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Excelsior College v. Frye

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


January 10, 2007

EXCELSIOR COLLEGE, PLAINTIFF,
v.
CHARLES M. FRYE AND PROFESSIONAL DEVELOPMENT SYSTEMS SCHOOL OF HEALTH SCIENCES, A CALIFORNIA CORPORATION, DEFENDANTS.

The opinion of the court was delivered by: Hayes, Judge

ORDER

The matters before the Court are: 1) the Motion to extend the stay of all further proceedings to co-Defendants filed by Defendant Charles M. Frye (# 378); 2) the Ex Parte application by Defendant Charles M. Frye for an order shortening time (#385); 3) the Motion for a new trial and other relief by Defendant Charles M. Frye (# 386); 4) the Motion to reduce damages and provide other relief by Defendant Charles M. Frye (# 387); and 5) the Motion to conduct limited post-trial discovery by Defendant Charles M. Frye (# 388).

On November 14, 2006, the jury returned a verdict against Defendant Charles M. Frye and Defendant Professional Development Systems School of Health Sciences. The Court ordered Plaintiff to prepare a proposed judgment and allowed Defendants time to file objections to the proposed judgment.

On November 27, 2006, Defendant Charles M. Frye filed a Notice of Chapter 7 Bankruptcy Filing which states in part:

Defendant Frye ... filed a Petition with the United States Bankruptcy Court, Central District of California, on November 22, 2006. Attached hereto as Exhibit 1 is a copy of said three-page Petition. Pursuant to Section 362 of Title 11, Chapter 3, Subchapter IV of the United States Code, the filing of said Petition "operates as a stay ... of the ... continuation ... of a judicial ... action or proceeding against the debtor that was ... commenced before the commencement of the case under this title...". Therefore the Court is respectfully requested to stay any further proceedings in the instant action until said bankruptcy matter is addressed.

Notice of Chapter 7 Bankruptcy Filing, Docket No 378.

Defendant Frye moves the court to extend the stay of all further proceedings to co-defendants Professional Development Systems School of Health Sciences and West Haven University on the grounds that the Court has ruled that there is alter ego liability of Frye for the acts of those Defendants. Plaintiff opposes extending the stay to all co-defendants. Defendant Frye contends that the co-defendants are not represented by Defendant Frye and that Defendant Frye cannot make a motion seeking relief on behalf of the co-defendants. Plaintiff contends that the automatic stay triggered by a bankruptcy petition does not halt proceedings against the co-defendants and there are no grounds to extend the stay in this case.

RULING OF THE COURT

The Court finds that Defendant Frye has no standing to move for a stay of these proceedings on behalf of co-defendants. The automatic stay pursuant to Section 362(a)(1) applies only to the debtor filing bankruptcy proceedings and not to non-bankrupt co-defendants. Cohen v. Stratosphere Corp., 115 F.3d 695, 697 (9th Cir, 1997); Matter of Lockard , 884 F.2d 1171, 1179 (9th Cir. 1989). Pursuant to Section 362(a)(1) this action is stayed only as to Defendant Charles M. Frye.

IT IS HEREBY ORDERED that the action is stayed only as to Defendant Charles M. Frye until further order of this Court. The parties shall file a report in this matter every 60 days notifying the Court of the status of the bankruptcy proceedings. Plaintiff is entitled to move for a partial judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.

IT IS FURTHER ORDERED that 1) the Motion to extend the stay of all further proceedings to co-defendants filed by Defendant Charles M. Frye (# 378) is denied; 2) the Ex Parte application by Defendant Charles M. Frye for an order shortening time (#385) is denied; 3) the Motion for a new trial and other relief by Defendant Charles M. Frye (# 386) is denied; 4) the Motion to reduce damages and provide other relief by Defendant Charles M. Frye (# 387) is denied; and 5) the Motion to conduct limited post-trial discovery by Defendant Charles M. Frye (# 388) is denied.

WILLIAM Q. HAYES United States District Judge

20070110

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