532 B.R. 581
Bankr. M.D. Penn.2015Background
- Debtor Anthony R. Popple filed individual Chapter 11 on December 17, 2014; no plan filed yet and he is not a "small business debtor."
- Prepetition, Elliott Greenleaf & Siedzikowski, P.C. filed a state-court suit (Montgomery County) on April 21, 2014 naming ten defendants including Popple.
- Postpetition, Debtor alleges Elliott Greenleaf continued to pursue discovery from non-debtor co-defendants (and sought depositions/documents) that could be used against Popple, thereby violating the automatic stay.
- Complaint (filed March 31, 2015) is sparse: docket and a sanctions motion are attached, but the actual discovery requests at issue are not described or produced.
- Elliott Greenleaf moved to dismiss under Fed. R. Civ. P. 12(b)(6) (Bankr. R. 7012). Court heard briefing and oral argument and took judicial notice of bankruptcy dockets and schedules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Elliott Greenleaf's postpetition discovery of non-debtors violated the automatic stay | Postpetition discovery sought from co-defendants seeks information that would be used to prosecute claims against Popple — a stay violation under §362 | Discovery directed to non-debtors is not proceedings "against" the debtor; liberal discovery permissible and not per se barred by the stay | Dismissed as pleaded — complaint fails to allege sufficient facts about the discovery requests to show a plausible §362(k) stay violation |
| Whether debtor pleaded a willful stay violation warranting damages under §362(k) | Alleged continued pressing for discovery after petition constitutes willful violation | No specific factual allegations showing knowledge-plus-action producing a willful violation; assertions are conclusory | Dismissed for failure to plead factual support for willfulness and damages claim |
| Whether the court should enjoin proceedings against non-debtor co-defendants under §105(a) | Debtor asked court (in briefing/oral argument) to enjoin continuation of state-court action to protect reorganization | Injunctive relief requires proper adversary pleading, allegations of irreparable harm, and preliminary-injunction elements | Denied at this time — no injunctive claim in complaint and no factual showing of irreparable harm; sua sponte injunction refused |
| Whether discovery from debtor/co-defendants can be stayed when it could yield information used against debtor | Debtor contends any discovery that could be used against him should be barred | Courts draw distinction: discovery of non-debtors (even if it elicits debtor-related info) often permitted; stay protects actions against debtor, not all inquiry | Court adopts the distinction: stay is broad but does not automatically bar discovery from non-debtors or nonparty witnesses; complaint must allege specifics to show overreach |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard governs dismissal)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions require supporting factual allegations)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (Third Circuit summary of Twombly/Iqbal pleading analysis)
- Acands, Inc. v. Travelers Cas. & Sur. Co., 435 F.3d 252 (automatic stay covers proceedings against debtor; stay scope is broad)
- McCartney v. Integra Nat’l Bank N., 106 F.3d 506 (third parties generally do not get protections of §362)
- Solfanelli v. Corestates Bank, N.A., 203 F.3d 197 (willful stay violations may support punitive damages and attorneys' fees)
- A.H. Robins Co. v. Piccinin, 788 F.2d 994 (use of §105 to enjoin actions against non-debtor in large reorganizations discussed)
- Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700 (preliminary injunction factors)