233 A.3d 588
N.J. Super. Ct. App. Div.2020Background
- On June 2, 2013 Carmella Minelli slipped and fell at Harrah’s Resort Atlantic City and later sued for personal injuries.
- Caesars Entertainment Operating Company, Inc. (the debtor, a successor/affiliate of Harrah’s Operating Company) filed Chapter 11 on January 15, 2015, triggering the automatic stay under 11 U.S.C. § 362(a).
- The two-year statute of limitations for Minelli’s claim would have expired in early June 2015; the plaintiff filed her complaint on June 30, 2015 (after the statutory period had run but while the automatic stay as to the debtor remained in effect).
- Plaintiffs obtained a bankruptcy-court consent order (January 28, 2019) permitting them to proceed against the debtor as a nominal defendant to pursue recovery from non-debtor defendants or applicable insurance proceeds.
- The Law Division dismissed the complaint as time-barred; the Appellate Division concluded § 108(c)(2) of the Bankruptcy Code could make the filing timely as to the debtor, and remanded unresolved questions about whether the automatic stay extended to non-debtor Harrah’s entities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 11 U.S.C. § 108(c)(2) extended the limitations period for claims against the debtor | §108(c)(2) tolled or extended the limitations period so plaintiff could timely sue while the automatic stay remained in place | The filing after the statutory period but before stay termination is not saved by §108 because plaintiff should have waited to file until the stay was lifted | The court held §108(c)(2) plainly permitted filing up to 30 days after notice of termination of the stay; plaintiff’s June 30, 2015 complaint was timely as to the debtor (Caesars Entm’t Operating Co.) |
| Whether plaintiffs forfeited §108(c) protection by filing before the 30-day grace period after stay termination | Minelli relied on §108(c) and the stay to preserve her claim despite filing after the statutory deadline | Defendants argued plaintiffs should have waited and cannot now invoke §108(c) | The court dismissed this defense as inadequately briefed and rejected it on that basis |
| Whether the automatic stay extended to non-debtor Harrah’s entities (so §108 would apply to claims against them) | The stay should extend to non-debtor subsidiaries because of identity/alter-ego and risk that judgments against subsidiaries would affect the debtor | Defendants contended the Harrah’s entities were not in the bankruptcy and thus not protected by the stay | The court vacated dismissal as to non-debtors and remanded because the record lacked information whether the bankruptcy court extended the stay to those non-debtors; the question is for the bankruptcy/state courts to resolve |
Key Cases Cited
- Nativo v. Grand Union Co., 315 N.J. Super. 185 (App. Div. 1998) (interpreting §108(c) to extend limitations 30 days after stay termination)
- A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986) (bankruptcy court may apply automatic stay to non-debtor co-defendants where identity makes suit effectively against debtor)
- Queenie, Ltd. v. Nygard Int'l, 321 F.3d 282 (2d Cir. 2003) (applying stay to wholly owned affiliate when judgment against affiliate would directly harm debtor)
- In re Siciliano, 13 F.3d 748 (3d Cir. 1994) (bankruptcy courts can grant retroactive relief that validates actions otherwise void for stay violations)
- In re Baldwin-United Corp. Litig., 765 F.2d 343 (2d Cir. 1985) (state court has jurisdiction to determine whether a proceeding is subject to the automatic stay)
- Citizens First Nat'l Bank of N.J. v. Marcus, 253 N.J. Super. 1 (App. Div. 1991) (state courts adjudicate their jurisdiction including whether federal automatic stay applies)