CARMELLA C. MINELLI VS. HARRAH'S RESORT ATLANTIC CITY (L-1509-15, MERCER COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4431-18T1
CARMELLA C. MINELLI and
ANTHONY MINELLI,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants,
May 19, 2020
v. APPELLATE DIVISION
HARRAH'S RESORT ATLANTIC
CITY, HARRAH'S OPERATING
COMPANY, INC., CAESARS
ENTERTAINMENT, and CAESARS
ENTERTAINMENT OPERATING
COMPANY, INC.,
Defendants-Respondents.
Submitted March 3, 2020 - Decided May 19, 2020
Before Judges Fisher, Accurso and Rose.
On appeal from the Superior Court of New Jersey,
Law Division, Mercer County, Docket No. L-1509-15.
Dasti Murphy McGuckin Ulaky Koutsouris &
Connors, PC, attorneys for appellants (Christopher K.
Koutsouris, on the briefs).
Camacho Mauro Mulholland, LLP, attorneys for
respondents (Reena Shah, on the brief).
The opinion of the court was delivered by
ACCURSO, J.A.D.
Plaintiffs Carmella C. Minelli and her husband Anthony Minelli appeal
from the dismissal of their personal injury action against defendants Harrah's
Resort Atlantic City, Harrah's Operating Company, Inc., Caesars
Entertainment and Caesars Entertainment Operating Company, Inc. based on
the two-year statute of limitations, N.J.S.A. 2A:2-14. Because we conclude
that operation of Section 108(c)(2) of the Bankruptcy Code made plaintiffs'
claims timely filed, at least as to defendant Caesars Entertainment Operating
Company, we reverse.
Plaintiff Carmella Minelli contends she was injured in a slip and fall at
Harrah's Resort Atlantic City. Her complaint alleges that at the time of her
accident, Harrah's Operating Company, d/b/a Harrah's Resort Atlantic City, a
subsidiary of defendant Caesars Entertainment Operating Company, which in
turn was a subsidiary of defendant Caesars Entertainment, were indistinct
entities, "inadequately capitalized" and structured "to merely evade
responsibility." Her complaint asserts the court should accordingly "pierce the
corporate veil," disregarding defendants' corporate forms in assessing liability
for her injuries.
Plaintiff does not dispute that she filed her complaint more than two
years after her accident. She claims, however, that "Harrah's AC," as the
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Harrah's defendants referred to themselves in correspondence with her lawyer,
was aware of the claim, and that the bankruptcy of Caesars Entertainment
Operating Company, approximately six months before the limitations period
was set to expire, extended her time to sue.
Because the case was dismissed at the pleadings stage, the facts
presented to us are limited. There appears no dispute, however, at least for
purposes of the motion to dismiss, as to these few, key procedural facts.
Plaintiff's fall at Harrah's AC happened on June 2, 2013. On January 15, 2015,
Caesars Entertainment Operating Company, Inc., formerly known as Harrah's
Operating Company, Inc. or Harrah's Casino Hotel Reno, and 172 or more
affiliated entities, but not Harrah's AC, filed a voluntary Chapter 11 petition in
the United States Bankruptcy Court for the Northern District of Illinois,
triggering the automatic stay under Section 362 of the Bankruptcy Code, 11
U.S.C. §362(a).
Plaintiff filed her complaint on June 30, 2015. Defendants did not
answer but instead filed a Notice of Suggestion of Bankruptcy. Plaintiff
obtained relief from the bankruptcy court on January 28, 2019, by way of
consent order permitting plaintiff "to proceed against Caesars [Entertainment
Operating Company] as a nominal defendant only" in order to allow plaintiffs
to "establish liability against Caesars for the sole purpose of recovering from
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either (a) any non-Reorganized Debtor defendants, (b) any proceeds of
available insurance policies issued in the name of or for the benefit of the
Debtors . . . , or (c) any third-party insurance policies that may apply."
Defendants thereafter filed a motion to dismiss pursuant to Rule 4:6-
2(e), arguing plaintiffs' complaint was time-barred. Plaintiffs opposed the
motion, arguing 11 U.S.C. §108 made the filing timely. Defendants filed a
reply brief asserting, allegedly for the first time, that the Harrah's defendants
were not among the Caesars entities seeking protection in the bankruptcy
court.
After hearing argument, the Law Division dismissed the complaint with
prejudice. Relying on our opinion in Nativo v. Grand Union Co., 315 N.J.
Super. 185, 188 (App. Div. 1998), the court concluded that had plaintiffs filed
their complaint before the limitations period expired, "then the matter might
have been delayed until the automatic stay was lifted on January 28, 2019. But
because [p]laintiff did not file until after the two-year statute of limitations, the
filing was out of time and not subject to the automatic stay."
Plaintiffs moved for reconsideration, arguing Nativo was distinguishable
because the plaintiff in that case received stay relief before expiration of the
two-year limitations period but did not file her complaint until after the statute
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had run. See id. at 186-87. The court denied the motion for reconsideration.
This appeal follows.
11 U.S.C. §108(c) provides in pertinent part:
Extension of time: [I]f applicable nonbankruptcy law
. . . fixes a period for commencing or continuing a
civil action in a court other than a bankruptcy court on
a claim against the debtor, or against an individual
with respect to which such individual is protected
under section 1201 or 1301 of this title, and such
period has not expired before the date of the filing of
the petition, then such period does not expire until the
later of (1) the end of such period, including any
suspension of such period occurring on or after the
commencement of the case; or (2) 30 days after notice
of the termination or expiration of the [automatic]
stay.
In Nativo, we interpreted this provision as extending the applicable two-year
statute of limitations thirty days beyond the termination of an automatic stay
under 11 U.S.C. §362(a), if the limitations period would otherwise have ended
while the stay remained in place. See Nativo, 315 N.J. Super. at 187-88.
Because the plaintiff in that case, however, received notice of stay relief forty-
two days before the statute of limitations expired but did not file her complaint
until seven days afterward, we found the defendant's bankruptcy proceeding
did not "add[] anything to the limitations period." Id. at 188.
This case is different. The statute of limitations on plaintiff's personal
injury claim expired while the bankruptcy stay, at least as to Caesars
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Entertainment Operating Company, 1 remained in place. Accordingly, Section
108(c)(2) of the Bankruptcy Code plainly permitted her to file an action
"against the debtor, or against an individual . . . protected under section 1201
or 1301 [stays of action against a codebtor]," up until "30 days after notice of
the termination or expiration of the stay under section 362," here, January 28,
2019. As plaintiffs filed their complaint well before that date, it would appear
timely filed under Section 108(c)(2) as to those defendants protected by the
automatic stay.
Defendants contend, however, that plaintiffs "are not entitled to relief
under 11 U.S.C. §108(c)" because they filed their complaint after expiration of
the limitations period but before the start of the thirty-day grace period.
Defendants reason that had plaintiffs "wanted the protection of 11 U.S.C.
§108(c), they would have waited to file their complaint until the bankruptcy
stay was terminated and they received the order modifying the injunction."
Putting aside defendants' tacit admission that plaintiffs' complaint would
have been timely under Section 108(c)(2) if filed within thirty days of January
28, 2019, more than three-and-one-half years after its actual filing in June
1
Defendant Caesars Entertainment Operating Company, not its parent,
Caesars Entertainment, is the debtor. Defendants, however, have argued that
plaintiffs are not entitled to the Section 108 "grace period" as to the Harrah's
defendants only. Defendants have not explained why this distinction among
the non-debtor defendants, and we cannot discern it from the limited record.
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2015, defendants cite no case or other authority in support of their argument.
We accordingly dismiss it as inadequately briefed. 2 See 700 Highway 33 LLC
v. Pollio, 421 N.J. Super. 231, 238 (App. Div. 2011); Weiss v. Cedar Park
Cemetery, 240 N.J. Super. 86, 102 (App. Div. 1990).
Defendants further argue that "[p]laintiffs are not entitled to a grace
period for their claims against Harrah's Resort Atlantic City and Harrah's
Operating Company since these entities were not subject to the automatic
stay." Specifically, defendants contend that although "some of the 174 entities
listed [in the bankruptcy filing] contain some iteration of Harrah's or Atlantic
City," the Harrah's defendants in this action were not among those entities
seeking bankruptcy protection.
2
Because the claim is not adequately briefed, we are not confident we fully
understand the argument. To the extent defendants are arguing that plaintiffs'
complaint is void because filed in violation of the automatic stay, we note the
Third Circuit has held the power of the bankruptcy court under Section 362(d)
to grant relief from the automatic stay, including by "annulling, . . . such stay,"
11 U.S.C. §362(d), "indicates a legislative intent to apply certain types of
relief retroactively and validate proceedings that would otherwise be void ab
initio," In re Siciliano, 13 F.3d 748, 751 (3d Cir. 1994) (quoting In re
Schwartz, 954 F.2d 569, 572 (9th Cir. 1992)); see also Bascom Corp. v. Chase
Manhattan Bank, 363 N.J. Super. 334, 341 (App. Div. 2003) (same). The
consent order signed by the bankruptcy judge in this matter expressly permits
plaintiffs to "proceed against Caesars [Entertainment Operating Company]" in
their action "pending in the Superior Court of New Jersey, Law Division,
Mercer County" in accordance with the order's terms.
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Plaintiffs appear to concede the point, at least implicitly, in asserting the
automatic stay should extend to defendant Harrah's Resort Atlantic City, the
"alleged non-debtor" subsidiary of debtor Caesars Entertainment Operating
Company. In support of their argument, they rely on Judge Posner's opinion
for the Seventh Circuit in the bankruptcy action, remanding to the bankruptcy
judge the question of whether suits against the debtor's parent should be stayed
by the court. See Caesars Entm't Operating Co. v. BOKF, N.A. (In re Caesars
Entm't Operating Co.), 808 F.3d 1186, 1188 (7th Cir. 2015). Following the
remand, the bankruptcy court temporarily enjoined certain actions against
Caesars Entertainment, the non-debtor parent of debtor Caesars Entertainment
Operating Company. 3 Caesars Entm't Operating Co. v. BOKF, N.A., 561 B.R.
441, 443 (Bankr. N.D. Ill. 2016).
The Law Division did not reach plaintiffs' argument that the automatic
stay triggered by defendant Caesars Entertainment Operating Company's
Chapter 11 filing extended to the Harrah's defendants as non-debtor
subsidiaries, based on its conclusion that Section 108 afforded plaintiffs no
3
We note, however, that those cases did not involve application of the
automatic stay under Section 362, but rather imposition of an injunction
pursuant to the exercise of the bankruptcy court's equitable powers. See In re
Caesars Entm't Operating Co., 808 F.3d at 1188. Plaintiffs do not explain how
those cases support their argument that their claims against defendants
Harrah's Resort Atlantic City and Harrah's Operating Company were timely
filed pursuant to Section 108, and the point is not obvious to us.
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relief whatsoever. Although federal bankruptcy law holds the automatic stay
of Section 362(a)(1) is generally limited to the debtor, it appears likewise well -
established that a bankruptcy court may extend the stay under that section to
"non-bankrupt co-defendants" when there is such identity between the debtor
and the co-defendant "that the debtor may be said to be the real party
defendant and that a judgment against the [co-]defendant will in effect be a
judgment or finding against the debtor." A.H. Robins Co. v. Piccinin, 788
F.2d 994, 999 (4th Cir. 1986); see also Queenie, Ltd. v. Nygard Int'l, 321 F.3d
282, 287-88 (2d Cir. 2003) (applying the automatic stay to debtor's wholly
owned corporation because adjudication of a claim against the non-debtor
corporation would have an immediate adverse economic impact on the debtor).
We note here that the only question for our courts is whether the
automatic stay was extended by the bankruptcy court to the non-debtor
defendants. Whether the stay should extend beyond the debtor is a question
reserved to the exclusive jurisdiction of the federal courts. See 28 U.S.C.
1334(a) and (d); Union Cty. Sav. Bank v. Johnson, 210 N.J. Super. 589, 597
(Ch. Div. 1986).
In other words, a state trial court must decide its own jurisdiction to hear
the case before it, including, specifically, whether that case is stayed by
operation of Section 362. See In re Baldwin-United Corp. Litig., 765 F.2d
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343, 347 (2d Cir. 1985) (holding "[t]he court in which the litigation claimed to
be stayed is pending has jurisdiction to determine not only its own jurisdiction
but also the more precise question whether the proceeding pending before it is
subject to the automatic stay"); accord Citizens First Nat'l Bank of N.J. v.
Marcus, 253 N.J. Super. 1, 6 (App. Div. 1991). But as the Supreme Court of
Connecticut has recently explained, that state courts necessarily have
jurisdiction to determine whether the automatic stay provision, "by its own
terms," applies to a proceeding in state court, does not confer "jurisdiction to
modify the application of the automatic stay provision pursuant to 11 U.S.C. §
105 (a) or 11 U.S.C. § 362 (d) by extending its application to proceedings to
which it does not, by its own terms, automatically apply." U.S. Bank Nat'l
Ass'n v. Crawford, 219 A.3d 744, 758 (Conn. 2019).4
Because the parties have not presented us with any information as to
whether the bankruptcy court extended the automatic stay to the non-debtor
4
Although beyond the scope of the issues to be decided here, we note a state
court's exercise of jurisdiction to decide issues relating to the automatic stay can
raise complicated questions of federal collateral review of state court judgments,
notwithstanding the Rooker-Feldman doctrine. See Gruntz v. County of Los
Angeles (In re Gruntz), 202 F.3d 1074, 1079, 1084 (9th Cir. 2000) (en banc)
(explaining that "modifying the automatic stay is not the act of a state court merely
interpreting federal law; it is an intervention in the operation of an ongoing federal
bankruptcy case, the administration of which is vested exclusively in the
bankruptcy court"); In re Phila. Entm’t & Dev. Partners, 879 F.3d 492, 498-99 (3d
Cir. 2018); In re Knapper, 407 F.3d 573, 583 n.22 (3d Cir. 2005).
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defendants and, if so, whether plaintiffs sought stay relief to proceed against
them, and the trial court did not consider the issue, it is inappropriate for us to
do so in the first instance, see Selective Ins. Co. of Am. v. Rothman, 208 N.J.
580, 586 (2012); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
We only vacate the dismissal as to Caesars Entertainment and the Harrah's
defendants based as it was on the erroneous conclusion that Section 108
afforded plaintiffs no relief even as to Caesars Entertainment Operating
Company, an entity clearly protected by the automatic stay.
To recap, we reverse the Law Division's dismissal of plaintiffs'
complaint as to Caesars Entertainment Operating Company, vacate the
dismissal as to Caesars Entertainment and the Harrah's defendants and remand
for further proceedings not inconsistent with this opinion. We do not retain
jurisdiction.
Reversed in part, vacated in part, and remanded.
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