Allied World Specialty Insurance Company v. Progressive Plumbing, Inc.
6:15-cv-01397
| M.D. Fla. | Sep 9, 2015Background
- Allied World Specialty Insurance Company sued several defendants to enforce an indemnity agreement on August 24, 2015.
- Three corporate defendants (Progressive Plumbing, Gracious Living Design Center, Progressive Services) filed Chapter 11; the Court stayed the action as to those debtor-defendants on August 27, 2015.
- The Court issued a show-cause order requiring plaintiff to allege the citizenship of non-debtor individuals William E. Lawson and Charlene H. Lawson to confirm subject-matter jurisdiction.
- Plaintiff alleged the Lawsons are Florida citizens; plaintiff is a citizen of Delaware and Connecticut, and other non-debtor defendants are Florida citizens, so the Court found complete diversity and federal jurisdiction under 28 U.S.C. § 1332.
- Plaintiff moved to stay the proceedings as to the Lawsons (non-debtors), arguing they are insiders of the debtor corporations and that litigation against them risks running afoul of the bankruptcy automatic stay.
- The Court granted a limited stay as to the Lawsons for 60 days to protect interests and avoid interference with the bankruptcy proceedings, and directed plaintiff to file a status report by November 9, 2015.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has subject-matter jurisdiction | Plaintiff alleges Lawsons are Florida citizens, creating complete diversity with plaintiff (Delaware/Connecticut) | (No contrary citizenship pleaded) | Court found complete diversity; jurisdiction exists under §1332 |
| Whether stay should extend to non-debtor Lawsons | Lawsons are insiders of debtor corporations; proceeding against them risks violating bankruptcy automatic stay and interference by debtor counsel | Lawsons are non-debtors and not automatically stayed (implicit objection) | Court exercised discretion to grant a limited stay as to the Lawsons for 60 days |
| Proper scope/duration of any stay | Plaintiff requested 60-day stay to avoid pressing need to litigate now | (Implicit) defendants would prefer litigation proceed | Court granted a 60-day stay, denying any broader relief |
| Whether further reporting required | Plaintiff should update court on Lawsons' posture in bankruptcy | (No objection recorded) | Plaintiff ordered to provide a status report by Nov 9, 2015 |
Key Cases Cited
- Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (11th Cir. 1983) (district court’s discretionary power to stay proceedings)
- Clinton v. Jones, 520 U.S. 681 (1997) (broad district-court discretion to control docket and stay matters)
- Landis v. N. Am. Co., 299 U.S. 248 (1936) (stay discretion requires weighing competing interests; avoid indefinite stays absent pressing need)
- Lincoln Prop. Co. v. Roche, 546 U.S. 81 (2005) (complete diversity requirement for federal jurisdiction)
- In re Steven P. Nelson, D.C., P.A., 140 B.R. 814 (Bankr. M.D. Fla. 1992) (precedent granting a limited stay as to a non-debtor insider)