MISHIYEV
v.
CIERRA
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The court held that counterclaims asserted against a debtor are automatically stayed by the bankruptcy filing, while the debtor's own claims and counterclaims against non-debtors are not stayed.
A Chapter 7 Trustee was substituted for a debtor who had filed for bankruptcy and was also controlling litigation for a wholly owned LLC. The court ad…
The full statement of facts, procedural history, and disposition for this case are member content.
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ELISEO CIERRA and IHEARTMEDIA INC.,
Defendants. /
ORDER1
Erik Mishiyev filed for Chapter 7 bankruptcy and Beth Ann Scharrer, as Chapter 7 Trustee, has been substituted in his place. She is also controlling the litigation positions of Short-E LLC, which is wholly owned by Mishiyev. Given this, the Court directed the parties to state their positions on what impact (if any) the automatic stay has on the counterclaims asserted against Plaintiffs. (Doc. 46, Doc. 59, Doc. 63). The parties responded. (Doc. 58, Doc. 65)
1180 (11th Cir. 2017) (en banc). The stay, however, would usually apply to Defendants’ counterclaims—as those are against a debtor. Koolik v. Markowitz, 40 F. 3d 567, 568 (2d Cir. 1994) (“Thus, an answer that asserts a counterclaim against a plaintiff who becomes a bankruptcy debtor is an ‘action or proceeding against the debtor’ within the meaning of § 362(a)(1), notwithstanding the fact that the plaintiff initiated the lawsuit.”); Parker v. Bain, 68 F. 3d 1131, 1137 (9th Cir. 1995); Vasile v. Dean Witter Reynolds, 20 F. Supp. 2d 465, 499 (E.D.N.Y. 1998).
Because Mishiyev has filed for bankruptcy, the counterclaims asserted against him were automatically stayed under § 362(a). The automatic stay does not apply to Plaintiffs’ claims, nor does it apply to Defendants’ counterclaims against Short-E, which will proceed.
Accordingly, it is now ORDERED: 1. Defendants’ counterclaims against Erik Mishiyev (Doc. 40) are STAYED. Plaintiffs must notify the Court, in writing, within seven (7) days of the bankruptcy proceedings concluding.
2. The Clerk is directed to add a stay flag to the file.
3. Plaintiffs must provide the Court with a status update on the bankruptcy proceedings by March1, 2022, and every ninety days thereafter. DONE and ORDERED in Fort Myers, Florida on December1, 2021.
UNITED STATES DISTRICT JUDGE
Copies: All Parties of Record
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