Estate of Tomi Kartchner v. County of Merced

[1] EASTERN DISTRICT OF CALIFORNIA [2] FRESNO DIVISION [3] 4 ESTATE OF TOMI KARTCHNER, et al., ) ) 5 Plaintiffs, ) ) 6 ) Case No. 1:23-cv-01672-KES-SKO ) 7 vs. ) ) 8 ) ) 9 COUNTY OF MERCED, et al., ) ) O SHR OD UE LR D T NO O S TH O BEW S C TA AU YS EE D WHY CASE 10 Defendants. ) ) (Doc. 59) 11 ) ) 12 ) ) ) 13 ) ) 14 ) 15 On November 19, 2024, Defendants California Medical Group DBA Wellpath, Saetern 16 Kao, Teresa Olvera, and Dylan Fulcher filed a “Notice of Stay” requesting the case against all 17 defendants be stayed during the pendency of Defendant Wellpath, LLC’s bankruptcy proceedings. 18 (Doc. 57). On November 20, 2024, the Court stayed Plaintiffs’ claims against Defendant Wellpath, 19 LLC pursuant to 11 U.S.C. § 362 (a), but declined to stay the claims against the non-debtor 20 defendants. (Doc. 58); see In re Miller, 262 B.R. 499 , 503–04 & n.6 (B.A.P. 9th Cir. 2001) (holding 21 that section 362(a) does not empower bankruptcy courts to stay proceedings against non-debtor 22 defendants); In re Silverman, 616 F.3d 1001 , 1005 n.1 (9th Cir. 2010) (holding that non-bankruptcy 23 courts should “treat the BAP’s decisions as persuasive authority given its special expertise in 24 bankruptcy issues and to promote uniformity of bankruptcy law throughout the Ninth Circuit”); see 25 also Acosta v. Valley Garlic, Inc., No. 116CV01156AWIEPG, 2017 WL 3641761 , at *1 (E.D. Cal. 26 Aug. 24, 2017), on reconsideration, No. 116CV01156AWIEPG, 2018 WL 288017 (E.D. Cal. Jan. 27 4, 2018) (citing In re Miller and declining to stay proceedings against non-debtor defendants). [28] 1 On November 25, 2024, Defendants filed an “Amended Notice of Stay,” again requesting 2 that the Court stay the proceedings in toto. (Doc. 59). Because the Court is persuaded by In re 3 Miller, it again declines to stay the case against the non-debtor defendants pursuant to 11 U.S.C. § 4 362(a). 5 However, district courts have the inherent power to stay a lawsuit. Landis v. N. Am. Co., [6] 299 U.S. 248 , 254–55 (1936). If an independent and related case is pending, in certain 7 circumstances federal courts may stay the instant suit while the independent proceeding moves 8 forward. Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 9 2007); Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 863 (9th Cir. 1979). 10 To determine whether a Landis stay is appropriate, courts weigh the following competing 11 interests: (1) whether there is a fair possibility that a stay will cause damage; (2) whether a party 12 may suffer hardship or inequity if a stay is not imposed; and (3) whether a stay will contribute to 13 the orderly course of justice. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). Additionally, 14 a Landis stay (4) cannot be imposed only for judicial economy and (5) cannot be indefinite and 15 result in undue delay. Dependable Highway Exp., Inc., 498 F.3d at 1066–67. A stay may be the 16 most efficient and fairest course when there are “independent proceedings which bear upon the 17 case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). 18 In light of the pending bankruptcy proceeding, is HEREBY ORDERED that, within 19 fourteen (14) days of service of this order, Plaintiffs shall show cause as to why the entire action 20 should not be stayed until the bankruptcy proceeding in the related case is resolved. Plaintiffs are 21 warned that an inadequate or lack of response may result in a recommendation to stay the action. [22] IT IS SO ORDERED. [23] 24 Dated: December 9, 2024 /s/ Sheila K. Oberto . UNITED STATES MAGISTRATE JUDGE