In re Cain, Case No. 13-04056-TOM-7
| Decision Date | 09 July 2014 |
| Docket Number | Case No. 13-04056-TOM-7 |
| Parties | In Re: TANITA M. CAIN, Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Alabama |
This case came before the Court on May 8, 2014, for an evidentiary hearing on the Motion for Relief from Stay ("Motion") to pursue insurance coverage filed by Derrick and Cassandra Roseman. Appearing before the Court were Anthony Piazza, counsel for movants Derrick and Cassandra Roseman; and debtor Tanita Cain, pro se. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b), 151, and 157(a) and the District Court's General Order Of Reference Dated July 16, 1984, As Amended July 17, 1984.1 This is a core proceeding arising under Title 11 of the United States Code as defined in 28 U.S.C. § 157(b)(2)(G).2 This Court has considered the pleadings, arguments of counsel, the testimony of Ms. Cain, and the law, and finds and concludes as follows.3
According to the Motion and Mr. Piazza's representations in open Court, his client, Derrick Roseman, was shot and seriously injured at a nightclub while he was attending a social event conducted by Ms. Cain either in an individual capacity or through her business, First Friday. Mr. Piazza contends that homeowners insurance policies may contain provisions covering injuries suffered by third parties away from the insured premises and therefore his clients5 should be entitled to relief from the stay to pursue any such coverage that Ms. Cain should have. Mr. Piazza states that he has not seen a copy of Ms. Cain's homeowners insurance policy, although he sought to obtain a copy through discovery in the underlying state court litigation against Ms. Cain and other defendants but that Ms. Cain filed her bankruptcy case before he obtained discovery responses.
Ms. Cain testified that her business, First Friday, used to have a social networking event on the first Friday of every month. With regard to the event at which Mr. Roseman was injured, she testified that she had been asked to hold the event at the nightclub, and that she did not plan the event but just brought her friends there. According to Ms. Cain, First Friday is an Alabama corporation with its own business address and bank account, and although the corporation has not been dissolved, it is no longer active.
The Motion was first heard by the Court on March 27, 2014. Mr. Piazza appeared before the Court at the appointed time but Ms. Cain did not appear until after the Court had already ruled thatrelief was due to be granted. Later that day Ms. Cain filed a Motion to Reconsider which was heard on April 10, 2014. It was at that hearing that Mr. Piazza first disclosed to the Court that the type of insurance he sought to pursue was Ms. Cain's homeowners insurance policy and not a business liability policy or policy covering the premises where the incident occurred. The parties were informed that an evidentiary hearing would be set and Mr. Piazza was instructed that he should be prepared at the evidentiary hearing to provide sufficient evidence to convince the Court that his Motion should be granted. At the May 8, 2014 evidentiary hearing, Mr. Piazza did not call any witnesses aside from Ms. Cain, and did not present any case law, form homeowners insurance policies, or other evidence to support his Motion. He was given an additional 14 days to obtain a copy of Ms. Cain's homeowners insurance policy via third-party subpoena in the pending state court case and submit a brief in support of his position; however, nothing was filed or submitted to the Court.
The filing of a petition for relief under any chapter of the Bankruptcy Code operates as a stay of certain actions. 11 U.S.C. § 362(a). Typically, the actions stayed are actions by creditors to recover from the debtor, property of the debtor, or property of the estate for a debt that arose prior to the petition date. Also stayed is the continuation of judicial proceedings against the debtor that were commenced before the bankruptcy filing. 11 U.S.C. § 362(a)(1). A party in interest may obtain relief from this automatic stay under the provisions of 11 U.S.C. § 362(d). Subsection (1) of § 362(d) provides that the court shall grant relief from the stay upon a showing of "cause" including (but not limited to) the lack of adequate protection of an interest in property. Subsection (2) of § 362(d) provides that the court shall grant relief from the stay of an act against property of the debtoror of the estate if the debtor does not have equity in the property and the property is not necessary to an effective reorganization. Since the Rosemans are only seeking relief to pursue insurance coverage, and not property of the debtor or the estate, subsection (2) is not applicable in this case. Subsection (3) of § 362(d) applies only in single asset commercial real estate cases and, therefore, is also not applicable in this case.
The movant must carry the initial burden of establishing a prima facie case for relief before the debtor is required to go forward with his or her proof. Sonnax Industries, Inc., v. Tri Componetry Products Corp. (In re Sonnax Industries, Inc.), 907 F.2d 1280 (2nd Cir. 1990); see also In re Marvin Johnson's Auto Service, Inc., 192 B.R. 1008 (Bankr. N.D. Ala. 1996). The debtor has the burden of proof on all other issues. 11 U.S.C. § 362(g)(2).
According to 11 U.S.C. § 362(d)(1), the court shall grant relief from the stay upon a showing of "cause" including the lack of adequate protection of movant's interest in property. Cause to lift the stay may also be found "when necessary to permit litigation to be concluded in another forum, particularly if the nonbankruptcy suit involved multiple parties or is ready for trial." 3 Collier on Bankruptcy ¶ 362.07[3] at 362-84 (). See also In re Cummings, 221 B.R. 814, 818 (Bankr. N.D. Ala. 1998). However, when determining whether stay relief should be granted on this basis, a bankruptcy court must also keep an eye on another pertinent issue - whether or not any debt resulting from the litigation will be dischargeable in the bankruptcy case. Even if relief from stay is granted to pursue litigation in another forum, any liability of the debtor resulting from the litigation will be discharged unless the debt falls within one of the exceptions to discharge. See In re Salisbury, 123 B.R. 913, 915 (Bankr. S.D. Ala. 1990) (); see also Cummings, 221 B.R. at 827 ().
The Rosemans are seeking to litigate in another forum only to the extent that Ms. Cain has homeowners insurance that would cover liability, if any, that Ms. Cain may have for Mr. Roseman's injury.6 Homeowners insurance policies may provide coverage for injuries that occurred away from the insured's home. See Crossett v. St. Louis Fire and Marine Ins. Co., 269 So. 2d 869 (Ala. 1972). However, such policies may exclude injuries arising from business pursuits. See Woodall v. Alfa Mutual Ins. Co., 658 So. 2d 369 (Ala. 1995).
Mr. Piazza has not presented sufficient evidence for this Court to determine that cause exists to lift the automatic stay to allow his clients to pursue Ms. Cain's homeowners insurance coverage. His Motion does not reflect that he intends to pursue homeowners insurance coverage, nor does it reflect that he cannot be sure whether Ms. Cain even...
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