Yates v. Delano Retail Partners LLC et al

Filing 48

ORDER by Judge Claudia Wilken Denying 32 Motion to Stay Entire Action. (ndr, COURT STAFF) (Filed on 3/29/2012)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 CRAIG YATES, 5 6 7 No. C 10-3073 CW Plaintiff, ORDER DENYING MOTION TO STAY (Docket No. 32) v. 9 DELANO RETAIL PARTNERS, LLC, doing business as DELANO’S IGA MARKET #1; and ARTHUR S. BECKER, as Trustee of the ARTHUR S. BECKER REVOCABLE LIVING TRUST, 10 Defendants. United States District Court For the Northern District of California 8 11 12 ________________________________/ Defendant Arthur S. Becker, Trustee of the Arthur S. Becker 13 Revocable Trust, moves to stay the entire case based on the 14 bankruptcy filing of his co-Defendant, Delano Retail Partners LLC. 15 Plaintiff Craig Yates opposes the motion. 16 papers filed by the parties and their arguments at the hearing, 17 the Court DENIES Becker’s motion. 18 19 Having considered the BACKGROUND Plaintiff alleges that he is a person with physical 20 disabilities and brings this action against Defendants for failure 21 to remove architectural barriers at the Delano’s Market in San 22 Francisco, California, thereby denying him and others with 23 physical disabilities access to, and full and equal enjoyment of, 24 the grocery store on August 19, 2009, March 27, 2010, May 6, 2010, 25 May 16, 2010 and June 6, 2010. 26 injunctive relief and statutory damages under the Americans with 27 Disabilities Act of 1990 (ADA), 42 U.S.C. § 12101, et seq., the 28 Unruh Civil Rights Act, California Civil Code §§ 51, 51.5, Plaintiff asserts claims for 1 California Health and Safety Code §§ 19955, et seq., and the 2 California Disabled Persons Act, California Civil Code §§ 54, 54.1 3 and 54.3. 4 company which rents the property and operates the grocery store, 5 and Arthur S. Becker, Trustee of the Arthur S. Becker Revocable 6 Trust, the owner of the property and landlord to Delano Retail 7 Partners. The two Defendants are Delano Retail Partners, LLC, a 8 On February 10, 2012, Plaintiff filed a notice that Delano 9 Retail Partners had filed for bankruptcy and was entitled to an United States District Court For the Northern District of California 10 11 automatic stay. See Docket No. 33. In a case management statement filed on February 15, 2012, 12 Plaintiff stated that Delano Retail Partners “had entered into an 13 injunctive relief agreement” with Plaintiff “to remove barriers 14 and in fact removed barriers.” 15 Docket No. 34, 3. 16 completed,” Plaintiff no longer seeks injunctive relief and seeks 17 only “statutory damages, attorneys’ fees, costs and litigation 18 expenses.” Because “[t]he remedial repairs have been Id. at 7. 19 20 Joint Case Management Statement, DISCUSSION Becker seeks to have the bankruptcy stay that automatically 21 applied to Delano Retail Partners extended to stay the entire 22 action. 23 indispensable party to this action, because issues of Becker’s 24 liability are “interwoven” with those of Delano Retail Partners’ 25 liability, because Delano Retail Partners is contractually 26 obligated to indemnify Becker for these violations, and because 27 Becker is unable properly to defend itself without Delano Retail 28 Partners’ participation. Becker argues that Delano Retail Partners is an 2 1 “Ordinarily, . . . unless the assets of the bankrupt estate are at stake, the automatic stay does not extend to actions 3 against parties other than the debtor, such as codebtors and 4 sureties.” 5 1491 (9th Cir. 1993). 6 nor repudiated it, the Ninth Circuit recognizes that other “courts 7 have carved out” a “limited exception[] to this general rule” in 8 certain cases where “‘there is such identity between the debtor 9 and the third-party defendant that the debtor may be said to be 10 United States District Court For the Northern District of California 2 the real party defendant and that a judgment against the third- 11 party defendant will in effect be a judgment or finding against 12 the debtor.’” 13 Piccinin, 788 F.2d 994, 999 (4th Cir. 1986); In re Circle K Corp., 14 121 Bankr. 257, 259 (Bankr. D. Ariz. 1990); In re Family Health 15 Service, 105 Bankr. 937, 943 (Bankr. C.D. Cal. 1989)). 16 courts have recognized “an exception where the debtor is an 17 indispensable party to the litigation.” 18 Assocs., 965 F.2d 160, 170 (7th Cir. 1992). 19 United States v. Dos Cabezas Corp., 995 F.2d 1486, Though it has neither explicitly adopted Id. at 1491 n.3 (citing A.H. Robins Co. v. Some In re James Wilson However, Becker’s potential liability is independent from 20 that of Delano Retail Partners. 21 that a landlord has an obligation to comply with the ADA that is 22 separate and independent from that of its tenant and that “a lease 23 allocating liability between a landlord and a tenant does not 24 affect either parties’ liability with respect to third parties.” 25 Botosan v. Paul McNally Realty, 216 F.3d 827, 834 (9th Cir. 2000). 26 In so holding, the court relied heavily on the Department of 27 Justice’s formal interpretation of the ADA regulations in its 28 Technical Assistance Manual: The Ninth Circuit has recognized 3 1 2 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 Both the landlord and the tenant are public accommodations and have full responsibility for complying with all ADA title III requirements applicable to that place of public accommodation. The title III regulation permits the landlord and the tenant to allocate responsibility, in the lease, for complying with particular provisions of the regulation. However, any allocation made in a lease or other contract is only effective as between the parties, and both landlord and tenant remain fully liable for compliance with all provisions of the ADA relating to that place of public accommodation. ILLUSTRATION: ABC Company leases space in a shopping center it owns to XYZ Boutique. In their lease, the parties have allocated to XYZ Boutique the responsibility for complying with the barrier removal requirements of title III within that store. In this situation, if XYZ Boutique fails to remove barriers, both ABC Company (the landlord) and XYZ Boutique (the tenant), would be liable for violating the ADA and could be sued by an XYZ customer. Of course, in the lease, ABC could require XYZ to indemnify it against all losses caused by XYZ’s failure to comply with its obligations under the lease, but again, such matters would be between the parties and would not affect their liability under the ADA. 14 Id. at 833-34 (quoting Department of Justice, Technical Assistance 15 Manual on the American With Disabilities Act § III-1.2000 (1994)). 16 See also Hoewischer v. Terry, 2011 U.S. Dist. LEXIS 130330, at *7 17 (M.D. Fla.) (“The ADA makes the landlord and tenant of a place of 18 public accommodation each individually responsible for any 19 violations found on the leased property. 20 tenant may use the terms of their lease to allocate costs 21 associated with the ADA between themselves, a lease cannot relieve 22 a landlord of its underlying obligations under the ADA.”). 23 While a landlord and Thus, Becker’s liability for ADA violations is distinct from 24 that of Delano Retail Partners, not derivative of it or 25 inextricably intertwined with it. 26 name Delano Retail Partners as a Defendant in order to hold Becker 27 responsible for the ADA violations. Plaintiff was not required to 28 4 Each may be held separately 1 liable for the violations found on the leased property. 2 Becker may attempt to rely on his lease agreements to seek 3 indemnification from Delano Retail Partners, these contracts does 4 not affect his obligations as to Plaintiff, a third party. 5 Further, the possible existence of an indemnification 6 agreement does not make Delano Retail Partners an indispensable 7 party. 8 right of reimbursement, indemnity, or contribution against an 9 absent party is not sufficient to make the absent party While Courts have consistently held that “a defendant’s possible United States District Court For the Northern District of California 10 indispensable to the litigation.” 11 LEXIS 36886, at *7-8 (N.D. Cal.) (citing Nottingham v. Gen. Am. 12 Commc’ns Corp., 811 F.2d 873, 880 (5th Cir. 1987); Field v. 13 Volkswagenwerk A.G., 626 F.2d 293, 298 (3rd Cir. 1980)). 14 Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 838 (1989) 15 (jointly and severally liable indemnitors are not indispensable 16 parties under Federal Rule of Civil Procedure 19(b)); Bank of Am. 17 Nat’l Trust & Sav. Ass’n v. Hotel Rittenhouse Assocs., 844 F.2d 18 1050, 1054 (3d Cir. 1988) (“A defendant’s right to contribution or 19 indemnity from an absent . . . party does not render that absentee 20 indispensable pursuant to Rule 19.”). 21 SASCO v. Byers, 2009 U.S. Dist. See also Becker’s argument that he will be prejudiced if he must go 22 forward without Delano Retail Partners, because he “cannot obtain 23 any discovery from Delano who operated the store” to “rebut 24 Plaintiff’s version of his alleged visits to the grocery store and 25 the barriers he allegedly encountered,” Reply, at 2, is also 26 unavailing. 27 same extent as it can against any other non-party. 28 262 B.R. 499, 504-05 (B.A.P. 9th Cir. 2001). Discovery can proceed against a bankrupt defendant to 5 In re Miller, See also Lewis v. 1 Russell, 2009 U.S. Dist. LEXIS 41539 (E.D. Cal.) (“In general, 2 parties may seek discovery from a debtor on matters related to 3 claims against non-debtor parties.”). 4 While Becker points to three cases for the proposition that 5 “courts routinely extend the automatic stay to non-bankrupt 6 landlords in ADA barrier cases when the tenant has filed for 7 bankruptcy,” Reply at 2, none of the stays in the cases he cited 8 were issued over an objection from the plaintiff. 9 El Torito Restaurants, Inc., Case No. 11-1002 (C.D. Cal. 2012), In Goldkorn v. United States District Court For the Northern District of California 10 the parties stipulated to extend the bankruptcy stay to the 11 non-bankrupt defendant. 12 Entire Action and Vacate All Pending Dates and Deadlines, Docket 13 No. 23. 14 (N.D. Cal.), the plaintiff agreed that the entire action should be 15 stayed because the injunctive relief sought against all defendants 16 to that action would materially affect the bankruptcy estate of 17 the bankrupt defendant. 18 Effect of the Automatic Stay, Docket No. 48. 19 Bankruptcy Stay, Docket No. 50 (granting stay where the “parties 20 are in agreement”). 21 issue. 22 11-2364, the court sua sponte stayed the entire case after being 23 notified of the bankruptcy filing of one defendant, stating that 24 the parties may file a motion “should they desire this matter 25 placed back on active status.” Order Removing Mater from Court’s 26 Active Caseload, Docket No. 17. The docket for the case reveals 27 that the plaintiff did not file an objection or a motion to lift 28 the stay as to any defendants. See Stipulation for an Order to Stay the In Muegge v. Chevy Fresh Mex Santa Rosa, Case No. 10-4863 See Pl.’s Brief on the Acknowledged See also Order re Here, injunctive relief is no longer an In Crespo v. El Torito Restaurants, Inc., Case No. Becker has not established the 6 1 existence of any general rule that courts should routinely extend 2 a bankruptcy stay applicable to a bankrupt tenant to non-bankrupt 3 landlords in ADA barrier cases. 4 5 6 7 CONCLUSION For the reasons set forth above, Becker’s motion to stay the entire action is DENIED (Docket No. 32). IT IS SO ORDERED. 8 9 United States District Court For the Northern District of California 10 Dated: 3/29/2012 CLAUDIA WILKEN United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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