Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_14-cv-01023/USCOURTS-almd-2_14-cv-01023-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

THE MILL STEEL COMPANY, 

et al.,

Plaintiffs,

v.

SOUTHEASTERN STUD & 

COMPONENT, INC., et al.,

Defendants.

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CASE NO. 2:14-CV-1023-WKW

 [WO]

ORDER

Upon consideration of Plaintiffs’ Motion to Lift Stay (Doc. # 54), and for good 

cause shown, it is ORDERED that the motion is GRANTED. On October 27, 2014,

Defendant Southeastern Stud and Components, Inc. (“Southeastern Stud”) provided 

notice that it had filed a voluntary petition under Chapter 11 of the Bankruptcy 

Code.1 (Doc. # 26.) When Southeastern Stud filed for bankruptcy – regardless of 

precipitating events – an automatic stay was triggered, prohibiting “the 

commencement or continuation . . . of a judicial, administrative, or other action or 

proceeding against the debtor that was or could have been commenced before the 

commencement of the [bankruptcy petition].” U.S.C. § 362(a)(1). In light of the 

 

1 The events that led to Southeastern Stud’s Chapter 11 bankruptcy petition remain fiercely 

contested.

Case 2:14-cv-01023-WKW-WC Document 61 Filed 02/19/15 Page 1 of 3
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automatic stay’s shield of Southeastern Stud’s estate, and upon the motion of 

Plaintiffs, a stay over the entirety of this litigation was ordered in the hopes that a 

controlled and efficient bankruptcy proceeding would preserve the debtor-estate 

while presenting all parties with an opportunity for judicial resolution of the 

competing claims. (Doc. # 52.)

As the bankruptcy proceeding has moved forward, however, Plaintiffs no 

longer wish to refrain from pursuing their claims against the non-debtor Defendants2

and have requested that the stay be lifted as to all Defendants except Southeastern 

Stud.3 Defendants counter with allegations of Plaintiffs’ bad faith and good 

engineering (alleging that Plaintiffs wish to “capitalize on the default which Mill 

Steel itself engineered.” (Doc. # 56, at 2.)) The cure for the ills of all parties 

(excluding the debtor in bankruptcy, Southeastern Stud) is litigation, which will 

proceed in this court. Because Mr. Whaley is a party, the court concludes that, at 

least on the information currently available, his presence in the litigation gives a 

potential avenue of relief as an equity owner of Southeastern Stud and most of the 

non-debtor Defendants for the alleged wrongful conduct of Plaintiffs. 

 

2

“Non-debtor Defendants” refers to all Defendants in this action who are not in 

bankruptcy. Of course, it is alleged that they are debtors to Plaintiffs.

3 The stay was initially extended to encompass the non-debtor Defendants in light of this 

court’s authority to orderly and expeditiously manage its docket. See Equity Lifestyle Props. Inc. 

v. Fla. Mowing and Landscape Serv., Inc., 556 F.3d 1232, 1240 (11th Cir. 2009).

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Therefore, after thoroughly reviewing the Trustee Report submitted to the 

Bankruptcy Court on January 2, 2015, the arguments of the parties, and the record, 

it is apparent that the continuation of the present litigation is warranted as to the 

claims of Plaintiffs and all non-debtor Defendants.4

Accordingly, it is ORDERED that the stay imposed by Order dated 

November, 26, 2014, is LIFTED as to all parties, with the exception of Southeastern 

Stud & Components, Inc. It is further ORDERED, that Plaintiffs file a Third

Amended Complaint on or before February 25, 2015, to reflect the current status of 

the litigation. Defendants are DIRECTED to answer, counterclaim, or otherwise 

respond to Plaintiffs’ Third Amended Complaint on or before March 9, 2015. 

DONE this 19th day of February, 2015. 

 /s/ W. Keith Watkins 

CHIEF UNITED STATES DISTRICT JUDGE

 

4

It is not likely the court would appoint Mr. Alexander, trustee in bankruptcy for 

Southeastern Stud, as receiver of non-debtor Defendants, should appointment of a receiver be 

appropriate. This is due to a potential conflict of interest in the event it is determined by the 

bankruptcy court that preferences may have been paid to some or all of the non-debtor Defendants, 

or allegations here or there that Mr. Whaley is the alter ego of one or more of all the entities. 

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