Frazier v. Stephnan
2:24-cv-02198
E.D.N.YNov 12, 2024Background
- Plaintiff Desmond Frazier alleges injuries from a July 27, 2023 motor vehicle accident in Jersey City, New Jersey, involving a bus operated by defendant Brian J. Stephnan.
- At the time, Stephnan was operating the bus within the scope of his employment with Transportation Management Services, which leased the bus from Coach Leasing Inc.
- Coach USA Inc., Coach Leasing, and Transportation Management Services—all defendants—filed for Chapter 11 bankruptcy in June 2024 in Delaware; Stephnan himself did not file for bankruptcy.
- Defendants moved to stay proceedings against Stephnan, arguing that the bankruptcy’s automatic stay should extend to him due to potential vicarious liability.
- Plaintiff opposed, contending the automatic stay should not shield Stephnan, a non-debtor, from suit.
- The motion was heard following recent decisions in other cases involving Coach USA under joint bankruptcy administration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the automatic stay in bankruptcy extend to non-debtor co-defendant Stephnan? | Stay does not apply to Stephnan | Stay should extend due to vicarious liability and unity of interests | Yes; stay extended to Stephnan |
| Would a judgment against Stephnan affect the debtor estate? | Not direct impact | Judgment would be imputed to employer, impacting debtor’s estate | Yes; risk of vicarious liability warrants extending the stay |
| Is there precedent for staying proceedings against non-debtor employees? | Not applicable | Courts have extended stays in similar contexts, especially with identity of interest | Yes; precedent supports stay extension for Stephnan |
| Should this Court defer to the Bankruptcy Court for scope decisions? | Defer for clarity | Not necessary; efficiency dictates local resolution | No; Court decided not to refer for further clarification |
Key Cases Cited
- E. Refractories Co. Inc. v. Forty Eight Insulations, Inc., 157 F.3d 169 (2d Cir. 1998) (automatic bankruptcy stay provisions and their reach)
- Queenie, Ltd. v. Nygard Int’l, 321 F.3d 282 (2d Cir. 2003) (extension of automatic stay to non-debtor where judgment would have economic impact on the debtor)
- Teachers Ins. & Annuity Ass’n of Am. v. Butler, 803 F.2d 61 (2d Cir. 1986) (rationale and purpose of the automatic stay in bankruptcy)