaintiff UL LLC (“Plaintiff”) filed the instant action on September 19, 2016, against

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Defendants Sturgeon Services International, Inc., Engineered Well Services International, Inc.,

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and John Powell (jointly “Defendants”). (Compl., ECF No. 1.) On November 14, 2016,

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Defendants Sturgeon Services International, Inc. and Engineered Well Services International, Inc.

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initiated a third-party complaint for indemnity and contribution against Rebecca Rynders aka

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Rebecca Shiyin Zhu. (See ECF No. 12.) Rebecca Rynders filed a Notice of Bankruptcy

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Proceeding on December 22, 2016, seeking a stay of the instant action pursuant to 11 U.S.C. §

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362. (ECF No. 28 at 2.) Plaintiff filed a response to Rynders’ notice on December 29, 2016.

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(ECF No. 29.) Plaintiff asserts that only the third-party cross-complaint filed against Rynders

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may be stayed under 11 U.S.C. § 362 and cites Ingersoll-Rand Financial Corp. v. Miller Mining

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Co., Inc., 817 F. 2d 1424 (9th Cir. 1987), in support of this argument. (ECF No. 29 at 2.)

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In Ingersoll-Rand, the Ninth Circuit held that “[i]n the absence of special circumstances,

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stays pursuant to section 362(a) are limited to debtors and do not include non-bankrupt co-

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defendants.” Id. at 1427. Plaintiff argues this reasoning should extend to Defendants in the

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instant matter who claim indemnity by Rynders. (ECF No. 29 at2.) The Court agrees. The

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parties do not assert, and the Court cannot find, any special circumstances that would permit the

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Court to extend the automatic stay to the entire proceeding, including claims Rynders is not a

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party to and the original complaint between Plaintiff and Defendants. While Rynders may be

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responsible for the indemnification of Plaintiff’s claims against Defendants, Defendants may

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assert their claim in the Bankruptcy action as an unsecured-claim after a judgment is entered in

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the instant action. See In re All Seasons Resorts, Inc., 79 B.R. 901, 904 (C.D. Cal. 1987) (finding

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that no threat of harm to reorganization plans existed where the party may pay the full amount of

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his claim and seek indemnification from debtor at a later date). Furthermore, Rynders has not

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presented the Court with evidence that the Bankruptcy Court extended the automatic stay to non-

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debtors in the instant action. See Federal Land Bank of Spokane v. Stiles, 700 F. Supp. 1060,

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1062–63 (D. Mont. 1988) (finding 11 U.S.C. § 105(a) does not extend the automatic stay to no-

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debtors where the bankruptcy court did not issue an order extending the stay). Accordingly, the

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instant action is STAYED only as to the cross-complaint against Rynders filed by Defendants

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Surgeon Services International, Inc. and Engineered Well Services International, Inc.

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IT IS SO ORDERED.

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Dated: January 4, 2017

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Troy L. Nunley
United States District Judge

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