Coy Cox, Jr. v. Specialty Vehicle Solutions
20-5036
| 6th Cir. | May 9, 2022Background
- Coy G. Cox, Jr. (a police officer) sued Specialty Vehicle Solutions, LLC (SVS) for injuries allegedly caused by a vehicle SVS sold; the suit was filed after SVS filed a Chapter 11 petition (Cox was unaware of the bankruptcy).
- Cox’s counsel moved in the bankruptcy court for relief from the automatic stay; the parties negotiated an agreed order stating the stay was "vacated" to permit Cox to "resume and prosecute" a specifically identified Kentucky action, and limiting recovery to available insurance.
- The state action had been filed post-petition; SVS removed and argued the original complaint was void as filed in violation of the stay; Cox later filed a second suit that was dismissed as time-barred.
- On initial appeal this court remanded, holding the agreed order was ambiguous as to whether it retroactively annulled the stay and instructing the district court to determine the parties’ intent via extrinsic evidence.
- On remand the district court (after limited discovery) treated the defense motion as one for summary judgment, found evidence showed the negotiating attorneys intended only prospective relief (or no meeting of the minds), and granted judgment for SVS.
- The Sixth Circuit affirmed: the order was ambiguous and extrinsic evidence supported that the parties (through their attorneys) did not intend retroactive annulment; Cox’s post-petition complaint remains void.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy agreed order retroactively validated Cox’s post-petition suit | The order’s plain language ("vacated"/"resume") shows it annulled the stay and should validate the suit | The order was intended to permit resumption of a pre-petition suit only; it did not annul the stay retroactively | The order was ambiguous; extrinsic evidence (attorneys’ intent) shows the parties intended prospective relief or no meeting of minds; affirmed for SVS |
| Whether the court erred by relying on extrinsic evidence instead of the order’s plain meaning | Court should adopt the plain meaning and draw all inferences for Cox | Remand required inquiry into intent because the order is ambiguous | Court properly followed remand and considered extrinsic evidence alongside the order; no error |
| Whether ambiguities should be construed against SVS as drafter (contra proferentem) | Ambiguities should be resolved against SVS | The order was negotiated between counsels of equal bargaining power; contra proferentem is inapplicable | Contra proferentem not applied because parties negotiated the order and the court discerned intent |
| Whose intent controls — client’s subjective understanding vs. negotiating attorneys’ intent | Cox’s subjective intent when consenting should control | Clients are bound by their attorneys’ negotiated representations; opposing counsel reasonably relied on those representations | Attorneys’ negotiations bind clients; absence of evidence from Cox’s bankruptcy counsel (Levy) undermines Cox’s position |
Key Cases Cited
- Easley v. Pettibone Michigan Corp., 990 F.2d 905 (6th Cir. 1993) (discusses equitable annulment of the automatic bankruptcy stay)
- In re AmTrust Fin. Corp., 694 F.3d 741 (6th Cir. 2012) (permitting extrinsic evidence to construe ambiguous agreements)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (explaining contra proferentem applies only after intent cannot be discerned)
- Nafziger v. McDermott Int’l, Inc., 467 F.3d 514 (6th Cir. 2006) (clients are accountable for acts and omissions of chosen counsel)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (1993) (discusses client responsibility for counsel’s conduct and related equitable considerations)