IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION. SENIOR CARE CENTERS, LLC, et al. Case No.

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1 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: Chapter 11 SENIOR CARE CENTERS, LLC, et al. Case No BJH-11 Debtors (Jointly Administered) SALLIE RUTH SMITH S MOTION FOR RELIEF FROM AUTOMATIC STAY PURSUANT TO LOCAL BANKRUPTCY RULE (B), A RESPONSE IS REQUIRED TO THIS MOTION, OR THE ALLEGATIONS IN THE MOTION MAY BE DEEMED ADMITTED, AND AN ORDER GRANTING THE RELIEF SOUGHT MAY BE ENTERED BY DEFAULT. ANY RESPONSE SHALL BE IN WRITING AND FILED WITH THE CLERK OF THE UNITED STATES BANKRUPTCY COURT AT EARLE CABELL FEDERAL BUILDING, 1100 COMMERCE ST., RM. 1254, DALLAS, TX BEFORE CLOSE OF BUSINESS ON APRIL 4, 2019, WHICH IS AT LEAST 14 DAYS FROM THE DATE OF SERVICE HEREOF. A COPY SHALL BE SERVED UPON COUNSEL FOR THE MOVING PARTY AND ANY TRUSTEE OR EXAMINER APPOINTED IN THE CASE. ANY RESPONSE SHALL INCLUDE A DETAILED AND COMPREHENSIVE STATEMENT AS TO HOW THE MOVANT CAN BE ADEQUATELY PROTECTED IF THE STAY IS TO BE CONTINUED. COME NOW Wiley Smith, Karen Polk, Wilete Stewart, Sharon Smith, Veronica Dailey, and Wiley Breon Smith, Individually and on Behalf of Sallie Ruth Smith (D) ( Movants ), by and through undersigned counsel, who file this Motion for Relief from Automatic Stay set for hearing at 9:30 a.m. on April 17, 2019, and in support thereof would show the Court as follows: 1

2 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 2 of 8 I. BACKGROUND 1. On or about September 14, 2016, Movants sent notice to the Commissioner of Administration, Medical Review Panel, State of Louisiana, of a health care liability claim, pursuant to Louisiana Civil Practice, Louisiana Medical Malpractice Act, LSA- R.S. 40:1231.8, et seq., requesting the formation of a Medical Review Panel for the evaluation and assessment of this claim against all private health care providers, asserting an actual negligence health care liability claim against Normandie SCC, LLC d/b/a/ The Guest House ( Normandie SCC ), arising from the medical, surgical and/or other health care provided by Normandie SCC, on or about January 4, 2013 through September 20, Under the Louisiana Medical Malpractice Act, supra, a defendant private healthcare provider qualified under the Act is limited to liability of $100, (paid directly from that provider s liability insurer; in this case, Underwriters at Lloyd s London), with an excess of up to an additional $400, in liability paid from the Louisiana Patient s Compensation Fund to a plaintiff for damages, including general damages, but specifically excluding future medical expenses which remain the responsibility of the Louisiana Patient s Compensation Fund. 3. On December 4, 2018, Debtors, including Normandie SCC, LLC d/b/a/ The Guest House, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. 2

3 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 3 of 8 4. The plaintiffs seek to have this motion for relief from stay granted for the purpose of pursuing a medical negligence claim against the defendant healthcare provider s liability insurer, Underwriters at Lloyd s London, and the Louisiana Patient s Compensation Fund only, at no detriment to the defendant Debtors, Normandie SCC, LLC d/b/a/ The Guest House. II. JURISDICTION 5. The Court has jurisdiction of this Motion by virtue of 11 U.S.C. 105, 361 and 362 and 28 U.S.C. 157 and III. ARGUMENT 6. Section 362(d)(1) of the Bankruptcy Code provides that the court shall grant relief from the stay such as by terminating, annulling, modifying or conditioning such stay for cause. 11 U.S.C. 362(d)(1) (emphasis added). To determine whether cause exists, courts conduct a fact intensive, case-by-case balancing test, examining the totality of the circumstances. In re Downey Financial Corp., 428 B.R. 595, 608 (Bankr. D. Del. 2010). Specifically, courts consider: a. Whether any great prejudice to either the bankrupt estate or the debtor will result from lifting the stay; b. Whether the hardship to the non-bankrupt party by maintenance of the stay considerably outweighs the hardship to the debtor; and c. The probability of the creditor prevailing on the merits. Id. At

4 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 4 of 8 7. Bankruptcy courts frequently lift stays to allow tort suits to go forward in state court to determine the liability, if any, of the Debtor. Frequently, these actions are coupled with a pledge by the creditor that he only seeks to go forward to determine the liability and that such liability will be paid by the liability insurance carrier. In re Fowler, 259 B.R. 856, 861 (Bankr. E.D. Tex. 2001). No great prejudice to either the bankrupt estate or the debtor will result when possible recovery in a tort suit in state court will be limited to proceeds of the debtor s liability insurance policy or policies. See In re R.J. Groover Const., L.L.C., 411 B.R. 460, 465 (Bankr. S.D. Ga. 2008); see Fowler, 259 B.R. at 861. The hardship to creditors seeking relief from the stay in order to proceed with a tort action in state court considerably outweighs any hardship to the debtor because for as long as the stay remains in effect [the creditor] is being denied her day in court. R.J. Groover Const., 411 B.R., at 466. Significantly, even a slight probability of success on the merits may be sufficient to support lifting an automatic stay in an appropriate case. Downey Financial Corp., 428 B.R. at 610 (quoting In re The SCO Group, Inc., 395 B.R. 852, 859 (Bankr. D. Del. 2007); see also R.J. Groover Constr., 411 B.R. at 466 (finding that the likelihood of success on the merits is of limited relevance unless the case is entirely and unquestionably frivolous ). 8. By this Motion, Movants agree to limit the extent of Movants recovery efforts against Debtor to the funds available under any and all insurance policies which may provide coverage for Debtors adjudicated liability, if any, and the additional coverage 4

5 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 5 of 8 provided by the Louisiana Patient s Compensation Fund, as provided for under Louisiana law. Movants seek authority from this Court, to the extent it may be necessary under 11 U.S.C. Sec. 362, to proceed with his personal injury claims to judgment to liquidate Movants claims against the Debtor in the Commissioner of Administration and/or State action. Movants also seek authority, to the extent it may be necessary, to execute, levy and collect upon such judgment as may be obtained by Movant in the Commissioner of Administration and/or state court action from Debtor s insurance carrier or carriers and the Louisiana Patient s Compensation Fund, only. 9. Movants allege that the Court should lift the automatic stay to permit the continuation of the Commissioner of Administration and/or state court action since no great prejudice to either the Debtor or the bankruptcy estate would result from the continuation of the civil action. Additionally, the hardship to Movants caused by the continuation of the stay considerably outweighs the hardship caused to the Debtor by modification of the stay. Further, Movants allege that the imposition of the automatic stay deny them the opportunity to litigate since further time delays will result in the aging of evidence and possible loss of witnesses. Additionally, Movants allege that there is more than a slight probability of success on the merits. IV. PRAYER WHEREFORE, ALL PREMISES CONSIDERED, Movants respectfully pray that the automatic stay be provisionally terminated as to Movants to permit Movants to proceed 5

6 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 6 of 8 with this medical negligence action against Debtor as a Defendant in an effort to obtain proceeds from Debtor s liability insurer(s) and the Louisiana Patient s Compensation Fund, exclusively, and to execute, levy and collect upon such judgment as may be obtained by Movants in the Commissioner of Administration and/or state court action to the extent of available policies of insurance, which provide coverage in such matters, and for any and all other such relief to which the Court finds Movants justly entitled. Respectfully Submitted, /s/ Patrick R. Jackson Patrick R. Jackson, APLC Louisiana State Bar No.: Viking Drive, Suite 100 Bossier City, LA (318) (318) facsimile ATTORNEY FOR MOVANTS CERTIFICATE OF CONFERENCE On March 20, 2019, Movants counsel spoke with Trey A. Monsour, counsel for the Debtors, regarding this Motion. At this time, Debtors are opposed to the present motion. CERTIFICATE OF SERVICE /s/ Patrick R. Jackson I hereby certify that, on March 21, 2019, a true and correct copy of the foregoing document was served electronically by the Court s CM/ECF PACER system on all parties registered to receive CM/ECF notice in these cases, including without limitation, the following parties: 6

7 Case bjh11 Doc 742 Filed 03/21/19 Entered 03/21/19 09:52:39 Page 7 of 8 Counsel for Debtors: Polsinelli PC Trey A. Monsour 1000 Louisiana St., Ste Houston, TX TMonsour@Polsinelli.com Jeremy Johnson 600 Third Avenue, 42 nd Floor New York, NY Jeremy.johnson@polsinelli.com Counsel for the Unsecured Creditors Committee: Nancy A. Peterman Shari L. Heyen Greenberg Traurig LLP 1000 Louisiana St., Ste Houston, TX (713) Fax: (713) petermann@gtlaw.com heyens@gtlaw.com Office of the United States Trustee Attn: Meredyth A. Kippes 1100 Commerce Street, Room 976 Dallas, TX Meredyth.a.kippes@usdoj.gov Counsel for the Administrative Agent: Duane Morris LLP Attn: John Robert Weiss; Rosanne Ciambrone 190 S. LaSalle Street, Suite 3700 Chicago, IL jrweiss@duanemorris.com rciambrone@duanemorris.com /s/ Patrick R. Jackson 7

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13 Case bjh11 Doc Filed 03/21/19 Entered 03/21/19 09:52:39 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: Chapter 11 SENIOR CARE CENTERS, LLC, et al. Case No BJH-11 Debtors (Jointly Administered) ORDER MODIFYING 362 AUTOMATIC STAY Upon the motion (the Motion ) of Wiley Smith, Karen Polk, Wilete Stewart, Sharon Smith, Veronica Dailey, and Wiley Breon Smith, Individually and on Behalf of Sallie Ruth Smith (D) ( Movants ) for Relief from the Automatic Stay Pursuant to 11 U.S.C. 362(d)(2) to permit movant to proceed with a personal injury claim against Normandie SCC, LLC d/b/a/ The Guest House ( Normandie SCC ), with the Commissioner of Administration, Medical Review Panel, State of Louisiana, pursuant to Louisiana Civil Practice, Louisiana Medical Malpractice Act, LSA-R.S. 40:1231.8, et seq., and it appearing that the Court has jurisdiction over this matter, and it appearing that notice of the Motion is sufficient, and that no other or further notice need be provided, and the Court having determined that the legal and factual bases set forth in the Motion establish good cause for granting the Motion, and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED AND DECREED that: 1. The Motion is GRANTED as provided below. 1

14 Case bjh11 Doc Filed 03/21/19 Entered 03/21/19 09:52:39 Page 2 of 3 2. To the extent applicable and subject to the reservations set forth in this Order, Movant is granted relief from the automatic stay to proceed with their personal injury claim against any applicable insurance, and the additional coverage provided by the Louisiana Patient s Compensation Fund, as provided for under Louisiana law, only, at no detriment to the defendant Debtors, Normandie SCC, LLC d/b/a/ The Guest House. 3. Movant shall only seek and obtain satisfaction of any amounts in connection with his personal injury claim on any third party insurance funds and policies, and the additional coverage provided by the Louisiana Patient s Compensation Fund, as provided for under Louisiana law, and shall not seek any recovery, payment or satisfaction of such amounts from any of the Debtors other assets or any assets of any successor to the Debtors or the purchaser of any of the Debtors assets. 4. Upon entry of this Order, MovantS, on behalf of themselves, their heirs, representatives and assigns, will be deemed to have waived and released the (a) Debtors and their estates and (b) the purchaser of the Debtors assets, and each of their representative heirs, successors, assigns, affiliates, officers, directors and employees, from any and all claims, actions, causes of action, suits, debts, obligations, liabilities, accounts, damages, defenses or demands whatsoever, known or unknown, of any nature, except to the extent of those proceeds available under any of the Debtors third party insurance funds and policies, and the additional coverage provided by the Louisiana Patient s Compensation Fund, as provided for under Louisiana law. 2

15 Case bjh11 Doc Filed 03/21/19 Entered 03/21/19 09:52:39 Page 3 of 3 5. Except as expressly set forth herein, nothing contained herein shall constitute an admission or waiver of any substantive or procedural rights, remedies, claims or defenses of Normandie SCC or Movants in any personal injury claim pursued. 6. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation of this Order and the Motion. Dated: April, The Honorable Barbara J. Houser Chief United States Bankruptcy Judge Order Submitted By: Patrick R. Jackson, APLC Louisiana State Bar No.: Viking Drive, Suite 100 Bossier City, LA (318) (318) facsimile ATTORNEY FOR MOVANTS 3