In re United Container LLC

• Decision Date: 08 October 2002
• Docket Number: Bankruptcy No. 01-22614-8G7.,Adversary No. 02-1372-BKC-RAM-A.,Adversary No. 02-1285-BKC-RAM-A.
• Citation: 284 B.R. 162
• Parties: In re UNITED CONTAINER LLC, Debtor. E.S. Bankest, LLC, Plaintiff, v. United Beverage Florida, LLC, et al., Defendants. E.S. Bankest, LLC, Plaintiff, v. General Electric Company, d/b/a GE Supply, et al., Defendants.
• Court: U.S. Bankruptcy Court — Southern District of Florida

284 B.R. 162

In re UNITED CONTAINER LLC, Debtor.

E.S. Bankest, LLC, Plaintiff, v. United Beverage Florida, LLC, et al., Defendants.

E.S. Bankest, LLC, Plaintiff, v. General Electric Company, d/b/a GE Supply, et al., Defendants.

Bankruptcy No. 01-22614-8G7.

Adversary No. 02-1285-BKC-RAM-A.

Adversary No. 02-1372-BKC-RAM-A.

United States Bankruptcy Court, S.D. Florida.

October 8, 2002.

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Raymond V. Miller, Gunster, Yoakley & Stewart, P.A., Miami, Fla., for Bankest in United Beverage Proceeding.

Gary M. Freedman, Tabas, Freedman & Soloff, P.A., Miami, Fla., for Bankest in GE Proceeding.

David Levine, Tew, Cardenas & Rebak, et al., Miami, Fla., for Unipro.

Lawrence M. Dudek, Miller, Canfield & Paddock, P.A., Detroit, MI, for Unisource.

Andrea S. Hartley, Merrick L. Gross, Andrea S. Hartley, Brian P. Miller, and Megan J. Knight, Akerman, Senterfitt & Eidson, P.A., Miami, Florida, for Brown Foodservice, Inc., et al.

Jose I. Astigarraga, Astigarraga, Davis, Mullins & Grossman, P.A., Miami, Fla., for GE.

MEMORANDUM OPINION

ROBERT A. MARK, Chief Judge.

This opinion addresses motions for remand filed in two adversary proceedings, proceeding Adv. No. 02-1285, styled E.S. Bankest, L.L.C. ("Bankest") v. United Beverage, L.L.C. et al. (the "United Beverage Proceeding") and Adv. No. 02-1372, styled Bankest v. General Electric Company ("GE"), et al. (the "GE Proceeding"). These proceedings are not consolidated but the Court is issuing a single Memorandum Opinion since the motions for remand in the two proceedings present similar factual issues and identical legal issues.

Before the Court are three motions to remand the United Beverage Proceeding, specifically Bankest's Motion to Remand Case to State Court, the Motion by Unipro Foodservice, Inc. for Abstention and Remand of Adversary Proceeding, and the Motion to Remand to State Court filed by Defendants, Brown Foodservice, Inc., Doerle Food Service, Inc., Cash-Wa Distributing Company of Kearney, Inc., and Farm Boy Meats of Evansville, Inc. By separate pleading, Defendant, Alcoa, Inc. filed a Joinder in Unipro's Motion for Remand. Also before the Court is Bankest's Motion to Abstain and to Remand Case to State Court filed in the GE Proceeding (The Court will refer collectively to these motions as the "Motions for Remand" and collectively refer to the moving parties as the "Remand Movants").

Procedural Background

The United Beverage Proceeding was removed to this Court under 28 U.S.C. § 1452 on June 21, 2002, from the Circuit Court, Miami-Dade County, Florida, Case No. 02-13207-CA0-4 on a Notice of Removal filed by one of the defendants, Unisource Worldwide, Inc. ("Unisource"). The GE proceeding was removed to this Court on July 25, 2002 from the Circuit Court, Miami-Dade County, Florida, Case No. 02-15662-CA-32, on a Notice of Removal filed by GE. Removal is based on an allegation that these adversary proceedings are "related to" the Chapter 7 bankruptcy case of United Container, L.L.C. ("United Container") (Unisource and GE will be collectively referred to in this Opinion as the "Removing Defendants"). Although the United Container bankruptcy case is pending in the Middle District of Florida, the state court cases were removed to this Court since cases removed under 28 U.S.C. § 1452(a) are removed "to the district court for the district where such civil action is pending."

United Container (the "Debtor") filed its voluntary Chapter 11 petition on December 6, 2001 in the Middle District of Florida, Tampa Division, Case No. 01-22614-BKC-8G7. The bankruptcy case is pending before Judge Glenn. United Container's bankruptcy schedules list Bankest, the plaintiff in both of these proceedings, as United Container's largest secured creditor, holding a secured, but disputed claim in an amount close to $11 million. Bankest filed a proof of claim in United Container's bankruptcy case, and filed a motion to convert the case to Chapter 7 on January 15, 2002. On January 22, 2002, the bankruptcy court entered an order converting the case to Chapter 7.

Unisource, the defendant which removed the United Beverage Proceeding, also filed a proof of claim in United Container's bankruptcy case. Following removal of the United Beverage Proceeding, on July 12, 2002, Unisource filed a Motion to Transfer Venue of the proceeding to the United States Bankruptcy Court for the Middle District of Florida, Tampa Division, the court that is presently administering United Container's bankruptcy case. On July 19, 2002, this Court entered an Order setting a hearing on August 29, 2002, on the Motion to Transfer Venue and setting a status conference on certain other related matters, including the Motions for Remand. The Court's intention was to consider the Motion to Transfer Venue first.

Unipro and Bankest both filed motions seeking reconsideration of the July 19th Order. They argued that the Court should hear the Motions for Remand first, and only entertain the Motion to Transfer Venue if the Motions for Remand were denied. The Court then entered a second Scheduling Order which advised the parties that, at the August 29th hearing, the Court would determine whether the Motions for Remand should be heard first. The Order further advised the parties that a briefing schedule and further hearing would be set on the Motions for Remand if the Court agreed that the remand issues should be determined here rather than by Judge Glenn in Tampa.

At the August 29th hearing, the Removing Defendants stipulated to the procedure urged by the Remand Movants, namely having this Court first determine whether to remand these proceedings to the state court, and only thereafter, if remand is denied, entertain the Motion to Transfer Venue. This procedure is in accord with the majority view that jurisdictional issues should be considered first. See Lone Star Industries, Inc. v. Liberty Mutual Insurance, 131 B.R. 269, 272 (D.Del.1991); Global Underwriting Management, Inc. v. Chatham Underwriting Management Inc., 147 B.R. 601, 603 (Bankr.S.D.Fla.1992).

Following the August 29th hearing, the Court entered a Scheduling Order setting a briefing schedule and oral argument for September 18, 2002 on the Motions for Remand. The Court has reviewed the record, including the two state court complaints, the Motions for Remand and the memoranda submitted by the parties. The Court has also considered the oral arguments presented at the September 18th hearing, and applicable case law. For the reasons that follow, the Motions for Remand are granted.

Facts

On May 21,2002, Bankest filed the United Beverage Proceeding in state court alleging it was victimized by a large multi-party fraudulent invoice scheme involving the more than fifty named defendants. The scheme allegedly originated from Bankest's factoring relationship with the Debtor, United Container, which is not a party to this proceeding.

By its complaint, Bankest, a commercial factor, seeks damages in excess of $10 million in the United Beverage Proceeding, and has requested a jury trial. The complaint is based upon state law claims broken into five main legal theories: 1) conspiracy to defraud; 2) violation of Florida's Civil Remedies for Criminal Practices Act; 3) fraudulent misrepresentation; 4) negligent misrepresentation; and 5) account stated for the accounts receivable. Several defendants have filed responsive pleadings. Some answered and others filed motions to dismiss.

On June 21, 2002, Unisource filed its Notice of Removal pursuant to 28 U.S.C. § 1452(a) and 28 U.S.C. § 1334(b). The sole relationship between the United Beverage Proceeding and the United Container bankruptcy case, according to Unisource's removal papers, is that both Unisource and Bankest have filed proofs of claim in the United Container bankruptcy. According to its papers, Unisource's bankruptcy claim is contingent upon the results of the United Beverage Proceeding. Specifically, Unisource argues that if it is found liable to Bankest, it will have a claim upon a guarantee or for contribution and indemnity against the Debtor, United Container.

The GE Proceeding has taken a similar course. On June 18, 2002, Bankest filed the similar GE Proceeding in state court alleging it was victimized by the same multi-party fraudulent invoice scheme that allegedly originated from Bankest's factoring relationship with United Container. The complaint names GE and four other defendants. Bankest seeks damages in the GE Proceeding in excess of $2 million, and again has requested a jury trial. This complaint is also based upon state law claims divided into the same five main legal theories alleged in the United Beverage Proceeding.

GE also filed a proof of claim in United Container's bankruptcy case. The GE proof of claim sets forth claims against United Container for breach of contract, fraud, and amounts due on open accounts. GE filed its Notice of Removal on July 25, 2002, pursuant to 28 U.S.C. § 1452(a) and 28 U.S.C. § 1334(b) alleging that this proceeding is "related to" the now-pending United Container bankruptcy case in which Bankest is pursuing its overlapping bankruptcy claim on the same invoices at issue in the GE Proceeding.

Generally speaking, Bankest's claim against United Container is in the nature of a "put back" claim under its factoring agreement with United Container. Bankest owns outright the receivables which form the basis for its claims in both of these proceedings. Those receivables are not property of United Container's Chapter 7 estate, but Bankest seeks recovery from United Container to the extent it cannot recover upon the receivables from the Defendants in these adversary proceedings.

Discussion

Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (11th Cir.1994); Wymbs v. Republican...