IN THE SUPREME COURT OF FLORIDA

Case No.: SC10-397

PADC MARKETING, LLC, COLLINS AVENUE ASSOCIATES, LLC,
and R. DONAHUE PEEBLES,
Petitioners,
v.
DORA PUIG, THE PUIG GROUP, and DORA PUIG, P.A.
Respondents.
__________________________________________________________________
ON DISCRETIONARY REVIEW FROM THE DISTRICT
COURT OF APPEAL OF FLORIDA, THIRD DISTRICT
L.T. CASE NO: 3D09-2094
__________________________________________________________________
______________________________________________
PETITIONERS BRIEF ON JURISDICTION
_____________________________________________

Michael J. Higer, Esq.

Florida Bar No.: 500798
Esther S. Meisels, Esq.
Florida Bar No.: 0037142
Higer Lichter & Givner, LLP
18305 Biscayne Blvd., Suite 402
Aventura, Florida 33160
Telephone: 305-933-9970
Facsimile: 305-933-0998
Counsel for Petitioners

TABLE OF CONTENTS
TABLE OF CONTENTS .......................................................................................... ii
TABLE OF AUTHORITIES ................................................................................... iii
INTRODUCTION .................................................................................................... 1
STATEMENT OF CASE AND FACTS .................................................................. 2
SUMMARY OF ARGUMENT ................................................................................ 3
ARGUMENT ............................................................................................................ 4
A.

The Decision Below Expressly and Directly Conflicts With

the First Districts McCray Holding that a Trial Court has
Discretion to Refuse to Proceed with Actions Against a
Bankruptcy Debtors Co-Defendants Pending the Bankruptcy
Courts Exclusive Jurisdiction Over the Debtor. .......................................... 4

B.

The Decision Below Expressly and Directly Conflicts With

McCrays Holding that a Trial Court Cannot Proceed With an
Action Against a Bankruptcy Debtors Co-Defendants
Premised on a Contract to which the Debtor is a Party. ............................... 7

C.

The Decision Below Expressly and Directly Conflicts With

McCrays Holding that a Trial Court Cannot Proceed With an
Action Against a Bankruptcy Debtors Co-Defendants Which
Would Also Determine the Debtors Liability.............................................. 8

D.

The Conflict Arises From the Trial Courts Discretion to

Refuse to Proceed Where the Debtor is Necessary to the
Resolution of the Action Even Where the Bankruptcy Stay
Itself May Not Apply to the Debtors Co-Defendants .................................. 8

CONCLUSION ......................................................................................................... 9
CERTIFICATE OF SERVICE ............................................................................... 11
CERTIFICATE OF COMPLIANCE ...................................................................... 11
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TABLE OF AUTHORITIES

Cases
In re Johns-Manville Corp.,
26 B.R. 405 (S.D.N.Y. 1983) ................................................................................ 9
Loxahatchee River Envtl. Control Dist. v. Martin County Little Club, Inc.,
409 So. 2d 135 (Fla. 4th DCA 1982) ..................................................................... 7
Malloy v. Gunster Yoakley, Valdes-Fauli & Stewart, P.A.,
850 So. 2d 578 (Fla. 2d DCA 2003) ........................................................ 3, 6, 7, 10
McCray v. Adams,
529 So. 2d 1131 (Fla. 1st DCA 1988) ................................. 1, 3, 4, 5, 6, 7, 8, 9, 10
W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd.,
545 So. 2d 1348 (Fla. 1989) .................................................................................. 9
Other Authorities
11 U.S.C. 362 ......................................................................................................... 3
Art. V, 3(b)(3) Fla. Const....................................................................................... 2
Rules
Fla. R. App. P. 9.030(a)(2)(A)(iv) ............................................................................ 2

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INTRODUCTION
The Third District Court of Appeals decision holds that a trial court has no
discretion to stay proceedings against a bankruptcy debtors co-defendants because
a stay for an indefinite time frame (through the bankruptcy proceeding) . . . is
overbroad and improper. Appendix (App.) at 4. Effectively, the Third District
eviscerates all conventional discretion of a trial court to stay actions against a
bankruptcy debtors co-defendants, even where the debtor is a necessary or
indispensable party to the state courts jurisdiction but is under the exclusive
jurisdiction of the bankruptcy court, simply because there is no set date for
resolution of the bankruptcy proceeding.
The Third Districts opinion expressly and directly conflicts with the First
District Court of Appeals opinion in McCray v. Adams, 529 So. 2d 1131 (Fla. 1st
DCA 1988), which correctly holds that if the debtor is a party that the court
believes should be present before it issues a ruling resolving the issues raised,
then the trial court has discretion to refuse to proceed with actions against
bankruptcy debtors co-defendants pending exclusive bankruptcy court jurisdiction
over the debtors during the automatic bankruptcy stay. Id. at 1136.
The Third District allows state court creditors the ability to end-run the
bankruptcy courts exclusive jurisdiction over the debtor by suing a bankruptcy
debtors affiliates, principals and co-contractors directly for the actions and
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contracts of the debtor. Both this express and direct conflict and the policy reasons
for not allowing a state court creditor to sidestep the bankruptcy courts exclusive
jurisdiction over a debtor demonstrate that this Court should exercise jurisdiction
pursuant to Article V, Section 3(b)(3) of the Florida Constitution and Rule
9.030(a)(2)(A)(iv) of the Florida Rules of Appellate Procedure.
STATEMENT OF CASE AND FACTS
Respondents Dora Puig and/or her entities Puig Group, Inc. and Dora Puig,
P.A. (collectively, Puig) entered an employment contract as sales director of a
condominium with Petitioner Collins Avenue Associates, LLC (CAA). With
Puigs consent, CAA assigned the contract to PADC Marketing, LLC (PADC).
As part of the assignment, Puig argued below, and the Third District accepted:
Collins Avenue guaranteed PADCs obligation to Puig. Appendix (App.) at 5.
Thus, to determine CAAs liability to Puig, the trial court must first determine
whether and to what extent PADC failed to properly pay Puig.
Puig sued PADC and CAA for claims stemming from the employment
contract, alleging entitlement to commissions earned after the assignment. Puig
later joined Petitioner R. Donahue Peebles, the managing member of PADC, in the
action based on PADCs alleged failure to pay commissions, seeking to hold
Peebles directly liable for PADCs actions.

PADCs subsequent filing for bankruptcy stayed all actions against PADC in
the state court pursuant to 11 U.S.C. 362. Because Puigs claims against CAA
and Peebles were premised on PADCs alleged obligations, a determination of
Petitioners liability also requires a determination of PADCs liability to Puig.
Petitioners thus sought a stay pending resolution of PADCs bankruptcy. The trial
court granted the stay, but Puig petitioned for certiorari, maintaining that the
claims were independent claims.

Without addressing if the claims were

independent, the Third District granted the petition based on the blanket holding
that a stay for an indefinite time frame (through the bankruptcy proceeding) . . . is
overbroad and improper. App. 4. The Third District allowed Puig to proceed on
PADCs obligation to Puig, as long as those claims sought recovery only from
PADCs co-defendants. App. 5.
SUMMARY OF ARGUMENT
The Third Districts opinion expressly and directly conflicts with the Firsts
decision in McCray, which holds that a trial court has discretion to refuse to
proceed with actions against bankruptcy debtors co-defendants where the trial
court finds the debtor is a party that the court believes should be present before it
issues a ruling resolving the issues raised. McCray, 529 So. 2d at 1136; see also
Malloy v. Gunster Yoakley, Valdes-Fauli & Stewart, P.A., 850 So. 2d 578, 579
(Fla. 2d DCA 2003) (implicitly approving same approach taken by McCray). In
3

stark contrast, the Third District creates a blanket prohibition against staying
proceedings pending the resolution of bankruptcy proceedings, effectively forcing
state trial courts to adjudicate claims against co-defendants in the debtors absence,
even where the trial courts believe the debtors are necessary to resolution of those
claims.
The Third Districts blanket prohibition applies even if the claims against the
co-defendants are, as in this case, based primarily on the breach of a contract to
which the debtor is a party. Thus, the Thirds opinion is also irreconcilable with
the Firsts holdings that: a) claims based on a contract cannot proceed in the
absence of a debtor where the debtor is party to or assignee of the contract; and b)
a plaintiff may not litigate a bankruptcy debtors alleged liabilities via claims
against the debtors co-defendants, where such litigation would create claims by
the co-defendants against the debtor. McCray, 529 So. 2d at 1136.
ARGUMENT
A.

The Decision Below Expr essly and Dir ectly Conflicts With the
Fir st Distr icts McCr ay Holding that a Tr ial Cour t has Discr etion
to Refuse to Pr oceed with Actions Against a Bankr uptcy Debtor s
Co-Defendants Pending the Bankr uptcy Cour ts Exclusive
J ur isdiction Over the Debtor .

In McCray, McCray, a mortgagee, sued Skolsky, a bankruptcy debtor, along

with several co-defendants, alleging that they had forged McCrays signature on a
satisfaction of mortgage. Id. at 1133. The trial court found that McCray had not

properly joined Skolsky in the action because the Bankruptcy Codes automatic
stay was still in effect. The trial court consequently dismissed the action as to the
co-defendants because Skolsky was an indispensable party to the action. Id. at
1133-34. McCray upheld the dismissal, concluding that although the complaint
sought no damages against Skolsky, its intention [was] to establish Skolskys
personal liability as being a participant in the offenses of fraud alleged, violating
the bankruptcy courts exclusive jurisdiction over all claims against Skolsky that
seek a determination of personal liability for fraud. Id. at 1134.

The court

reasoned that to the extent McCray sought to determine Skolskys personal liability
in the action, McCray should have pursued the remedy available to him in federal
court, or should have asked permission of the bankruptcy court to relinquish
jurisdiction so that he could proceed in state court. Id. at 1135.
The First District also upheld the dismissal of the claims against the codefendants, holding that it was within the trial courts discretion in attempting to
avoid the necessity of multiple suits, to determine that, if not an indispensable
party, Skolsky is a necessary party that the court believes should be present before
it issues a ruling resolving the issues raised in the amended complaint. Id. at 1136.
McCray thereby recognizes that a trial court may even dismiss, let alone stay
the claims against the bankruptcy debtors co-defendants that might incidentally
establish the debtors liability pending the bankruptcy courts exclusive jurisdiction
5

over the debtor. Id. McCray concludes that where determination of the debtors
liability was necessary to adjudication of the rest of the action, the burden was on
[plaintiff] . . . to approach the bankruptcy court to release the debtor from its
exclusive jurisdiction so the action could proceed against all parties. Id. at 1137.
Malloy is the only case the Third District cites in support of its blanket
prohibition against stays as to co-defendants pending bankruptcy proceedings.
App. 3. Yet, in Malloy, the Second District implicitly approved the McCray
approach, not the Thirds holding. In Malloy, after the debtor filed for bankruptcy,
plaintiffs moved to sever their claims against the debtor and proceed against its codefendants. Malloy, 850 So. 2d at 579. The trial court denied this motion, finding
that the debtor was an indispensable party to the action, where the claims against
all defendants, as here, were premised on essentially the same facts. Id. The
Second District made no comment about the propriety of this decision, implicitly
approving it and implying the action could not have proceeded against the codefendants absent the severance. Id. at 579-80.
The plaintiffs then requested, and were granted, an order lifting the stay as to
the debtor in the bankruptcy court. Id. at 580. After the bankruptcy court lifted the
stay as to the debtor, only the non-debtor co-defendants moved to abate the action
pending resolution of the bankruptcy proceedings. The Second District reversed
the trial courts abatement not because it was indefinite, but because the state court
6

had responsibility to adjudicate the action due to the bankruptcy courts lifting of
the stay as to the debtor defendant, and its consequent concurrent jurisdiction with
the federal court over the bankruptcy debtor and all issues in the case. Id. at 581.
Unlike the Third Districts decision, McCray and Malloy recognize the proper
roles of the federal and state courts in our federal alignment of responsibilities,
creating opportune ground for this Court to resolve the express and direct conflict.
B.

The Decision Below Expr essly and Dir ectly Conflicts With
McCr ays Holding that a Tr ial Cour t Cannot Pr oceed With an
Action Against a Bankr uptcy Debtor s Co-Defendants Pr emised
on a Contr act to which the Debtor is a Par ty.

The First District in McCray also held that an action involving a bankruptcy
debtor may not proceed against a debtors co-defendants where the action requires
litigation of the parties rights and liabilities under a contract to which the debtor is
a party. McCray, 529 So. 2d at 1136; cf. Loxahatchee River Envtl. Control Dist. v.
Martin County Little Club, Inc., 409 So. 2d 135, 137 (Fla. 4th DCA 1982). The
First District reasoned that where the bankruptcy debtor is a signatory or assignee
to the contract, the general rule is that where rights sued upon arise from a
contract all parties to it must be joined. . . . Where there is an assignment of
contractual rights, an assignee must be joined in an action which may impact on
the assignees rights. McCray, 529 So. 2d at 1136. Therefore, under McCray, the
state court cannot proceed against co-defendants of a bankruptcy debtor for claims
where, as here, the debtor is an assignee and party to the contract at issue.
7

C.

The Decision Below Expr essly and Dir ectly Conflicts With
McCr ays Holding that a Tr ial Cour t Cannot Pr oceed With an
Action Against a Bankr uptcy Debtor s Co-Defendants Which
Would Also Deter mine the Debtor s Liability

The McCray court also concluded that where an action against co-defendants
would establish the bankruptcy debtors liability, if the co-defendants could later
seek to recover for that liability directly from the debtor, any liability, and degrees
thereof as to the debtors actions should be established in a single trial. Id. at
1136. The court rejected the plaintiffs argument that no prejudice to the codefendants would result from continuing the litigation without the debtor because
they could then seek contribution from him. Rather, the court recognized the
prejudice that results from forcing co-defendants to litigate the same issues in two
different actions first without the debtor, and then against him. Id. at 1137.
D.

The Conflict Ar ises Fr om the Tr ial Cour ts Discr etion to Refuse

to Pr oceed Wher e the Debtor is Necessar y to the Resolution of the
Action Even Wher e the Bankr uptcy Stay Itself May Not Apply to
the Debtor s Co-Defendants

Puig may muddy these clear waters for conflict by arguing that Petitioners
seek to extend the automatic bankruptcy stay for their own benefit. This argument
has no bearing on the express and direct conflict, which is independent of the
automatic stay issue.

Although the Third District commented that unusual

circumstances would not be warranted to extend the bankruptcy stay to the

Petitioners, App. 5, it expressly noted that the only way that this action could be

properly stayed is through the discretionary power of the lower court and
proceeded to reverse the stay based on its broad holding that [a] stay for an
indefinite time frame (through the bankruptcy proceeding), like what happened
here, is overbroad and improper. App. 4.
The issue before the Court is not whether the automatic stay applies to the
non-debtors, but whether trial courts have discretion to refuse to proceed with
claims against a debtors co-defendants where the debtor is necessary to the action.
McCray distinguished In re Johns-Manville Corp., 26 B.R. 405 (S.D.N.Y. 1983),
cited by the Third District below, on that very basis. McCray, 529 So. 2d at 113637. Likewise, this Courts dicta in W.W. Gay Mech. Contractor, Inc. v. Wharfside
Two, Ltd., 545 So. 2d 1348, 1350 (Fla. 1989), that [g]enerally the protections of
the automatic stay do not apply to a codefendant not in bankruptcy is also
inapposite, as it has no bearing on the trial courts discretion to stay actions as to
co-defendants pending the bankruptcy courts exclusive jurisdiction over necessary
debtors.
CONCLUSION
The Third District held that the trial court had no discretion to stay the
proceedings because a stay for an indefinite time frame (through the bankruptcy
proceeding), like what happened here, is overbroad and improper. App. 4. By
refusing to allow the trial court discretion to enter a stay pending the bankruptcy
9

proceedings, the Third District in effect forced the trial court to proceed to
adjudicate a bankruptcy debtors liabilities and contracts within the action against
the debtors co-defendants. App. 4.

This holding completely contravenes

McCrays holding that trial courts have discretion to dismiss actions against a
bankruptcy debtors co-defendants where the debtor is a necessary party that the
court believes should be present before it issues a ruling resolving the issues raised
in the []complaint. Id. at 1136. It also conflicts with Malloy, which implied that
an action could not proceed as to the debtors co-defendants absent severance of
the debtor from the action. Malloy, 850 So. 2d at 579-80.
This Court should intercede to resolve this irreconcilable conflict in Florida
law, regarding cases where a bankruptcy debtors rights must be litigated incident
to the claims against its co-defendants: the First District grants the trial court
proper discretion to go so far as to dismiss an action against a debtors codefendants; but the Third District refuses to give a trial court discretion even to
stay proceedings involving the debtor pending the bankruptcy courts exclusive
jurisdiction.
This Court has discretionary jurisdiction to review the decision below and
should exercise that jurisdiction to consider the merits of the Petitioners argument.

10

Respectfully Submitted,
Michael J. Higer, Esq.
Florida Bar No. 500798
Esther S. Meisels, Esq.
Florida Bar No.: 0037142
Higer Lichter & Givner, LLP
Counsel for Petitioners
18305 Biscayne Blvd., Suite 402
Aventura, Florida 33160
Telephone: 305-933-9970
Facsimile: 305-933-0998
Email: mhiger@HLGlawyers.com
s/Michael J. Higer
Michael J. Higer

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of this brief was furnished to Michael J.
Schlesinger, P.A., Esq. and Michael L. Cotzen, Esq., Michael J. Schlesinger, P.A.,
799 Brickell Plaza, Suite 700, Miami, Florida 33131 by United States Mail, this
15th day of March, 2010.
By: s/Michael J. Higer
Michael J. Higer

CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief complies with the font requirements
of rule 9.210(a)(2) of the Florida Rules of Appellate Procedure.

By: s/Michael J. Higer

Michael J. Higer
11