Opinion
No. 20 CV 00170 WJ-CG
02-12-2021
Gary MARTIN, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. TAP ROCK RESOURCES, LLC, Defendant.
Andrew W. Dunlap, Richard M. Schreiber, Pro Hac Vice, Michael A. Josephson, Josephson Dunlap Law Firm, Richard Burch, Bruckner & Burch PLLC, Houston, TX, for Plaintiffs. Anthony Campiti, Jasmine Wynton, Lauren Timmons, Thompson & Knight LLP, Dallas, TX, Jules Elese Angelley, Little West, Holland & Hart LLP, Santa Fe, NM, for Defendant.
Andrew W. Dunlap, Richard M. Schreiber, Pro Hac Vice, Michael A. Josephson, Josephson Dunlap Law Firm, Richard Burch, Bruckner & Burch PLLC, Houston, TX, for Plaintiffs.
Anthony Campiti, Jasmine Wynton, Lauren Timmons, Thompson & Knight LLP, Dallas, TX, Jules Elese Angelley, Little West, Holland & Hart LLP, Santa Fe, NM, for Defendant.
ORDER SUSTAINING PLAINTIFF'S OBJECTIONS TO MAGISTRATE JUDGE'S ORDER; FINDING STAY IMPOSED ON FEDERAL CASE AS MOOT; LIFTING STAY; and REFERRING MATTER TO MAGISTRATE JUDGE FOR SCHEDULING DEADLINES
WILLIAM P. JOHNSON, CHIEF UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court upon the Objection to Magistrate's Order Extending Automatic Stay, filed October 2, 2020 (Doc. 70) by Plaintiff Gary Martin ("Plaintiff"). Having considered the relevant pleadings, the written and oral arguments of counsel and the applicable law, the Court SUSTAINS Plaintiff's objection and finds that the Magistrate Judge's extension of the automatic bankruptcy stay to this entire case is now MOOT. BACKGROUND
Plaintiff initiated this case on January 26, 2020 by filing suit against Tap Rock Resources, LLC ("Tap Rock") in a potential class action case to recover unpaid overtime wages and other damages, as a collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b) and as a Rule 23 Class Action under the New Mexico Minimum Wage Act, NMSA § 50-4-19 et seq. Plaintiff worked for Tap Rock as a Drilling Consultant from approximately February 2018 until October 2018. Tap Rock is an oil and gas company doing business throughout the United States and, relevant to this case, Tap Rock is focused on Exploration and Production of oil and gas in the geological formation known as the Delaware Basin in southeast New Mexico.
On June 2, 2020, Tap Rock filed a third-party complaint against RWDY, Inc. ("RWDY"), the staffing company that supplied workers to Tap Rock, alleging that RWDY breached the terms of a Master Service Agreement ("MSA") that was executed between RWDY and Tap Rock Operating, LLC. Doc. 39. According to the third-party complaint, RWDY warranted in the MSA that it and its subcontractors were deemed independent contractors rather than employees; that RWDY and its subcontractors were bound by the MSA; and that RWDY is liable for any breach of the MSA by its subcontractors—and would be required to indemnify Tap Rock—as if such breach had been committed by RWDY. Id., ¶¶11, 12; see Ex. A (MSA).
The Court is unable to determine from the record in this case the significance, if any, between the two entities identified as Tap Rock Resources, LLC and Tap Rock Operating, LLC.
A. RWDY's Bankruptcy Filing
On June 22, 2020, subsequent to being sued by Tap Rock as a third-party defendant and after being served with the third-party complaint in this case, RWDY filed a petition under Chapter 11 of the Bankruptcy Code. The RWDY bankruptcy case is still pending in the United States Bankruptcy Court, Western District of Louisiana, Shreveport Division, Case Number 20-10616. See In re RWDY, Inc. , Case No. 20-10616, 2020 WL 4937704 (Bankr. W.D. La. filed June 22, 2020) ("bankruptcy case"); see also Doc. 56 (Suggestion of Bankruptcy in federal court case). According to the docket entries in the bankruptcy case, on January 20, 2021, RWDY filed an Amended Chapter 11 Plan of Reorganization ("Amended Plan") as the debtor-in-possession. Doc. 271 (bankruptcy case). The Amended Plan includes a provision allowing RWDY to retain any causes of action against Tap Rock after plan confirmation although the Amended Plan does not specify the treatment of Tap Rock's individual claim. Id. The Court takes judicial notice of the Proof of Claim form Tap Rock filed in the RWDY bankruptcy case and notes that the Amended Plan contains a provision whereby RWDY reserves the right to utilize the appropriate Bankruptcy Code provisions to object to undetermined claims within ninety days after the effective date of the Amended Plan. Doc. 271 (bankruptcy case) at 36. The Confirmation Order also contains a provision addressing Tap Rock's undetermined claim, clarifying that nothing in the Amended Plan impairs RWDY's ability to object to Tap Rock's claim or Tap Rock's ability to assert a right of setoff or a deficiency claim. Doc. 283 (bankruptcy case) at 15. Considering that the Amended Plan also has a definition of "contested" that includes contingent claims, it is not unreasonable at this time to assume that RWDY will treat the Tap Rock claim as a contested claim and will file the appropriate objection to said claim in the Bankruptcy Court. If the Bankruptcy Court allows some or all of Tap Rock's claim, Tap Rock will be entitled to distributions from RWDY's liquidating trust. Doc. 271 (bankruptcy case) at 37.
The parties filed a Joint Status Report in this federal court case indicating that RWDY plans to schedule the bankruptcy confirmation hearing for January 21, 2021, Doc. 79, and the Amended Plan was confirmed on that date. See Doc. 283 (bankruptcy case, Confirmation Order, Jan. 21, 2021).
B. Entry of Stay of Discovery
On August 13, 2020, Chief United States Magistrate Judge Carmen E. Garza entered an order staying discovery in this FLSA case pending resolution of the bankruptcy case. Doc. 57. The Order specifically stayed discovery in this case based on the RWDY bankruptcy case and more specifically on the premise that the automatic stay provisions of 11 U.S.C. § 362 of the Bankruptcy Code applied to the instant case. Both parties filed motions in response to the Magistrate Judge's stay of discovery order. See Doc. 58 (Tap Rock's Mot. for Clarification of Stay Order) and Doc. 61 (Pltff's Emergency Mot. to Lift Stay or Sever Tap Rock's Claims Against RWDY). After a hearing, the Magistrate Judge found that RWDY is a "necessary party" to these proceedings and that pursuant to 11 U.S.C. § 362, the filing of RWDY's bankruptcy petition results in an automatic stay of this entire case:
RWDY, Inc. is a necessary party to the instant proceedings and, pursuant to 11 U.S.C. § 362, the filing of RWDY, Inc.’s bankruptcy petition results in an automatic stay of the entire case.
Doc. 69 at 1.
Plaintiff objects to the Magistrate Judge's imposition of a stay and asserts that the application of the automatic stay in the RWDY bankruptcy case to Tap Rock, a non-bankrupt entity, is clear error of law and therefore a clearly erroneous conclusion. Plaintiff maintains that the stay should be lifted and/or Tap Rock's claims against RWDY should be severed. Defendant Tap Rock supports the imposition of the stay. Tap Rock argues that it should get the benefit of the automatic stay in the RWDY bankruptcy case because RWDY is a "necessary party" to this lawsuit under Rule 19 of the Federal Rules of Civil Procedure and going forward in this case would impact RWDY's liability as a debtor. Tap Rock also claims that an automatic stay imposed under § 362(a)(3) of the Bankruptcy Code is broad enough to extend to non-debtors.
C. Legal Standard
"Motions to stay are non-dispositive and normally reviewed under the clearly erroneous standard of review." D'Alise v. Basic Dental Implant Sys., Inc. , No. 10CV0016 WPJ/DJS, 2010 WL 11552978, at *1 (D.N.M. Aug. 9, 2010) (explaining the applicable standard). "A finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Amaya v. Bregman , No. 14-CV-0599 WJ/SMV, 2016 WL 10516170, at *1 (D.N.M. June 21, 2016) (citing, e.g., United States v. United States Gypsum Co. , 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948) ; Ocelot Oil Corp. v. Sparrow Indus. , 847 F.2d 1458, 1464 (10th Cir. 1988) ). "When reviewing a question of law, however, the standard is de novo. " Id. "Thus, the district court owes no deference to the magistrate's legal conclusions, and may substitute its own judgment on questions of law." Id. (citations omitted). DISCUSSION
I. Relevant Law
The question here is whether this entire FLSA case should be stayed because RWDY, a third-party defendant, filed a Chapter 11 bankruptcy case. The answer depends on whether RWDY is indeed a necessary party under Rule 19 of the Federal Rules of Civil Procedure, in light of RWDY's status as a debtor-in-possession in the bankruptcy case. The following law on the bankruptcy stay and Rule 19 governs the Court's decision.
A. Application of Automatic Stay
The starting point for this discussion is the general rule that the automatic stay under 11 U.S.C. § 362(a) of the Bankruptcy Code does not extend to solvent non-debtors. See Dixie Aire Title Servs., Inc. v. SPW, L.L.C. , 389 B.R. 222, 225 (W.D. Okla. 2008) (It "would make no sense to extend the automatic stay protections to solvent co-defendants.") (citing Fortier v. Dona Anna Plaza Partners , 747 F.2d 1324, 1330 (10th Cir. 1984)) ; Lightbody v. Girlie's Ambulette Serv. Inc. , No. 09-CV-5493 ILG, 2010 WL 3417844, at *2 (E.D.N.Y. Aug. 27, 2010) (finding stay of FLSA action with respect to non-bankrupt defendants was "clear error").
An exception to this rule "allows a stay to be imposed under § 362(a)(1) against a nonbankrupt party in ‘unusual situations’ where the debtor may be said to be the real party defendant and when a judgment against the third-party defendant will in effect be a judgment or finding against the debtor." Oklahoma Federated Gold & Numismatics v. Blodgett , 24 F.3d 136, 141 (10th Cir. 1994) ; A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir.), cert. denied, 479 U.S. 876, 107 S.Ct. 251, 93 L.Ed.2d 177 (1986).
An automatic stay against a non-debtor also may be proper if the liability of the non-debtor affected the property of the bankruptcy estate. See Boucher v. Shaw , 572 F.3d 1087, 1093 (9th Cir. 2009) (if the liability of the non-debtor party were to affect the property of the bankruptcy estate, it may be necessary for the plaintiff in such a case to proceed against the non-debtor party through bankruptcy proceedings) (citing A.H. Robins Co., Inc., 788 F.2d at 999 ("[W]here ... a debtor and non-debtor are so bound by statute or contract that the liability of the non-debtor is imputed to the debtor by operation of law, then the Congressional intent to provide relief to debtors would be frustrated by permitting indirectly what is expressly prohibited in the [Bankruptcy] Code.")); see also Blundell v. Home Quality Care Home Health Care, Inc. , No. 3:17-CV-1990-L-BN, 2017 WL 5889715, at *2 (N.D. Tex. Nov. 29, 2017) (extending automatic stay under § 362 to non-debtors because the joint and several liability of the FLSA "will negatively impact the bankruptcy estate").
B. Federal Rule of Civil Procedure 19
"The question of whether an absent party is necessary or required is resolved by applying Rule 19 of the Federal Rules of Civil Procedure." Davis v. United States , 192 F.3d 951, 957 (10th Cir. 1999) ; see Wheeler Peak, LLC v. L.C.I.2, Inc. , No. CIV 07-1117 JB/WDS, 2009 WL 2982817, at *5 (D.N.M. Aug. 15, 2009) (noting that the 2007 amendments to the rules "changed the term necessary parties to required parties"). " Rule 19 provides a three-step process for determining whether an action should be dismissed for failure to join a purportedly indispensable party." Citizen Potawatomi Nation v. Norton , 248 F.3d 993, 997 (10th Cir. 2001), modified on reh'g , 257 F.3d 1158 (10th Cir. 2001) :
(1) the court must find that a prospective party is ‘required to be joined’ or necessary to the lawsuit under Rule 19(a) ;
(2) the court must determine that the required party cannot feasibly be joined; and
(3) the court must determine under Rule 19(b) whether the required-but-not-feasibly-joined party is so important to the action that the action cannot ‘in equity and good conscience’ proceed in that person's absence. If that is the case, then the action should be dismissed.’ "
Id.; Northern Arapaho Tribe v. Harnsberger , 697 F.3d 1272, 1278 (10th Cir. 2012).
Under Rule 19, a person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
Davis , 192 F.3d at 958.
II. RWDY's Bankruptcy Posture
At oral argument, the Court noted that there was no evidence of RWDY's position on the matter, which would seem to be relevant under Rule 19 and with respect to any potential impact on RWDY's bankruptcy estate. The Court also inquired as to whether there had been any effort by counsel for Tap Rock to seek partial relief from the automatic stay in the RWDY bankruptcy case by asking the Bankruptcy Court to compel RWDY to participate in this litigation, or whether bankruptcy counsel for RWDY has thus far expressed any concern if the stay of discovery order in this case was lifted. Counsel for Tap Rock explained that it did not consider this necessary because there was a potential standing issue preventing Tap Rock from obtaining such relief and because Tap Rock was concerned that going forward would somehow violate the automatic stay that had been entered.
In order to determine RWDY's position as to what effect Tap Rock's claims might have upon RWDY's liability or ability to reorganize, the Court issued an order requiring Tap Rock's counsel to:
(1) serve that Court order on RWDY's bankruptcy counsel; and
(2) attempt to ascertain from bankruptcy counsel if there are any reservations or concerns as to whether going forward with this litigation absent RWDY could potentially violate the automatic stay in the bankruptcy case and/or negatively impact RWDY's ability to confirm its reorganization plan.
Doc. 75 at 5.
Tap Rock complied with the Court's directive, and after contacting RWDY's counsel of record in the Chapter 11 bankruptcy proceeding, provided the Court with a copy of an email exchange between Tap Rock's counsel and bankruptcy counsel for RWDY. The email states Tap Rock's understanding of RWDY's position in that "allowing the litigation to proceed against Tap Rock during the pendency of the bankruptcy is tantamount to allowing the litigation to proceed against RWDY." Doc. 79 at 4. RWDY's counsel acknowledged that Tap Rock had "accurately state[d] the good faith position of RWDY, Inc., regarding the litigation" but that his stated position was "not legal advice, and my law firm will not be responsible for any parties’ reliance thereon." Id. (emphasis in original).
Following this response to the Court's inquiry, RWDY's Amended Plan of reorganization was confirmed on January 21, 2021, as mentioned above. The Amended Plan provides that the automatic stay terminates on the Amended Plan's effective date, i.e., when the Confirmation Order becomes final and when certain conditions precedent are met. See Amended Plan (Doc. 271, bankruptcy case) at 31 & Doc. 283 (Confirmation Order). Once the automatic stay terminates, it will be replaced by a discharge injunction, which enjoins the prosecution of pre-bankruptcy lawsuits against RWDY. See Amended Plan (Doc. 271, bankruptcy case) at 50. The Amended Plan provides that the "exclusive remedy for payment of any claim or debt against the debtor ... shall be payment or distribution under ... the plan." Id. The Amended Plan further provides that "all parties holding claims, whether allowed or disallowed, are enjoined from taking any other action ... to prosecute or collect any ... claim against ... the debtor, unless and until there shall be a court order terminating this injunction because of ... a default." Id.
Therefore, the real focus in this inquiry is on the confirmed bankruptcy plan rather than the automatic stay itself, which dissolves after the Amended Plan's effective date and is replaced by a discharge injunction. The Amended Plan contains a provision for Resolution of Undetermined Claims. Doc. 271 (bankruptcy case) at 37-38. RWDY can object to Tap Rock's contingent claim within 90 days after the effective date, and the Bankruptcy Court retains jurisdiction to liquidate that claim through a contested matter. Under the terms of the Amended Plan, if Tap Rock's undetermined claim becomes an allowed claim, RWDY will pay a pro rata share of Tap Rock's claim through the RWDY distribution trust. Id. However, what is unmistakably clear from the Amended Plan is that RWDY will not be returning to U.S. District Court to defend against Tap Rock's claims in this FLSA case, unless the Bankruptcy Court takes the highly unusual step of modifying the discharge injunction.
III. Analysis
Both parties focus on arguments related to a Rule 19 analysis to argue their respective positions, but none of the arguments take into consideration the particulars of RWDY's bankruptcy posture. For example, Plaintiff contends that RWDY cannot be considered a necessary party under Rule 19 because Plaintiff can obtain complete relief without RWDY in the case. See Freeman v. Liu, 112 F.R.D. 35, 41 (N.D. Ill. 1986) ("Potential indemnitors have never been considered indispensable parties or even parties whose joinder is required if feasible."). Tap Rock counters by pointing out that Plaintiff's ability to obtain complete relief is only one of the grounds on which a person may be considered a necessary party under Rule 19(a) and argues instead that RWDY is a necessary party because severance of Tap Rock's claims against RWDY will impair or impede RWDY's ability to protect its direct interest relating to Plaintiff's claims. See Rule 19(a)(1)(B)(i). Given the current status of RWDY's bankruptcy case, the Court finds that extending the automatic stay to claims against Tap Rock is not necessary under Rule 19, for several reasons. First, the Court is not convinced that RWDY is a "necessary party" under Rule 19 at the present time, despite Tap Rock's protestations that RWDY's interests would be "materially and adversely impacted" by going forward in this federal case without RWDY. The feedback received from bankruptcy counsel regarding RWDY's position is tepid at best. One might even venture to say that Tap Rock is making the arguments for RWDY hoping to engineer a halt to the federal litigation during the pendency of the RWDY bankruptcy—and for an indeterminate amount of time after the bankruptcy claims liquidation process. The email forwarded to the Court regarding RWDY's position on the matter was drafted by Tap Rock, not RWDY, based on Tap Rock's "understanding" of RWDY's position. The email refers to RWDY's potential liability on Plaintiff's claims asserted against Tap Rock. See Doc. 78 at 4 ("You ... indicated that you believe Tap Rock's claim is subject to objection under Section 502(e)(1)(B) of the Bankruptcy Code because, essentially, RWDY has no liability unless Tap Rock has liability."). The recent Confirmation of RWDY's Amended Plan provides further evidence of Tap Rock's agenda and why RWDY does not appear to be concerned about this litigation. The provision addressing Tap Rock's undetermined claim—clarifying that RWDY may object to Tap Rock's claim in Bankruptcy Court and Tap Rock may assert a right of setoff—is redundant in light of the Amended Plan provision addressing Resolution of Unresolved Claims and the Bankruptcy Code. Doc. 283 (bankruptcy case) at 15. The addition of this "comfort provision" strongly suggests Tap Rock knows it will resolve all outstanding claims against RWDY in the Bankruptcy Court, and that RWDY will not be returning to this Court to defend against the claims asserted by Tap Rock in its third party complaint.
Plaintiff presents other arguments as well—for example, that as a staffing company that furnished workers to Defendant, RWDY cannot be considered a necessary party in an FLSA case, and that the FLSA does not imply a right to contribution or indemnification for liable employers. See Sullivan-Blake v. FedEx Ground Package Sys., Inc. , 2020 WL 2572273, at *7 (W.D. Pa. May 21, 2020) (staffing companies used by the defendant were not necessary parties in FLSA overtime action); Roy v. FedEx Ground Package Sys., Inc. , No. CV 3:17-30116-KAR, 2020 WL 3799203, at *4 (D. Mass. July 7, 2020) (collecting cases); Scalia v. Employer Sols. Staffing Grp., LLC, 951 F.3d 1097, 1104 (9th Cir. 2020) (finding the FLSA does not imply a right to contribution or indemnification for liable employers); Freeman , 112 F.R.D. at 41 ("Potential indemnitors have never been considered indispensable parties or even parties whose joinder is required if feasible."). Tap Rock argues in turn that it is not liable on any debt with RWDY, nor has Plaintiff alleged a "joint employer" theory where RWDY would be liable to Tap Rock as a joint employer for Tap Rock's violations of the FLSA, and thus Plaintiff's arguments are not relevant under the facts of this case. However, none of these arguments are dispositive on the issue of whether the automatic stay should extend to this litigation.
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The Court is also of the view that RWDY must have been aware of the parties’ disputes regarding the stay imposed by the Magistrate Judge since Plaintiff first filed objections to the stay in this case in early October 2020. Yet RWDY has never entered an appearance in this case or taken any direct action to extend the protection of the automatic stay to Tap Rock, even after the Court solicited feedback from RWDY's bankruptcy counsel. Doc. 75. In other words, if RWDY's interests in its bankruptcy case would be prejudiced by Plaintiff pursuing Tap Rock in this case, then surely RWDY would enter its appearance in this case on a limited basis or take some affirmative action to make the parties and this Court aware of the potential negative impacts on RWDY's reorganization efforts if this case moved forward. Thus, the Court is not persuaded that Tap Rock's representations about RWDY's "interests" in this case are genuine.
Second, even if the Court were to find that RWDY is a "necessary party" under Rule 19, RWDY can no longer be feasibly joined. Tap Rock points out that RWDY has already been joined as a party under Rule 14, and so the case can only proceed with RWDY as a third-party defendant. Cf. Thunder Basin Coal Co. v. Sw. Pub. Serv. Co. , 104 F.3d 1205, 1208 (10th Cir. 1997) (holding that "an entity or individual subject to impleader under Fed.R.Civ.P. 14 ... is never an indispensable party under Fed.R.Civ.P. 19(b)"). However, nothing in Rule 19 suggests that feasibility of joinder is an immutable status. While there was nothing to stop Tap Rock from impleading RWDY as a third-party defendant under Rule 14 in June 2020, see Doc. 39, since that time RWDY filed for bankruptcy thereby receiving the protections afforded by the automatic stay. Thus, as a matter of law, RYDY's confirmed Amended Plan of reorganization changes the feasibility of joinder under Rule 19.
Third, the Court recognizes that Tap Rock would find it convenient to litigate two lawsuits in one forum—that forum being in federal district court—but that scenario cannot happen. Under the Amended Plan, Tap Rock's claim against RWDY must be handled in the Bankruptcy Court under the Provision for Resolution of Undetermined Claims. The Automatic Stay terminates on the Amended Plan's effective date and is subsequently replaced by a discharge injunction which prevents the prosecution of claims against RWDY in this District Court case. See Amended Plan (Doc. 271, bankruptcy case) at 50. Accordingly, even if the Court were to find that RWDY is a "necessary party" under Rule 19, joinder is not feasible because RWDY has no legal obligation to defend this pre-bankruptcy lawsuit. Stated another way, the issue of whether the § 362 automatic stay should be extended to the entire case, which then stays discovery and any obligations by non-debtor Tap Rock, has now become moot. Thus, this case may proceed without RWDY, Plaintiff may obtain complete relief from Tap Rock, and to the extent there are contested claims between Tap Rock and RWDY, those contested claims will be resolved by the Bankruptcy Court in the RWDY bankruptcy case.
Finally, the Court observes that, even if Tap Rock successfully exploited the pressure points between the Bankruptcy Code and the Rules of Civil Procedure, such efforts would not be enough to overcome the general prohibition on non-debtor stays. "The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws," and "it would distort congressional purpose to hold that a third party solvent co-defendant should be shielded ... by a device intended for the protection of the insolvent debtor." Lynch v. Johns-Manville Sales Corp. , 710 F.2d 1194, 1197 (6th Cir. 1983) (citing H.R.Rep. No. 95–595, 95th Cong., 2d Sess. 340 (1978)). In the extraordinary instances where the bankruptcy stay is extended, the debtor generally makes the request based on their own reorganization efforts. See In re Med. Mgmt. Grp., Inc., 302 B.R. 112 (B.A.P. 10th Cir. 2003) (collecting cases and explaining that "[i]t is the debtor's interests, and not the interests of non-debtors, which the extraordinary" remedy is directed at). This case is not one of those extraordinary situations justifying an extension of the automatic stay to a solvent non-debtor, and Tap Rock's continued insistence that it should receive the protections of the automatic stay of the RWDY bankruptcy case is misdirected.
CONCLUSION
In sum, the Court is not persuaded that RWDY is a "necessary party" that can be feasibly joined or included as a third-party defendant under Rule 19. The Court also finds and concludes that the Bankruptcy Court's confirmation of RWDY's Amended Plan of reorganization precludes RWDY from having to defend this lawsuit, thus rendering the Magistrate Judge's stay of discovery Order moot.
IT IS THEREFORE ORDERED that Plaintiff's Objection to the Magistrate Judge's Order Extending Automatic Stay (Doc. 70) is SUSTAINED for the reasons stated in this Order.
IT IS FURTHER ORDERED that the stay of discovery order (Doc. 69) is hereby lifted so that litigation in this federal case may proceed, including discovery and the prosecution of Plaintiff's claims against Tap Rock.
IT IS FINALLY ORDERED that this case is referred back to Chief Magistrate Judge Garza to issue the appropriate modifications to scheduling deadlines based on the Court's findings and conclusions as stated in this Order.