Trustees Of The New York City District Council Of Carpenters Pension Fund v…
Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund v. Universal Developers, Inc.
- Analisa Torres
- 1:23-cv-01082
- U.S. District Court · Southern District of New York
- 2
In Trustees v. Universal Developers, Judge Torres stayed the case for all defendants and denied plaintiffs’ request for a conference and briefing schedule.
The entire action and all named defendants were covered by the stay, pausing further proceedings until further order of the court; the parties must continue providing periodic bankruptcy-status updates.
What happened
The case is Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund v. Universal Developers, Inc. Defendant Christopher Zigo filed for bankruptcy, which automatically paused the case against him. The other defendants asked the court to extend that pause to everyone, while the plaintiffs opposed the request and alternatively sought a conference and briefing schedule.
The court explained that bankruptcy usually does not automatically pause a case against a bankruptcy debtor’s codefendants. But it may do so when the claims against the other defendants could immediately harm the bankruptcy estate, including when the debtor and another defendant are so closely connected that the debtor is effectively the real party being sued. The court relied on the plaintiffs’ allegations that Zigo owned Universal Developers and Universal Fixture Installations and that the defendants were related as alter egos or successors.
Judge Analisa Torres granted the defendants’ request to stay the case for all defendants and ordered that the action remain paused until further order. She denied the plaintiffs’ request for a conference and briefing schedule. The parties must provide an update about the bankruptcy proceeding by August 28, 2023, and every sixty days afterward.
The detailed version
- Trustees Of The New York City District Council Of Carpenters Pension Fund v… · No. 1:23-cv-01082
- Analisa Torres
- June 29, 2023
Background
The court reviewed letters from the parties concerning defendant Christopher Zigo’s voluntary Chapter 13 bankruptcy petition filed in the Bankruptcy Court for the Eastern District of New York. Under 11 U.S.C. § 362, the bankruptcy filing automatically stayed—or paused—the action against Zigo.
Universal Developers, Inc., Universal Fixture Installations, Inc., and Zigo asked the court to apply the stay to all defendants. The plaintiffs opposed that request and alternatively asked the court to schedule a conference and briefing. The opinion does not describe the underlying claims in detail, but it refers to the plaintiffs’ allegations that the defendants were responsible for obligations under a collective bargaining agreement.
Court’s Analysis
The court explained that a bankruptcy filing ordinarily does not automatically stay claims against codefendants who are not debtors. However, a court may extend the stay to non-debtor codefendants when continuing the case against them would have an immediate adverse economic effect on the bankruptcy estate. One example is when the debtor and the other defendant are so closely connected that the debtor can be considered the real party being sued.
The court found the cited precedent applicable because the amended complaint alleged that Zigo owned Universal Developers and Universal Fixture Installations. The amended complaint also alleged that Universal Developers, Universal Fixture Installations, and Allied Millwork Installations LLC were alter egos or successors of one another, with substantially identical management, business purposes, operations, equipment, customers, supervision, and ownership. The court concluded that these allegations supported extending the stay because the non-debtor defendants were closely connected to Zigo and adjudicating the claims against them would have an immediate adverse economic impact on him.
Disposition
The court granted the defendants’ request to stay the case for all defendants. It ordered that the action be stayed until further order of the court. It denied the plaintiffs’ request for a conference and briefing schedule. The clerk was directed to stay the matter and terminate the motion at ECF No. 36. The parties were ordered to submit a status update about the pending bankruptcy proceeding by August 28, 2023, and every sixty days thereafter.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.