24-81498
Bankr. M.D. Ala.Jul 22, 2025Background
- Creditor Johnny Ray Jenkins filed a motion under Bankruptcy Rule 2004 seeking discovery of all liability insurance policies covering debtor Shelly H. Moseley, following an underlying $1.5 million personal injury tort claim against Moseley in Alabama state court.
- The state court litigation stems from alleged negligent acts by Moseley during her employment at Sylacauga Health Care Authority.
- Jenkins argues that the requested insurance information is property of the estate and relevant to determine available coverage, indemnity, and insurance disputes.
- The bankruptcy court had previously allowed Jenkins only a contingent, unsecured, disputed claim in the bankruptcy for $1.00 pending liquidation of his claim.
- Moseley opposes the Rule 2004 request, noting pending state court litigation and arguing the claim is still unliquidated and disputed.
- The court addresses whether Rule 2004 discovery is proper given the existence of related pending non-bankruptcy state court litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Rule 2004 allow Creditor to discover Debtor's liability insurance details during parallel state litigation? | Jenkins: Info is property of the estate; good cause; discovery is narrow; Ala. Code § 6-5-548(d) privilege is waived by bankruptcy filing | Moseley: Rule 2004 misuse; claim is disputed, contingent, and unliquidated; state litigation governs | Denied; discovery limited by pending proceeding rule—Rule 2004 cannot circumvent discovery limits of ongoing state litigation |
| Is the discovery request tied to administration of the bankruptcy estate? | Jenkins: Coverage may affect estate; necessary to know debtor’s available assets | Moseley: Insurance proceeds not for estate; relates only to creditor’s recovery, not administration of bankruptcy | Denied; insurance info has no bearing on bankruptcy administration or plan consummation |
| Can Rule 2004 be used if the requested discovery is otherwise barred in state court litigation by statute? | Jenkins: Bankruptcy court not constrained by AMLA; Debtor allegedly waived privilege | Moseley: State law discovery restrictions apply; Rule 2004 cannot override AMLA | Denied; Rule 2004 not to be used to circumvent forum-specific discovery limitations, including § 6-5-548(d) |
| Is there a viable alternative for creditor to seek discovery in the state forum? | Jenkins: Seeks bankruptcy court only for discovery (due to limitation in state court) | Moseley: State court is proper forum, creditor can seek stay relief to pursue discovery | Denied; alternative forum exists and Rule 2004 is not appropriate workaround |
Key Cases Cited
- In re Enron Corp., 281 B.R. 836 (Bankr. S.D.N.Y. 2002) (Rule 2004 allows broad but not unlimited discovery, and is subject to discretion and limits like the pending proceeding rule).
- Stern v. Marshall, 564 U.S. 462 (2011) (Bankruptcy courts' limits in adjudicating state law claims not core to bankruptcy).
- In re Kelton, 389 B.R. 812 (Bankr. S.D. Ga. 2008) (Pending proceeding rule limits use of Rule 2004 when parallel litigation exists).