Court Opinion

ID: 1016723
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:53:40.921228+00
Date Added: 2024-06-11T15:27:07.254811
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                            No. 04-1922

JACOB W. RUNKLE,

                                             Plaintiff - Appellee,

          and

THE MONARCH MACHINE TOOL COMPANY; GENESIS
WORLDWIDE,    INCORPORATED;    GENSYSTEMS
INCORPORATED,

                                           Defendants - Appellees,

          versus

GENESIS WORLDWIDE II, INCORPORATED; NEW STAMCO
INCORPORATED,

                                          Defendants - Appellants,

          and

STAMCO INCORPORATED; STAMCO, A Division of the
Monarch Machine Tool Company; MONARCH MACHINE
TOOL INCORPORATED; CYGNUS MANAGEMENT ADVISORS;
PEGASUS   PARTNERS   II,   LP;   KPS   SPECIAL
SITUATIONS FUNDS LP; NEW MONARCH MACHINE TOOL
INCORPORATED,

                                                       Defendants.

Appeal from the United States District Court for the District of
South Carolina, at Charleston.   Patrick Michael Duffy, District
Judge. (CA-03-195-23-2)
Argued:   May 25, 2005                   Decided:   July 26, 2005

Before LUTTIG and SHEDD, Circuit Judges, and Eugene E. SILER, Jr.,
Senior Circuit Judge of the United States Court of Appeals for the
Sixth Circuit, sitting by designation.

Dismissed in part and affirmed in part by unpublished per curiam
opinion.

ARGUED: Gray Thomas Culbreath, COLLINS & LACY, Columbia, South
Carolina, for Appellants.    Mark Charles Tanenbaum, Charleston,
South Carolina, for Appellee. ON BRIEF: Mia Lauren Maness, MARK C.
TANENBAUM, P.A., Charleston, South Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:

     Jacob W. Runkle sued The Monarch Machine Tool Company, Genesis

Worldwide, Inc., and Gensystems, Inc. (the “GWI defendants”) and

Genesis   Worldwide   II,    Inc.   and   New   Stamco,   Inc.   (the   “GWII

defendants”) on claims for negligence, breach of express and

implied warranties, and strict liability arising from an injury

caused by industrial equipment designed, manufactured, and sold by

the GWI defendants.1        At the time Runkle brought suit, the GWI

defendants were in bankruptcy.       The GWI defendants filed a notice

of bankruptcy with the district court and requested a stay in

accordance with 11 U.S.C. § 362.           The district court granted a

statistical stay over the case and abstained from exercising

jurisdiction until the bankruptcy proceedings concluded.

     Before the GWI defendants served a responsive pleading, Runkle

filed a notice of voluntary dismissal as to the GWI defendants and

moved the district court to proceed against the GWII defendants.2

The GWII defendants argued that Runkle’s suit should not proceed

     1
      Since the issuance of the district court’s order, Runkle has
filed a Second Amended Complaint against the GWII defendants
alleging the additional claim of breach of an independent duty to
warn.
     2
      Runkle filed a motion in the bankruptcy court for
clarification of the effect that the GWI defendants’ bankruptcy
would have on his claims against the GWII defendants. The GWII
defendants filed a cross-motion in bankruptcy court to enjoin the
products liability action. The bankruptcy court determined that
Runkle was not prevented from bringing suit against the GWII
defendants.

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against them because (1) the GWI defendants were indispensable

parties whose absence warranted dismissal of the case under Fed. R.

Civ. P. 19(b), and (2) the automatic stay applicable to the GWI

defendants should also extend to them under A.H. Robins Co., Inc.

v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986).       The district court

ruled that the GWI defendants were not indispensable parties and

that an extension of the stay was not appropriate under the

circumstances   of   the   case.   The   GWII    defendants   appeal   both

rulings.3   For the following reasons, we affirm.

                                   I.

     The GWII defendants first contend that the district court

abused its discretion by finding that the GWI defendants were not

indispensable parties under Rule 19(b).          Rule 19(b) authorizes a

district court to dismiss an action where an “indispensable” party

cannot be made a party to the action.           In determining whether a

party is “indispensable,” Rule 19(b) provides that “the factors to

be considered by the court include: first, to what extent a

judgment rendered in the person's absence might be prejudicial to

the person or those already parties; second, the extent to which,

by protective provisions in the judgment, by the shaping of relief,

or other measures, the prejudice can be lessened or avoided; third,

     3
      Although the GWII defendants appealed the voluntary dismissal
of the GWI defendants as violative of the automatic stay, they
abandoned that claim at oral argument.

                                   4
whether   a   judgment    rendered   in       the   person's    absence    will   be

adequate; fourth, whether the plaintiff will have an adequate

remedy if the action is dismissed for nonjoinder.”

     At the outset, we must determine whether we have jurisdiction

to entertain an appeal from this order.                    The district court’s

ruling on the Rule 19 issue is not a final order under 28 U.S.C. §

1291, and the district court did not certify this ruling for

interlocutory    appeal    under     28       U.S.C.   §   1292(b).       The   GWII

defendants argue, however, that this decision falls within the

“small class” of nonfinal orders that are immediately appealable as

collateral orders under Cohen v. Beneficial Industrial Loan Corp.,

337 U.S. 541 (1949).

     Under the collateral order doctrine, we may entertain an

appeal from an otherwise interlocutory order if that order (1)

conclusively determines the issue before the lower court, (2)

resolves an important question independent of the subject matter of

the litigation, and (3) is effectively unreviewable on appeal from

a final judgment in the case.             Id. at 546; Under Seal v. Under

Seal, 326 F.3d 479, 481-84 (4th Cir. 2003).                    Assuming that the

first and second elements of the collateral order doctrine are

satisfied, we are convinced that the district court’s Rule 19(b)

determination is not effectively unreviewable on appeal from a

final judgment.      Should the GWII defendants suffer an adverse

ruling on the merits, we could review the Rule 19(b) issue in an

                                          5
appeal from that judgment.        See Provident Tradesmens Bank & Trust

Co.   v.    Patterson,   390    U.S.    102,   110-12     (1968)    (considering

indispensability     under     Rule    19(b)   on   an   appeal    from    a   final

judgment); Universal Reinsurance Co., Ltd. v. St. Paul Fire &

Marine Ins. Co., 312 F.3d 82, 87-89 (2d Cir. 2002) (same); Gardiner

v. Virgin Islands Water & Power Auth., 145 F.3d 635, 640-43 (3d

Cir. 1998) (same). Because the district court’s determination that

the GWI defendants are not indispensable parties under Rule 19(b)

is effectively reviewable on appeal from a final judgment, that

determination is not a collateral order under Cohen, and we lack

jurisdiction over this portion of the appeal.

                                        II.

      The   GWII   defendants    also    challenge       the   district     court’s

decision to allow Runkle to proceed against them despite the

pendency of the GWI defendants’ bankruptcy proceedings.                   According

to the GWII defendants, the § 362 stay applicable to the GWI

defendants should also apply to them because a judgment against

them is in effect a judgment against the GWI defendants.                   We held

in A.H. Robins that a § 362 stay protects a nondebtor third-party

defendant in the “unusual situation . . . when there is such

identity between the debtor and the third-party 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

                                         6
judgment or finding against the debtor.” 788 F.2d at 999 (internal

quotations omitted).       Distinguishing A.H. Robins from this case,

the district court concluded that (1) there was no basis for

automatic indemnification, (2) these proceedings would not impair

the GWI defendants’ ability to liquidate in bankruptcy, (3) these

proceedings would not reduce the property of the bankrupt estate,

and (4) there was not such identity between the parties that the

GWI defendants were the real party defendant.          J.A. 351-53.     Upon

our own review of the record, we agree with the district court that

“the GWII Defendants have not brought forth any evidence of unusual

circumstances which would justify an extension of the automatic

stay to their protection or that would permit the court to stay the

proceedings on equitable grounds.          An extension of the stay would

only delay [Runkle’s] action, with no benefit to the debtor’s

estate.”    J.A. 353-54.

                                    III.

     In    conclusion,     we   dismiss    that   portion   of   the   appeal

challenging the district court’s ruling under Rule 19, and we

affirm the district court’s order permitting Runkle to proceed

against the GWII defendants.

                                                        DISMISSED IN PART
                                                     AND AFFIRMED IN PART

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