After the Debtor, Touchstone Home Health, LLC, terminated its pre-petition representation by the Santangelo Law Offices, P.C. (the “Law Firm”), the Law Firm continued to assert that it was owed substantial attorneys’ fees, costs, and interest for its work; but the Debtor contested such obligation. In 2015, as a result of the parties’ impasse, the Law Firm initiated an arbitration proceeding under its fee agreement with the Debtor.
Before the arbitration was scheduled to proceed to a final evidentiary hearing, and just one day prior to an important deadline in the arbitration, the Debtor filed for relief under Chapter 11 of the Bankruptcy Code. The Law Firm moved for relief from the automatic stay pursuant to 11 U.S.C. § 362(d)(1) to proceed with liquidation of its claims against the Debtor through arbitration.
After a preliminary hearing at which the Court received oral offers of proof and exhibits and heard legal arguments from the parties, the Court determined that relief from stay “for cause” was warranted and the parties must be compelled to liquidate the Law Firm’s claim by arbitration. Finding no inherent conflict between arbitration and bankruptcy law in the context of the case, the Court concluded that it was required to enforce the arbitration agreement. The Court further concluded that, even if it had discretion to refuse to compel arbitration, it would exercise such discretion in favor of allowing the arbitration to proceed. Under the circumstances, bankruptcy did not eclipse the right to continue the arbitration.