Parmalat Capital Finance Ltd. v. Bank of America Corp., 011811 FED2, 09-4302-cv (L)

Docket Nº:09-4302-cv (L), 09-4306-cv (con), 09-4373-cv (con)
Opinion Judge:WESLEY, Circuit Judge:
Party Name:Parmalat Capital Finance Limited, Plaintiff-Appellant, v. Bank of America Corporation, Banc of America Securities Limited, Bank of America, N.A., Bank of America National Trust & Savings Association, Banc of America Securities LLC, Bank of America International, Ltd., Grant Thornton International, Ltd, Defendants-Appellees, Dr. Enrico Bondi, Extrao
Attorney:Kathleen M. Sullivan, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY (Peter E. Calamari, Terry L. Wit, Sanford I. Weisburst, on the brief), for Plaintiff-Counter-Defendant-Third-Party Defendant-Appellant Bondi. J. Gregory Taylor, Diamond McCarthy LLP, New York, NY (Allan B. Diamond, Richard...
Judge Panel:Before: Cabranes, Wesley, Circuit Judges, and Koeltl, District Judge.
Case Date:January 18, 2011
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Parmalat Capital Finance Limited, Plaintiff-Appellant,

Dr. Enrico Bondi, Extraordinary Commissioner of Parmalat Finanziaria S.p.A., Parmalat S.p.A., and other affiliated entities, in Extraordinary Administration under the laws of Italy, Plaintiff-Counter-Defendant-Third-Party-Defendant-Appellant,

Capital & Finance Asset Management S.A., Cattolica Partecipazioni S.p.A., Hermes Focus Asset Management Europe Limited, Erste Sparinvest Kapitalanlagegesellschaft m.b.H., Solotrat, Societe Moderne des Terrassements Parisiens, Renato Esposito, Fondazione Italo Monzino, Southern Alaska Carpenters Pension Fund, on behalf of itself and all others similarly situated, Cristina Poncibo, Margery Louise Kronengold, Robert McQueen, Custodian, individually and on behalf of all others similarly situated, Ferri Giampolo, Food Holdings Limited, Dairy Holdings Limited, G. James Cleaver, Gordon I. MacRae, Gerald K. Smith, Laura J. Sturaitis, Monumental Life Insurance Company, TransAmerica Occidental Life Insurance Company, TransAmerica Life Insurance Company, Aviva Life Insurance Company, Principal Global Investors, LLC, Principal Life Insurance Company, Scottish Re (US) Inc., Hartford Life Insurance Company, Plan Administrator G. Peter Pappas, Plaintiffs,

v.

Bank of America Corporation, Banc of America Securities Limited, Bank of America, N.A., Bank of America National Trust & Savings Association, Banc of America Securities LLC, Bank of America International, Ltd., Grant Thornton International, Ltd, Defendants-Appellees,

Grant Thornton International, Grant Thornton LLP, Defendants-Third-Party-Plaintiffs-Counter-Claimants-Appellees,

Deutsche Bank AG, Morgan Stanley & Co., Incorporated, Bonlat Financing Corporation, Calisto Tanzi, Fausto Tonna, Coloniale S.p.A., Citigroup Inc., Buconero, LLC, Zinni & Associates, P.C., Deloitte Touche Tohmatsu, Deloitte & Touche S.p.A., a Societa per Azioni under the laws of Italy, James E. Copeland Jr., Parmalat Finanziaria S.p.A., Stefano Tanzi, Luciano Del Soldato, Domenico Barili, Francesco Giuffredi, Giovanni Tanzi, Deloitte & Touche USA, LLP, Deloitte & Touche L.L.P., Credit Suisse First Boston, Citibank, Eureka Securitisation plc, Vialattea LLC, Pavia e Ansaldo, Banca Nazionale Del Lavoro S.p.A., Citibank, N.A., Professor Maria Martellini, Banca Intesa S.p.A., Deloitte & Touche Tohmatsu Auditores Independentes, Credit Suisse International, Credit Suisse Securities (Europe) Limited, Credit Suisse, Credit Suisse Group, Grant Thorton S.p.A., a Societa per Azioni under the laws of Italy, now known as Italaudit, S.p.A., Defendants, Parmatour S.p.A., Defendant-Third-Party-Defendant.

Nos. 09-4302-cv (L), 09-4306-cv (con), 09-4373-cv (con)

United States Court of Appeals, Second Circuit

January 18, 2011

Argued: November 2, 2010

Amended: April 12, 2011

Plaintiff-Appellant Parmalat Capital Finance Limited and Plaintiff-Counter-Defendant-Third-Party-Defendant-Appellant Dr. Enrico Bondi (collectively, "Appellants") commenced these actions to recover damages that they contend are owed to them pursuant to Illinois state law. In this appeal, Appellants challenge orders of the United States District Court for the Southern District of New York (Kaplan, J.) and the Northern District of Illinois (Castillo, J.) denying Appellants' motions for remand and abstention, and granting summary judgment to Defendants-Third-Party-Plaintiffs-Counter-Claimants-Appellees Grant Thornton International and Grant Thornton LLP. We hold that the district courts had proper removal jurisdiction over these actions. As a matter of first impression in our Circuit, we set forth the standard for determining "timely adjudication" for the purposes of 28 U.S.C. § 1334(c)(2) abstention. We then VACATE and REMAND to allow the district court to consider, in light of this Opinion, whether abstention is mandatory in the circumstances presented here.

Kathleen M. Sullivan, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY (Peter E. Calamari, Terry L. Wit, Sanford I. Weisburst, on the brief), for Plaintiff-Counter-Defendant-Third-Party Defendant-Appellant Bondi.

J. Gregory Taylor, Diamond McCarthy LLP, New York, NY (Allan B. Diamond, Richard I. Janvey, J. Benjamin King, on the brief), for Plaintiff-Appellant Parmalat Capital Finance Limited.

Linda T. Coberly, Winston & Strawn LLP, Chicago, IL (Bruce R. Braun, William P. Ferranti, on the brief), for Defendant-Third-Party-Plaintiff-Counter-Claimant-Appellee Grant Thornton LLP.

Joseph B. Tompkins Jr., Sidley Austin LLP, Washington, DC (Alan C. Geolot, Mark P. Guerrera, Robert D. Keeling, A. Robert Peitrzak, Daniel A. McLaughlin, on the brief), for Defendants-Appellees Bank of America et al.

James L. Bernard, Strook & Strook & Lavan LLP, New York, NY (Quinlan D. Murphy, Katherine I. Puzone, David M. Cheifetz, on the brief), for Defendant-Third-Party-Plaintiff-Counter-Claimant-Appellees Grant Thornton International, Inc. and Grant Thornton International Ltd.

Partha P. Chattoraj, Markowitz & Chattoraj LLP, New York, NY for Amicus Curiae Guido Alpa.

George M. Pavia, Pavia & Harcourt LLP, New York, NY for Amicus Curiae the Government of the Republic of Italy.

Before: Cabranes, Wesley, Circuit Judges, and Koeltl, [*] District Judge.

WESLEY, Circuit Judge:

The questions presented are (1) whether the district court erred in exercising jurisdiction over plaintiffs' claims, pursuant to 28 U.S.C. § 1334(b); and (2) whether the district court properly declined to abstain from exercising that jurisdiction, pursuant to 28 U.S.C. § 1334(c)(2). This appeal is taken from judgments of the United States District Court for the Southern District of New York (Kaplan, J.) and challenges rulings made by that court and by the United States District Court for the Northern District of Illinois (Castillo, J.). The contested rulings include two orders dated February 25, 2005 and February 16, 2006 finding federal jurisdiction in the present cases and declining to abstain from exercising that jurisdiction. We conclude that jurisdiction was proper, but remand to allow the district court1 to consider, in light of this Opinion, whether abstention is mandatory.

I. BACKGROUND

These cases arise from the financial collapse of Parmalat Finanziaria, S.p.A. and many of its subsidiaries. Twenty-three Parmalat-related corporations are now in the midst of bankruptcy and reorganization proceedings in Italy. Italy's Minister of Finance appointed Dr. Enrico Bondi, here the Plaintiff-Counter-Defendant-Third-Party-Defendant-Appellant, to serve as Extraordinary Commissioner of these bankruptcy proceedings in a role analogous to a Chapter 11 Trustee. Parmalat Capital Finance Limited ("PCFL"), a Parmalat subsidiary headquartered in the Grand Caymans, is likewise insolvent and currently in liquidation proceedings. These liquidation proceedings are ongoing in the Grand Caymans and are overseen by Joint Official Liquidators appointed by the Grand Court of the Cayman Islands.

In January and June 2004 respectively, PCFL and Bondi commenced separate proceedings pursuant to former 11 U.S.C. § 304 in the Bankruptcy Court for the Southern District of New York. Section 304 permitted PCFL and Bondi, as representatives of the foreign bankruptcy estates, to commence bankruptcy cases in the United States in order to enjoin litigation against PCFL and Parmalat in United States courts.2 Section 304 also empowered PCFL and Bondi to seek orders from the bankruptcy court regarding turnover of property in the United States belonging to the respective bankruptcy estates.

Meanwhile, purchasers of Parmalat's debt and equity securities filed class action lawsuits against Parmalat and others for securities fraud. Those cases were consolidated before Judge Kaplan in the United States District Court.

In August 2004, Bondi filed suit in Illinois state court against Defendants-Third-Party-Plaintiffs-Counter-Claimants-Appellees Grant Thornton International and Grant Thornton LLP (collectively, "Grant Thornton"). Bondi alleges claims against Grant Thornton arising under Illinois state law for professional malpractice, fraud, aiding and abetting fraud and constructive fraud, negligent misrepresentation, aiding and abetting breach of fiduciary duty, theft and diversion of corporate assets, conversion, unjust enrichment, aiding and abetting fraudulent transfer, deepening insolvency, and unlawful civil conspiracy. On September 16, 2004, Grant Thornton removed the case to the United States District Court for the Northern District of Illinois on the basis of 28 U.S.C. §§ 1334(b) and 1452. In its Notice of Removal, Grant Thornton argued, among other things, that removal was proper because the Illinois state law case was "related to" Bondi's § 304 proceedings in the Southern District of New York. The next day, Bondi filed a "Motion to Remand to State Court." Bondi argued therein that there was no federal jurisdiction over the case and, in any event, the court should abstain pursuant to 28 U.S.C. § 1334(c)(2).

On December 9, 2004, the Judicial Panel on Multidistrict Litigation transferred Bondi's action against Grant Thornton to Judge Kaplan in the Southern District of New York. On February 25, 2005, Judge Kaplan denied Bondi's Motion to Remand to State Court. The district court found that it had jurisdiction pursuant to § 1334(b) and that abstention was not mandatory.3 The district court reasoned that Bondi failed to file a motion for abstention and, in the alternative, Bondi failed to demonstrate that his claims could be "timely adjudicated" in Illinois state court.4 28 U.S.C. § 1334(c)(2).

In December 2005, PCFL likewise filed suit against Grant Thornton in Illinois state court alleging similar claims to those asserted by Bondi. On January 5, 2006, Grant Thornton removed the case to the United States District Court for the Northern District of Illinois on the basis of 28 U.S.C. §§ 1334(b) and 1452....

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