Opinion
CV-21-01265-PHX-JAT (JZB)
03-02-2023
Kee Nelson Steah, Sr., Plaintiff, v. David Shinn, et al., Defendants.
ORDER
James A. Teilborg Senior United States District Judge
Defendant Corizon Health, Inc. has filed a Suggestion of Bankruptcy and Notice of Automatic Stay under 11 U.S.C. § 362(a) (Doc. 57). Defendants in this action are Corizon Health Care and Centurion Healthcare (Doc. 10). While the automatic stay under Section 362 of the Bankruptcy Code is automatic as to Corizon, it does not appear this stay extends to stay Plaintiff's claims against the remaining Defendant. The Ninth Circuit has stated:
As a general rule, “[t]he automatic stay of section 362(a) protects only the debtor, property of the debtor or property of the estate. It does not protect non-debtor parties or their property. Thus, section 362(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 In re Advanced Ribbons & Office Prods., 125 B.R. 259, 263 (B.A.P. 9th Cir. 1991)). Further, the Court “does not have the jurisdiction to extend the stay to a non-debtor party.” Placido v. Prudential Ins. Co. of Am., 2010 WL 334744, at *1 (N.D. Cal. Jan. 21, 2010) (“In order to apply the automatic stay outlined in 11 U.S.C. § 362 to a non-debtor party, the bankruptcy court must issue an extension of the stay under its jurisdiction.”) (citing Boucher v. Shaw, 572 F.3d 1087, 1093 (9th Cir. 2009)). A party seeking to extend the stay to co-defendants or others must affirmatively seek an order from the bankruptcy court. Totten v. Kellogg Brown & Root, LLC, 152 F.Supp.3d 1243, 1268 (C.D. Cal. 2016).
The acts prohibited by the stay do not include: (a) a continuance, extension or stay of a non-bankruptcy proceeding; or (b) a status hearing in such proceeding to ascertain if the automatic stay still applies. In re Miller, 262 B.R. 499, 503 (B.A.P. 9th Cir. 2001); In re Perryman, 631 B.R. 899, 903 (B.A.P. 9th Cir. 2021).
The Court will therefore direct each party to file a response reflecting their positions on the effect of the automatic bankruptcy stay as to the remainder of this action, including resolution of the pending motions for summary judgment.
Ultimately, however, Plaintiff is required to prosecute this case. See O'Donnell v. Vencor Inc., 466 F.3d 1104, 1110 (9th Cir. 2006) (stay did not preclude dismissal of case against debtor based on plaintiff's failure to prosecute). To that end, Plaintiff generally must either dismiss his claim against Defendant Corizon and pursue that claim in bankruptcy court or file a motion in the bankruptcy court to lift the automatic stay to permit his claim against Corizon to proceed in this Court. Plaintiff's response should indicate his intended course of action. The Court notes, however, that it is not inclined to grant an indefinite stay of Plaintiff's claim against Corizon.
Defendant Centurion has also moved for clarification regarding whether the bankruptcy stay applies to Centurion and whether Centurion may file a reply in support of its motion for summary judgment without violating the automatic stay rules. As the cases cited herein indicate, the automatic stay does not appear to apply to Centurion. Moreover, the bankruptcy court, not this Court, would extend the automatic stay to Centurion if appropriate. Therefore, while the Court will allow the parties to brief their respective positions and intentions regarding the bankruptcy, it is unlikely this Court would be the forum to extend the automatic stay to Centurion.
Based on the foregoing, IT IS ORDERED that no later than March 10, 2023 each party must file a response as directed herein.
IT IS FURTHER ORDERED that the motion for clarification (Doc. 61) is granted to the limited extent that the deadline for Defendant Centurion to file a reply in support of its motion for summary judgment is extended to March 30, 2023. (The reference to the Magistrate Judge is withdrawn only as to Doc. 61).