First Interstate Bank v. W Resources, LLC et al

Filing 7

ORDER STAYING CASE. IT IS FURTHER ORDERED that the parties provide the Court with a status report on the bankruptcy proceeding by March 1, 2019, September 1, 2019, and every March 1 and September 1 going forward. Additionally, Plaintiff must provide the Court with a status report within thirty (30) days of the Bankruptcy Court's resolution of issues relevant to this proceeding. Signed by Judge Donald W. Molloy on 8/30/2018. (NOS)

FILED
AUG 3 0 2018

IN THE UNITED STATES DISTRICT COUR1Cte~. lJ.s .
FOR THE DISTRICT OF MONTANA
Dist~off::;/,~courr
MISSOULA DIVISION
issouta ana

FIRST INTERSTATE BANK,

CV 18-94-M-DWM

Plaintiff,
vs.

ORDER

W RESOURCES, LLC, a Louisiana
limited liability company; KATHY
ANN CRESS, fka KATHY ANN
CRESS WORLEY, an individual; and
UNITED MISSISSIPPI BANK, a
Mississippi corporation,
Defendants.

This case involves Defendant W Resources' s alleged default on an
obligation to Plaintiff First Interstate Bank under a note secured by a mortgage and
security agreement. (Doc. 1 at 2-4.) Defendant Kathy Ann Cress is allegedly a
personal guarantor on the note. (Id. at 3.) Defendant United Mississippi Bank
allegedly holds a junior interest in the mortgaged property. (Id.) Defendants have
not yet appeared in this case.
Count One of the Complaint alleges that First Interstate Bank is entitled to
judgment against W Resources for the note's $8,702,189.50 unpaid balance, plus
interest. (Id. at 5-6.) Count Two alleges that Plaintiff is entitled to foreclose W

Resources's mortgaged property. (Id. at 6-8.) Count Three alleges that Plaintiff is
entitled to foreclose W Resources' s personal property named in the security
agreement. (Id. at 8-9.) Count Four alleges that Plaintiff is entitled to judgment
against Cress for the note's $8,702, 189.50 unpaid balance, plus interest. (Id. at 910.) On August 7, 2018, First Interstate Bank provided notice that on July 23,
2018, W Resources filed for bankruptcy in the U.S. Bankruptcy Court for the
Middle District of Louisiana. (Doc. 4.)
Under Section 362(a) of the Bankruptcy Code, a petition for bankruptcy
automatically stays all judicial proceedings against the debtor. 11 U.S.C. §
3 62( a)( 1). But, "section 3 62( a) does not stay actions against guarantors, sureties,
corporate affiliates, or other non-debtor parties liable on the debts of the debtor."

In re Chugach Forest Prods., Inc., 23 F.3d 241, 246 (9th Cir. 1994) (quoting
Advanced Ribbons & Office Prods., Inc. v. US. Interstate Distrib. Inc., 125 B.R.
259, 263 (Bankr. 9th Cir. 1991)). Nevertheless, this Court has discretion to stay
proceedings pursuant to its inherent power to control its docket, see, e.g., Leyva v.

Certified Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979), considering
fairness to the parties and judicial economy, see Lockyer v. Mirant Corp., 398 F.3d
1098, 1110-13 (9th Cir. 2005) (canvassing Ninth Circuit precedent upholding
discretionary stays). A discretionary stay may be appropriate for purposes of
fairness and efficiency when pending proceedings in another forum implicate the
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case before the Court. Leyva, 593 F.2d at 863.
Here, Counts One, Two, and Three are against the debtor, W Resources, and
therefore fall within Section 362(a)'s automatic stay. Count Four, against the
alleged guarantor, Cress, is not automatically stayed. However, because the
Bankruptcy Court's resolution of First Interstate Bank's claims against W
Resources may impact the claim against Cress, fairness and judicial economy
counsel staying proceedings against Cress pending resolution of the related
bankruptcy action.
Accordingly, IT IS ORDERED that these proceedings are STAYED.
IT IS FURTHER ORDERED that the parties provide the Court with a status
report on the bankruptcy proceeding by March 1, 2019, September 1, 2019, and
every March 1 and September 1 going forward. Additionally, Plaintiff must
provide the Court with a status report within thirty (30) days of the Bankruptcy
Court's resolution of issues relevant to this proceeding.
DATED this ~ay of August, 2018.

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