Trustees of the Eighth District Electrical Pension and Benefits Funds et al v. Portneuf Electric Inc. et al

Filing 32

MEMORANDUM AND ORDER RE: NOTICE OF BANKRUPTCY AND MOTION FOR LEAVE TO FILE AMENDED COMPLAINT denying 19 Motion for Leave to File. All proceedings in this action as against Brent and Terri Harris only shall be, and the same hereby are, STAYED pursua nt to the provisions of 11 U.S.C. § 362(a) pendingresolution of their bankruptcy proceeding. Signed by Judge William B. Shubb. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

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UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF IDAHO
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THE TRUSTEES OF THE EIGHTH
DISTRICT ELECTRICAL PENSION
AND BENEFITS FUNDS,
DELINQUENCY COMMITTEE OF THE
EIGHTH DISTRICT ELECTRICAL
PENSION AND BENEFIT FUNDS, and
IBEW LOCALS 291 and 449,

NO. CIV. 1:12-126 WBS
MEMORANDUM AND ORDER RE:
NOTICE OF BANKRUPTCY AND
MOTION FOR LEAVE TO FILE
AMENDED COMPLAINT

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Plaintiffs,
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v.
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PORTNEUF ELECTRIC INC., an
Idaho Corporation, BRENT
HARRIS and TERRI HARRIS,

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Defendants.
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Plaintiffs Delinquency Committee of the Eighth District
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Electrical Pension and Benefit Funds, IBEW Local 291, IBEW Local
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449, and Trustees of the Eighth District Electrical Pension and
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Benefits Funds brought suit against defendants Portneuf Electric,
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Inc. (“Portneuf”), Brent Harris, and Terri Harris alleging
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violations of the Employee Retirement Income Security Act

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(“ERISA”) and certain collective bargaining agreements.

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Plaintiffs requested leave to amend the Complaint.

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(Pls.’ Mot. for Leave to File Am Compl. (Docket No. 19)).

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day before the hearing, defendants Brent and Terri Harris filed

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for bankruptcy.

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The

(Notice of Bankruptcy Filing (Docket 30).)

The notice of bankruptcy indicates that Brent and Terri

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Harris have “property interests” in co-defendant Portneuf

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Electric, (id.), though oral argument did not reveal the exact

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nature of those interests.

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an automatic stay of all proceedings against the debtor, 11

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U.S.C. § 362(a), the court will stay all actions against Brent

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and Terri Harris.

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amend sought to add claims against Brent and Terri Harris, it

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will be denied without prejudice.

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Since a filing of bankruptcy requires

Furthermore, because the motion for leave to

Absent special circumstances, however, “the automatic

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stay of § 362(a) protects only the debtor, property of the debtor

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or property of the estate.”

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23 F.3d 241, 246 (9th Cir. 1994); see also Ingersoll-Rand Fin.

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

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(“In the absence of special circumstances, stays pursuant to §

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

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defendants.”).

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Electric is seeking bankruptcy, qualifies as the Harris’

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property, is under the administration of the bankruptcy estate,

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or qualifies for a stay due to special circumstances.

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court will decline to stay proceedings against Portneuf under §

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362(a).

In re Chugach Forest Prods., Inc.,

There is currently no evidence that Portneuf

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Thus the

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When there are separate proceedings against a

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defendant, the court has inherent authority to stay the entire

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action before it if a stay is “efficient for its own docket and

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the fairest course for the parties.”

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of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979).

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not be granted unless it appears likely the other proceedings

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will be concluded within a reasonable time in relation to the

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urgency of the claims presented to the court.”

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is even a fair possibility that the stay . . . will work damage

Leyva v. Certified Grocers

Id.

“A stay should

“‘[I]f there

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to someone else,’ the party seeking the stay ‘must make out a

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clear case of hardship or inequity.’”

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398 F.3d 1098, 1111 (9th Cir. 2005) (quoting Landis v. N. Am.

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Co., 299 U.S. 248, 254 (1936)).

Lockyer v. Mirant Corp.,

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Here, the claims against Portneuf are the primary focus

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of the litigation, thus it does not appear that a stay as against

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the Harris defendants will force the litigation to proceed on a

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piecemeal basis.

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proceedings will last, plaintiffs wish to proceed against

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Portneuf as quickly as possible because they believe Portneuf is

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dissipating its assets, and their interest in the bankruptcy

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estate could be harmed by delaying a judgment against Portneuf.

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The court will therefore decline to exercise its inherent power

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to stay the action against Portneuf.

There is no way to know how long the bankruptcy

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IT IS THEREFORE ORDERED that:

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(1) all proceedings in this action as against Brent and

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Terri Harris only shall be, and the same hereby are, STAYED

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pursuant to the provisions of 11 U.S.C. § 362(a) pending

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resolution of their bankruptcy proceeding; and
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(2) plaintiffs’ motion for leave to file an Amended
Complaint be, and the same hereby is, DENIED.

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This action shall proceed as against Portneuf, but the

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court may reconsider whether to stay the action its entirety

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should evidence indicate that such a stay is appropriate under

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either § 362(a) or the court’s inherent authority.

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DATED:

October 22, 2012

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