Lone Wolfe Natural Resource Services Inc. v. Johnson

555 B.R. 537, 2016 WL 1084235, 2016 U.S. Dist. LEXIS 35653
CourtDistrict Court, S.D. West Virginia
DecidedMarch 18, 2016
DocketCIVIL ACTION NO. 2:16-cv-1701
StatusPublished

This text of 555 B.R. 537 (Lone Wolfe Natural Resource Services Inc. v. Johnson) is published on Counsel Stack Legal Research, covering District Court, S.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lone Wolfe Natural Resource Services Inc. v. Johnson, 555 B.R. 537, 2016 WL 1084235, 2016 U.S. Dist. LEXIS 35653 (S.D.W. Va. 2016).

Opinion

MEMORANDUM OPINION & ORDER

JOSEPH R. GOODWIN, UNITED STATES DISTRICT JUDGE

Pending before the court is the Combined Motion to Dismiss & Memorandum of Law in Support [ECF No. 3] (“Motion”) filed by the defendant, Arley Johnson.1 The plaintiff, Lone Wolfe Natural Resource Services Inc. (“Lone Wolfe”), did not file a timely response, making the Motion ripe for adjudication. However, for reasons discussed below, the court concludes this case should be STAYED pending the conclusion of the related bankruptcy proceedings. Because these proceedings are stayed, the court DENIES the Motion.

I. Background

Lone Wolfe alleges that, in 2013, it entered into a construction agreement with Brooks ■ Run Mining Company LLC (“Brooks Run”). Lone Wolfe agreed to provide construction services at Brooks Run’s Sumter Mine near Erbacon, West Virginia. And among other things, the parties’ agreement “provided for some work under the said construction work to be paid for by Brooks Run to Lone Wolfe on an hourly basis as work was performed,” “included penalties should the work not be completed within specified time periods,” “included provisions excusing penalties for delays in the construction schedule caused by foul weather,” and “provided for billings by Lone Wolfe to Brooks Run and payments by Brooks Run to Lone Wolfe on intervals of every other week.” Compl. ¶¶7-10 [ECF No. 1-1]. Lone Wolfe commenced work under the construction agreement in 2014.

In February 2015, Lone Wolfe submitted an invoice to Brooks Run. Thomas Turpin, Lone Wolfe’s manager of the Sumter Mine project, discussed the invoice with Johnson, According to Lone Wolfe, Johnson — an employee of Maxxim Shared Services LLC2 — “had the authority to authorize payment of Lone Wolfe’s billings and failed or refused to authorize payment of the said invoice.” Compl. ¶ 13. During the discussion, “Johnson suggested that Lone Wolfe reduce the amount billed to Brooks Run during the month of February 2015 and increase the bill for January 2015 by the amount of the reduction from the December billing.” Id. ¶ 11. After Lone Wolfe adjusted its invoices per Johnson’s suggestion, Johnson rejected the invoices. In a subsequent conversation about the rejected invoices, “Johnson admitted that Lone Wolfe was owed $91,655.90 of the amount claimed by Lone Wolfe.” Id. ¶ 14.

Through the end of 2014 and into spring of 2015, “the weather was unusually wet and rainy,” which would permit “exceptions from the construction schedule for foul weather.” Compl. ¶ 16. Lone Wolfe continued construction — under objection— at the urging of Johnson. Around the same time, Johnson was also “giving specific directions for work to be performed by Lone Wolfe’s agents and employees in a particular manner and sequence.” Id. [539]*539¶20. Nevertheless, “Johnson failed and refused to authorize payments to Lone Wolfe.” Id. ¶ 18.

In early 2015, as the Sumter Mine project neared its end and Lone Wolfe continued its efforts, Johnson hired another contractor to perform work Lone Wolfe had agreed to perform. The presence of the second contractor interfered with Lone Wolfe’s work schedules and efforts, “caus[ing] Lone Wolfe to not be able to complete the work required by the construction contract.” Compl. ¶ 25.

On May 19, 2015, Brooks Run filed suit in the Circuit Court of Webster County, West Virginia, alleging Lone Wolfe breached an agreement and certain warranties related to the construction of a roadway. Compl., Brooks Run Mining Co., LLC v. Lone Wolfe Nat. Res. Servs., Inc., No. 15-C-16 (W.Va.Cir.Ct. May 19, 2015) [ECF No. 3-1, at 4-6].3 However, Brooks Run filed for bankruptcy on August 3, 2015, resulting in an automatic stay of the state court proceedings. Order, Brooks Run Mining Co., LLC v. Lone Wolfe Nat. Res. Servs., Inc., No. 15-C-16 (W.Va.Cir.Ct. Aug. 20, 2015) [ECF No. 3-1, at 1]; Notice of Commencement of Chapter 11 Cases & Meeting of Creditors, In re Alpha Nat. Res., Inc., No. 15-33896 (Bankr.E.D.Va. Aug. 14, 2015) (“Notice”).4

On November 2, 2015 — after the automatic stay took effect — Lone Wolfe filed a proof of claim against Brooks Run in the United States Bankruptcy Court for the Eastern District of Virginia.5 In the proof of claim, Lone Wolfe claims it is owed $141,606.10 for “construction of mine road.” Claim No. 1130, In re Brooks Run Mining Co., LLC, No. 15-34016 (Bankr.E.D.Va. Nov. 2, 2015) [ECF No. 1-3].6

Lone Wolfe then filed its Complaint in the Circuit Court of Nicholas County, West Virginia, on January 15, 2016. The Complaint does not name Brooks Run as a defendant; the sole defendant is Johnson. In the Complaint, Lone Wolfe alleges Johnson’s actions were done “with malice toward Lone Wolfe and constitute tortious interference by Johnson with Lone Wolfe’s construction agreement contract with Brooks Run.” Compl. ¶ 26.

On February 18, 2016, Johnson filed a Notice of Removal [ECF No. 1], removing this case to the United States District Court for the Southern District of West Virginia and invoking the court’s bankruptcy jurisdiction under 28 U.S.C. § 1334. On the same day, Johnson filed his Motion, seeking dismissal of the plaintiff’s Complaint on various grounds.

II. Jurisdiction

Despite the lack of diversity7 and [540]*540the absence of a federal question,8 Johnson claims this court has jurisdiction over this case pursuant to 28 U.S.C. § 1334 because this case is related to bankruptcy proceedings. Specifically, Johnson claims Maxx-im — -whose chapter 11 case is being jointly administered with Brooks Run’s chapter 11 case — “has agreed to indemnify [him] in regard to this action.” Notice of Removal ¶ 23. This case, Johnson argues, is related to the bankruptcy proceedings because he is entitled to indemnification from a debtor (i.e., Maxxim) if he is found liable in this case. This connection to the bankruptcy proceedings, the court concludes, is enough to vest this court with jurisdiction.

III. Discussion

The filing of a bankruptcy petition automatically stays any proceeding “against the debtor that was or could have been commenced before the commencement of the [bankruptcy proceedings].” 11 U.S.C. § 362(a)(1).9 Generally, an automatic stay only applies to proceedings against the debtor, “not third party defendants or codefendants.” A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir.1986). But a narrow exception expands the application of an automatic stay to cases involving “unusual circumstances.” Id. These circumstances arise “when there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor.” Id.

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Related

A.H. Robins Co. v. Piccinin
788 F.2d 994 (Fourth Circuit, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
555 B.R. 537, 2016 WL 1084235, 2016 U.S. Dist. LEXIS 35653, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lone-wolfe-natural-resource-services-inc-v-johnson-wvsd-2016.