Cox v. Specialty Vehicle Solutions LLC
Filing
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MEMORANDUM OPINION AND ORDER: (1) SVS's motion to dismiss in Pikeville Civil No. 7:15-cv-00080-ART-EBA, R. 10 , is GRANTED. (2) SVS's motion to dismiss in Pikeville Civil No. 7:15-cv-00090-ART-EBA, R. 4 , is GRANTED. (3) The clerk shall file a copy of this order in both of the above-captioned cases. (4) All pending deadlines are CANCELLED. (5) These matters are STRICKEN from Court's active docket. Signed by Judge Amul R. Thapar on 11/18/2015. (RCB)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
PIKEVILLE
COY G. COX, JR.,
Plaintiff,
v.
SPECIALTY VEHICLE SOLUTIONS LLC,
Defendant.
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Civil No. 15-80-ART
Civil No. 15-90-ART
MEMORANDUM OPINION
AND ORDER
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The plaintiff, Coy G. Cox, Jr., currently has two lawsuits pending against the defendant,
Specialty Vehicle Solutions (“SVS”). One he filed in state court that was later removed, and one
that he filed in this Court alone. SVS now moves to dismiss both suits. For the reasons that follow,
those motions are granted.
BACKGROUND
On February 23, 2015, the plaintiff, Coy G. Cox, Jr., filed a suit in state court against SVS.
Cox I, R. 1-1 (complaint).1 Cox alleged that he was working as a federal task force officer and
that, as part of his work, he performed surveillance in a van that SVS manufactured. Cox I, R. 11 ¶¶ 4–5; Cox I, R. 14 at 1. SVS manufactured vans that on the outside looked ordinary, but SVS
modified the inside of the van to allow officers to perform surveillance. See Cox I, R 1-1 ¶¶ 13–
15. According to Cox, one of the batteries malfunctioned while he was conducting surveillance in
his van. Cox I, R 1-1 ¶¶ 4, 18–19. Specifically, he says that one of the batteries used to power the
The Court will refer to this case, Pikeville Civil No. 7:15-cv-00080-ART-EBA, as “Cox I” and Pikeville Civil No.
7:15-cv-00090-ART-EBA as “Cox II.”
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van’s surveillance equipment began to spew “noxious and deadly gases, liquids, and vapors into
the enclosed van compartment.” Id. ¶ 18. Cox alleges these fumes severely injured him. Id. ¶ 19.
After receiving notice of the state court suit, SVS informed Cox that it had filed for
bankruptcy four months earlier. Cox I, R. 10-3 (notice of automatic stay); Cox I, R. 10-2
(notification letter). When a party files for bankruptcy, an automatic stay is put into place. See
Cox I, R. 10-3. The stay in this case expressly prohibited “the commencement or continuation of
any judicial proceeding against [SVS].” Cox I, R. 1-2 at 1. Thus, Cox violated the stay when he
filed his initial lawsuit.
Cox then filed a petition in the New Jersey bankruptcy court that was overseeing SVS’s
bankruptcy. Cox I, R. 10-4 (motion to lift stay). He asked the bankruptcy court to lift the stay and
allow him to pursue his personal-injury claims against SVS. Id. at 3. The bankruptcy court granted
that motion and lifted the stay. Cox I, R. 10-5 (order lifting stay). SVS notified the Kentucky state
court that the stay had been lifted. Cox I, R. 10-6 (notice of lifted stay).
SVS removed the state-court case to this Court and filed a motion to dismiss Cox’s claims.
Cox I, R. 1 (notice of removal); Cox I, R. 10 (motion to dismiss). In its motion to dismiss, SVS
argues that Cox’s initial suit is void as a matter of law because Cox violated the bankruptcy stay
by filing it. Cox I, R. 10. In response to this claim, Cox filed a new action with this Court on
September 11, 2015, asserting the same claims as the previous suit. Cox II, R. 1 (complaint).
Again, SVS filed a motion to dismiss that suit as well, arguing that it was untimely. Cox II, R. 4
(motion to dismiss). Both motions are now before the Court.
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DISCUSSION
I.
SVS argues that Cox’s first complaint must be dismissed because Cox violated the
bankruptcy stay when he filed it. Cox I, R. 10. Under Federal Rule of Civil Procedure 12(b)(6),
the Court must dismiss a complaint that does not state a claim for relief that is “plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). To state a plausible claim, Cox must plead such facts to allow a court to draw a
reasonable inference that SVS is liable for the alleged misconduct. Id. (citing Twombly, 550 U.S.
at 556). At this stage, the Court construes factual allegations “in the light most favorable to the
plaintiff” and draws “all reasonable inferences in favor of the plaintiff.” Watson Carpet & Floor
Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 456 (6th Cir. 2011) (quoting In re Travel
Agent Comm’n Antitrust Litig., 583 F.3d 896, 903 (6th Cir. 2009)).
A bankruptcy court has the power to lift a stay. See Easley v. Pettibone Mich. Corp., 990
F.2d 905, 910 (6th Cir. 1993). However, in the Sixth Circuit, a lawsuit that violated a stay when
it was filed must be dismissed absent “limited equitable circumstances.” Id. at 911. This equitable
exception applies only if the party protected by the stay: 1) has “attempt[ed] to exploit the stay to
gain an unfair advantage,” or 2) has “fraudulent[ly], willful[ly] delay[ed] in asserting the stay as a
defense.” Id.
Both parties acknowledge that, when Cox filed his initial lawsuit, the stay was in place.
Cox I, R. 14 at 2–3; Cox I, R. 10 at 2. And, for good reason, Cox does not argue that the equitable
exception applies. See Cox I, R. 14 (response to motion to dismiss). There is no evidence that
SVS has fraudulently or willfully delayed in asserting the stay as a defense. Indeed, when Cox
initially filed suit, SVS gave him prompt notice of the stay. Cox I, R. 10-3 (notice of stay). Nor
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is there any evidence that SVS has attempted to exploit the stay to gain an unfair advantage.
Because the equitable exception does not apply, Cox’s original complaint is void as a matter of
law. See Easley, 990 F.2d at 911.
In response, Cox argues that a lawsuit filed in violation of a stay may proceed if the
bankruptcy court intended to allow the suit to proceed when the bankruptcy court lifted the stay.
Cox I, R. 14 at 5. In support of this argument, Cox cites only one Fifth Circuit case, Sikes v. Global
Marine, Inc., 881 F.2d 176 (5th Cir. 1989). There, the plaintiffs filed a suit in violation of a
bankruptcy stay, but the bankruptcy court later lifted the stay. Id. at 177. The Fifth Circuit held
that the bankruptcy court had “intended to validate the filing of the original complaint” when it
lifted the stay. Id. at 179. Specifically, the court noted that the bankruptcy court was aware that
the lawsuit, when initially filed, violated the stay. Id. The court reasoned that the bankruptcy court
must have intended to excuse this initial violation when the bankruptcy court lifted the stay and
allowed the suit to proceed.
Id. Thus, the Fifth Circuit held, the plaintiffs’ claims were
“permit[ted] . . . to proceed to judgment.” Id.
The problem with Cox’s argument is that the Sixth Circuit has taken a different course
from the Fifth. The Sixth Circuit expressly considered Sikes, yet chose to define the equitable
exception more narrowly. See Easley, 990 F.2d at 909–12. This narrow exception provides
“fundamental protection to the debtor” while also allowing creditors to file suit when a debtor
abuses this protection. Id. at 910–11. In contrast, Sikes calls for a broad exception in which the
intent of the bankruptcy court—rather than the equities of the situation—is the focus of the inquiry.
See Sikes, 881 F.2d at 179 (determining the bankruptcy court’s “clear intent” to lift the stay was
sufficient to give legal effect to a suit filed in violation of the stay). By forcing debtors to spend
increased time and money litigating claims brought by creditors, this unconstrained exception
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could erode the fundamental protection of the bankruptcy stay. See Easley, 990 F.2d at 910
(discussing the importance of such “fundamental protection” for debtors). Thus, Cox’s argument
is unpersuasive under Sixth Circuit law.
Cox filed the original lawsuit while the stay was in place. As such, the original lawsuit
violated the automatic stay. Since no equitable exception applies, the original suit must be
dismissed.
II.
SVS argues that Cox’s second suit must be dismissed because it is untimely. Cox II, R. 4.
Under Kentucky Revised Statute § 413.140(1)(a), Cox had one year from the date of his alleged
injuries to file a claim. Cox alleges that his injuries occurred on February 28, 2014. Cox I, R. 11 at 2. Thus, the initial statute of limitations expired on February 27, 2015. Under the Bankruptcy
Code, however, a plaintiff is given a grace period following the lifting of a stay during which he
may file a lawsuit. 11 U.S.C. § 108(c)(2). This grace period allows a party to bring an action
within “30 days after notice of the termination or expiration of the stay,” even if the statute of
limitations expired while the stay was in place. Id.
Cox argues that his second lawsuit should be allowed to continue because it was filed
within this 30-day grace period. On August 13, 2015, SVS filed a notice that the stay was lifted
in the previous case. Under Cox’s theory, he had until September 12, 2015, to file a second suit.
See Cox I, R. 14 at 6 (acknowledging such). Cox filed his second suit on September 11, 2015,
which, according to him, means his second suit was timely.
Cox’s argument misunderstands what counts as notice under 11 U.S.C. § 108(c)(2). In
Easley, the court indicated that the lifting of the stay is the type of notice that begins the 30-day
grace period. There, the court held that a products-liability claim had to be dismissed because the
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plaintiff “failed to refile their [products liability] claim within thirty days of the lifting of the
automatic stay.” Easley, 990 F.2d at 912. Using the lifting of the stay as the date of notice makes
sense: as the party that filed the motion to lift the stay, Cox, through counsel, received electronic
notice of the Court’s decision to grant his motion on that same day. Thus, Cox had actual
knowledge that the stay was lifted on August 7, 2015. Accordingly, 30-day grace period began on
August 7, 2015, and ended on September 6, 2015. So Cox’s new complaint, filed on September
11, 2015, fell outside of the 30-day grace period and must be dismissed as untimely.
CONCLUSION
Cox’s first complaint is void as a matter of law. And his second is time-barred under the
applicable statutes. Thus, both of these complaints must be dismissed.
Accordingly, it is ORDERED that:
(1)
SVS’s motion to dismiss in Pikeville Civil No. 7:15-cv-00080-ART-EBA, R. 10,
is GRANTED.
(2)
SVS’s motion to dismiss in Pikeville Civil No. 7:15-cv-00090-ART-EBA, R. 4, is
GRANTED.
(3)
The clerk shall file a copy of this order in both of the above-captioned cases.
(4)
All pending deadlines are CANCELLED.
(5)
These matters are STRICKEN from the Court’s active docket.
This the 18th day of November, 2015.
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