Verit Muy and Mr. Tea v. Michelle Moore and Michelle Moore
- Dulce Foster
- 0:25-cv-00499
- U.S. District Court · District of Minnesota
- 1
In Verit Muy and Mr. Tea, LTD v. Michelle Moore and Michelle Moore, LLC, Magistrate Judge Foster denied Defendants' request to pause the case based on Plaintiff Muy's bankruptcy filing.
Franchisors and franchisees involved in franchising disputes where one party is a plaintiff who has filed for bankruptcy, and anyone seeking to use a counterparty's bankruptcy filing to pause litigation they did not initiate.
What happened
This case, Verit Muy and Mr. Tea, LTD v. Michelle Moore and Michelle Moore, LLC, is a franchising dispute in which the plaintiffs (the franchisees) sued the defendants (the franchisors). After plaintiff Verit Muy filed for Chapter 13 bankruptcy, the defendants asked the court to automatically pause the entire lawsuit, citing a federal bankruptcy law that halts legal proceedings when someone files for bankruptcy.
The defendants argued that the bankruptcy filing triggered an automatic pause under federal bankruptcy law (11 U.S.C. § 362). However, the court found that argument clearly wrong. That law pauses proceedings brought against a person who has filed for bankruptcy — not proceedings that the bankruptcy filer themselves started. Because Mr. Muy initiated this lawsuit and the defendants had not filed any counterclaims against him, the law simply did not apply here.
Magistrate Judge Dulce J. Foster denied the defendants' request for a stay, ruling that all pretrial deadlines remain in full force and effect.
The detailed version
- Verit Muy and Mr. Tea v. Michelle Moore and Michelle Moore · No. 0:25-cv-00499
- Dulce J. Foster
- Apr. 2, 2026
Background
This is a franchising dispute. Plaintiffs Verit Muy and Mr. Tea, LTD are the franchisees; Defendants Michelle Moore and Michelle Moore, LLC are the franchisors. The plaintiffs initiated the lawsuit.
The Motion
Defendants filed a Suggestion of Bankruptcy and Request for Stay of Proceedings (ECF No. 48), informing the court that Plaintiff Verit Muy had filed for Chapter 13 bankruptcy — a form of personal bankruptcy that allows individuals with regular income to propose a repayment plan. On that basis, Defendants asked the court to automatically pause (stay) the entire proceeding under 11 U.S.C. § 362, the federal statute that imposes an automatic stay of legal proceedings upon a bankruptcy filing.
The Court's Analysis
Magistrate Judge Foster rejected the defendants' argument as plainly mistaken. Section 362 of the Bankruptcy Code provides an automatic stay of proceedings against a debtor who has filed for bankruptcy — that is, it protects the debtor from being sued or having legal actions pursued against them while bankruptcy proceedings are pending. It does not, however, pause proceedings that the debtor themselves filed and is pursuing as a plaintiff.
The court cited the Eighth Circuit Court of Appeals' decision in Brown v. Armstrong, 949 F.2d 1007, 1009-10 (8th Cir. 1991) in support of this distinction. Because Mr. Muy initiated this lawsuit against the defendants — rather than being a defendant in a case brought by others — the automatic stay provision does not apply. The court further noted that the defendants had not filed any counterclaims against Mr. Muy, which might otherwise have raised a different question about the statute's applicability.
Disposition
Defendants' request for a stay was denied. The court ordered that all pretrial schedule deadlines remain in full force and effect.
Read the full 1-page opinion on CourtListener, the free public archive maintained by the Free Law Project.