Court Opinion

ID: 32246
Source: CourtListenerOpinion
Date Created: 2010-04-25 18:51:35+00
Date Added: 2024-06-11T14:56:21.666998
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                 August 25, 2003

                                                         Charles R. Fulbruge III
                                                                 Clerk
                           No. 02-21354
                         Summary Calendar

United States of America, ex rel.; JAMES BOWMAN; JERMON BROWN;
DONNA BUZZELLI; CHRISTINA CARLYLE; GILBERT CRUZ; LEVI GASTON,
III; MICHAEL GRANDMAITER; RICHARD HIGGINS; BEN HUGHES; JOHN
KURUVILLA; JOHN T. KEYS; DONNA LEATH; KYLE LYNCH; GEORGE
MICHALINOS; MICHAEL MORRIS; KIMBERLY D. PRICE; SCOTT SORENSON;
JACK H. TA; LINDA VANDALL; FRANK WETEGROVE; MICHAEL WOOD,

                                    Plaintiffs-Appellants,

versus

COMPUTER LEARNING CENTERS, INC.; REID R. BECHTLE; CHARLES S.
COSGROVE; SUSAN L. LUSTER; MARK M. NASSER; HARRY H. GAINES; RALPH
CLARK; IRA COHEN; JOHN L. CORSE; STEPHEN P. REYNOLDS; PRICE
WATERHOUSE LLP,

                                    Defendants-Appellees.

                       --------------------
          Appeal from the United States District Court
               for the Southern District of Texas
                      USDC No. H-99-CV-1138
                       --------------------

Before JONES, BENAVIDES, and CLEMENT, Circuit Judges.

PER CURIAM:*

     James Bowman, et al. (Bowman) filed a qui tam action

pursuant to 31 U.S.C. § 3730(b)(1) of the False Claims Act

against Computer Learning Centers (CLC), various officers and

     *
        Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                            No. 02-21354
                                 -2-

board members of CLC, and Price Waterhouse LLP (“PW”).    After CLC

filed a bankruptcy petition, the district court, invoking 11

U.S.C. § 362(a)(1), issued an order dismissing the entire action

without prejudice.

     Bowman argues that the district court’s dismissal of the

entire action was erroneous.    He argues that CLC’s filing of a

bankruptcy petition should not affect the pursuit of claims

against PW and the remaining defendants.

     Once a party files in bankruptcy, further actions against

the debtor are stayed under 11 U.S.C. § 362.    See Arnold v.

Garlock, Inc., 278 F.3d 426, 435-36 (5th Cir. 2001).     However,

“a section 362(a)(1) stay is available only for the debtor’s

benefit and does not prohibit actions against nonbankrupt third

parties or codefendants.”     In re S.I. Acquisition, Inc., 817 F.2d

1142, 1147 (5th Cir. 1987).    Accordingly, we VACATE the district

court’s order of dismissal and REMAND this matter for further

proceedings not inconsistent with this opinion.

     PW argues that the district court’s dismissal should be

affirmed on an alternate ground.    PW contends that Bowman failed

to effect service within the 120-day period provided by FED.

R. CIV. P. 4(m), and that Bowman cannot show “good cause.”

However, as we explained in Thompson v. Brown, 91 F.3d 20, 21

(5th Cir. 1996), a district court enjoys discretion under Rule

4(m) to extend the time for service even when a plaintiff fails

to show good cause.   “If good cause is present, the district
                              No. 02-21354
                                   -3-

court must extend time for service.     If good cause does not

exist, the court may, in its discretion, decide whether to

dismiss the case without prejudice or extend time for service.”

Id.

      Because Rule 4(m) vests the district court with discretion

to extend the time for service if good cause does not exist, see

id., it would be inconsistent with the dictates of the rule, as

well as an infringement on the discretion granted the district

court, to affirm the district court’s dismissal based merely on

the absence of good cause.     Accordingly, we do not reach the good

cause issue, and we decline to affirm the judgment on the

alternate ground argued by PW.

      VACATED and REMANDED.