## Facts

- Floyd Weed (Weed) sued Mansfield Tire & Rubber Co. (Mansfield) and Fleet Tire Mart (Fleet) for products liability.
- Weed’s complaint asserted seven causes of action; five were directed at Fleet alone.
- After Weed filed suit, Mansfield filed a Chapter 11 reorganization petition on October 1, 1979.
- Mansfield’s bankruptcy filing triggered the automatic stay, halting continuation of Weed’s action against Mansfield.
- Weed argued the stay should not block his efforts because Mansfield might have had a products-liability insurance policy that could satisfy any recovery without affecting the reorganization.
- On that basis, Weed moved for relief from the automatic stay to conduct additional discovery concerning the existence and scope of any products-liability insurance.
- Mansfield submitted an affidavit dated March 12, 1980 stating that it had no products-liability insurance policy of the type Weed claimed might exist.
- The court heard Weed’s request for stay relief in light of Mansfield’s affidavit and Weed’s insurance-based theory.

## Issues

1. Whether a tort claimant shows “cause” under 11 U.S.C. § 362(d)(1) to modify or lift the automatic stay to pursue discovery aimed at locating possible liability insurance.
2. Whether stay relief is warranted when the movant’s insurance-coverage showing is speculative and the debtor submits sworn evidence denying the existence of applicable coverage.

## Decision

- The court denied Weed’s motion for relief from the automatic stay.
- The court determined Weed had not made an adequate factual showing of “cause” to justify modifying the stay for insurance-related discovery.
- The court treated Mansfield’s sworn denial of relevant insurance coverage as defeating Weed’s asserted basis for proceeding outside the bankruptcy process.

## Legal Principles

- Filing a Chapter 11 petition triggers an automatic stay that stops continuation of actions against the debtor. See 11 U.S.C. § 362(a).
- A party seeking relief from the stay bears the burden of establishing “cause” under 11 U.S.C. § 362(d)(1).
- Requests to proceed based on insurance are generally tied to a concrete showing that applicable coverage exists and that the requested action will be confined to non-estate sources of payment.
- Mere speculation that liability insurance “might” exist is insufficient to justify lifting or modifying the stay, particularly where the debtor provides sworn evidence negating the asserted coverage.
- Courts may consider the costs and disruption to the reorganization that would follow from permitting discovery or litigation to proceed without a solid factual basis.

## Conclusion

In *Floyd Weed v. Fleet Tire Mart*, the court left the automatic stay in place because Weed’s request depended on an unproven theory that Mansfield had products-liability insurance, and Mansfield countered with a sworn affidavit denying any such coverage; without a concrete evidentiary foundation, Weed did not establish “cause” for stay relief under § 362(d)(1).


Floyd Weed v. Fleet Tire Mart, 1980 U.S. Dist. LEXIS 16924 (1980)