Fergison V Vanderhall Motorworks Inc
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
KELLIE FERGISON, *
Plaintiff, *
vs. *
VANDERHALL MOTORWORKS INC., * CASE NO. 4:25-CV-146 (CDL)
HALL LABS, LLC, EXTREME
POWERSPORTS INC., and GENERAL *
MOTORS LLC,
*
Defendants.
*
O R D E R
Plaintiff filed this civil action in the State Court of
Muscogee County, then one of the Defendants filed a voluntary
Chapter 11 petition in Utah. One of the non-debtor Defendants
removed the state court civil action to this Court under the
bankruptcy removal statute. The parties now agree on one thing:
another court should preside over the case. They do not agree on
which court. Plaintiff contends that her claims against the debtor
Defendant should be severed from her claims against the non-debtor
Defendants and that the claims should all be remanded to the state
court. Two of the Defendants argue that the entire action should
be transferred to the U.S. District Court for the District of Utah.
For the reasons set forth below, the Court grants Plaintiff’s
motion to sever (ECF No. 15) to the extent that Plaintiff’s claims
against the three non-debtor Defendants (Vanderhall Motorworks
Inc., Extreme Powersports Inc. and General Motors LLC) are severed
from the claims against Hall Labs LLC. Those claims are remanded
to the State Court of Muscogee County. Vanderhall Motorworks
Inc.’s motion to transfer (ECF No. 14) is denied. Hall Labs LLC’s
motion to transfer (ECF No. 13) is granted, and the claims against
Hall Labs LLC shall be transferred to the U.S. District Court for
the District of Utah, where the related bankruptcy matter is
Petition # 25-21038.
BACKGROUND
Plaintiff’s husband died following a single-vehicle crash of
his Vanderhall Venice vehicle. Plaintiff brought this wrongful
death action in the State Court of Muscogee County, Georgia. She
alleges that (1) Defendant Vanderhall Motorworks, Inc. designed,
manufactured, and marketed the vehicle, then sold it to Plaintiff’s
husband through a dealership; (2) Defendant Hall Labs LLC, a
shareholder of Vanderhall, provided consulting and technical
assistance to Vanderhall for the design, manufacture, marketing,
and sale of the vehicle; (3) Defendant General Motors LLC sold
Vanderhall electronic vehicle modules that were used on the
vehicle; and (4) Defendant Extreme Powersports Inc. is the
dealership that sold the vehicle to Plaintiff’s husband.1
1 Plaintiff also alleged that Hall Labs controlled Vanderhall to the
extent that the corporate form should be disregarded and Hall Labs should
be held liable for any wrongdoing by Vanderhall, though in her briefing
she acknowledges that she obtained evidence that Hall Labs and Vanderhall
are separate entities and Hall Labs has no control over Vanderhall.
Plaintiff asserts that her husband’s death was caused by
Defendants’ defective product design, inadequate warnings, breach
of warranties, and negligence.
After Plaintiff filed the state court action, Hall Labs filed
a motion to dismiss the claims against it for lack of personal
jurisdiction in Georgia. Hall Labs also raised lack of personal
jurisdiction as an affirmative defense in its answer. Hall Labs
then filed a voluntary Chapter 11 petition in the United States
Bankruptcy Court for the District of Utah, where it is pending as
Petition # 25-21038. Vanderhall removed the action to this Court
under the bankruptcy removal statute, 28 U.S.C. § 1452(a). The
state court did not decide Hall Labs’ motion to dismiss for lack
of personal jurisdiction before removal.
DISCUSSION
Hall Labs and Vanderhall argue that this action should be
transferred to the District of Utah because the wrongful death
claims against Hall Labs are related to the Hall Labs chapter 11
proceeding, the claims against Vanderhall are also related to the
Hall Labs chapter 11 proceeding, and federal law permits such a
transfer. Plaintiff, on the other hand, opposes a transfer and
argues that the Court should sever the claims against the non-
debtor Defendants and remand them to the state court. She also
contends that the Court must abstain from hearing her claims
against Hall Labs and remand them to the state court, where they
would still be subject to the automatic bankruptcy stay. In the
alternative, Plaintiff asserts that the claims against the non-
debtor Defendants should be severed and remanded and that the
claims against Hall Labs should remain in this Court, subject to
the bankruptcy stay. General Motors LLC and Extreme Powersports
did not weigh in on the motion to sever or either motion to
transfer.2
Federal Rule of Civil Procedure 21 permits the Court to “sever
any claim against a party.” So, the Court may divide an action
containing multiple claims into two discrete, independent actions.
Vanderhall argues that severance is only allowed if the parties
are misjoined, although the main authority it cited on this point
is a non-final report and recommendation from a U.S. Magistrate
Judge that recommended granting a motion to sever some of the
plaintiff’s unrelated claims that the plaintiff argued were
properly joined. See Order & Non-Final R&R, ECF No. 47 in Daker
v. Jones, 4:24-cv-173 (N.D. Ga. Nov. 21, 2024). The Magistrate
Judge in Daker did not recommend holding that a Rule 21 motion to
sever may only be granted if the parties are misjoined. Moreover,
although the Court of Appeals for the Eleventh Circuit has not
clearly reached a holding on the issue, many district courts within
the circuit have concluded that misjoinder is not required for
2 General Motors LLC did file a motion to dismiss for lack of personal
jurisdiction, but the Court need not reach that motion given the remand.
Rule 21 severance. See, e.g., Simmons v. Wal-Mart Assocs., Inc.,
No. 2:23-CV-15-SCJ-JCF, 2024 WL 4649389, at *1 (N.D. Ga. Jan. 9,
2024), report and recommendation adopted, No. 2:23-CV-0015-SCJ,
2024 WL 4649259 (N.D. Ga. Jan. 29, 2024); Essex Ins. Co. v. Kart
Const., Inc., No. 8:14-CV-356-T-23TGW, 2015 WL 628782, at *5 (M.D.
Fla. Feb. 12, 2015). And, even the courts which have suggested
that Rule 21 severance is normally proper only when claims are
misjoined recognize that Rule 21 severance should be permitted
even where Rule 20 allows for joinder if severance is justified by
“considerations of judicial economy, case management, prejudice to
parties, and fundamental fairness.” Barber v. Am.’s Wholesale
Lender, 289 F.R.D. 364, 368 (M.D. Fla. 2013).
Here, Plaintiff’s claims against Hall Labs are subject to the
automatic bankruptcy stay. Severing the claims against Hall Labs
will allow Plaintiff’s claims against the non-debtor Defendants to
proceed without delay while protecting the debtor Defendant’s
estate, and the Court is not persuaded that severance will
substantially prejudice any party. The Court thus finds that
considerations of judicial economy, prejudice to the parties, and
fundamental fairness weigh in favor of severing Plaintiff’s claims
against Hall Labs.
Vanderhall argues that Plaintiff’s claims against it are so
closely related to the claims against Hall Labs that severance
should not be permitted.3 Vanderhall asserts that the state law
tort claims against it are “related to” the state law tort claims
against Hall Labs, which are in turn “related to” the Hall Labs
bankruptcy proceeding. In making this argument, Vanderhall
invokes the test for determining whether a civil action has a
sufficient nexus to the bankruptcy case to give rise to federal
court jurisdiction over that civil action. That test is “whether
the outcome of the proceeding could conceivably have an effect on
the estate being administered in bankruptcy.” Miller v. Kemira,
Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir.
1990). Although a “proceeding need not necessarily be against the
debtor or against the debtor’s property” to be “related to
bankruptcy,” it can only be “related to bankruptcy if the outcome
could alter the debtor’s rights, liabilities, options, or freedom
of action (either positively or negatively)” and “in any way
impacts upon the handling and administration of the bankrupt
estate.” Id.
Vanderhall did not clearly explain how the outcome of the
claims against it (or the other non-debtor Defendants) could
conceivably have any effect on the Hall Labs bankruptcy estate.
Plaintiff brought separate claims against each Defendant based on
3 Vanderhall does not contend that this is an unusual case where the
automatic bankruptcy stay should apply to a non-debtor due to a close
identity between the debtor and non-debtor such that a judgment against
the non-debtor would be, in effect, a judgment against the debtor.
that Defendant’s alleged actions. Her claims are asserted under
Georgia law, which provides for apportionment of damages based on
a liable defendant’s percentage of fault and does not give rise to
a right of contribution against an alleged joint tortfeasor. See
generally O.C.G.A. § 51-12-33.4 Under these circumstances, the
Court is not persuaded that the claims against Hall Labs are so
intertwined with the claims against the non-debtor Defendants that
severance would be inappropriate. Vanderhall notes that Plaintiff
alleges that it and Hall Labs worked together on the vehicle’s
design, but it is not evident how that alleged conduct, standing
alone, would affect the bankruptcy estate given that liability and
fault must be separately determined for each Defendant.5 For all
these reasons, the Court grants Plaintiff’s motion to sever her
claims against Hall Labs from her claims against Vanderhall,
General Motors, and Extreme Powersports. Those claims shall
proceed as a separate, independent action.
The Court also finds that the claims against Vanderhall,
General Motors, and Extreme Powersports should be remanded to the
state court. The only asserted basis for this Court to exercise
jurisdiction over the claims against those three Defendants was
4 Even if Alabama law applied to Plaintiff’s wrongful death claims,
Vanderhall did not explain how a recovery against it would affect the
Hall Labs bankruptcy estate.
5 Plaintiff appears to concede that her “piercing the corporate veil”
theory against Hall Labs is dubious. Even if that claim is still in the
case, Vanderhall did not establish how the claim would be affected by
the outcome of Plaintiff’s claims against Vanderhall.
“related to” bankruptcy jurisdiction. For the reasons explained
above, the Court is not persuaded that it may exercise “related
to” bankruptcy jurisdiction over the claims against the non-debtor
Defendants. Accordingly, Plaintiff’s action against Vanderhall,
General Motors, and Extreme Powersports is remanded to the State
Court of Muscogee County.6
Turning to the claims against Hall Labs, those claims are
indisputably “related to” the bankruptcy proceeding. Hall Labs
contends that the claims should be transferred to the U.S. District
Court for the District of Utah under 28 U.S.C. § 157(b)(5). That
statute requires that a “district court shall order that personal
injury tort and wrongful death claims shall be tried in the
district court in which the bankruptcy case is pending, or in the
district court in the district in which the claim arose, as
determined by the district court in which the bankruptcy case is
pending.” 28 U.S.C. § 157(b)(5) (emphasis added). So, the
District of Utah is supposed to decide where Plaintiff’s tort
claims against Hall Labs should be tried.
6 Although there is complete diversity of the parties and the amount in
controversy exceeds the jurisdictional amount, the action was not
removable under the general removal statute based on diversity
jurisdiction because Extreme Powersports is a Georgia citizen. See 28
U.S.C. § 1441(b)(2) (“A civil action otherwise removable solely on the
basis of the jurisdiction under section 1332(a) of this title may not
be removed if any of the parties in interest properly joined and served
as defendants is a citizen of the State in which such action is
brought.”).
Plaintiff contends that despite the mandatory “shall order”
language of § 157(b)(5), the Court should abstain from hearing
this matter pursuant to 28 U.S.C. § 1334(c) and remand to the state
court. Section 1334(c) permits (or in some cases requires) a
district court to abstain from hearing a case that is related to
a bankruptcy proceeding and remand it to the state court. There
are two types of abstention under § 1334(c): mandatory and
permissive. Plaintiff argues that both types apply here. But
non-core proceedings like Plaintiff’s tort claims against Hall
Labs “shall not be subject to the mandatory abstention provisions
of section 1334(c)(2).” 28 U.S.C. § 157(b)(4); Kadel v. Thompson,
84 B.R. 878, 881 (N.D. Ga. 1988) (explaining interaction between
§ 157 and § 1334); Coker v. Pan Am. World Airways, Inc. (In re Pan
Am. Corp.), 950 F.2d 839, 845 (2d Cir. 1991) (same). So, mandatory
abstention does not apply.
Some courts, though, have concluded that permissive
abstention under § 1334(c)(1) is allowed for personal injury
cases, although transfer under § 157(b)(5) “should be the rule,
abstention the exception” given § 157(b)(5)’s purpose of
centralizing administration of the bankruptcy estate. Coker, 950
F.2d at 845. Permissive abstention allows a court to decline to
exercise its jurisdiction over a matter, and it is permitted for
“related to” cases “in the interest of justice, or in the interest
of comity with State courts or respect for State law.” Id.
(quoting § 1334(c)(1)). Here, the Court finds it significant that
Hall Labs never consented to personal jurisdiction in Georgia.
Rather, it filed a motion to dismiss in the state court and raised
lack of personal jurisdiction as an affirmative defense.
Consenting to Vanderhall’s removal did not constitute a waiver of
Hall Labs’ personal jurisdiction challenge. Reynolds v. Behrman
Cap. IV L.P., 988 F.3d 1314, 1323 (11th Cir. 2021) (“[D]efendants
who remove their action to federal court do not waive their
challenge to personal jurisdiction.”). Although Hall Labs has not
refiled the motion to dismiss in this Court, it did promptly file
a motion to transfer the claims against it to a court where it
does not contest personal jurisdiction. And, if the claims against
Hall Labs were remanded to state court, the state court would still
have to decide the personal jurisdiction issue (if Plaintiff
obtains relief from the automatic stay).
Under these circumstances, particularly the concerns about
personal jurisdiction over Hall Labs, the Court finds that
abstention is not appropriate. The Court further finds that it is
in the interest of justice to transfer Plaintiff’s claims against
Hall Labs to the U.S. District Court for the District of Utah.
See 28 U.S.C. § 1412 (permitting a district court to transfer a
bankruptcy proceeding “to a district court for another district,
in the interest of justice or for the convenience of the parties”).
The Utah court can then decide where Plaintiff’s claims against
Hall Labs should be tried.
CONCLUSION
As discussed above, the Court grants Plaintiff’s motion to
sever (ECF No. 15) to the extent that Plaintiff’s claims against
the three non-debtor Defendants (Vanderhall Motorworks Inc.,
Extreme Powersports Inc. and General Motors LLC) are severed from
the claims against Hall Labs LLC. Those claims are remanded to
the State Court of Muscogee County. Vanderhall Motorworks Inc.’s
motion to transfer (ECF No. 14) is denied. Hall Labs LLC’s motion
to transfer (ECF No. 13) is granted, and the claims against Hall
Labs LLC shall be transferred to the U.S. District Court for the
District of Utah, where the related bankruptcy matter is Petition
# 25-21038.
IT IS SO ORDERED, this 22nd day of July, 2025.
S/Clay D. Land
CLAY D. LAND
U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA