Nesloney v. Midway Oilfield Constructors, Inc. et al
Filing
31
OPINION AND ORDER - Nelsoneys 26 motion for leave to file a motion to lift the stay and his 24 motion to lift the stay are granted. The defendants 23 motion to dismiss is granted in part and denied in part. Nelsoneys claims against Midway are dismissed. The claims against Smith may proceed....*** Midway Oilfield Constructors, Inc. terminated...*** Attorney Carmen Jo Rejda-Ponce and Larry J Simmons, Jr terminated. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(sanderson, 4)
Case 4:18-cv-00407 Document 31 Filed on 07/17/20 in TXSD Page 1 of 4
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BRAXTON NELSONEY,
Plaintiff,
VS.
MIDWAY OILFIELD CONSTRUCTORS,
INC. and BILLY A. SMITH,
Defendants.
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July 17, 2020
David J. Bradley, Clerk
CIVIL ACTION NO. H-18-407
OPINION AND ORDER
Braxton Nelsoney sued Midway Oilfield Constructors, Inc. and its sole owner and
officer, Billy A. Smith, alleging a failure to pay overtime wages under the FLSA. (Docket Entry
No. 1). When Midway filed for Chapter 11 bankruptcy in August 2018, Nelsoney’s claims
against Midway and Smith were stayed. (Docket Entry Nos. 18, 19, 22). The stay order stated
that either party could move to reinstate the case within 14 days after the bankruptcy court lifted
the automatic stay as to Midway. (Docket Entry No. 22 at 3).
In April 2020, Midway’s liquidation plan became effective and the automatic stay was
lifted in the bankruptcy court. (Docket Entry No. 23-2 at 17; Docket Entry No. 23-3). Two
months later, in June 2020, Midway and Smith moved to dismiss this litigation, arguing that
Midway’s bankruptcy plan required dismissal of Nelsoney’s claims against both Smith and
Midway, and that Nelsoney’s failure to timely move for reinstatement was a separate cause for
dismissal under Federal Rule of Civil Procedure 41(b). (Docket Entry No. 23). Nelsoney then
moved to lift this court’s stay and responded to the defendants’ motion to dismiss. (Docket
Entry Nos. 24, 25, 26). The defendants responded to Nelsoney’s motion to lift the stay and
replied to his opposition to the motion to dismiss. (Docket Entry Nos. 29, 30). The parties agree
Case 4:18-cv-00407 Document 31 Filed on 07/17/20 in TXSD Page 2 of 4
that the bankruptcy plan requires dismissing the claims against Midway. (Docket Entry No. 25
at 2).
Because Nelsoney’s failure to timely move does not present an egregious circumstance
that itself warrants dismissal with prejudice, and because Midway’s bankruptcy plan does not
require dismissing the claims against Smith, the court grants in part and denies in part the
defendants’ motion to dismiss, and grants Nelsoney’s motion to lift the stay. The reasons for
these rulings are explained below.
The defendants first argue that Nelsoney’s failure to timely move to reinstate the case
requires dismissal. Federal Rule of Civil Procedure 41(b) allows a party to move for dismissal
“[i]f the plaintiff fails to prosecute or to comply with these rules or a court order.” FED. R. CIV.
P. 41(b). Rule 41(b) dismissals “are affirmed only upon a showing of a clear record of delay or
contumacious conduct by the plaintiff, . . . and where lesser sanctions would not serve the best
interest of justice.” Wash. v. Johnson, 108 F. App’x 154, 156 (5th Cir. 2004) (quoting Dorsey v.
Scott Wetzel Servs., 84 F. 3d 170, 171 (5th Cir. 1996)). Dismissal “is reserved for the most
egregious of cases, usually cases where the requisite factors of clear delay and ineffective lesser
sanctions are bolstered by the presence of at least one of the aggravating factors,” which include
“the extent to which the plaintiff, as distinguished from his counsel, was personally responsible
for the delay, the degree of actual prejudice to the defendant, and whether the delay was the
result of intentional conduct.” Rogers v. Kroger Co., 669 F.2d 317, 320 & n.5 (5th Cir. 1982).
Nelsoney’s failure to move to reinstate by the court’s deadline does not present an
egregious circumstance that warrants dismissal with prejudice. The Fifth Circuit has affirmed
dismissals only when a party failed to comply with court orders despite warnings that sanctions
might result. See, e.g., Thanedar v. Time Warner Commc’ns of Hous., LLP, 227 F. App’x 385
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(5th Cir. 2007) (affirming the dismissal “[i]n light of [Plaintiff’s] serially contumacious
conduct”); Beard v. Experian Info Sols. Inc., 214 F. App’x 459 (5th Cir. 2007) (affirming the
dismissal on the grounds that the plaintiff “failed to comply with several court orders and failed
to prosecute his case” after repeated warnings that failing to timely comply with the court’s
orders could result in sanctions, including dismissal); Dorsey, 84 F.3d 170 (affirming the
dismissal after the plaintiff failed to timely file a joint pretrial order, appear for docket call,
timely designate an expert, and appear at trial); Salinas v. Sun Oil Co., 819 F.2d 105, 106–07
(5th Cir. 1987) (affirming the dismissal after the plaintiff had engaged in a “pattern of delay” for
over two years “in the face of three warnings of dismissal”).
Nelsoney explains his tardiness as an inadvertent calendaring error that occurred during
the transition to remote working at the start of the COVID-19 pandemic. The defendants argue
that Smith would suffer prejudice because he lacks access to Midway’s employment records, but
this appears be less about the two-month delay and more about Smith facing liability separate
from the company. Nelsoney’s delay is not egregious conduct that warrants the dismissal with
prejudice the defendants seek.
Nor does Midway’s bankruptcy plan require dismissing the FLSA claim against Smith.
Hernandez v. Larry Miller Roofing, Inc., 628 F. App’x 281 (5th Cir. 2016), is instructive. In
Hernandez, the Fifth Circuit reversed the district court’s grant of summary judgment dismissing
FLSA claims against a corporate officer. Hernandez, 628 F. App’x at 289. The plaintiff had
originally brought FLSA claims against both the corporation and an officer, but the district court
stayed the case when the corporation filed for bankruptcy. Id. at 283–84. After the bankruptcy
court lifted the automatic stay, the corporate officer moved for summary judgment, arguing that
the bankruptcy plan required dismissal of the claims against him. Id. at 284. The Fifth Circuit
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reversed, holding that the plan’s language was not specific enough to discharge a third party’s
liability. Id. at 288. The court noted that the plan’s language did not include the officer by
name. The court compared the language to that in an earlier case holding that “a party’s status as
an officer combined with boilerplate release language is not sufficiently specific” to discharge an
officer’s liability. Id. at 288 (citing In re Applewood Chair Co., 203 F.3d 914, 919 (5th Cir.
2000)).
Midway’s bankruptcy plan states that:
On the Effective Date, all lawsuits, litigations, administrative actions or other
proceedings, judicial or administrative, in connection with the assertion of Claims
against Midway, except Proofs of Claim and/or objections thereto pending in the
Bankruptcy Court, shall be dismissed as to Midway. . . . Such dismissal shall be
with prejudice to the assertion of such Claim in any manner other than as
prescribed by the Plan. Such dismissal with prejudice shall only apply as to
claims against Midway and shall not dismiss lawsuits and/or claims against nondebtor parties.
(Docket Entry No. 23-1 at 32). Not only is the plan language insufficiently specific to discharge
Smith’s liability, it states that dismissal “shall only apply as to claims against Midway and shall
not dismiss lawsuits and/or claims against non-debtor parties.” (Id.). Nelsoney’s FLSA claims
against Smith may proceed.
Nelsoney’s motion for leave to file a motion to lift the stay, (Docket Entry No. 26), and
his motion to lift the stay, (Docket Entry No. 24), are granted. The defendants’ motion to
dismiss, (Docket Entry No. 23), is granted in part and denied in part. Nelsoney’s claims against
Midway are dismissed. The claims against Smith may proceed.
SIGNED on July 17, 2020, at Houston, Texas.
_______________________________________
Lee H. Rosenthal
Chief United States District Judge
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