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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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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CRAIG YATES,

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No. C 10-3073 CW

Plaintiff,

ORDER DENYING
MOTION TO STAY
(Docket No. 32)

v.

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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,

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Defendants.

United States District Court
For the Northern District of California

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________________________________/
Defendant Arthur S. Becker, Trustee of the Arthur S. Becker

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Revocable Trust, moves to stay the entire case based on the

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bankruptcy filing of his co-Defendant, Delano Retail Partners LLC.

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Plaintiff Craig Yates opposes the motion.

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papers filed by the parties and their arguments at the hearing,

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the Court DENIES Becker’s motion.

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Having considered the

BACKGROUND
Plaintiff alleges that he is a person with physical

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disabilities and brings this action against Defendants for failure

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to remove architectural barriers at the Delano’s Market in San

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Francisco, California, thereby denying him and others with

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physical disabilities access to, and full and equal enjoyment of,

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the grocery store on August 19, 2009, March 27, 2010, May 6, 2010,

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May 16, 2010 and June 6, 2010.

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injunctive relief and statutory damages under the Americans with

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Disabilities Act of 1990 (ADA), 42 U.S.C. § 12101, et seq., the

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Unruh Civil Rights Act, California Civil Code §§ 51, 51.5,

Plaintiff asserts claims for

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California Health and Safety Code §§ 19955, et seq., and the

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California Disabled Persons Act, California Civil Code §§ 54, 54.1

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and 54.3.

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company which rents the property and operates the grocery store,

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and Arthur S. Becker, Trustee of the Arthur S. Becker Revocable

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Trust, the owner of the property and landlord to Delano Retail

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Partners.

The two Defendants are Delano Retail Partners, LLC, a

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On February 10, 2012, Plaintiff filed a notice that Delano

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Retail Partners had filed for bankruptcy and was entitled to an

United States District Court
For the Northern District of California

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automatic stay.

See Docket No. 33.

In a case management statement filed on February 15, 2012,

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Plaintiff stated that Delano Retail Partners “had entered into an

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injunctive relief agreement” with Plaintiff “to remove barriers

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and in fact removed barriers.”

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Docket No. 34, 3.

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completed,” Plaintiff no longer seeks injunctive relief and seeks

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only “statutory damages, attorneys’ fees, costs and litigation

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expenses.”

Because “[t]he remedial repairs have been

Id. at 7.

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Joint Case Management Statement,

DISCUSSION
Becker seeks to have the bankruptcy stay that automatically

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applied to Delano Retail Partners extended to stay the entire

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action.

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indispensable party to this action, because issues of Becker’s

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liability are “interwoven” with those of Delano Retail Partners’

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liability, because Delano Retail Partners is contractually

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obligated to indemnify Becker for these violations, and because

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Becker is unable properly to defend itself without Delano Retail

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Partners’ participation.

Becker argues that Delano Retail Partners is an

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“Ordinarily, . . . unless the assets of the bankrupt estate
are at stake, the automatic stay does not extend to actions

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against parties other than the debtor, such as codebtors and

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sureties.”

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1491 (9th Cir. 1993).

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nor repudiated it, the Ninth Circuit recognizes that other “courts

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have carved out” a “limited exception[] to this general rule” in

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certain cases where “‘there is such identity between the debtor

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and the third-party defendant that the debtor may be said to be

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United States District Court
For the Northern District of California

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the real party defendant and that a judgment against the third-

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party defendant will in effect be a judgment or finding against

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the debtor.’”

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Piccinin, 788 F.2d 994, 999 (4th Cir. 1986); In re Circle K Corp.,

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121 Bankr. 257, 259 (Bankr. D. Ariz. 1990); In re Family Health

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Service, 105 Bankr. 937, 943 (Bankr. C.D. Cal. 1989)).

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courts have recognized “an exception where the debtor is an

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indispensable party to the litigation.”

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Assocs., 965 F.2d 160, 170 (7th Cir. 1992).

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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

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that of Delano Retail Partners.

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that a landlord has an obligation to comply with the ADA that is

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separate and independent from that of its tenant and that “a lease

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allocating liability between a landlord and a tenant does not

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affect either parties’ liability with respect to third parties.”

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Botosan v. Paul McNally Realty, 216 F.3d 827, 834 (9th Cir. 2000).

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In so holding, the court relied heavily on the Department of

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Justice’s formal interpretation of the ADA regulations in its

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Technical Assistance Manual:

The Ninth Circuit has recognized

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United States District Court
For the Northern District of California

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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.

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Id. at 833-34 (quoting Department of Justice, Technical Assistance

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Manual on the American With Disabilities Act § III-1.2000 (1994)).

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See also Hoewischer v. Terry, 2011 U.S. Dist. LEXIS 130330, at *7

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(M.D. Fla.) (“The ADA makes the landlord and tenant of a place of

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public accommodation each individually responsible for any

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violations found on the leased property.

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tenant may use the terms of their lease to allocate costs

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associated with the ADA between themselves, a lease cannot relieve

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a landlord of its underlying obligations under the ADA.”).

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While a landlord and

Thus, Becker’s liability for ADA violations is distinct from

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that of Delano Retail Partners, not derivative of it or

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inextricably intertwined with it.

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name Delano Retail Partners as a Defendant in order to hold Becker

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responsible for the ADA violations.

Plaintiff was not required to

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Each may be held separately

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liable for the violations found on the leased property.

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Becker may attempt to rely on his lease agreements to seek

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indemnification from Delano Retail Partners, these contracts does

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not affect his obligations as to Plaintiff, a third party.

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Further, the possible existence of an indemnification

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agreement does not make Delano Retail Partners an indispensable

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party.

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right of reimbursement, indemnity, or contribution against an

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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

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indispensable to the litigation.”

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LEXIS 36886, at *7-8 (N.D. Cal.) (citing Nottingham v. Gen. Am.

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Commc’ns Corp., 811 F.2d 873, 880 (5th Cir. 1987); Field v.

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Volkswagenwerk A.G., 626 F.2d 293, 298 (3rd Cir. 1980)).

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Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 838 (1989)

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(jointly and severally liable indemnitors are not indispensable

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parties under Federal Rule of Civil Procedure 19(b)); Bank of Am.

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Nat’l Trust & Sav. Ass’n v. Hotel Rittenhouse Assocs., 844 F.2d

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1050, 1054 (3d Cir. 1988) (“A defendant’s right to contribution or

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indemnity from an absent . . . party does not render that absentee

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indispensable pursuant to Rule 19.”).

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SASCO v. Byers, 2009 U.S. Dist.

See also

Becker’s argument that he will be prejudiced if he must go

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forward without Delano Retail Partners, because he “cannot obtain

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any discovery from Delano who operated the store” to “rebut

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Plaintiff’s version of his alleged visits to the grocery store and

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the barriers he allegedly encountered,” Reply, at 2, is also

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unavailing.

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same extent as it can against any other non-party.

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262 B.R. 499, 504-05 (B.A.P. 9th Cir. 2001).

Discovery can proceed against a bankrupt defendant to

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In re Miller,

See also Lewis v.

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Russell, 2009 U.S. Dist. LEXIS 41539 (E.D. Cal.) (“In general,

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parties may seek discovery from a debtor on matters related to

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claims against non-debtor parties.”).

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While Becker points to three cases for the proposition that

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“courts routinely extend the automatic stay to non-bankrupt

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landlords in ADA barrier cases when the tenant has filed for

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bankruptcy,” Reply at 2, none of the stays in the cases he cited

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were issued over an objection from the plaintiff.

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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

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the parties stipulated to extend the bankruptcy stay to the

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non-bankrupt defendant.

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Entire Action and Vacate All Pending Dates and Deadlines, Docket

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No. 23.

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(N.D. Cal.), the plaintiff agreed that the entire action should be

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stayed because the injunctive relief sought against all defendants

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to that action would materially affect the bankruptcy estate of

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the bankrupt defendant.

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Effect of the Automatic Stay, Docket No. 48.

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Bankruptcy Stay, Docket No. 50 (granting stay where the “parties

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are in agreement”).

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issue.

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11-2364, the court sua sponte stayed the entire case after being

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notified of the bankruptcy filing of one defendant, stating that

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the parties may file a motion “should they desire this matter

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placed back on active status.”

Order Removing Mater from Court’s

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Active Caseload, Docket No. 17.

The docket for the case reveals

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that the plaintiff did not file an objection or a motion to lift

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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
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existence of any general rule that courts should routinely extend

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a bankruptcy stay applicable to a bankrupt tenant to non-bankrupt

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landlords in ADA barrier cases.

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CONCLUSION
For the reasons set forth above, Becker’s motion to stay the
entire action is DENIED (Docket No. 32).
IT IS SO ORDERED.

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United States District Court
For the Northern District of California

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Dated: 3/29/2012

CLAUDIA WILKEN
United States District Judge

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