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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

IRON WORKERS’ LOCAL 25 

PENSION FUND, ET AL., 

Plaintiffs, No. 09-CV-10568 

vs. Hon. Gerald E. Rosen 

DETROIT DOOR AND HARDWARE CO. 

AND MICHAEL J. WILT, 

 Defendants. 

_____________________________________/ 

OPINION AND ORDER DENYING 

PLAINTIFF’S MOTION TO LIFT BANKRUPTCY STAY 

AS TO MICHIGAN COMMERCIAL DOOR GROUP, LLC.

 At a session of said Court, held 

in the U.S. Courthouse, Detroit, Michigan 

on September 22, 2010 

PRESENT: Honorable Gerald E. Rosen 

 United States District Chief Judge 

I. INTRODUCTION

This action is presently before the Court on Plaintiffs’ Motion to lift the automatic 

bankruptcy stay for the purpose of amending their complaint to add Michigan 

Commercial Door group, LLC as a defendant. Plaintiffs have fully briefed the motion. 

Defendant has not filed a response. Even so, the Court finds that the facts and legal 

arguments presented by the Plaintiffs are adequate for the determination of the motion 
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and the decision process would not be significantly aided by oral argument. Therefore, 

pursuant to E.D. Mich. L.R. 7.1(f)(2), this matter will be decided on the briefs. For the 

reasons set forth below, Plaintiffs’ motion will be denied. 

II. BACKGROUND

Plaintiffs, the trustees of pension funds managed on behalf of various labor unions, 

filed the instant action in this Court for unpaid employee benefit contributions owed to 

Plaintiffs’ funds under ERISA. On July 1, 2009, the Court entered a default judgment 

against Defendant Detroit Door and Hardware Co. Defendant Michael J. Wilt filed for 

Chapter 7 bankruptcy on April 1, 2010. The filing of bankruptcy operated as an 

automatic stay of all actions or claims against Defendant Wilt, and this court ordered, on 

April 12, 2010, that the present action be closed, for administrative purposes only, 

without prejudice. 

Plaintiffs allege that Michigan Commercial Door Group, LLC is the alter 

ego/successor corporation of Detroit Door, and now move that this Court lift the 

bankruptcy stay for the purpose of filing an amended complaint to add Michigan 

Commercial Door as a defendant. Plaintiffs further assert that once the amended 

complaint is filed, Wilt’s bankruptcy filing should not stay their action against Michigan 

Commercial Door1

. 

                                                           

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 As the Court noted in its order to close the case for administrative purposes, the default 

judgment against Detroit Door is unaffected by Wilt’s bankruptcy filing. 
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III.LEGAL STANDARD

Federal district courts have original and exclusive jurisdiction of all cases under 

Title 11 (The Bankruptcy Code). 28 U.S.C. § 1334(a). The district courts have original 

but not exclusive jurisdiction of all civil proceedings arising under Title 11, or arising in 

or related to cases under Title 11. § 1334(b). The district court may provide that any or 

all cases where the court has jurisdiction under § 1334 be referred to bankruptcy judges. 

§ 157(a). This Court has so provide by Local Court Rule 83.50 which states, “all cases 

under Title 11 of the United States Code and any or all proceedings arising under Title 11 

or arising in or related to a case under Title 11 are referred to bankruptcy judges.” E.D. 

Mich. L.R. 83.50(a)(1). A civil proceeding is related to a case under Title 11 if the 

outcome affects the bankruptcy debtor’s rights or liabilities and in any way impacts the 

handling and administration of the bankruptcy estate. Lindsey v. O'Brien, Tanski, Tanzer 

& Young Health Care Providers (In re Dow Corning Corp.), 86 F.3d 482, 489 (6th Cir. 

1996); Browning v. Levy, 283 F.3d 761, 773 (6th Cir. 2002). 

IV.ANALYSIS

Bankruptcy judges have original jurisdiction to hear claims arising under the 

Bankruptcy Code. 28 U.S.C. § 157(b). Such claims, called “core proceedings,” invoke 

either a substantive right created by federal bankruptcy law or that could not exist outside 

of the bankruptcy. Browning, 283 F.3d at 773. Bankruptcy judges also have limited 

jurisdiction to hear “non-core proceedings” that are related to a case under Title 11. 28 
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U.S.C. § 157(c). It is the intention of this Court to give bankruptcy judges the broadest 

possible authority to administer cases that fall within their jurisdiction. L.R. 83.50(a)(1). 

Plaintiffs assert that their cause of action against Michigan Commercial Door is 

not subject to the automatic stay placed on actions against Michael Wilt because 

Michigan Commercial Door is a separate entity from Michael Wilt and the alter 

ego/successor cause of action2

 is not property of the bankruptcy estate under 11 U.S.C. § 

541(a)(1). If the cause of action is not property of the bankruptcy estate, it follows that it 

is not a core proceeding under the bankruptcy judge’s exclusive jurisdiction. Plaintiffs 

cite Spartan Tube & Steel v. Himmelspach (In re RCS Engineered Prods. Co.), 102 F.3d 

223, 225-7 (6th Cir. 1996), in support of their argument that a bankruptcy debtor cannot 

bring an alter ego action against its alter ego since a party cannot support a claim that it 

defrauded itself. Plaintiffs do not address the question of whether the bankruptcy court 

has “related to” jurisdiction over the claim at issue. 

To be related to a case under Title 11, a proceeding need not be against the debtor 

or the debtor’s property; rather there must be a nexus between the proceeding and the 

Title 11 case. In re Dow Corning Corp., 86 F.3d at 489. The effect of the proceeding 

need not be automatic or even likely imposition of liability on the bankruptcy estate to 

bring it within the bankruptcy court’s jurisdiction; a conceivable effect on the debtor’s 

                                                           

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 “The successorship doctrine is often confused with the alter ego doctrine. The successorship 

doctrine is used to determine whether a new employer has an obligation to bargain when there is 

a bona fide sale of the employing company ... a new corporation that is the alter ego of the 

employer it replaced will be held to all of the prior employer's agreements and obligations.” 

NLRB v. Fullerton Transfer & Storage, Ltd., 910 F.2d 331, 336 n. 6 (6th Cir. 1990) (emphasis 

added). 
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rights, liabilities, options, or freedom of action is all that is required. Id. at 491 (quoting 

In re Marcus Hook Dev. Park Inc., 943 F.2d 261, 264 (3d Cir. 1991)). When a plaintiff 

alleges liability resulting from joint conduct of debtor and non-debtor defendants, 

bankruptcy jurisdiction exists since success against the non-debtor defendant has 

potential effects on the liabilities and administration of the estate bankruptcy. Id. at 492. 

Jurisdiction also may exist when "there is such identity between the debtor and the thirdparty defendant that the debtor may be said to be the real party defendant and that a 

judgment against the third-party defendant will in effect be a judgment or finding against 

the debtor." Id. at 493 (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 

1986). 

The broad scope of the bankruptcy court’s jurisdiction to hear cases related to 

cases under Title 11 is exemplified in In re Salem Mortgage. Co., 783 F.2d 626 (6th Cir. 

1986)3

. That case involved a class action suit against four consolidated bankruptcy 

debtors and eight non-debtor defendants arising from a series of allegedly fraudulent real 

estate financing transactions. Id. at 629. The District Court determined that it did not 

have subject matter jurisdiction over the case under either core or non-core proceedings 

arising under or related to the Title 11 case. Id. at 631-2. The Sixth Circuit held that the 

bankruptcy court had jurisdiction over the proceedings because the parties to the 

                                                           

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 The 7th Circuit Court of Appeals, in its opinion in In re Xonics, 813 F.2d 127, 131 (1987), 

disapproved, in part, of the breadth of the rule announced in In re Salem Mortg. Co., and would 

require that the effect of the related case be on the amount of the bankruptcy debtor’s property 

available for distribution. But see In re Marcus Hook Dev. Park Inc., 943 F.2d 261, 264 (3d Cir. 

1991); In re A.H. Robins Co., Inc., 788 F.2d 994, 1002 n.11 (4th Cir. 1986); In re Wood, 825 

F.2d 90, 93 (5th Cir. 1987); In re Dogpatch, U.S.A., Inc., 810 F.2d 782, 786 (8th Cir. 1987); In re 

Fietz, 852 F.2d 455, 457 (9th Cir. 1988) supporting the broader interpretation (and all adopting 

the rule as first stated in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). 
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transactions were so entwined as to sufficiently relate to the bankruptcy estate to support 

jurisdiction. Id. at 634-5. The court did not need to determine whether the non-debtor 

defendants were alter egos of debtor defendants or whether the debtor defendants might 

have a cause of action against non-debtor defendants. While many of the defendants 

were corporate officers of defendant corporations or shared a business address, others 

were wholly independent. Id. at 629 n7. 

In the immediate case, Plaintiffs allege that Michigan Commercial Door is the 

alter ego of Detroit Door and Hardware Co, which in turn was a co-defendant with 

Michael Wilt. See Plaintiffs’ Motion to File Amended Complaint, Doc. 208, p. i ¶ 6 

(filed 06/18/2010). Plaintiffs allege Michigan Commercial Door is located at the same 

place, does the same work, serving the same customers, using the same equipment, 

employees and management as Detroit Door did before it stopped operating. Id. at ¶ 5. 

The entwinement between Michigan Commercial Door and the bankruptcy estate is at 

least as extensive as that among the co-defendants in Salem Mortg. Co. Furthermore, if 

Michigan Commercial Door is the alter ego of Detroit Door, then it is also a co-defendant 

with Michael Wilt involved in joint conduct with him. It appears, therefore, that any alter 

ego proceedings against Michigan Commercial Door based on liability arising from 

conduct of Detroit Door and Michael Wilt is sufficiently related to the Wilt bankruptcy 

case under Title 11. Therefore, the Court declines to take any action with respect to the 

automatic bankruptcy stay imposed over this case. 
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CONCLUSION

For all of the foregoing reasons, 

IT IS HEREBY ORDERED that Plaintiffs’ Motion to Lift the Automatic 

Bankruptcy Stay for the purpose of amending their complaint to add Michigan 

Commercial Door group, LLC as a Defendant is DENIED. 

 s/Gerald E. Rosen 

 GERALD E. ROSEN 

 Chief Judge, United States District Court 

Dated: September 22, 2010 

I hereby certify that a copy of the foregoing document was served upon counsel of record on

September 22, 2010, by electronic and/or ordinary mail.

     s/Ruth A.Gunther, Case Manager