Nuno Carrera v. DT Hospitality Group Inc.
- Ronnie Abrams
- 1:19-cv-04235
- U.S. District Court · Southern District of New York
- 2
In Patricio Nuno Carrera v. DT Hospitality Group, Judge Abrams stayed the case only against bankrupt defendant Kien Truong, not DT Hospitality Group.
The order pauses the case as to Kien Truong because of his Chapter 7 bankruptcy filing, but allows the case to proceed against DT Hospitality Group, including consideration of the pending default-judgment motion.
What happened
Patricio Nuno Carrera and Geraldo Marquez sued DT Hospitality Group and Kien Truong, and sought default judgment against DT Hospitality Group. Truong later filed for Chapter 7 bankruptcy, which ordinarily automatically pauses proceedings against the person who filed bankruptcy.
The plaintiffs argued that the pause should apply only to Truong, not to DT Hospitality Group. The court asked the plaintiffs to explain why, because a bankruptcy pause can sometimes extend to a related defendant if continuing the case would immediately harm the bankruptcy estate.
Judge Ronnie Abrams ruled that the evidence did not show an immediate economic effect on Truong’s bankruptcy estate, especially because Truong did not list DT Hospitality Group as an asset. The court stayed the action only as to Truong and said it would later address the pending default-judgment motion against DT Hospitality Group.
The detailed version
- Nuno Carrera v. DT Hospitality Group Inc. · No. 1:19-cv-04235
- Ronnie Abrams
- Feb. 25, 2021
Background
Plaintiffs Patricio Nuno Carrera and Geraldo Marquez reported that Defendant Kien Truong had filed a Chapter 7 bankruptcy petition. Under Section 362 of the Bankruptcy Code, filing for bankruptcy automatically pauses proceedings against the person who filed the petition. Plaintiffs argued that this pause should apply to Truong but not to co-defendant DT Hospitality Group, against whom they had filed a motion for default judgment.
The court asked Plaintiffs to submit a letter explaining why the bankruptcy stay should not also apply to DT Hospitality Group. Plaintiffs submitted that letter on December 23, 2020.
Court’s Analysis
The court explained that a bankruptcy stay generally does not automatically protect a co-defendant who did not file for bankruptcy. It can extend to a non-bankrupt defendant when a claim against that defendant would have an immediate adverse economic effect on the bankruptcy estate.
After reviewing Plaintiffs’ letter and Truong’s bankruptcy petition, the court found insufficient evidence that continuing the claim against DT Hospitality Group would have such an immediate economic effect on Truong’s estate. The court particularly noted that Truong had not listed DT Hospitality Group as an asset in his bankruptcy petition.
Ruling
Judge Ronnie Abrams ordered that the action be stayed only as to Kien Truong. The Clerk was directed to enter the automatic stay only as to Truong. Plaintiffs were directed to serve the order on Truong and DT Hospitality Group and file proof of service. The court stated that it would later address Plaintiffs’ pending motion for default judgment against DT Hospitality Group; this order did not decide that motion.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.