Beasley v. Lang et al

Filing 96

ORDER denying 91 Motion to Stay Proceedings. Signed by Magistrate Judge Michael T. Parker on May 4, 2018. (jg)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
TERESA BEASLEY

PLAINTIFF

V.

Case No. 5:16cv82-DCB-MTP

ROBERT LANG, et al.

DEFENDANTS
ORDER

This matter is before the Court on the Motion [91] To Stay Pending Resolution Of
Collateral Bankruptcy Court Action. Defendant, EF Properties, LLC argues that this case should
be stayed pursuant to 11 U.S.C. § 362 pending the outcome of an involuntary bankruptcy action
filed against Eduardo Flechas and Flechas & Associates, P.A. EF Properties, LLC is not a party
to the bankruptcy action. Having carefully considered the parties’ submissions, the Court finds
the Motion to Stay [91] should be DENIED.
Procedural Background
Plaintiff Teresa Beasley previously obtained a judgment against Robert and Beverly Lang
in a state court action. In this matter, Plaintiff initially sued Robert Lang, Beverly Lang, Eduardo
Flechas, and EF Properties, LLC claiming they were fraudulently frustrating the collection of a
judgment against the Langs by attempting to hide certain real property, some of which they claim
was transferred to EF Properties. See Complaint [1]. Eduardo Flechas was the Lang’s attorney in
the underlying state court matter.
In January of 2017, Plaintiff filed an amended complaint that excluded Eduardo Flechas
personally as a defendant as he was in bankruptcy. See Second Amended Complaint [9]. Now,
over a year and three months after that amended complaint was filed, EF Properties suggests the
bankruptcy stay that would have applied to Eduardo Flechas applies to it as well.

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Analysis
Section 362 of the Bankruptcy Code provides that a bankruptcy petition “operates as a
stay, applicable to all entities, of ... any act to collect, assess, or recover a claim against the
debtor that arose before the commencement of the case under this title.” 11 U.S.C. § 362(a)(6).
The purposes of this automatic stay “are to protect the debtor's assets, provide temporary relief
from creditors, and further equity of distribution among the creditors by forestalling a race to the
courthouse.” GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711, 716 (5th Cir. 1985).
“By its terms the automatic stay applies only to the debtor, not to co-debtors under
Chapter 7 or Chapter 11 of the Bankruptcy Code nor to co-tortfeasors.” Id. at 716 (emphasis
added). The Fifth Circuit has further noted that “[s]ection 362 is rarely ... a valid basis on which
to stay actions against non-debtors.” Arnold v. Garlock, Inc., 278 F.3d 426, 436 (5th Cir. 2001);
see also Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983) There are,
however, two primary exceptions to this general rule. Labaty v. UWT, Inc., SA–13–CV–389–
XR, 2013 WL 4520562, at *7 (W.D. Tex. Aug. 26, 2013). First, a bankruptcy stay may be
extended to stay proceedings against non-bankrupt third parties if there are “unusual
circumstances” showing “such identity between the debtor and the third-party defendant that the
debtor may be said to be the real party defendant and that a judgment against the third-party
defendant will in effect be a judgment or finding against the debtor.” Reliant Energy Services,
Inc. v. Enron Can. Corp., 349 F.3d 816, 825 (5th Cir. 2003) (quoting A.H. Robins Co., Inc. v.
Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)). The party seeking to invoke the stay through this
exception has the burden to show that it is applicable. Beran v. World Telemetry, Inc., 747
F.Supp.2d 719, 723 (S.D. Tex. 2010). Second, the district court may also grant a discretionary

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stay of the action against non-bankrupt parties, though this discretion is limited. Wedgeworth,
706 F.2d at 544–45.
EF Properties has not met its burden to show the exceptions are applicable, and the Court
declines to grant a discretionary stay. First, EF Properties did not submit a memorandum brief in
support of the motion in violation of the local rules, and the motion could be denied for this
reason alone. See L.U. Civ. R. 7(b)(4) (“Failure to timely submit the required motion documents
may result in the denial of the motion.”). Likewise, EF Properties has not met its burden of
presented “unusual circumstances” showing “such identity between the debtor and the thirdparty defendant that the debtor may be said to be the real party defendant and that a judgment
against the third-party defendant will in effect be a judgment or finding against the debtor.”
Reliant Energy Services, 349 F.3d at 825. In a conclusory manner, EF Property states:
In this action, the Plaintiff seeks to adjudicate the ownership of certain real
Property conveyed by the Defendants, Robert Lang and Beverly Lang, to the
Defendant, EF Properties, LLC. However, in that Eduardo Flechas is a member of
EF Properties, LLC, certain real property owned by EF Properties, LLC, is subject
to the claims of the creditors of Eduardo Flechas and Flechas & Associates, P.A.
The ownership of the subject real property, and whether the same is part of the
involved bankruptcy estate, has yet to be determined by the Bankruptcy Court.
That statement alone without any supporting facts or documents is not enough for
Defendant to establish “unusual circumstances.” Furthermore, the motion does not clearly
establish, nor is it altogether clear to the Court from other filings in this matter who the members
of EF Properties, LLC might be. In fact, EF Properties has contended in a motion to dismiss a
cross claim against it that the Langs lack standing to sue it because the Langs or Beverley Lang

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own “one hundred percent (100%) of EF Properties, LLC.”1 See [51] at 4. Based on the record
before the Court, the Motion to stay will be denied.
For the reasons stated above, the Motion [91] To Stay Pending Resolution Of Collateral
Bankruptcy Court Action is DENIED.
SO ORDERED, THIS the 4th day of May, 2018.
s/ Michael T. Parker
United States Magistrate Judge

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Counsel further cements this assertion by stating, “After a diligent search, counsel for the
Cross-Defendant can find no Mississippi federal or state case law which supports or allows the
complete ownership of a limited liability company to commence an action against the subject
business entity. Common sense dictates that one may not file an action against himself or herself,
or against an entity in which they have complete ownership.” See [51] at 4.
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