PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 23-1349

In re: DAVID ANDREW LEVINE; MONICA LARSON LEVINE,

Debtors.

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THOMAS M. FLUHARTY, Trustee of the Bankruptcy Estate of David Levine and Monica Levine; MARTIN P. SHEEHAN, Trustee of the Bankruptcy Estate of Geostellar, Inc.,

Plaintiffs – Appellants,

v.

PHILADELPHIA INDEMNITY COMPANY; DAVID A. LEVINE,

Defendants – Appellees.

Appeal from the United States District Court for the Northern District of West Virginia, at Martinsburg. Gina M. Groh, District Judge. (3:22-cv-00050-GMG)

Argued: September 25, 2024 Decided: February 26, 2025

Before KING, BENJAMIN, and BERNER, Circuit Judges.

Affirmed by published opinion. Judge Benjamin wrote the opinion in which Judge King and Judge Berner joined. USCA4 Appeal: 23-1349 Doc: 43 Filed: 02/26/2025 Pg: 2 of 10

ARGUED: Patrick S. Cassidy, CASSIDY LAW, PLLC, Wheeling, West Virginia, for Appellants. David Edward Grassmick, COPE ELHERS PC, Chicago, Illinois for Appellee Philadelphia Indemnity Insurance Company. ON BRIEF: Timothy F. Cogan, COGAN LAW OFFICE, PLLC, Wheeling, West Virginia; Martin P. Sheehan, SHEEHAN & ASSOCIATES, PLLC, Wheeling, West Virginia, for Appellants. Debra Tedeschi Varner, VARNER & VAN VOLKENBURG PLLC, Clarksburg, West Virginia, for Appellee Philadelphia Indemnity Insurance Company.

2 USCA4 Appeal: 23-1349 Doc: 43 Filed: 02/26/2025 Pg: 3 of 10

DEANDREA GIST BENJAMIN, Circuit Judge:

Appellants Thomas Fluharty, Trustee of the Bankruptcy Estate of David and Monica

Levine (“Levine Trustee”), and Martin P. Sheehan, Trustee of the Bankruptcy Estate of

Geostellar, Inc. (“Geostellar Trustee,” together “Trustees”), appeal the district court’s

dismissal of their adversary proceeding for declaratory judgment against appellee

Philadelphia Indemnity Company (“Insurer”). We affirm. 1

I.

This is a tale of two bankruptcies and two adversary actions. Geostellar Inc. filed

for bankruptcy and subsequently brought an adversary action (“Geostellar Adversary

Action”) against its former CEO David Levine, accusing him of defrauding and

bankrupting the company. Before the Geostellar Adversary Action began, Geostellar had

purchased a directors and officers policy (“Policy”) from Insurer. Levine sought and

Insurer began to provide a defense under the Policy. The Policy is a declining balance or

“wasting” policy, meaning that, as Insurer pays defense costs, those costs are deducted

from the $3 million coverage limit.

Later, Levine and his wife filed for personal bankruptcy. The start of Levine’s

bankruptcy proceedings automatically stayed the Geostellar Adversary Action pursuant to

11 U.S.C. § 362(b). To continue prosecuting the Geostellar Adversary Action, the

1 After oral argument, the Trustees moved to modify the record (ECF No. 37) and we grant the motion.

3 USCA4 Appeal: 23-1349 Doc: 43 Filed: 02/26/2025 Pg: 4 of 10

Geostellar Trustee moved the Levine bankruptcy court to lift § 362(b)’s automatic stay. In

his motion, the Geostellar Trustee admitted that because Geostellar had not objected to

Levine’s discha

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