Funding Holding, LLC d/b/a LawCash v. Blue Ocean Partners LLC

Background

Funding Holding, LLC d/b/a LawCash sued Blue Ocean Partners LLC, Joseph DiNardo, and Dean Chase. The opinion text describes LawCash’s claims against Blue Ocean as involving an agreement and describes claims against DiNardo and Chase involving alleged interference with contractual or prospective economic relationships.

Blue Ocean filed a Chapter 7 bankruptcy case on March 23, 2023. A bankruptcy “automatic stay” generally pauses litigation against the bankruptcy debtor and certain actions involving the debtor’s property or estate. The parties disagreed about whether that stay also paused the claims against DiNardo and Chase, who were not identified as the bankruptcy debtor.

The Parties’ Positions

LawCash argued that the bankruptcy stay did not apply to DiNardo or Chase because its claims against them concerned their alleged independent misconduct. LawCash also asked to continue discovery from DiNardo and to proceed with its motion to compel.

DiNardo argued that the case was stayed as to everyone because Blue Ocean remained a named party. He also argued that the stay should apply to him because he acted as Blue Ocean’s managing member and might be entitled to indemnification from Blue Ocean. Chase similarly argued that the claims against him were based on conduct as Blue Ocean’s agent and that the stay should extend to him. In the alternative, Chase argued that his motion to dismiss should be granted.

Court’s Action

The court stated that the parties had not agreed about whether the case should be stayed in its entirety. Because DiNardo continued to indicate that he would file for personal bankruptcy, the court said it would not resolve the parties’ dispute about the current reach of the automatic stay at that time.

The court directed DiNardo to submit a letter by April 10, 2023, stating whether he had filed for personal bankruptcy. It also directed DiNardo and Chase to submit by that date any agreements providing for indemnification—that is, reimbursement for liability—from Blue Ocean, for the court’s private review. The court further stated that Blue Ocean had time to submit bankruptcy documentation concerning its assets and liabilities and that the parties could notify the court if the filing remained deficient on April 10.

Regarding discovery, the court largely agreed with DiNardo’s position. After reviewing LawCash’s requests, it found that they were plainly directed to Blue Ocean rather than DiNardo. Because proceedings against Blue Ocean were stayed, the court did not order the requested discovery from DiNardo. The clerk was directed to terminate the pending motion at Docket 63. The order did not resolve DiNardo’s or Chase’s motions to dismiss on their merits.