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Passport Health, Inc., A Maryland Corporation v. Travel Med

April 13, 2012

PASSPORT HEALTH, INC., A MARYLAND CORPORATION,
PLAINTIFF,
v.
TRAVEL MED, INC., A CALIFORNIA CORPORATION, AND GINA FLAHERTY, AN INDIVIDUAL,
DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER

Plaintiff filed a motion for post-judgment orders against Defendant Travel Med, Inc. ("Travel Med"), seeking:

An Order pursuant to Code of Civil Procedure section 699.040 that [Travel Med] shall turn over to PLAINTIFF all non-exempt personal property together with documentary and electronic evidence of title, including but not limited to [Travel Med's] customer list, business telephone number(s), . . . and [Travel Med's] business web address(es)

An Order pursuant to Code of Civil Procedure sections 708.510-708.560 directing [Travel Med] to assign to PLAINTIFF, or in the alternative to a Receiver, to the extent necessary to fully pay and satisfy the judgment with all accrued interest and post-judgment costs, the rights to any and all payments due or to become due to [Travel Med] including but not limited to from [Travel Med's] business operations at 4250 H Street, Suite 4, Sacramento, CA 95819, 850 Iron Point Road, Suite 150, Folsom, CA 95630 and 125 N. Lincoln Street, Suite I, Dixon, CA . . .

An Order pursuant to Code of Civil Procedure sections 564(b)(4) and 708.620 appointing a Post Judgment Receiver to take possession of [Travel Med's] business and any and all real and/or personal property owned by [Travel Med] either directly, indirectly, or beneficially (which are not exempt from execution), all for the purpose of having it lawfully liquidated and the proceeds applied to the satisfaction of the Judgment, and to have access to all books and records pertaining to [Travel Med's] business, all for the purpose of identifying and applying its assets toward satisfaction of the Judgment . . . .

An Order pursuant to Code of Civil Procedure sections 526 and 708.520(a) restraining [Travel Med] from assigning or otherwise disposing, through sale, transfer, conveyance, or encumbrance of all of [Travel Med's] property, assets and rights to payments pending satisfaction of the Judgment herein. (Pl.'s Mot. 1:23-2:23.) Travel Med opposes the motion, arguing "Plaintiff's motion must be denied in its entirety because Travel Med's sole shareholder, [Gina Flaherty], filed for bankruptcy on or about December 30, 2011 and an automatic stay bars [Plaintiff] from taking any further action[.]" (Def.'s Opp'n 1:24-26.) Further, Travel Med argues Plaintiff's requested turnover order is improper and broad; its requested assignment order for all payments is broad, vague, and ambiguous; and its requests for a receiver and a restraining order is unnecessary. Id. 2:3-16.

I. AUTOMATIC STAY

Travel Med argues "an automatic stay bars [Plaintiff] from taking any further action against [Travel Med] under 11 [U.S.C.] § 362 because protection of the automatic stay is extended to non-debtors where an action [against] a non-debtor might have a significant adverse impact upon the debtor." Id. 1:26-28. Plaintiff rejoins, arguing "the automatic stay [imposed because of Flaherty's] Chapter 7 filing does not extend to [Travel Med], despite the fact that [Travel Med] is wholly owned by Ms. Flaherty." (Pl.'s Reply 2:5-7.)

"The automatic stay of § 362(a)(1) prohibits the 'commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor . . . to recover a claim against the debtor that arose before the commencement of the case under this title.'" Zurich Am. Ins. Co. v. Trans Cal Assoc., No. CIV. 2:10-01957, 2011 WL 6329959, at *2 (E.D. Cal. Dec. 16, 2011) (quoting § 362(a)(1)). "In the absence of special circumstances, stays pursuant to [§] 362(a) are limited to debtors and do not include . . . non-bankrupt co-defendants." Ingersoll-Rand Fin. Corp. v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir. 1987). Here, "the entity defendant[] [has] not filed for bankruptcy, and so the claims against [it] are not automatically stayed by § 362(a)." Zurich Am. Ins. Co., 2011 WL 6329959, at *2; see also Queenie, Ltd. v. Nygard Int'l, 321 F.3d 282, 287 (2d Cir. 2003) ("[A] suit against a co-defendant is not automatically stayed by a debtor's bankruptcy filing.").

II. REQUESTED RELIEF

The execution of final judgments is governed by Federal Rule of Civil Procedure ("Rule") 69(a)(1), which states:

A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.

Therefore, "[p]ost-judgment enforcement proceedings in this court must comply with California law." Garden City Boxing Club, Inc. v. Briano, No. CIV-F-06-1270, 2007 WL 4463264, at *2 (E.D. Cal. Dec. 17, 2007) (citing Credit Suisse v. U.S. Dist. Court for Cent. Dist. of Cal., 130 F.3d 1342, 1344 (9th Cir. 1997); Hilao v. Estate of Marcos, 95 F.3d 848, 850 (9th Cir. 1996)). The California Code of Civil Procedure "provides procedures for the assignment of assets, issuance of restraining orders, and issuance of ...


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