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Richard Parmeley and Sara v. Fleetwood Homes

May 29, 2012

RICHARD PARMELEY AND SARA PARMELEY, INDIVIDUALLY, AND SARA PARMELEY, AS MOTHER AND NEXT FRIEND OF LANDON PARMELEY, A MINOR, PLAINTIFFS,
v.
FLEETWOOD HOMES, INC., A CAVCO COMPANY, FLEETWOOD ENTERPRISES, INC., AND MT. VERNON DREAM HOMES/FREEDOM HOMES-MT. VERNON, DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM & ORDER

This matter comes before the Court on the plaintiffs' Richard Parmeley and Sara Parmeley (in her individual capacity and as next friend of Landon Parmeley, a minor) (hereinafter "Parmeley"), Motion to Remand (Doc. 10) and memorandum in support (Doc. 11). Defendant CMH Homes (improperly named as "Mt Vernon Dream Homes/Freedom Homes-Mt. Vernon, and hereinafter "CMH") has filed a response in opposition (Doc. 14).

Background

Parmeley filed this action in the Second Judicial Circuit Court in the county of Jefferson, Illinois on January 17, 2012 (Doc. 2). The suit was filed against three defendants, Fleetwood Homes, Inc., Fleetwood Enterprises, Inc., and Mt. Vernon Dream Homes (CMH). For jurisdictional purposes, CMH is a citizen of Tennessee, Fleetwood Homes, Inc. is a citizen of Delaware and Arizona, and Fleetwood Enterprises, Inc. is a citizen of Delaware and California.

There is no disagreement over the citizenship of the defendants. The plaintiffs are all citizens of Illinois.

Parmeley's complaint stated fifteen counts based upon negligence, products liability, and breach of contract. In support of these counts, Parmeley alleged they purchased a manufactured home on May 22, 2009 from CMH. The home was delivered and installed by employees of Fleetwood Homes, Inc. and/or CMH in August of 2009. In January of 2010, Richard and Sarah Parmeley noticed the block foundation for the home was wet and two days later an employee of Fleetwood Homes, Inc., and/or CMH came to the home. The employee determined there was a supply line leaking in the utility room and tightened the fittings on that line. On May 22, 2010, the Parmeleys then saw water leaking on the floor in the master bathroom where the bath tub meets the wall along the baseboards, under the walls into the kitchen and laundry room. The same day, an employee of Fleetwood Homes, Inc., and/or CMH came to the home, removed a panel from the wall and determined a pipe to the shower was leaking. The pipe also caused damage throughout the home and had caused mold to grow behind walls located in the master bathroom, laundry room, and kitchen. At this time, Sara and Richard Parmeley were sneezing and had congestion with scratchy throats from the mold and Landon Parmeley developed respiratory problems which required medical treatment. The Parmeleys seek "in excess of fifty-thousand dollars" in compensation.

CMH was served on February 10, 2012. Fleetwood Homes was served on February 21, 2012 and did not return the service of process until March 15, 2012. Fleetwood Enterprises has not been served in this case. CMH filed a Notice of Removal on March 2, 2012 (Doc. 2). In the notice, CMH alleges complete diversity and that the amount in controversy will exceed seventy-five thousand dollars. Parmeley then filed a motion to remand (Doc. 10). In his motion, Parmeley alleges CMH has not proven the amount in controversy will exceed seventy-five thousand dollars and that the notice of removal was improper because all the defendants did not consent. CMH argues that the notice was proper because the other two defendants had not filed a return of service and did not do so before the removal period ran. It further argues Parmeley did not properly serve Fleetwood Homes and therefore CMH was not required to get its consent. Finally, CMH states Fleetwood Enterprises is in Chapter 11 Bankruptcy.

Analysis

A. Fleetwood Enterprises Bankruptcy

CMH informs the Court that Fleetwood Enterprises entered bankruptcy. CMH goes on to discuss the relationship between Fleetwood Enterprises and Fleetwood Homes. Fleetwood Homes allegedly purchased the assets of Fleetwood Enterprises upon Fleetwood Enterprises' filing of bankruptcy. CMH argues that because Fleetwood Homes purchased the assets "free and clear of all claims and liens," CMH was not allowed to contact Fleetwood Homes because the suit against it is invalid. The Court will address the impact of Fleetwood Enterprises' bankruptcy but will not address the claim Fleetwood Homes is immune from suit. Fleetwood Homes itself may assert that in a Motion to Dismiss but it is inappropriate for a Motion to Remand. The Court finds no merit to the argument CMH could not contact Fleetwood Homes without violating the Bankruptcy Court's Order the purchase was made free of all claims. CMH was not making a claim against Fleetwood Homes but rather would have been communicating about a claim a separate party (Parmeley) made against both of them.

The filing of a bankruptcy petition imposes an automatic stay under section 362 of the Bankruptcy Code. 11 U.S.C. § 362. This automatic stay applies to the party in bankruptcy. The construction of Chapters 11 and 13 of the Bankruptcy Code support the proposition that Congress did not envision or intend the automatic stay of proceedings to be available to solvent co-defendants of a Chapter 11 debtor. Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194, 1198 (Ohio 1983). "Not only is the absence of any expansion of the scope the stay in Chapter 11 probative of congressional intent but, further, the pronouncement which does appear in Chapter 13 is extremely limited; it applies only to co- debtors rather than, as in the action at bar, co-defendants of the petitioner." Id. Accordingly, the Court finds Congress did not intend the § 362 stay to be utilized in a manner other than for the purpose of protecting the debtor and its estate. See also Pitts v. Unarco Industries, Inc., 698 F.2d 313 (7th Cir.1983).

The solvent co-defendants (Fleetwood Homes and CHM) do not fall within the judicial classification of the Chapter 11 debtors as "indispensable" so as to mandate a stay of proceedings under Rule 19, Fed.R.Civ.P. It is well established that joint tortfeasors are not indispensable parties in the federal forum. See Field v. Volkswagenwerk-AG, 626 F.2d 293, 298 n. 7 (3d Cir.1980); Herpich v. Wallace, 430 F.2d 792, 817 (5th Cir.1970); Royal Truck and Trailer v. Armadora Maritime Salvadorena, 10 B.R. 488 (N.D.Ill.1981). Since the complaints at bar allege mold occurred in the house which was a product of both the solvent co-defendants and the insolvent Fleetwood Enterprises, Inc., the Chapter 11 debtors are joint tortfeasors and not indispensable. See also, In re Related Asbestos Cases, 23 B.R. 523 (N.D.Cal.1982); Austin v. Unarco Industries, Inc., 705 F.2d 1 (1st Cir.1983).

The Court takes judicial notice of Fleetwood Enterprises, Inc.'s bankruptcy and will stay proceedings only as to Fleetwood Enterprises, Inc., and will continue as to CMH and Fleetwood Homes. Fleetwood Homes is free to file a motion to dismiss ...


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