BMO Harris Bank N.A. v. Kuskie et al

Filing 104

ORDER in Response to 103 Letter to District Judge, 102 Letter to District Judge. The Court properly denied Capitol Sales' Motion to Dismiss Mr. Hayes's claim for advancement of legal fees. It strikes from its earlier order the requi rement that Capitol Sales advance the demanded fees immediately. And in light of the automatic stay of proceedings against Capitol Sales pursuant to the Bankruptcy Code, the parties are ordered to file a letter on or before April 19, 2023, updating the Court regarding the bankruptcy proceedings.(Written Opinion) Signed by Judge Katherine M. Menendez on 1/19/2023.(JCM)

CASE 0:22-cv-00435-KMM-TNL Doc. 104 Filed 01/19/23 Page 1 of 3

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
BMO Harris Bank N.A.,

Case No. 22-cv-00435 (KMM/TNL)

Plaintiffs,
v.

ORDER

Kenneth Kuskie, John Stedman, Susan
Stedman and Curtis A. Hayes,
Defendants.
v.
Capitol Sales Company, Inc.
Third-Party Defendant.

On January 4, 2023, this Court issued an Order granting in part and denying in part
several motions to dismiss that had been filed by the parties in this matter. [Dkt. No. 100.]
On January 17, 2023, Capitol Sales filed a Suggestion of Bankruptcy, advising the Court that
it had filed for Chapter 7 bankruptcy on December 27, 2022, and noting the operation of the
required automatic stay that results from that filing. [Dkt. No. 102.] In addition, Capitol
Sales’ letter contained factual updates regarding this matter, and sought clarification of this
Court’s January 4, 2023 order in one respect. Specifically, Capitol Sales urges the Court to
agree that, while it could deny the Motion to Dismiss with respect to Mr. Hayes’s claim
seeking advancement of legal fees pursuant to Minn. Stat. § 302A.521, it was not appropriate
for the Court to assume that Capitol Sales had approved the advancement while the motion
1

CASE 0:22-cv-00435-KMM-TNL Doc. 104 Filed 01/19/23 Page 2 of 3

was pending and to, in the alternative, Order the payment of fees if it had not done so yet.
[Id.] Capitol Sales attached to its letter a report from its counsel supporting its conclusion
that Mr. Hayes is not entitled to advancement of fees in this case. [Id.]
On January 18, 2023, Curtis Hayes filed a letter responding to Capitol Sales’ filing.
[Dkt. No. 103.] Mr. Hayes does not address the bankruptcy stay. Instead, he disputes that
Capitol Sales timely responded to his request for advancement and also argues that the Court
should not consider the report from the company’s special counsel. [Id.] Mr. Hayes states
that he intends to make a motion to compel the advancement of his fees in the future. [Id.]
Advancement of Legal Fees
The Court agrees that a portion of its January 4, 2023 Order went too far. The Court
properly denied Capitol Sales’ Motion to Dismiss Mr. Hayes’ claim for advancement of legal
fees. However, the Court believed, based on the briefing, that Capitol Sales’ only opposition
to the advancement of those fees was based on timing, and the initial failure of Mr. Hayes to
comply with the technical requirements of Minn. Stat. § 302A.521 in requesting those fees—
the record demonstrated that those particular concerns were now past. It is clear now that
Capitol Sales also opposes advancement of fees on the merits, arguing that Mr. Hayes fails to
meet several provisions of the statute that gives rise to his claim. And the Court agrees that
those merits were not before the Court in the motions to dismiss. Indeed, Mr. Hayes does
not appear to disagree that other provisions of the statute require attention from the Court
prior to ordering the payment of fees. Mr. Hayes’s letter advises the Court that he intends to
file a motion to compel the advancement of fees after conducting some discovery. The

2

CASE 0:22-cv-00435-KMM-TNL Doc. 104 Filed 01/19/23 Page 3 of 3

Court therefore strikes from its earlier order the requirement that Capitol Sales advance the
demanded fees immediately.
Bankruptcy Stay
The Court also agrees that this litigation must be stayed as to Capitol Sales: the stay in
this case is mandatory. 11 U.S.C. § 362(a)(1); Midlantic Nat’l Bank v. New Jersey Dep’t of Env’t
Prot., 474 U.S. 494, 503 (1986) (describing the automatic stay provision of the Bankruptcy
Code as “one of the fundamental debtor protections”). Although Mr. Hayes states an intent
to conduct discovery and file additional motions, including a motion for advancement of
legal fees, doing so as to Capitol Sales must wait until the stay is lifted. The issue is not that
Mr. Hayes missed a deadline for filing his motion, as his letter suggests, but that such a
motion cannot be considered while the stay is in place.
Finally, the parties are ordered to file a letter on or before April 19, 2023, updating
the Court regarding the bankruptcy proceedings and advising whether it is yet appropriate to
lift the stay.

Date: January 19, 2023
s/Katherine Menendez
Katherine Menendez
United States District Judge

3