Dwyer Instruments Inc v. Sensocon Inc et al
Filing
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OPINION AND ORDER granting 166 Motion to Sever. The trial in this matter will proceed against Defendant Sensocon Inc as the automatic stay 149 does not extend to it. The case remains stayed as to Defendant Kohl. All previous deadlines remain in effect. Signed by Judge Theresa L Springmann on 4/15/14. (smp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
DWYER INSTRUMENTS, INC.,
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Plaintiff,
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v.
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SENSOCON, INC., and TONY E. KOHL, )
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Defendants.
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CAUSE NO.: 3:09-CV-10-TLS
OPINION AND ORDER
On November 22, 2013, Defendant Tony E. Kohl filed a Suggestion of Bankruptcy,
notifying the Court that he had filed a petition under Chapter 13 of the Bankruptcy Code. As a
result, Plaintiff Dwyer Instruments’s action to recover from the estate of the Debtor, Tony E.
Kohl, has been stayed pursuant to 11 U.S.C. § 362(a). This automatic stay provision is generally
limited to debtors and does not encompass non-bankrupt codefendants. See Pitts v. Unarco
Indus., Inc., 698 F.2d 313, 314 (7th Cir. 1983) (“The clear language of Section 362(a)(1) . . .
extends the automatic stay provision only to the debtor filing bankruptcy proceedings and not to
non-bankrupt co-defendants.”). Accordingly, the Plaintiff has filed a Motion to Separate or Sever
Defendant Tony E. Kohl in View of Bankruptcy Proceedings [ECF No. 166].
The stay should not impact the proceedings against the non-debtor corporate entity unless
it is demonstrated that the debtor is merely its “alter ego,” Funding Sys. Railcars, Inc. v. Pullman
Standard Inc., 34 B.R. 706, 709 (N.D. Ill. 1983), or that the debtor possesses such a similarity of
interests to the non-debtor that a failure to protect the non-debtor will mean that the assets of the
debtor itself will fall into jeopardy, Fox Valley Constr. Workers Fringe Benefit Funds v. Pride of
Fox Masonry and Expert Restoration, 140 F.3d 661, 666 (7th Cir. 1998). Defendant Sensocon,
Inc., has not responded to the Plaintiff’s Motion or otherwise attempted to make such a showing.
However, for completeness of the record, the Court notes that the Plaintiff’s First Amended
Complaint alleged that Sensocon is the alter ego of Kohl (First Am. Compl. ¶ 8, ECF No. 52),
but that the Defendants denied this allegation (Answer, ECF No. 92). Likewise, in a previous
motion for partial summary judgment, the Plaintiff asserted that Kohl was personally liable for
Sensocon’s violations because Kohl is the alter ego of Sensocon and because he personally
directed the acts of infringement. The Defendants, again, disputed the alter ego characterization.
In deciding the alter ego issue in the summary judgment context, the Court noted that the
burden is on the party seeking to pierce the corporate veil to prove, by a preponderance of the
evidence, (1) that the corporate form was so ignored, controlled, or manipulated that it was
merely an instrumentality of another and (2) that misuse of the corporate form would constitute
fraud or promote injustice. Escobedo v. BHM Health Assocs., Inc., 818 N.E.2d 930, 933 (Ind.
2004); Aronson v. Price, 644 N.E.2d 864, 867 (Ind. 1994). Ultimately, the Court concluded that
the Plaintiff had failed to carry its burden of showing that a genuine issue of fact exists regarding
whether Sensocon is a shell for the conduct of Kohl’s personal business and that the corporate
form has been abused to the point of promoting injustice or fraud. (Opinion, ECF No. 125.) The
Court noted that the Plaintiff presented no evidence that Sensocon was undercapitalized, did not
have corporate records, or ignored corporate formalities. The Plaintiff had not cited any evidence
to suggest that Kohl commingled his assets and affairs with Sensocon’s, used the corporate form
to promote fraud, or payed his individual expenses with corporate funds. Nor had the Plaintiff
attempted to analyze the significance of Kohl’s position as Sensocon’s sole shareholder for
purposes of piercing the corporate veil. See, e.g., Comm’n, Dep’t of Envtl. Mgmt. v. RLG, Inc.,
755 N.E.2d 556, 563 (Ind. 2001) (“Roseman is entitled to the benefit of corporate limited
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liability even if he owned all of the shares of RLG and was its only officer and director. A
corporate officer is not liable simply because of his position within the corporation.”). A second
Opinion and Order addressing Kohl’s motion for summary judgment on all counts of the
Plaintiff’s First Amended Complaint, reiterated this same finding. (Opinion, ECF No. 126 at 6)
(stating that Kohl “cannot be held liable as the alter ego of Sensocon”). Rather, the question was
whether Kohl was personally and directly liable based on his own actions.
Consistent with the findings the Court has previously made in this matter, the Court
concludes that Sensocon is a separate legal entity from Kohl, and that the automatic stay does
not extend to Sensocon.
CONCLUSION
For the reasons stated above, the Court GRANTS the Plaintiff’s Motion to Separate or
Sever [ECF No. 166]. The trial in this matter will proceed against Defendant Sensocon, Inc., as
the automatic stay [ECF No. 149] does not extend to it. The case remains stayed as to Defendant
Kohl. All previous deadlines remain in effect.
SO ORDERED on April 15, 2014.
s/ Theresa L. Springmann
THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
FORT WAYNE DIVISION
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