Abouelmakarem v. MDNMA INC.

Background

Plaintiff Nader Abouelmakarem had moved to compel defendants to respond to his first request for production of documents and had challenged allegedly deficient interrogatory responses from MDNMA INC. In an August 17, 2022 order, the court denied the motion to compel as to MDNMA INC. because that defendant had filed a Chapter 7 bankruptcy petition and the bankruptcy law’s automatic stay applied. The court granted the motion to compel against MSSMINJA, Inc., Mahmoud Mustafa, and Nazih K. Mustafa, finding that they had not justified their failure to respond and had not shown that MDNMA INC.’s bankruptcy filing extended the stay to them.

Arguments

MSSMINJA, Inc., Mahmoud Mustafa, and Nazih K. Mustafa sought reconsideration and reargument under Federal Rules of Civil Procedure 59(e) and 60(b) and Local Civil Rule 6.3. They argued that the action against them should also be stayed because bankruptcy was “inevitable” due to separate state-court litigation. They also argued that complying with the document requests would create undue burdens and difficulties, including because Mahmoud Mustafa was in Palestine and Nazih K. Mustafa resided in Pennsylvania.

The opposing arguments were that reconsideration was improper because the defendants relied on facts available when they opposed the original discovery motion, that the limited circumstances for extending an automatic bankruptcy stay to non-bankrupt defendants were absent, and that the defendants had not shown hardship or even provided written responses to the document requests.

Court’s Analysis

The court treated the filing as both a motion for a stay and a motion to reconsider the order compelling document production. It denied the request for a stay because the moving defendants had not filed bankruptcy petitions, so the automatic stay did not apply to them by its own force. The court also held that counsel’s assertion that bankruptcy was inevitable was insufficient and that the defendants had not shown the limited exception allowing a stay to protect non-bankrupt parties from an adverse effect on a debtor that occurs by operation of law.

The court separately denied reconsideration. The defendants had not identified an intervening change in controlling law, new evidence, clear error, or manifest injustice. The prior order requiring the three defendants to respond to discovery therefore remained in effect. The clerk was directed to close Docket No. 49.

Disposition

The court denied the motion for a stay and denied the request for reconsideration and reargument. It did not alter or vacate the prior discovery order.