In re Bank Center, Ltd., Bankruptcy No. 81-1424

• Citation: 15 BR 64
• Decision Date: 14 October 1981
• Docket Number: Bankruptcy No. 81-1424,Adv. No. 81-939.
• Parties: In re The BANK CENTER, LTD., a Pennsylvania Limited Partnership, Debtor. The BANK CENTER, LTD., a Pennsylvania Limited Partnership, Plaintiff, v. Robert A. PAPARIELLA, t/d/b/a Consultants International, an individual, Defendant.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania

15 B.R. 64 (1981)

In re The BANK CENTER, LTD., a Pennsylvania Limited Partnership, Debtor The BANK CENTER, LTD., a Pennsylvania Limited Partnership, Plaintiff, v. Robert A. PAPARIELLA, t/d/b/a Consultants International, an individual, Defendant.

Bankruptcy No. 81-1424, Adv. No. 81-939.

United States Bankruptcy Court, W.D. Pennsylvania.

October 14, 1981.

Russell J. Ober, Pittsburgh, Pa., for defendant.

Philip E. Beard, Pittsburgh, Pa., for debtor/plaintiff.

MEMORANDUM OPINION

JOSEPH L. COSETTI, Bankruptcy Judge.

HISTORY OF THE CASE

On May 29, 1981, the Debtor filed a Petition for Reorganization under Chapter 11 of the Bankruptcy Code. On June 8, 1981, the Debtor filed this action seeking to enjoin the Defendant from confirming a judgment on an arbitration award at G.D. 81-12283 in the Court of Common Pleas of Allegheny County. The Defendant had received an award against the Debtor from a panel of arbitrators on April 27, 1981. Before the Defendant could confirm the arbitration award and enter judgment, this Bankruptcy was filed staying all actions against the Debtor pursuant to Section 362 of the Bankruptcy Code. The Defendant then sought to file in the Common Pleas Court of Allegheny County a Motion for Leave to Amend Motion to Confirm Arbitration Award and for Entry of Judgment and to Amend Caption in order to have the arbitration award confirmed to judgment against Seach Development Company and Hardy Enterprises, Inc., the general partners of the Debtor who have not filed petitions in Bankruptcy. A hearing was held in Common Pleas Court and the Judge refused to proceed on Defendant's Motion based on Debtor's assertions that to do so would violate the provisions of the automatic stay.

The Complaint that is before this Court asks merely that the Defendant be enjoined from further proceedings in G.D. 81-12283 because such action would violate the provisions of Section 362. At a first pretrial hearing on this matter which was held on August 5, 1981, it became apparent that the real issue in this case is whether an action solely against the partners would be a violation of the automatic stay provisions of Section 362 when the partnership has filed bankruptcy but not the partners.

The Defendant submitted a Memorandum of Law prior to the August 5, 1981. The Defendant also submitted a Supplemental Memorandum of Law. The Court requested a brief from the Debtor by August 25, 1981, but the Debtor has not submitted a brief.

CONCLUSIONS OF LAW

The Court withdraws its Order issued in this case on June 8, 1981. In that Order the Court enjoined the Defendant from taking any action whatsoever with regard to G.D. 81-12283. The Court specifically limits that Order to prohibit the Defendant from taking any action in G.D. 81-12283 with regard to the partnership The Bank Center, Ltd., the Debtor in this case.

The Court concludes that the Automatic Stay provisions of Section 362 do not apply to the actions against the partners of the Debtor. A partner is a separate entity from the partnership. See In re Ginsberg, 219 F.2d 472 (3rd Cir. 1955).

In a recent case involving the use of the automatic stay under the same circumstances as are presented here, a Bankruptcy Court declined to enjoin law suits which were brought against the individual partners of the partnership. On appeal the District Court upheld the finding of the Bankruptcy Court.

This Court sees no reason why the distinct existence of the partnership and its partners should be disregarded in the instant context. This court may stay suits against the Debtor\'s property, not that of the individual partners of the Debtor. It is, of course, true that execution upon the judgment against Edward and Louis Aboussie may impair their ability to contribute funds to the Debtor. Adverse effect upon the Debtor, alone, however is not sufficient justification for the exercise of jurisdiction over the property of the partners. Parkview-Gem Inc. v. Stein, 516 F.2d 807 (8th Cir. 1975); In Re Adolf Gobel, Inc., 80 F.2d 849 (1936); In Re Magnus Harmonica Corporation, 233 F.2d 803 (3rd Cir. 1956); McGinnis Lumber Co., Inc. v. Belser, 385 F.Supp. 390 (D.S.C.1974). In Re Aboussie Bros. Const. Co., 8 B.R. 302 (E.D.M.1981).

In the Magnus Harmonica case, the corporation was in a reorganization proceeding under the Bankruptcy Act. Officers of the corporation had individually guaranteed some of the debts of the corporation and these officers were being sued in state court proceedings. The Third Circuit refused to enjoin those lawsuits, stating:

It may be granted that this suit against the Magnus defendants may have an indirect

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