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Zloop, Inc. v. Phelps Dunbar, L.L.P.

United States District Court, M.D. Louisiana

July 10, 2017

ZLOOP, INC.
v.
PHELPS DUNBAR, L.L.P., ET AL.

          ORDER

          RICHARD L. BOURGEOIS, JR. MAGISTRATE JUDGE

         Before the Court is Defendants' Motion for Enlargement of Time to Answer or Otherwise Respond to Counts 1-3 of the Complaint (R. Doc. 20) filed on May 31, 2017. The motion is opposed. (R. Doc. 25). Defendants have filed a Reply. (R. Doc. 32).

         Also before the Court is Defendants' Motion For Protective Order Staying Initial Disclosures and Discovery Pending Resolution Of A Ruling On Their Rule 12(b)(6) Motion (R. Doc. 21) filed on May 31, 2017. The motion is opposed. (R. Doc. 24). Defendants have filed a Reply. (R. Doc. 34).

         The Court will consider these motions together because they concern related issues.

         I. Background

         On April 7, 2017, Zloop, Inc., by and through Patrick Trae' O'Pry, Plan Administrator, (“Plaintiff”) initiated this action against Phelps Dunbar, L.L.P. (“Phelps”) and the four individual attorneys Heather Duplantis, Michael D. Hunt, Kelly Kromer Boudreaux, and Marc G. Matthews (collectively, “Defendants”). (R. Doc. 1). Plaintiff subsequently filed a First Amended Complaint to modify the caption. (R. Doc. 2).

         Plaintiff alleges that Zloop, Inc. “is an inactive Delaware corporation currently being liquidated pursuant to a Chapter 11 Plan of Liquidation in the United States Bankruptcy Court for the District of Delaware that was confirmed on October 25, 2016 and which became [e]ffective on December 1, 2016.” (R. Doc. 1 at 1). In short, Plaintiff is seeking recovery of certain property and fees earned from Phelps in the course of its earlier representation of Zloop, Inc. and two of its officers, as well as additional damages as asserted in the Complaint. Through Count 1 (post-petition avoidance under 11 U.S.C. § 549 and recovery under 11 U.S.C. § 550), Count 2 (turnover of property of the estate under 11 U.S.C. § 542), and Count 3 (disgorgement of fees under 11 U.S.C. §§ 327, 328, 329), Plaintiff seeks recovery under various sections of the bankruptcy code. (R. Doc. 1 at 43-48). Through Count 4 (legal malpractice), Count 5 (breach of fiduciary duty), and Count 6 (aiding and abetting breach of fiduciary duty), Plaintiff seeks damages under Louisiana and Delaware law. (R. Doc. 1 at 48-77).

         On May 5, 2017, Defendants filed an Ex Parte Motion for Extension of Time to Answer or Otherwise Plead (R. Doc. 14) pursuant to Local Rule 7. The Court granted the motion, extending the deadline for Defendants to file an answer or responsive pleading to June 1, 2017. (R. Doc. 17).

         On May 31, 2017, Defendants filed a Motion to Dismiss Counts 4-6 of the Complaint. (R. Doc. 19).

         That same day, Defendants filed the instant motions. (R. Doc. 20; R. Doc. 21). In their first motion, Defendants seek an enlargement of time to answer or otherwise respond to Counts 1-3 of the Complaint until 14 days after notice of the Court's action on the Motion to Dismiss Counts 4-6 of the Complaint. (R. Doc. 20). In their second motion, Defendants seek a protective order staying all discovery in the instant action until the Court rules on the Motion to Dismiss Counts 4-6 of the Complaint. (R. Doc. 21).

         In light of Defendants' motion for a protective order staying all discovery, the Court cancelled its scheduling conference set for June 29, 2017, and informed the parties that it would set a new date for the scheduling conference after it ruled on that pending motion. (R. Doc. 33).

         II. Law and Analysis

         The Court first turns to Defendants' Motion for Enlargement of Time to Answer or Otherwise Respond to Counts 1-3 of the Complaint (R. Doc. 20)

         Rule 12(a)(4) allows a defendant to file a motion to dismiss and await its disposition before filing an answer by extending the deadline to serve an answer or responsive pleadings until 14 days after notice of the Court's denial of the motion to dismiss, or postponement of ruling until trial. Fed.R.Civ.P. 12(a)(4). Rule 12(a)(4) does not, however, explicitly provide whether a partial motion to dismiss extends the ...


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