Case MFW Doc 3509 Filed 03/24/17 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

Transcription

1 Case MFW Doc 3509 Filed 03/24/17 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: TSA WD Holdings, Inc. 1, et al., Chapter 11 Case No (MFW) Jointly Administered Debtors. Hearing Date: April 25, 10:30 Objection Deadline: April 14, 2017 MARIA MENDOZA S MOTION FOR RELIEF FROM AUTOMATIC STAY UNDER 11 U.S.C. 362 Maria Mendoza ( Mendoza ), moves for an Order Granting Relief from Automatic Stay and, in support thereof, would respectfully shows as follows: BACKGROUND 1. On June 28, 2016, unaware of these proceedings, Mendoza filed an action styled Maria Mendoza v. TSA Stores, Inc. d/b/a/ The Sports Authority, Inc., Case No L , in the Circuit Court of Cook County, Illinois (the Action ), a copy of the complaint is attached as Ex. A. 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: TSAWD Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); TSAWD, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664). The headquarters for the above captioned Debtors is located at 2305 East Arapahoe Road, Suite 234, Centennial, Colorado The Debtors were formerly known as: Sports Authority Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); The Sports Authority, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664) : DOCX.11

2 Case MFW Doc 3509 Filed 03/24/17 Page 2 of 5 2. The complaint in the Action alleges that on June 27, 2015, Mendoza was injured at the Sports Authority store located at 173 Yorktown Center, Lombard, Illinois, when she slipped and fell on an accumulation of liquid on the floor. 3. On March 2, 2016, each of the Debtors filed voluntary petitions under Chapter 11 of the United States Bankruptcy Court. 4. By this Motion, Mendoza seeks to lift the automatic stay retroactively to June 28, 2016, to proceed with the Action to settlement or judgment and seek recovery from applicable insurance proceeds : DOCX.1 JURISDICTION 5. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper pursuant to 28 U.S.C. 1409(a). The statutory basis for the relief requested in this motion is 11 U.S.C. 362, and 105. ARGUMENT Cause Exists to Lift of the Automatic Stay 6. Section 362(d)(1) of the Bankruptcy Code states: On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay... for cause. This provision clearly specifies that where cause exists, the bankruptcy court shall grant relief from the automatic stay, if requested to do so by a party in interest. 11 U.S.C. 362(d)(1) (emphasis added). 7. Cause is not defined in the Code whether cause exists to annul or modify the stay is determined on a case-by-case basis. See e.g., In re Rexene Products Co., 141 BR 574,

3 Case MFW Doc 3509 Filed 03/24/17 Page 3 of (Bankr. D. Del. 1992). In Re Rexene provides a balancing test of three factors to determine whether cause exists: (a) whether any great prejudice to either the bankrupt estate or debtor will result from allowing the civil suit; (b) whether the hardship to the non-bankrupt party by the maintenance of the stay considerably outweighs the hardship to the debtor; and (c) whether the creditor has a probability of prevailing on the merits. 8. In Re Rexene, 141 B.R. at 576. These factors are not determinative: Courts have wide latitude in crafting relief from the automatic stay. See Bladino v. Wilson (In re Wilson), 116 F.3d 87, 90 (3d Cir. 1997); Siciliano, 13 F.3d 748, 751 (3d Cir.1994). According to the court in In Re Rexene, the legislative history to section 362 provides that cause may be established by a single factor such as lack of any connection with or interference with the pending bankruptcy case. In Re Rexene, 141 B.R. at 576 (citing H.R. rep. No , 95th Cong., 1st Sess., (1977). 9. While a party requesting relief from the stay bears the initial burden to show that cause exists, once a prima facie case of cause is shown, the party opposing relief has the ultimate burden of disproving the existence of cause. Id. at 577; 11 U.S.C. 362(g). As explained below, the facts and circumstances here weigh heavily in favor of granting Mendoza relief from the stay. (i). No Prejudice Will Occur 10. It is believed that the Debtors have insurance coverage for Mendoza s claim. Thus, no prejudice will inure to the Debtors or the Debtors estates because Mendoza seeks to recover only from the proceeds of available insurance coverage, and agrees to not pursue the 93013: DOCX.1

4 Case MFW Doc 3509 Filed 03/24/17 Page 4 of 5 Debtors estates to the extent that any judgment exceeds available coverage. In re Memorial Corp., 382 B.R. 652, , (Bankr. D. Del. 2008), rev d on other grounds, 400 B.R. 420 (D. Del. 2009). The Debtors have no protectable interest in the insurance policy s proceeds, because the proceeds will be available only to creditors with the type of claims covered by such policy. Id. In such cases, there can be no legitimate complaint that the estates will be dissipated by allowing the litigation to go forward. Id. at 689 (Bankr. D. Del. 2008). Insurance proceeds are unnecessary to Debtors reorganization, and are not property in which the Debtors have equity. Therefore, neither the bankrupt estates nor the Debtors themselves will suffer prejudice much less great prejudice if the stay is annulled and lifted as to those proceeds only. Id. (ii). The Hardship to Mondoza by Maintenance of the Stay Considerably Outweighs any Hardship to Debtors if the Stay is Lifted 11. If the automatic stay is not lifted, Mendoza will be barred from prosecuting her claim. Because Mendoza seeks to recover only from insurance proceeds, there will be no hardship to the Debtors by lifting the stay. Indeed, the only party that stands to benefit financially if the stay is not lifted is [the Debtors insurance company]. In re Robertson, 244 B.R. at 883. [I]t would be grossly unfair for [the insurance company] to benefit at Movant s expense. Id; see also Awashi v. Jet Florida System, Inc., 883 F.2d 970 (11th Cir. 1989) ( The fresh start policy is not intended to provide a method by which an insurer can escape its obligations based simply on the financial misfortunes of the insured. ). (iii). Mendoza Can Demonstrate Probability of Success On the Merits 12. The required showing on the third factor, probability of success on the merits, is very slight. In Re Rexene, 141 B.R. at 578 (citation omitted). The third prong simply requires Mendoza to make a more than vague initial showing that they can establish a prima facie case : DOCX.1

5 Case MFW Doc 3509 Filed 03/24/17 Page 5 of 5 Id. (citing Peterson v. Cundy (In re Peterson), 116 B.R. 247, 250 (D. Colo. 1990) (foregoing merits analysis entirely in a relief from stay motion merely to liquidate claim)). Courts have also found that [o]nly strong defenses to state court proceedings can prevent a bankruptcy court from granting relief from the stay. Id. at 578 (quoting Fonseca v. Philadelphia Housing Authority (In re Fonseca), 110 B.R. 191, 196 (Bankr. E.D. Pa. 1990)). 13. On this point, Mendoza complaint, attached as Ex. A, reflects that she sustained injuries on June 27, 2015 while at the Debtors store. But for the negligence this Debtor, it is alleged, Mendoza would not have suffered the injuries and damages underlying her claim. Accordingly, Mendoza has met the low threshold of proving the likelihood of success on the merits. WHEREFORE, the Mendoza respectfully request that this Court enter an Order, in the form attached hereto, (i) granting the Motion (ii) lifting the automatic stay as to Mendoza (iii) modifying the automatic stay to allow Mendoza to liquidate her claim against the Debtors and to proceed against insurance proceeds and (iv) granting such other and further relief as this Court may deem is just and proper. SMITH, KATZENSTEIN & JENKINS LLP /s/kathleen M. Miller Kathleen M. Miller (DE ID 2898) The Brandywine Building 1000 West Street, Suite 1501 P.O. Box 410 Wilmington, Delaware (302) (phone) (302) (fax) kmiller@skjlaw.com March 24, 2017 Attorneys for Maria Mendoza 93013: DOCX.1

6 Case MFW Doc Filed 03/24/17 Page 1 of 6 Exhibit A

7 Case MFW Doc Filed 03/24/17 Page ELECTRONICALLY 2 FILED of 6/28/ :13 PM 2016-L CALENDAR: J PAGE 1 of 5 CIRCUIT COURT OF IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COOK COUNTY, ILLINOIS LAW DIVISION COUNTY DEPARTMENT, LAW DIVISION CLERK DOROTHY BROWN MARIA MENDOZA, Plaintiff, ) ) ) Case No.: TSA STORES, INC. d/b/a THE SPORTS AUTHORITY, INC., a foreign corporation, Defendant. COMPLAINT AT LAW NOW COMES the Plaintiff, MARIA MENDOZA, by and through her attorneys, BEKKERMAN LAW OFFICES, LLC., and complainingof Defendant, TSA STORES,INC. d/b/a THE SPORTS AUTHORITY, INC., a foreign corporation, and states as follows: COUNT I (Negligence: TSA STORES, INC. d/b/a THE SPORTS AUTHORITY, INC.) 1. That on June27,2015, and at all times hereinafter mentioned, the Plaintifi MARIA MENDOZA, resided in the Village of Villa Park, State of Illinois. 2. That on J:une27,2075, defendant TSA STORES, INC. dlblathe SPORTS AUTHORITY, NC. was a foreign corporation, licensed to do business in the State of Illinois with its registered agent at208 South LaSalle Street, City of Chicago, County of Cook, State of Illinois. 3. That on June 27,2075, and at all times hereinafter mentioned, the defendant, TSA STORES, INC. d/b/a THE SPORTS AUTHORITY, fnc., owned, leased, possessed, operated, maintained or managed a properly, located at or near 173 Yorktown Center, in the Village of Lombard, County of DuPage and State of lllinois. That property included a retail store, hereinafter

8 Case MFW Doc Filed 03/24/17 Page 3 of 6 referred to as The Sports Authority. 4. On or about June27,2015, Plaintifl MARIA MENDOZA, was lawfully upon the premises at The Sports Authority retail store located at or near 173 Yorktown Center, Lombard, Illinois, as an invitee of the Defendant TSA STORES, lnc. d/b/a THE SPORTS AUTHORITY, INC. 5. Based on information and belief, at the afbresaid time and place, liquid from a leak in the roof had accumulated on the floor at The Sports Authority retail store, such liquid existing for a period of time, thereby creating ahazardous and dangerous ground condition. 6. That on June27,2015, and all times hereinafter mentioned, defendant TSA STORES, INC. d/b/a THE SPORTS AUTHORITY, INC., had a duty to exercise ordinary care in the possession, ownership management, operation, maintenance, and control of the aforesaid premises for the ELECTRONICALLY FILED 6/28/2016 1:13 PM 2016-L PAGE 2 of 5 safety of the Plaintiff, MARIA MENDOZA, and those persons lawfully thereon. 7. That at the aforesaid time and place, the defendant, TSA STORES, lnc. d/b/a THE SPORTS AUTHORITY, INC breached its duty of ordinary care and was then and there guilty of one or more of the following careless and negligent acts andlor omissions: (a) Improperly managed, maintained, controlled and operated said premises so that as a direct and proximate result thereof Plaintiff was injured; (b) Failed to wam Plaintiff of the dangerous condition then and there existing on the premises, when the Defendant knew, or in the exercise of ordinary care should have known, that said warning was necessary to prevent injury to Plaintiff; (c) Failed to make a reasonable inspection of the aforesaid premises when the Defendant knew, or should have known, that said inspection was necessary to prevent injury to the Plaintiff; (d) Failed to clean up and/or remove the liquid which accumulated at the premises although Defendant knew or should have known that said failure was likely to result in injury to persons walking upon said premises, including the Plaintiff; (e) Failed to ensure safe, suitable, and proper ground conditions at The Sports Authority retail store;

9 Case MFW Doc Filed 03/24/17 Page 4 of 6 OR (f) Otherwise negligently managed, maintained, operated and controlled said premises. 8. That at the aforesaid time and place, Plaintiff, MARIA MENDOZA was walking in The Sports Authority retail store when she slipped and fell on the accumulation of liquid, thereby proximately causing Plaintiff to suffer severe and permanent injuries. 9. That as a direct and proximate result of one or more of the aforesaid careless and negligent acts and/or omissions of the defendant, TSA STORES, INC. dhlathe SPORTS AUTHORITY, INC, the Plaintiff, MARIA MENDOZA, was caused to and did sustain severe and permanent injury and further has incurred extensive medical costs and procedures in being treated for said injuries, has incurred lost wages, and further has and will in the future be prevented from attending ELECTRONICALLY FILED 6/28/2016 1:13 PM 2016-L PAGE 3 of 5 her usual, normal customary occupation and customary affairs of life and also sustained and will continue to sustain significant pain and suffering and disability. WHEREFORE, the Plaintiff, MARIA MENDOZA, respectfully requests judgment against the Defendant, TSA STORES, INC. d/b/a THE SPORTS AUTHORITY, INC, in an amount in excess of FIFTY THOUSAND DOLLARS ($50,000.00), the minimum jurisdictional amount of this Court, and any and all other relief this Court deems appropriate. Respectfully submitted, BEKKERMAN LAW OFFICES, LLC. BEKKERMAN LAW OFFICES, LLC. 444 N. Michigan Avenue, Suite 1000 Chicago, IL P:

10 Case MFW Doc Filed 03/24/17 Page 5 of 6 F: Id.:41817 ELECTRONICALLY FILED 6/28/2016 1:13 PM 2016-L PAGE 4 of 5

11 Case MFW Doc Filed 03/24/17 Page 6 of 6 MARIA MENDOZA, IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION Plaintiff, Case No.: TSA STORES, INC. d,&/a THE SPORTS AUTHORITY, INC., a foreign corporation, Defendant. AFFIDAVIT PURSUANT TO ILLINOIS SUPREME COURT RULB,222 ELECTRONICALLY FILED 6/28/2016 1:13 PM 2016-L PAGE 5 of 5 I, MEGHAN M. MCDONALD, under oath and subject to the penalties of perjury, depose and state that the damages sought in this cause exceed the sum of FIFTY THOUSAND DOLLARS ($s0,000.00). Pursuant to 735 ILCS 5/1- I 09, the undersigned certifies that the foregoing Affidavit is true and correct based upon the personal knowledge of the undersigned. By: eghan M. McDon BEKKERMAN LAW OFFICES, LLC. 444 N. Michigan Avenue, Suite 1000 Chicago, IL P: F: Id.:47817

12 Case MFW Doc Filed 03/24/17 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: TSA WD Holdings, Inc. 1, et al., Debtors. Chapter 11 Case No (MFW) Jointly Administered Rel. Dkt. No. ORDER GRANTING MARIA MENDOZA S MOTION FOR RELIEF FROM AUTOMATIC STAY UNDER 11 U.S.C. 362 Upon consideration of the motion of Maria Mendoza ( Mendoza ) for relief from the automatic stay (the Motion ); the Court having reviewed the Motion; and it appearing that due and adequate notice was provided under the circumstances; and the Court having found that (i) the Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and 1334 (ii) venue is proper in this Court pursuant to 28 U.S.C and 1409; (iii) this is a core proceeding pursuant to 28 U.S.C. 157(b); and the Court having determined that the legal and factual basis set forth in the Motion establish just cause for the relief requested; and after due consideration of the Motion and any responses thereto; and good and sufficient cause appearing therefore, it is hereby: ORDERED, ADJUDGED AND DECREED THAT: 1. The Motion is GRANTED as set forth herein. 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: TSAWD Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); TSAWD, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664). The headquarters for the above captioned Debtors is located at 2305 East Arapahoe Road, Suite 234, Centennial, Colorado The Debtors were formerly known as: Sports Authority Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); The Sports Authority, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664) : DOCX.1

13 Case MFW Doc Filed 03/24/17 Page 2 of 3 2. The automatic stay of 11 U.S.C. 362(a) is hereby modified and lifted retroactively to June 28, 2016, to permit Mendoza to prosecute the Action 2 to final judgment (including any appeals therefrom) or settlement, and to seek satisfaction of any judgment (or other resolution) obtained against one or more of the above-captioned Debtors (collectively, the Debtors ) solely from the proceeds of any insurance coverage available to the Debtors that may be applicable to the Mendoza s claim. The automatic stay shall remain in effect for all other purposes. 3. Mendoza shall not seek satisfaction of, and shall be permanently enjoined from seeking payment of, any judgment, award, settlement, claim or any other payment amount resulting from or in connection with the facts as alleged in the complaint filed in the Action from the Debtors (other than from available proceeds of insurance policies as provided above), including, but not limited to, seeking payment of any judgment, award, settlement, claim or any other payment in excess of the policy limits of the applicable insurance policy. 4. To the extent that Mendoza is entitled to any judgment, award or settlement relating to the Action, she shall hereby be deemed to waive such entitlement as to the portion of any such judgment, award or settlement that would implicate the Debtors obligations regarding any self-insured retention or deductible under any applicable insurance policy. For the avoidance of doubt, the Debtors shall not be obligated to pay to Mendoza any self-insured retention or deductible on account of such judgment, award or settlement. 5. Nothing herein is intended or shall be deemed to be a stipulation, agreement, warranty, or admission by the Debtors or their estates that (a) the Debtors or their estates are liable to Mendoza for any amounts or (b) any causes of action, claims, or damages alleged in the 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion : DOCX.1

14 Case MFW Doc Filed 03/24/17 Page 3 of 3 Action are covered in whole or in part under any of the Debtors insurance policies. For the avoidance of doubt, nothing herein is intended or shall be deemed to alter in any way the rights, duties, obligations, terms, conditions, or provisions under any of the Debtors insurance policies that may ultimately be determined to be applicable to the Action. 6. The fourteen-day stay imposed by Federal Rule of Bankruptcy Procedure 4001(a)(3) is hereby waived and this Order shall be effective immediately upon its entry. 7. The Court shall retain jurisdiction to interpret and enforce the terms of this Order and to hear any matters or disputes arising from or related to the Motion. Date: The Honorable Mary F. Walrath United States Bankruptcy Judge 93013: DOCX.1

15 Case MFW Doc Filed 03/24/17 Page 1 of 1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: TSA WD Holdings, Inc. 1, et al., Debtors. Chapter 11 Case No (MFW) Jointly Administered Hearing Date: April 25, 10:30 Objection Deadline: April 14, 2017 NOTICE OF MOTION OF MARIA MENDOZA FOR RELIEF FROM AUTOMATIC STAY PLEASE TAKE NOTICE that on March 24, 2017, Maria Mendoza filed a Motion for Relief from Automatic Stay under 11 U.S.C. 362 of the Bankruptcy Code (the Motion ) in the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware PLEASE TAKE FURTHER NOTICE that objections or responses, if any, to the Motion must be filed ON OR BEFORE APRIL 14, 2017 with the United States Bankruptcy Court for the District of Delaware and at the same time be served upon the undersigned counsel. PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE MOTION WILL BE HELD ON APRIL 25, 2017 AT 10:30 A.M., if necessary. IF YOU FAIL TO FILE A RESPONSE IN ACCORDANCE WITH THIS NOTICE THE COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: March 24, 2017 SMITH, KATZENSTEIN & JENKINS LLP /s/kathleen M. Miller Kathleen M. Miller (DE ID 2898) 1000 West Street, Suite 1501 Wilmington, DE (302) kmiller@skjlaw.com Attorneys for Maria Mendoza 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: TSAWD Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); TSAWD, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664). The headquarters for the above captioned Debtors is located at 2305 East Arapahoe Road, Suite 234, Centennial, Colorado : DOC : DOC.1

16 Case MFW Doc Filed 03/24/17 Page 1 of 1 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 24th day of March 2017, a true and correct copy of the foregoing MARIA MENDOZA S MOTION FOR RELIEF FROM THE AUTOMATIC STAY was served via first class mail on the following: Hannah Mufson McCollum Office of the United States Trustee U. S. Department of Justice 844 King Street, Suite 2207 Lockbox #35 Wilmington, DE Michael R. Nestor, Kenneth J. Enos and Andrew L. Magaziner Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, Delaware Bradford J. Sandler, Robert J. Feinstein, Jeffrey N. Pomerantz and Colin Robinson Pachulski Stang Ziehl & Jones LLP 919 North Market St., 17th Floor Wilmington, DE Robert A. Klyman, Matthew J. Williams, Jeremy L. Graves and Sabina Jacobs Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA Donald Rothman and Marjorie S. Crider Riemer & Braunstein LLP Three Center Plaza, Suite 600 Boston, MA Gregory A. Taylor and Benjamin W. Keenan Ashby & Geddes, P.A. 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE /s/kathleen M. Miller Kathleen M. Miller (I.D. No. 2898) 93013: DOCX.1