Dockside Association, Inc.
THIS MATTER is before the Court on the Motion for Relief from Stay (“Motion“) filed by William R. Wiggins (“Wiggins“) on February 16, 2026.1 Dockside Association, Inc. (“Dockside“, “Debtor“, or the “Association“) filed an objection to the Motion.2 Wiggins and Dockside both appeared for a hearing on the Motion on March 18, 2026.
The Motion requires the Court to determine whether “cause” exists under
The Dockside condominium complex is a 142-unit condominium regime located at 330 Concord Street in Charleston, South Carolina (the “Condominium Complex“). The Condominium Complex occupies highly valuable real property on the Charleston peninsula. Prior to the petition date, structural evaluations of the Condominium Complex revealed significant deficiencies in slab-to-column connections and related structural components. Engineering reports further identified widespread structural vulnerabilities affecting the integrity of the building. On February 27, 2025, the City of Charleston issued an Order to Vacate requiring all occupants to vacate the Condominium Complex due to life-safety concerns. The Condominium Complex has remained unoccupied since that date. After being presented with projected repair costs exceeding $150 million and projected demolition costs of approximately $11 million, most of the unit owners voted not to pursue repair or reconstruction.
The closure of the Condominium Complex created significant financial distress for the 181 unit owners. Dockside made efforts to market and sell all assets before filing for bankruptcy, but those efforts were unsuccessful. Dockside‘s Board ultimately determined that Chapter 11 relief was necessary to preserve value, centralize disputes among co-owners, and implement an orderly disposition strategy under court supervision. Dockside commenced this chapter 11 case on December 29, 2025 (the “Petition Date“) and continues to operate as debtor-in-possession pursuant to
Dockside is the governing association for the Dockside Horizontal Property Regime and owns unit 3-F in the Condominium Complex. The Master Deed and Restated and Amended Bylaws of Dockside Association, Inc. (“Bylaws“) mandate that Dockside shall purchase and maintain insurance policies covering property loss, public liability, and Directors’ and Officer‘s liability for the benefit of the Association, the owners of units, and their respective mortgagees.5 The Bylaws state that Dockside is irrevocably appointed agent for each co-owner to adjust all claims arising under insurance policies purchased by Dockside, and to execute and deliver releases upon payment of claims.6 Further, the Bylaws mandate that the premiums of the insurance policies would be paid by Dockside as a common expense and that proceeds of the insurance policies shall be distributed to or for the benefit of beneficial owners. Specifically, the Bylaws state:
Proceeds of insurance policies received by the Association shall be distributed to or for the benefit of the beneficial owners in the following manner: (a) If a damaged property for which the proceeds are paid is to be repaired or reconstructed, the proceeds shall be paid to defray the costs thereof as elsewhere provided. Any proceeds remaining after defraying such costs shall be distributed to the beneficial owners, remittances to Co-Owners and their mortgagees being payable jointly to them. This is a covenant for the benefit of any mortgagee of an Apartment and may be enforced by said mortgagee. (b) If it is determined in a manner elsewhere provided that the damage for which the proceeds are paid shall not be reconstructed or repaired, the proceeds shall be distributed to the beneficial owners, remittances to Co-Owners and their mortgagees being payable jointly to them. This is a covenant for the benefit of any mortgagee of an Apartment and may be enforced by him/her. . . .7
The principal insurance policies relevant here are: (i) the subscription Commercial Property Policy, effective March 30, 2024, through March 30, 2025, issued on a subscription basis by Arch Specialty Insurance Company (70%), Old Republic Union Insurance Company (15%), and CUMIS Specialty Insurance Company (15%) (the “Property Policy“)8; (ii) the Commercial General Liability Policy issued by Richmond National Insurance Company, effective March 30, 2024, through March 30, 2025 (the “Liability Policy“)9; and (iii) the Not-For-Profit Organization Management Liability (Directors and Officers) Policy issued by Atlantic Specialty Insurance Company, effective March 30, 2024, through March 30, 2025 (the “D&O Policy“).10 Each policy identifies Dockside as the named insured or first named insured.11
Wiggins purchased units 10-F and 10-G in the Condominium Complex in April 2022. After the residents of the Condominium Complex were ordered to vacate, Wiggins submitted a claim under the Property Policy on the basis that the structural engineering findings rendered the Condominium Complex unsafe and uninhabitable, causing Wiggins a direct, physical total constructive loss.12 Wiggins‘s claim under the Property Policy was denied on the basis that Wiggins is not an insured under the Property Policy and has no standing to make a claim.13 After Wiggins‘s claim was denied, Dockside informed the Market Insurers of its intent to make a claim under the Property Policy.14 In response, the Market Insurers requested certain information and documents from Dockside pertaining to the structural problems with the Condominium Complex and formally reserved their right to deny coverage.
After his claim under the Property Policy was denied, Wiggins filed a complaint in state court15 (the “Lawsuit“) on October 14, 2025, against Dockside and the Insurer Defendants asserting claims for: breach of contract and bad faith by the Insurer Defendants; breach of fiduciary duty against Dockside for failure to procure adequate insurance and present and prosecute claims on behalf of owners; fraudulent concealment and negligent misrepresentation against Dockside, based
The Insurer Defendants removed the Lawsuit to federal court on November 21, 2025.16 Shortly after the case was removed to District Court, the Insurer Defendants moved for realignment of Dockside as a plaintiff in the Lawsuit.17 Wiggins filed a response in opposition to the motion for realignment18 and moved to remand the Lawsuit back to state court.19 The Insurer Defendants have moved for dismissal of the Complaint.20 The District Court did not rule on any of these pleadings before the Lawsuit was stayed due to Dockside‘s chapter 11 petition.
After the Lawsuit was filed, Dockside notified the insurer of the D&O Policy, Atlantic Specialty Insurance Company (“ASIC“), of the Lawsuit and made a claim for coverage and legal defense under the D&O Policy.21 ASIC denied Dockside the requested coverage.22 Dockside then issued a formal Notice of Bad Faith and Demand for Defense and Indemnity on January 6, 2026.23 ASIC‘s coverage counsel
On February 4, 2026, Dockside filed Applications to Employ Mark C. Tanenbaum and Bundy McDonald, LLC, as special insurance coverage and litigation counsel for the purposes of investigating, negotiating, and, if necessary, prosecuting Dockside‘s claims under the insurance policies.25 These applications were granted.26
On March 17, 2026, Dockside filed a complaint in District Court for declaratory judgment and breach of contract against the Insurer Defendants.27 On May 5, 2026, Wiggins filed a proof of claim asserting an unsecured, non-priority claim against Dockside of $622,983.26, citing the Lawsuit as the basis for the claim.28 Eight claims were filed prior to deadline for non-governmental entities to file claims:
- Claim 1-1: An unsecured, non-priority claim in the amount of $7,230.79 filed by Dominion Energy South Carolina.
- Claim 2-1: An unsecured priority claim of $100.00, and an unsecured, non-priority claim of $100.00, filed by the Internal Revenue Service.
- Claim 3-1: An unsecured, non-priority claim in the amount of $220,316.27 filed by Tyler A. Lindsey.
- Claim 4-1: A secured claim in the amount of $509,712.75 filed by Selene Finance LP.
- Claim 5-1: Wiggins‘s claim, as described in the preceding paragraph.
- Claim 6-1: A secured claim in the amount of $2,197,188.54 filed by First-Citizens Bank & Trust Company.
- Claim 7-1: A secured claim in the amount of $722,795.63 filed by
- Claim 8-1: An unliquidated claim for amounts due and owing under insurance policies filed by Arch Specialty Insurance Company.
The total amount claimed by creditors is $4,280,427.24. The total amount of secured claims in this case is $3,429,696.92.
Wiggins now requests relief from the automatic stay, pursuant to
DISCUSSION AND CONCLUSIONS OF LAW
I. The Automatic Stay
This Court has jurisdiction over this matter pursuant to
“The automatic stay set forth in
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the [bankruptcy case], or to recover a claim against the debtor that arose before the commencement of the [bankruptcy case];
(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the [bankruptcy case];
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate . . . .
When a bankruptcy is filed, most judicial actions against the debtor commenced before the filing of the petition are automatically stayed. In re Robbins, 964 F.2d at 345 (citing
If both the debtor and the directors and officers have direct interests in the proceeds, the proper result becomes less clear. Celsius, 652 B.R. at 42. “Several
Wiggins bears the burden of proving that cause exists for granting relief from the automatic stay. In re Flint, 640 B.R. 869, 876 (Bankr. D.S.C. 2022). If Wiggins meets his burden of proof, the burden shifts to Dockside to demonstrate a lack of cause.
II. “Cause” and the Robbins Factors
Pursuant to
“The legislative history of § 362 is abundantly clear on the point that Congress intended the bankruptcy courts to be required to lift the stay in appropriate circumstances.” Elliott v. Hardison, 25 B.R. 305, 308 (E.D. Va. 1982). The Senate Report accompanying the Bankruptcy Reform Act of 1978 stated that:
Subsection (d) requires the court, upon motion of a party in interest, to grant relief from the stay for cause, such as by terminating, annulling, modifying, or conditioning the stay. The lack of adequate protection of an interest in property is one cause for relief, but is not the only cause. Other causes might include the lack of any connection with or interference with the pending bankruptcy case. Generally, proceedings in which the debtor is a fiduciary or involving postpetition activities of the debtor, need not be stayed because they bear no relationship to the purpose of the automatic stay, which is protection of the debtor and his estate from his creditors. Upon the court‘s finding that the debtor has no equity in the property subject to the stay and that the property is not necessary to an effective reorganization of the debtor, the subsection requires the court grant relief from the stay[.] . . .
S. REP. NO. 989, 95TH CONG., 2D SESS. 50 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787, 5838.
Courts recognize that stay relief should be denied where continuation of litigation would impair a debtor‘s ability to formulate and confirm a feasible plan. See Charter Int‘l Oil Co. v. Gen. Oil Distribs., Inc. (In re Gen. Oil Distribs., Inc.), 33 B.R. 717, 718 (Bankr. E.D.N.Y. 1983) (holding that modification of the stay would have had a detrimental impact on the debtor‘s efforts to formulate and solicit acceptances for a plan). “The purpose of the automatic stay is to preserve what remains of the debtor‘s insolvent estate and to provide a systematic equitable liquidation procedure for all creditors, secured as well as unsecured, [. . .] thereby preventing a ‘chaotic and uncontrolled scramble for the debtor‘s assets in a variety of uncoordinated proceedings in different courts.‘” Holtkamp v. Littlefield (In re Holtkamp), 669 F.2d 505, 508 (7th Cir.1982). In addition to considering the purpose of the automatic stay, the Court must consider whether modifying the stay in this case will be in “harmony with the Code‘s policy of quickly and efficiently formulating plans for repayment and reorganization.” Id.
(1) whether the issues in the pending litigation involve only state law, so the expertise of the bankruptcy court is unnecessary; (2) whether modifying the stay will promote judicial economy and whether there would be greater interference with the bankruptcy case if the stay were not lifted because matters would have to be litigated in bankruptcy court; and (3) whether the estate can be protected properly by a requirement that creditors seek enforcement of any judgment through the bankruptcy court.
Robbins, 964 F.2d. at 345 (citations omitted); see also In re Charleston Affordable Housing, Inc., C/A No. 09–01020–dd, slip op. at 4–5, 2009 WL 9071877 at *3 (Bankr. D.S.C. June 9, 2009) (focusing on “whether judicial economy will be served by returning the parties to state court or whether litigation in the bankruptcy court would impair progress” in the bankruptcy case). “For decades, courts in [the Fourth Circuit] have recognized Robbins as the controlling authority for deciding motions to lift an automatic stay.” Herlihy v. DBMP, LLC, 167 F.4th 142, 150 (4th Cir. 2026). See, e.g., In re Lee, 461 F. App‘x 227, 231–33 (4th Cir. 2012); In re McCullough, 495 B.R. 692, 697–98 (W.D.N.C. 2013); In re Badalamenti, 668 B.R. at 390; In re Parast, 612 B.R. at 722.
The Motion seeks relief from the automatic stay pursuant to
At the outset, the Court finds that the Property Policy and Liability Policy are property of the estate, as are Dockside‘s potential claim for coverage under those policies. Celsius, 652 B.R. at 42. Dockside is the named or first named insured under those policies, and any recovery under those policies could materially affect the value available to the estate and similarly situated creditors.
The present record is insufficient to determine whether proceeds of the D&O Policy constitute property of the estate or the claims asserted in the Lawsuit fall
Depletion of available insurance proceeds would adversely affect the estate. Dockside‘s schedules identify potential insurance recoveries as some of the estate‘s most significant assets. Dockside retained special insurance counsel to pursue recovery under those policies for the benefit of the estate. Said insurance counsel has already filed suit against the Insurer Defendants in the United States District Court for the District of South Carolina. Payment of defense costs, indemnity obligations, or other recoveries to individual claimants could reduce aggregate policy limits otherwise available to the estate and other claimants. Under these circumstances, the estate is worth more with preservation of the insurance proceeds than without them, and efforts to obtain or control those proceeds implicate property interests protected by
a. Robbins Factors
i. Do the issues in the pending litigation involve only state law such that the expertise of the bankruptcy court is unnecessary?
Applying the first of the Robbins factors, the Court finds that the causes of action set forth in the Lawsuit—breach of contract (against Insurer Defendants), breach of fiduciary duty (against Dockside), fraudulent concealment (against Dockside), negligent misrepresentation (against Dockside), breach of contract (against Dockside), and bad faith (against Insurer Defendants)— are not matters on which “state courts have special expertise and for which federal courts owe significant deference.” See Robbins, 964 F.2d at 345.
The claims asserted and relief requested in the Lawsuit fall under the purview of state law. See In re Reyna, 657 B.R. 845, 853 (Bankr. E.D. Va. 2024) (citing Butner v. United States, 440 U.S. 48, 56-57 (1979)). The Fourth Circuit has held that the presence of state law claims does not alone constitute “cause” for relief from stay. Robbins, 964 F.2d at 345. The inquiry is not whether a state court is competent to apply state law; it is whether allowing the litigation to proceed would interfere with the bankruptcy process. Id. “The majority of debts considered and determined by bankruptcy courts involve the application of state law.” In re
Bankruptcy courts routinely hear and determine questions of breach of contract, breach of fiduciary duty, fraudulent concealment, negligent misrepresentation, and bad faith. See, e.g., In re Mitchell, 546 B.R. at 347; In re Granati, 271 B.R. 89, 95 (Bankr. E.D. Va. 2001) (holding bankruptcy courts have exclusive jurisdiction to determine the dischargeability of debts alleged to be excepted from discharge on the ground of breach of fiduciary duty); Glencove Holdings, LLC v. Bloom (In re Bloom), 634 B.R. 559, 580 (10th Cir. BAP (Colo.) 2021), aff‘d, No. 22-1005, 2022 WL 2679049 (10th Cir. July 12, 2022) (affirming the bankruptcy court‘s finding that a creditor was entitled to damages from debtor for fraudulent concealment under Colorado law); Hovis v. Gen. Dynamics Corp., (In re Marine Energy Sys. Corp.), 362 B.R. 247, 256 (Bankr. D.S.C. 2006), aff‘d sub nom., In re Hovis, 396 B.R. 895 (D.S.C. 2007), aff‘d in part sub nom., In re Marine Energy Sys. Corp., 299 F. App‘x 222, 2008 WL 4820128 (4th Cir. 2008) (holding a defendant
Accordingly, although the Lawsuit involves state-law causes of action, the Court finds that bankruptcy courts routinely adjudicate such issues in the claims allowance and estate-administration context. The first Robbins factor is therefore neutral or weighs slightly against relief from stay.
ii. Will modifying the stay promote judicial economy and will there be greater interference with the bankruptcy case if the stay were not lifted because matters would have to be litigated in bankruptcy court?
Judicial economy will not be advanced by granting Wiggins relief from the stay. First, as to the merits of Wiggins‘s case, the Lawsuit is in its infancy. None of the Insurer Defendants have filed an Answer in District Court. Upon information and belief, the parties to the Lawsuit have not engaged in discovery. If relief from stay was granted, Dockside would be entering a case with a complex procedural posture that would require substantial briefing on topics ranging from insurance coverage to joinder, dismissal, and remand, before the Court could assess the merits of Wiggins‘s argument. Those unresolved procedural matters would likely generate additional expense and delay, therefore undermining judicial economy and
Second, Dockside‘s insurance counsel has already filed an action against the Insurer Defendants in the District Court. If the stay were lifted, the Lawsuit would proceed on a parallel track to both Dockside‘s case against the Insurer Defendants and this chapter 11 case. Between the Lawsuit, Dockside‘s action in District Court, and this bankruptcy case, inconsistent judgments could be entered for similarly situated parties. See In re Conejo Enterprises, Inc., 96 F.3d 346, 353 (9th Cir. 1996) (“By staying the state action, the bankruptcy court promoted judicial economy and efficiency by minimizing the duplication of litigation in two separate forums and preventing litigation of a claim that may have been discharged in bankruptcy proceedings.“). Permitting multiple legal actions to move forward concerning Dockside‘s entitlement to insurance proceeds could interfere with the estate‘s coordinated recovery strategy, complicate coverage determinations, and create competing claims to potentially limited proceeds. The duplication of these efforts to reach the proceeds of Dockside‘s insurance policies does not favor judicial economy. See In re Celsius Network LLC, 642 B.R. at 504.
Third, Wiggins has filed a proof of claim in this case in the amount of damages he seeks in the Lawsuit. If Wiggins‘s claim is undisputed or, if disputed, allowed through the claims allowance process, Wiggins will receive a pro rata
The Motion, if granted, risks conferring Wiggins the benefit of an opportunity to obtain a larger recovery than the 179 other (non-Dockside) co-owners, who would be barred from pursuing their own individual claims against Dockside during this chapter 11 case. Id. Alternatively, granting the Motion risks opening the floodgates for lawsuits against Dockside and the Insurer Defendants by said co-owners, or any other creditors who did not file actions before this case was initiated and wish to maximize their own recovery. Id. (citing In re SunEdison, Inc., 557 B.R. 303, 308–09 (Bankr. S.D.N.Y. 2016)) (finding relief from stay should not be granted, in part, due to the risk of “encourag[ing] other claimants to file their own stay relief motions“). Either of these outcomes would interfere with the purpose of chapter 11, which is intended to “allow a debtor to catch its financial breath and develop a cohesive reorganization plan; provide consistency and certainty in the resolution of matters potentially affecting the debtor‘s reorganization; and ensure fair and equal treatment of the debtor‘s creditors.” In re McPherson, 630 B.R. at 164.
If the Lawsuit continues, Dockside will be immediately prejudiced by the
iii. Will the estate be adequately protected by Wiggins‘s offer to seek enforcement of any judgment through this Court and limit his recovery to his fractional share of the insurance proceeds?
Wiggins proposes to limit any recovery to available insurance proceeds and to seek enforcement of any judgment solely through this Court.32 Those limitations partially mitigate concerns regarding direct collection efforts against estate assets. However, the Court finds that the proposed limitations do not presently eliminate the risk of prejudice to the estate.
The estate has a direct interest in the Property Policy and the Liability Policy. Dockside is the named or first named insured under those policies, and the estate is actively pursuing evaluation and potential recovery under them for the benefit of creditors and stakeholders. Litigation seeking to obtain or allocate those
As to the D&O Policy, the record does not permit a definitive determination of whether proceeds of the D&O Policy constitute property of the estate or whether particular claims asserted in the Lawsuit implicate coverage available to Dockside under the D&O Policy. Nevertheless, the Court finds that continuation of the stay is appropriate to permit Dockside to evaluate potential claims, coverage positions, and litigation strategy relating to the D&O Policy, and to avoid diverting Dockside‘s resources to duplicative litigation. Under these circumstances, the Court concludes that the third Robbins factor is neutral or weighs slightly against stay relief.
iv. Does the balance of hardships favor granting the Motion?
In addition to the three factors addressed above, Robbins instructs this court to balance potential prejudice to the estate against the hardships that will be suffered by Wiggins if the Motion is denied. Unsecured creditors like Wiggins bear a heavy burden in proving that the balance of hardships favors lifting the stay, and he simply has not met the burden here. See Celsius 642 B.R. at 504 (citing In re Conejo Enterprises, Inc., 96 F.3d at 353). See also In re Residential Capital, LLC, 508 B.R. 838, 848 (Bankr. S.D.N.Y. 2014) (“If the movant is an unsecured creditor, the policies of the automatic stay weigh against granting the relief requested.“).
Wiggins has not demonstrated that he will be more prejudiced than any other owner or potential creditor by delaying his recovery until a plan is in place. The
However, neither Wiggins nor Dockside have presented evidence on this point. The Court cannot determine if Dockside was aware of the structural deficiencies at the time Wiggins bought his units, or how many other owners may be entitled to damages for Dockside‘s alleged failure to disclose the structural deficiencies to prospective buyers. Further, the Bylaws appoint Dockside as agent for the co-owners for the purpose of obtaining insurance coverage for the Condominium Complex. All owners would suffer equal injury from Dockside‘s alleged failure to promptly and adequately present claims to the Insurer Defendants on behalf of the owners. With the information available to the Court at this time, Wiggins appears similarly situated to the other unit owners who have seen the value of their investment in the Condominium Complex vanish before their eyes. Those owners are also entitled to a share of any insurance proceeds that are recovered. The record before the Court indicates Wiggins will not sustain more significant harm than the other owners if the Motion is denied. See Celsius, 642
Further, the Fourth Circuit has recently noted that a litigant‘s desire to recover under pre-petition civil claims before distributions are made to the other creditors in bankruptcy does not constitute sufficient cause to lift the automatic stay. See Herlihy, 167 F.4th at 150 (affirming the bankruptcy court‘s finding that a potential delay to a movant‘s recovery from the debtor in a non-bankruptcy civil suit is speculative and therefore an insufficient basis for relief from the stay). Wiggins has filed a proof of claim in this case. Creditor claims are routinely addressed through the structured processes provided by the Bankruptcy Code, including the claims-allowance mechanism under
Finally, the Court finds that potential insurance recoveries are among the estate‘s most significant prospective assets. Dockside has filed suit against the Insurer Defendants and is, upon information and belief, actively evaluating and pursuing recovery under the Liability Policy and the D&O Policy. Piecemeal litigation between the co-owners and insurers concerning those policies could result in unnecessary defense expenditures, inconsistent determinations concerning entitlement to proceeds, and interference with the estate‘s coordinated efforts to
Forcing Dockside to participate in additional litigation over the potential insurance proceeds would distract and hinder Dockside from its efforts to reorganize its debt, sell the land where the Condominium Complex lies, and obtain recovery under its insurance policies. These efforts are essential to preserve the value of the estate for the benefit of all creditors. The balance of hardships weighs against granting relief from stay.
CONCLUSION
This case arises from an extraordinary and deeply unfortunate set of circumstances affecting hundreds of individuals connected to the Condominium Complex, Wiggins among them. In addition to the emotional and logistical toll wrought by the evacuation order, some owners now face substantial financial hardship. Now that Dockside has filed a chapter 11 petition, the co-owners will have access to a limited pool of available assets for recovery. The bankruptcy process cannot fully remedy the disruption, uncertainty, and financial losses experienced by those forced to pack their possessions and leave their homes with little notice. It can, however, provide a structured and centralized forum intended to preserve, maximize, and fairly allocate whatever value may ultimately be recovered for the benefit of all creditors and stakeholders. Preserving that process by avoiding piecemeal litigation that could diminish estate assets or interfere with coordinated recovery efforts remains a central purpose of the automatic stay in this case. In
AND IT IS SO ORDERED.
FILED BY THE COURT
05/20/2026
S. Jefferson Davis IV
US Bankruptcy Judge
District of South Carolina
Entered: 05/20/2026