Another case, while not on point, is also illustrative. In In re Hillsborough Holdings Corp., 130 B.R. 603, 605 (Bankr. M.D.Fla. 1991), a non-debtor co-defendant sought relief from stay in order to depose employees of debtor, its co-defendant. The plaintiff was unable to obtain relief from the stay to pursue its claims against the debtor, so it was pursuing its claims against the co-defendant only.
A request for such an extension must be made by adversary proceeding. In re Hillsborough Holdings Corp., 130 B.R. 603 (Bankr.M.D.Fla. 1991). An adversary complaint has not been filed and the issue is not properly before the Court.
The cases the parties have cited have largely concerned the application of section 105 to litigation or discovery requests made upon non-debtors (for example, employees of the debtor, officers or directors of the debtor, or non-debtor affiliates). See, e.g., Manville, 40 B.R. 219 (codefendant in other litigation sought document production and depositions from officers, directors, and employees of the debtor); Lane v. Philadelphia Newspapers, LLC (In re Philadelphia Newspapers, LLC), 423 B.R. 98, 100 (E.D.Pa.2010) (third party sought discovery against non-debtor co-defendants of the debtor); In re Richard B. Vance & Co., 289 B.R. 692, 697 (Bankr.C.D.Ill.2003) (third party issued subpoenas to the debtor's non-debtor parent company and its bank); In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 977 (N.D.Ill.1992) (third party sought depositions of debtor's employee); In re Hillsborough Holdings Corp., 130 B.R. 603, 605 (Bankr.M.D.Fla.1991) (third party sought depositions of present or former employees of the debtor). In one case cited by the Debtors, the discovery being sought (customer lists and other document production) was directed against the debtor itself—however, unlike this case, the debtor had been named as a party in the pending litigation.
Although no circuit courts have addressed the Miller rationale, a number of bankruptcy courts and district courts have applied it. See, e.g.,In re Hillsborough Holdings Corp., 130 B.R. 603, 605-06 (Bankr.M.D.Fla.1991) (holding that the debtor was not protected from participating in discovery by section 362(a), but recognizing that " under appropriate circumstances it is proper to ‘ extend the automatic stay’ to protect the non-debtors against discovery proceedings" ); In re Richard B. Vance & Co., 289 B.R. 692, 697 (Bankr.C.D.Ill.2003) (noting that although " there are valid arguments to the contrary, it is now generally accepted that discovery pertaining to claims against the bankrupts' codefendants is not stayed" ); Peter Rosenbaum Photography Corp. v. Otto Doosan Mail Order Ltd., Civ. A. No. 04-0767, 2004 WL 2973822, at *3 (N.D.Ill. Nov.30, 2004) (relying on Miller and finding that discovery may proceed against a debtor provided that the discovery is directed towards the claims of non-debtor defendants).
Worth noting is that the automatic stay, even if applicable here, would not operate to preclude AOL from obtaining information from Uhrig pursuant to the rules pertaining to discovery against non-parties. See In re Miller, 262 B.R. 499, 503 (9th Cir. BAP 2001) (holding that a post-petition third-party subpoena to a debtor and the seeking of a sanction against that debtor for failure to comply with the subpoenas did not offend the automatic stay); In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litigation, 140 B.R. 969, 976-77 (N.D.Ill. 1992) (holding that after a defendant filed for bankruptcy, the automatic stay did not bar discovery of its employees and former employees relating to claims against the other defendants); In re Hillsborough Holdings Corp., 130 B.R. 603, 605 (Bankr.M.D.Fla. 1991) (holding that the automatic stay did not prevent discovery aimed at debtor as long as the discovery pertained to claims and defenses of a non-debtor party). Also worth noting is that AOL relies on these cases for a different purpose; it argues that they support the position that the automatic stay precludes only claims asserted by a debtor's creditors.
See e.g., Maritime Electric Co., Inc., 959 F.2d 1194 (3d Cir.1991) (holding that the automatic stay of section 362(a) only applies to proceedings against a debtor, not addressing section 105, but noting that the "automatic stay may be extended to non-bankrupt codefendants in unusual circumstances") (citing A.H. Robins Co., Inc., v. Piccinin, 788 F.2d 994, 999 (4th Cir.)); In re Miller, 262 B.R. 499 (9th Cir. BAP 2001) (holding that the automatic stay did not preclude the debtor from participating in discovery requests pertaining to claims against non-debtor defendant and basing decision on section 362 of the Code only); In re Hillsborough H'ldgs. Corp., 130 B.R. 603, 606 (Bankr.M.D.Fla.1991) (granting Chapter 11 debtor's co-defendant relief from the automatic stay to conduct discovery while noting "there is no doubt that a debtor might obtain the relief sought by seeking injunctive relief based on § 105 of the Code[.]"); Peter Rosenbaum Photography Corp. v. Otto Doosan Mail Order Ltd., 2004 WL 2973822 (N.D.Ill. Nov. 30, 2004) (failing to discuss section 105).
However, such an extension is not automatic and an order must be obtained through the affirmative request of the debtor in the bankruptcy court where the bankruptcy proceeding is pending. In re Hillsborough Holdings Corp., 130 B.R. 603, 606 (Bankr. M.D. Fla. 1991); Brancato, 108 B.R. at 852; All Seasons Resorts, Inc. v. Milner, 79 B.R. 901, 903-04 (Bankr. C.D. Cal. 1987); Alvarez, 932 A.2d at 821-22. The bankruptcy court is in the best position, based upon its experience and expertise, to "assess the impact of litigation against a non-bankrupt co-defendant" and to decide whether the circumstances justify an extension of the automatic stay to such defendants.
Whether Mr. Otowhits currently works for Carl's Patio or another "new" associated entity does not alter the undersigned's analysis regarding whether his deposition should proceed under the facts of this case. In In re Hillsborough Holdings Corp. et al., 130 B.R. 603 (Bankr. M.D. Fla. 1991), a court determined that a non-debtor co-defendant's request to take the depositions of several of the debtor's present and former employees in order to prepare the non-debtor defendant's defense in a civil action against the non-debtor did not violate a § 362 automatic stay. In reaching this conclusion, the Court stated ". . . it is clear that a literal reading of §362(a) leaves no doubt that the automatic stay would not prevent [the non-debtor co-defendant] from conducting the proposed discovery to be used for its defense in the suit. . ."
Id.A similar result was reached in the case of In re Hillsborough Holdings Corp., 130 B.R. 603, 605 (Bankr.M.D.Fla.1991), also discussed by Miller. In Hillsborough, the court concluded that a co-defendant of the debtor could depose the employees of the debtor so that the co-defendant could discover facts that would aid its defense against the plaintiff.
To extend the automatic stay to a non-debtor under this exception, the debtor must make such a request with the bankruptcy court. See In re Hillsborough Holdings Corp., 130 B.R. 603 (Bankr. M.D. Fla. 1991). ANALYSIS