Smith v. City of Stockton, et al

Filing 64

ORDER signed by Judge Morrison C. England, Jr. on 8/2/2012 STAYING this action against all Defendants so long as the automatic stay is in place. (Michel, G)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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DIONNE SMITH-DOWNS,
et al.,

NO. 2:10-CV-02495-MCE-GGH

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Plaintiffs,
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v.

ORDER

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CITY OF STOCKTON,
et al.,

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Defendants.

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----oo0oo----

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On July 16, 2012, this Court issued an Order directing the

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parties to submit briefs addressing whether this action can or

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should proceed given that Defendant City of Stockton (“the City”)

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had filed a bankruptcy petition pursuant to Chapter 9 of the U.S.

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Bankruptcy Code and invoked the automatic stay prescribed in

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11 U.S.C. §§ 362 and 922.

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that, absent a compelling argument otherwise, it was inclined to

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stay the case.

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See ECF No. 59.)

The Court noted

On July 25 and 26, Plaintiffs and Defendants filed their

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briefs addressing the Court’s concerns.

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(See ECF Nos. 61-63.)

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In their brief, Plaintiffs generally contend that a stay of the

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entire action is not necessary because the City is only named in

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one of their three causes of action (their Monell cause of

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action), and argue that the action can proceed on their two other

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claims because the City cannot be held liable for the alleged

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Constitutional violations of the remaining Defendants.

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No. 61 at 1-4.)

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(1) California law mandates that the City both defend and pay any

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judgments against the individual City officers, therefore, the

(ECF

In essence, Defendants respond that

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automatic stay bars the continuation of this action against those

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officers; (2) the Court should exercise its discretionary

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authority to stay this action against the individual County

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officers because Plaintiffs’ complaint does not make clear what

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claims are made against which individual defendants.

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Nos. 62, 63.)

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(See ECF

As the Court noted in its prior Order, “in the absence of

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special circumstances,” a stay under 11 U.S.C. § 362 stays

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actions only against the debtor.

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Corp. v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir. 1987).

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Multiple claim and multiple party litigation must be

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disaggregated so that particular claims, counterclaims,

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cross-claims and third-party claims are treated independently

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when determining which of their respective proceedings are

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subject to the bankruptcy stay.

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1131, 1137 (9th Cir. 1995).

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discretion to stay actions in order to avoid duplicative

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litigation.

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See Ingersoll-Rand Fin.

See Parker v. Bain, 68 F.3d

However, district courts have wide

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Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936) (“the power to

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stay proceedings is incidental to the power inherent in every

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court to control the disposition of the causes on its docket with

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economy of time and effort for itself, for counsel, and for

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litigants.”); Lockyer v. Mirant Corp., 398 F.3d 1098, 1111

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(9th Cir. 2005) (“[A] trial court may, with propriety, find it

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efficient for its own docket and the fairest course for the

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parties to enter a stay of an action before it, pending

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resolution of independent proceedings which bear upon the

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case.”).

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Here, the Court concludes that special circumstances warrant

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staying this entire action until such time as the automatic stay

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against the City is lifted.

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held liable for Plaintiffs’ claims against the individual City

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officers, California law does require that:

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First, while the City may not be

upon request of an employee or former employee, a
public entity shall provide for the defense of any
civil action or proceeding brought against him, in his
official or individual capacity or both, on account of
an act or omission in the scope of his employment as an
employee of the public entity.

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Cal. Gov’t Code § 995 (emphasis added).

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results in a judgment adverse to the employee, or settles, the

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public entity is then required to indemnify the employee for the

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amount of the judgment or settlement.

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§ 825(a).

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Further, if the action

See Cal. Gov’t Code

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Therefore, if the Court permitted the case to proceed to

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judgment, or if the case were to settle, then the City could

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potentially be obligated to pay for the individual City officers

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defense costs, as well as to indemnify the officers for the

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amount of judgment or settlement, which would necessarily violate

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the automatic stay provisions of 11 U.S.C. §§ 362(a) 922.

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this action must be stayed against the individual City officer

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Defendants.

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Thus,

Turning to the individual County officer Defendants, the

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Court concludes that Plaintiffs’ claims, as alleged in their

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operative pleading, the Fifth Amended Complaint (ECF No 52),

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cannot be disaggregated from their claims against the individual

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City officer Defendants.

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all the individual Defendants were responsible for all of the

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acts alleged therein.

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claims against the individual County officer Defendants from

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those against the individual City officer Defendants, and because

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the Court has concluded that this action must be stayed against

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the City Defendants, the Court exercises its discretionary

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authority to stay this action as to the remaining County

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Defendants as well.

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The Complaint generally alleges that

Because there is no way to desegregate the

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CONCLUSION

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For the reasons set forth above, IT IS HEREBY ORDERED that

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this action is stayed against all Defendants so long as the

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automatic stay is in place.

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IT IS SO ORDERED.

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Dated: August 2, 2012

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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