Education Management Services, LLC v. Tracey

Filing 43

ORDER Administratively Closing Case. Signed by Judge David A. Ezra. (aej)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
EDUCATON MANAGEMENT
SERVICES, LLC,
Plaintiff,
vs.
MICHAEL J. TRACEY,
Defendant.

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No. 5:15–CV–075–DAE

ORDER STAYING AND ADMINISTRATIVELY CLOSING CASE
Education Management Services (“Plaintiff”) is a limited liability
company that provides administrative and staffing services for Armando
Montelango Seminars (“AMS”), a subsidiary corporation of Armando Montelango
Companies, Inc. (“AMC”) which sells real estate seminars. (“Compl.,” Dkt. # 1-3,
¶¶ 8–10). Pursuant to the arrangement between Plaintiff and AMS, all entities
doing business with AMS contract through Plaintiff, and Plaintiff indemnifies
AMS and pursues litigation against contractors who harm AMS. (Id. ¶¶ 11–12.)
On February 21, 2010, Michael J. Tracey (“Defendant”) began
contracting through Plaintiffs to do business with AMS. (Id. ¶¶ 16–17.) Mr.
Tracey gained access to various alleged trade secrets in the course of his work with
AMS, and signed at least one Non-Disclosure Agreements in 2010. (Am. Compl.

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¶¶ 27–29.) In October, 2014, Mr. Tracey terminated his employment with Plaintiff
and allegedly began providing services to The Nick Vertucci Companies, Inc.
(“Vertucci”), which operates a competing real estate seminar company. (Id. ¶¶ 30,
32–33.) On January 16, 2015, Plaintiff filed suit against Defendant in the 288th
Judicial District Court of Bexar County, seeking a temporary restraining order and
temporary and permanent injunctions enjoining Mr. Tracey from destroying
evidence and sharing alleged trade secrets with Vertucci. (Id. ¶¶ 67–72.) Plaintiff
also sought exemplary damages for breach of contract and trade secret
misappropriation claims. (Id. ¶¶ 78–79, 42–46, 47–51, 52–56, 57–66.)
On January 29, 2015, Mr. Tracey removed the suit to this Court.
(Dkt. # 1.) On December 18, 2015, Mr. Tracey filed a Suggestion of Bankruptcy,
notifying this Court of his Chapter 7 Bankruptcy suit, filed October 13, 2015,
pending before the United States Bankruptcy Court for the Middle District of
Florida. (Dkt. # 42.)
Section 362 of the United States Bankruptcy Code requires that “a
petition filed under section 301, 302, or 303 of this title . . . operates as a stay,
applicable to all entities, of the commencement or continuation . . . of a judicial,
administrative, or other action or proceeding against the debtor that was or could
have been commenced before the commencement of the case under this title.” 11
U.S.C. § 362(a)(1). The action before the Court is a judicial proceeding against

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Mr. Tracey, the debtor, which was commenced before the bankruptcy proceeding
began. Because a proceeding must be stayed while the debtor subject to suit is
engaged in a bankruptcy proceeding, this Court finds that the action must be
STAYED pursuant to Section 362 of the United States Bankruptcy Code.
Where a suit is stayed pursuant to a bankruptcy proceeding, an
administrative closure is appropriate. See Mire v. Full Spectrum Lending Inc., 389
F.3d 163, 167 (5th Cir. 2004). An administrative closure is “a postponement of
proceedings,” rather than “a termination.” S. La. Cement, Inc. v. Van Aalst Bulk
Handling, B.V., 383 F.3d 297, 302 (5th Cir. 2004). A case that is administratively
closed “may be reopened upon request of the parties or on the court’s own
motion.” Mire, 389 F.3d at 167.
The Clerk’s office is DIRECTED to administratively close this case
pending further order of the Court. Though administratively closed, this case will
remain on the docket of this Court and may be reopened upon request of any party
or on the Court’s own motion.
IT IS SO ORDERED.
DATED: December 22, 2015, San Antonio, Texas.

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David Alan Ezra
Senior United States Distict Judge
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