I receive daily email of the hot court decisions of the day. In today’s email, I received a notice about a case of mine. The irony of this decision is that it is a Bankruptcy Court opinion in which I nominally represent the “Creditor”. In this case, I represent a pedestrian who was struck by a truck delivering newspapers. I filed a lawsuit in state court, and the driver of the truck filed bankruptcy, which paused my action in the state court. In fact, the state court judge issued an order staying not only the case against the driver, but the case against the company the driver was delivering newspapers for.
This issue arises fairly commonly. From time to time we will have a case where our nominal defendant files bankruptcy and has our court proceeding automatically stayed. In most cases, the filing of bankruptcy will protect the Debtor/Defendant from personal liability. As such, the fact that my defendant has filed bankruptcy will keep us from pursuing his personal assets or attaching his pay check. However, bankruptcy does not protect the Debtor’s insurance company, nor does it protect the Debtor’s employer.
As a result, the Judge issued the correct, and actually the obvious, ruling in this case. The lawsuit may proceed. We will be allowed to pursue the Debtor for the purpose of obtaining his insurance coverage and for the purpose of pursuing the “vicarious liability” claim (employers are responsible for the negligence of their employees, when committed within “the scope of their employment”). Since we were never interested in going after the driver personally, this result basically puts us back where we were before the bankruptcy was filed.
As such, it is possible to pursue these claims, even when the nominal defendant is bankrupt. However, there is a procedure in the bankruptcy court that has to be followed. Fortunately, since I am also a bankruptcy attorney, as well as an accident attorney, I was able to handle this myself, with no additional legal fee charged to the client. I have had cases in which I was representing the Debtor, where the Plaintiff in an accident case had to hire a bankruptcy attorney to obtain relief from stay so that the case could proceed.
Here is a link to the case. I have edited the blog to add a new link to a public source for people who do not have Pacer.