Metro Bulletins Corp. v. Soboleski, 11047

Decision Date22 April 1993
Docket NumberNo. 11047,11047
Citation620 A.2d 1314,30 Conn.App. 493
CourtConnecticut Court of Appeals

Frank C. White, Jr., Middletown, for appellant (defendant).

Stephen G. Silverberg, East Hartford, for appellee (plaintiff).



The defendant appeals from a judgment, rendered after a court trial, awarding $9400 to the plaintiff. The defendant claims that the trial court (1) improperly denied his motion for a stay, (2) improperly construed the Connecticut Certificate of Trade Name statute, and (3) should have found that the defendant gave the plaintiff actual notice of the defendant's agency status. We reverse the judgment of the trial court.

The following facts are necessary to resolve this appeal. On April 22, 1989, the plaintiff entered into a written contract whereby it agreed to provide billboard advertising services to a business known as Prime Pontiac for a six month period. The name "Prime Pontiac" was written on the contract on the line reserved for the name of the contracting firm. Below that line, the defendant, Louis Soboleski, president of Prime Pontiac, signed his name on behalf of Prime Pontiac. Immediately following his signature, in the area reserved for the signer's title, the defendant wrote, in an illegible script, what appears to be a word beginning with the letter P.

At the time of contracting, Bridgeside Pontiac, Inc. (Bridgeside), was a Connecticut corporation in good standing and was doing business as Prime Pontiac. In compliance with General Statutes § 35-1, 1 Bridgeside's status had been disclosed in a certificate of trade name, executed and filed in the Middletown town clerk's office by the defendant in his capacity as president of Bridgeside.

On January 23, 1991, the plaintiff commenced this action for the unpaid balance owed on the contract. The complaint named the defendant as "Louis Soboleski doing business as Prime Pontiac." On January 31, 1991, Bridgeside filed a Chapter 11 bankruptcy petition listing the plaintiff as an unsecured creditor. Approximately one week later, the defendant filed a notice, in the present case, of Bridgeside's bankruptcy filing. The defendant pleaded as a special defense, that Bridgeside doing business as Prime Pontiac was the proper defendant in the action and that Bridgeside had filed for bankruptcy.

On August 20, 1991, the defendant filed a motion to stay the proceedings due to Bridgeside's Chapter 11 bankruptcy. The motion requested the court to "acknowledge and enforce the automatic stay...." The trial court denied the motion and referred the case to a fact finder who recommended judgment for the plaintiff for $9400. The trial court rendered judgment in accordance with the fact finder's report and recommendations. The defendant appealed.


We first consider the threshold question of whether the automatic stay provision of the federal bankruptcy law, 11 U.S.C. § 362, 2 is available to the defendant. Unlike Bridgeside, which is a debtor in the bankruptcy proceeding, the defendant is a nondebtor. As a general rule, the filing of a Chapter 11 bankruptcy petition does not enjoin litigation against nondebtors. G. Ishii-Chang, "Litigation and Bankruptcy: The Dilemma of the Codefendant Stay," 63 Am.Bank.L.J. 257 (1989). A number of courts have issued blanket prohibitions on the application of the stay to any nondebtor regardless of its relationship to the debtor and the effect of the action sought to be stayed. See, e.g., Fortier v. Dona Anna Plaza Partners, 747 F.2d 1324, 1329-30 (10th Cir.1984); Lynch v. Johns-Manville Sales Corporation, 710 F.2d 1194, 1196-97 (6th Cir.1983); Austin v. Unarco Industries, Inc., 705 F.2d 1, 4-5 (1st Cir.), cert. denied, 463 U.S. 1247, 104 S.Ct. 34, 77 L.Ed.2d 1454 (1983); Pitts v. Unarco Industries, Inc., 698 F.2d 313, 314 (7th Cir.1983); In re Kelton Motors, Inc., 121 B.R. 166, 193 (Bankr.D.Vt.1990).

There is, however, limited authority for extending the stay to a nondebtor in special circumstances. See A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994 (4th Cir.), cert denied, 479 U.S. 876, 107 S.Ct. 251, 93 L.Ed.2d 177 (1986). Here, the defendant claims the benefit of the stay, asserting that he has an identity of interest with the debtor. 3 He contends that a judgment against him is, in effect, a judgment against the bankrupt debtor. A sufficient identity of interest has been recognized as satisfying the special circumstances requirement. See id.

Before the merits of the defendant's identity of interest argument can be reached, however, we must determine the procedure by which the nondebtor may obtain the stay. Despite a split of authority, the weight of the case law indicates that a nondebtor, seeking to extend the stay beyond the debtor, must move for the extension in the bankruptcy court. See, e.g., Ingersoll-Rand Financial Corporation v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir.1987); Federal Land Bank of Spokane v. Stiles, 700 F.Supp. 1060, 1063 (D.Mont.1988); B and B Associates v. Fonner, 700 F.Supp. 7 (S.D.N.Y.1988); Rhode Island Hospital Trust National Bank v. Dube, 136 F.R.D. 37, 39 (D.R.I.1990); In re Codfish Corporation, 97 B.R. 132 (Bankr.D.Puerto Rico 1988); In re All Seasons Resorts, Inc., 79 B.R. 901, 903 (Bankr.C.D.Cal.1987); In re MacDonald/Associates, Inc., 54 B.R. 865, 867 (Bankr.D.R.I.1985); In re Precision Colors, Inc., 36 B.R. 429, 431 (Bankr.S.D.Ohio 1984); W.W. Gay Mechanical Contractor, Inc. v. Wharfside Two, Ltd., 545 So.2d 1348, 1350 (Fla.1989); Collier v. Eagle-Picher Industries, Inc., 86 Md.App. 38, 48, 585 A.2d 256, cert. denied sub nom. Corhart Refractories Co. v. Collier, 323 Md. 33, 591 A.2d 249 (1991).

In the present case, the defendant did not file for an extension of the automatic stay in the bankruptcy court. Instead, he proceeded by motion in our state trial court. We believe that the cases requiring filing of the motion for an extension of the stay in the bankruptcy court represent the better reasoning. This is because "[i]t is fundamental under federal bankruptcy law that the automatic stay operates for the benefit of the debtor and trustee only, and gives other parties interested in property affected by the automatic stay no substantive or procedural rights." (Citations omitted; internal quotation marks omitted.) Shorr v. Kind, 1 Cal.App.4th 249, 258, 2 Cal.Rptr.2d 192 (1991). Only the bankruptcy court has the entire picture before it. It would be difficult, if not impossible, for a state trial court, which has only the immediate case before it, to determine the best interests of the bankruptcy estate. Accordingly, because the defendant, as a nondebtor, did not apply for an extension of the automatic stay in the bankruptcy court, we affirm the trial court's denial of the defendant's motion to stay. 4


We turn next to the defendant's claim that General Statutes § 35-1 is a notice statute and, as a result, the plaintiff had constructive notice that Bridgeside was the proper defendant. The fact finder found "that at the time this contract was executed, Bridgeside Pontiac, Inc., did business as Prime Pontiac pursuant to a trade name certificate filed with the town clerk of Middletown, Connecticut." He further found "that the certificate would reasonably apprise a creditor that a corporation was doing business as Prime Pontiac, and that the true corporate name could reasonably be inferred...." Notwithstanding these findings, the fact finder gave no effect to the statute and made his recommendations according to the usual common law rules of agency.

There are two possible purposes that § 35-1 might serve. First, it could be intended to protect a trade name from use by competitors, similar to the protection afforded authors and composers by the federal copyright statutes, or, second, it could be intended to benefit the public in general and creditors in particular by disclosing the true name and address of the person behind a trade name.

The general rule is that "[t]he object or purpose of statutes which regulate the doing of business under a fictitious or assumed name is ... to protect the public by giving notice or information as to the person with whom they deal, and to afford protection against fraud and deceit." (Emphasis added.) 57 Am.Jur.2d, Names § 66. Our Supreme Court has recognized this rule as the purpose behind Connecticut's trade name statute by enunciating that "its object is to enable a person dealing with another trading under a name not his own, to know the man behind the name, that he may know or make inquiry as to his business character or financial responsibility...." DiBiase v. Garnsey, 103 Conn. 21, 27, 130 A. 81 (1925). The mandated disclosure is "intended for the protection of creditors...." Wofsey v. New York & Stamford R. Co., 106 Conn. 254, 258, 138 A. 136 (1927).

In this respect, § 35-1 differs from the statutes governing trademarks and service marks, which are designed to give their owners protection from infringement or unauthorized use. See General Statutes § 35-11a et seq. If a trade or service mark owner elects not to register the mark, the only risk is exposure to use of the mark by a competitor. This contrasts sharply with the risks posed by the failure to file a certificate of trade name. Section 35-1 provides two substantial penalties for noncompliance. First, a failure to comply shall be deemed to constitute an unfair or deceptive practice under § 42-110b(a) of the Connecticut Unfair Trade Practices Act (CUTPA). As a result, a defendant faces the full range of civil penalties and liabilities applicable to a CUTPA violation. Second, the defendant may be criminally prosecuted and imprisoned for as long as one year and fined up to $500. From this we conclude that, even though as an incidental...

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