Opinion ID: 2974265
Heading Depth: 3
Heading Rank: 1

Heading: The Blanket Stay

Text: At the onset of the receivership proceedings for both VES and Alpha, the district court entered blanket stays precluding suit against the Receiver or assets in the Receivership, absent explicit authorization by the Receivership court. The injunctions read: It is further ORDERED that all creditors, claimants, bodies politic, parties in interest, and all sheriffs, marshals, and other officers, and their respective attorneys, servants, agents, and employees, and all other persons, firms, and corporations be, and they hereby are, jointly and severally, enjoined and stayed from commencing or 3 The well-grounded rule that the district court enjoys broad power to stay any and all suits against a receiver is buttressed by a existence of a statutory exception created by Congress in the late 1800s. The exception permits suit without leave of the court for torts committed against persons by the receiver when the receiver is engaged in the “carrying out of business” of the entity in receivership. The Supreme Court has construed this exception to apply only to injuries incurred from the entity in receivership’s normal business operations, e.g., an injury to a passenger on a train, when the receiver continues to operate the receivership entity in the normal course of business. See 28 U.S.C. § 959; In re Tyler, 149 U.S. at 182-83. The exception does not apply to claims which arose before the implementation of court control. No. 05-3510 Liberte Capital Group, et al. v. Capwill, et al. Page 8 continuing any action at law or suit or proceeding in equity to foreclose any lien or enforce any claim against VES and/or CFL [and Alpha Capital Group], or their property, or against the Receiver in any court. Said entities are further stayed from executing or issuing or causing the execution or issuance out of any Court of any writ, process, summons, attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with, or enforcing any claim or lien upon, any property owned by or in the possession of the said Receiver, and from doing any act or thing whatsoever to interfere with the Receiver in the discharge of his duties in this proceeding with the exclusive jurisdiction of this Court over said properties and said Receiver. (J.A. at 277-78, 454.) The stay clearly enjoins “all . . . persons . . . from commencing or continuing any action at law or suit or proceeding in equity . . . to . . . enforce any claim against VES and/or CFL [and Alpha Capital Group], or their property, or against the Receiver in any court.” (J.A. at 277-78, 454.) The Insurers argue that this universal language is ambiguous with regard to its applicability to the Insurers because 1) the injunction does not specifically mention insurance companies, and 2) the injunction does not make it clear that the insurance companies could not bring suit to establish legal rights or claims, which could then only be enforced via application to the Receivership court. We find that both arguments are belied by the plain language of the injunction itself. The stay is clearly written to encompass the broadest possible scope of potential action against the Receiver, the entities in Receivership, and Receivership assets. In fact, the stay contains the catch-all “any other persons” to include any person who happens not to be included by “creditors, claimants, bodies politic, parties in interest, and all sheriffs, marshals, and other officers, and their respective attorneys, servants, agents, and employees.” The Insurers are clearly claimants, parties in interest, and “other persons.” The Insurers’ argument that the blanket stay does not unambiguously apply to them is disingenuous. The Insurers’ related argument that the stay does not clearly foreclose actions to “establish a legal claim” to be subsequently enforced only upon leave of the Receivership court similarly lacks merit. The stay is written in the broadest possible terms. The stay precludes suit “to . . . enforce any claim against VES and/or CFL [and Alpha Capital Group], or their property, or against the Receiver in any court.” (J.A. at 277-78, 454.) A “claim” is defined simply as a “cause of action.” Black’s Law Dictionary 247 (6th ed. 1990). To argue that the adjudication of the legal rights of the Insurers against the Receiver with respect to the disputed policies is not “to enforce a claim” is unsupportable. The blanket stay issued by the Receivership court was all-encompassing. The Insurers admit that they were on notice of this general injunction. Any suit brought by the Insurers must therefore have been specifically authorized by the “litigation exception” in the district courts’ subsequent orders.