Smith et al v. Lumio, HX, Inc. et al
Filing
101
ORDER granting #100 Motion to Extend Bankruptcy Stay of Proceedings. This case is stayed in its entirety, and all existing deadlines are suspended pending further order from the Court; Defendants are directed to file a status report by January 3, 2025, and every 90 days thereafter, on the pending motion to consolidate this case into the MDL. Signed by Magistrate Judge Kyle C. Dudek on 10/22/2024. (CGW) [Transferred from Florida Middle on 10/23/2024.]
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
SHOSHANA SMITH,
INDIVIDUALLY AND BEHALF OF
ALL OTHERS SIMILARLY
SITUATED, et al.,
Plaintiffs,
Case No. 2:23-CV-00849-SPC-KCD
v.
LUMIO HX, INC., ATLANTIC KEY
ENERGY, LLC, FIFTH THIRD
BANK NATIONAL ASSOCIATION,
and DIVIDEND FINANCE,
Defendants,
/
ORDER
Plaintiffs are homeowners who had solar panels installed by Defendant
Lumio HX, Inc., or its predecessor Defendant Atlantic Key Energy, LLC.
(Doc. 57.)1 According to the current complaint, Plaintiffs were “duped into
signing expensive solar contracts under the belief that they would be saving
money on their monthly energy costs. [But] [r]ather than saving money,
[they] are left with malfunctioning equipment, hefty bills, leaky roofs, and
property damage.” (Id. ¶ 18.)
Apart from the solar companies, the complaint also names Fifth Third
Bank and Dividend Finance. (See Doc. 57.) These defendants allegedly
Unless otherwise indicated, all internal quotation marks, citations, and alterations have
been omitted in this and later citations.
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“aided” the fraudulent scheme by “providing loans for home solar energy
systems.” (Id. ¶ 15.) The only claim against them is for “derivative liability . .
. under the Holder Rule.” (Id. ¶ 315)
Lumio recently filed for bankruptcy. So under 11 U.S.C. § 362, the
Court stayed the case as to Lumio. (Doc. 97.) The lender defendants now
move to “exten[d] the current stay . . . to include proceedings in this action
[against them] as well.” (Doc. 100 at 1-2.) No opposition was filed, and the
time to do so passed. The Court thus treats the motion as unopposed. See
Local Rule 3.01(c).
“[T]he power to stay proceedings is incidental to the power inherent in
every court to control the disposition of the causes on its docket with economy
of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936). A decision to stay is left to the discretion of the
district court. See Clinton v. Jones, 520 U.S. 681, 706 (1997).
After considering the arguments offered, the Court agrees that a stay of
the entire case is appropriate. First, as the lender defendants point out, they
have an indemnity agreement with Lumio. (Doc. 100 at 5.) “Faced with such
circumstances, federal courts have extended the [bankruptcy] stay’s
protections to non-debtors who would be entitled to indemnity from the
debtor in the event of a judgment against them.” Gulfmark Offshore, Inc. v.
Bender Shipbuilding & Repair Co., No. CIV. A. 09-0249-WS-N, 2009 WL
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2413664, at *2 (S.D. Ala. Aug. 3, 2009). This makes sense since “a judgment
against the third-party defendant will in effect be a judgment or finding
against the debtor.” Nat’l Indem. Co. of the S. v. MA Alternative Transp.
Servs., Inc., No. 6:19-CV-13-ORL-37LRH, 2019 WL 1559897, at *1 (M.D. Fla.
Mar. 26, 2019).
In any event, judicial economy independently favors a stay. On its
current procedural track, the case will proceed against the lender defendants
while the claims against Lumio remain stayed. This means the Court must
proceed through discovery (and possibly trial) and then repeat the process for
Lumio. Such an approach would be extraordinarily inefficient, setting the
stage for duplicative trials on derivative claims. Redundancies of effort would
be large and inevitable, and litigation costs for both sides would be increased
substantially. And since the lender defendants’ liability is derivative of
Lumio, there would be a non-trivial risk of inconsistent judgments. By
contrast, there is no discernable prejudice to Plaintiffs from staying the case
to litigate the claims together. Finally, piecemeal adjudication makes little
sense considering there is “a pending petition” to “consolidate this case into
[an existing multidistrict litigation.]” (Doc. 100 at 4, 9); see Ephraim v. Abbott
Lab’ys, Inc., 601 F. Supp. 3d 1274, 1276 (S.D. Fla. 2022) (staying case
pending decision on transfer into MDL to avoid “the possibility of
inconsistent rulings and duplicative litigation”).
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For these reasons, it is ORDERED:2
1.
Defendants’ Motion to Extend Bankruptcy Stay of Proceedings
(Doc. 100) is GRANTED;
2.
This case is stayed in its entirety, and all existing deadlines are
suspended pending further order from the Court;
3.
Defendants are directed to file a status report by January 3,
2025, and every 90 days thereafter, on the pending motion to consolidate this
case into the MDL.
ENTERED in Fort Myers, Florida on October 22, 2024.
“A request for a stay of proceedings is a non-dispositive matter, subject to adjudication by
a federal magistrate judge.” Delta Frangible Ammunition, LLC v. Sinterfire, Inc., No.
CIV.A. 06-1477, 2008 WL 4540394, at *1 n.1 (W.D. Pa. Oct. 7, 2008); see also Bufkin v.
Scottrade, Inc., No. 2:17-CV-281-FTM-29CM, 2017 WL 7360419, at *1 (M.D. Fla. Dec. 18,
2017) (“The Court finds that the magistrate judge had the authority to issue the Order to
stay discovery[.]”).
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