BT Prime Ltd. v. Bos. Techs. Powered By Forexware LLC (In re BT Prime Ltd.)
| Decision Date | 29 March 2019 |
| Docket Number | Adversary Proceeding No. 16-1178,Case No. 15-10745-FJB |
| Parties | IN RE BT PRIME LTD., Debtor BT Prime Ltd., Plaintiff v. Boston Technologies Powered by Forexware LLC, f/k/a Forexware LLC, Currency Mountain Holdings Limited, f/k/a Forexware Malta Holdings Ltd., FXDirectDealer, LLC, and FXDD Malta Ltd., Defendants |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of Massachusetts |
Charles R. Bennett, Jr., Michael K. O'Neil, Murphy & King, Professional Corporation, Andrea MacIver, Boston, MA, for Plaintiff.
Gregory M Boucher, Steven C. Reingold, Saul Ewing Arnstein & Lehr LLP, Boston, MA, Paul W. Carey, John O. Mirick, Mirick, O'Connell, DeMallie & Lougee, LLP, Worcester, MA, Irene Costello, Stefan Savic, Shipkevich PLLC, for Defendants.
By its 16-count complaint in this adversary proceeding, plaintiff and reorganized chapter 11 debtor BT Prime Ltd. ("BT Prime," "the Debtor," or "the plaintiff"), formerly a currency trading business, seeks against the four defendants, each an affiliate of BT Prime, to avoid and recover fraudulent and preferential transfers, recover damages for breach of contract, conversion, and breach of fiduciary duty, and related relief. The adversary proceeding is before the Court on two motions to dismiss. The first is brought jointly by FXDD Malta Ltd. ("FXDD Malta") and Currency Mountain Holdings, Ltd. ("CMH Malta") (FXDD Malta and CMH Malta collectively, "the Malta Defendants"), both Maltese entities; their motion seeks dismissal for lack of personal jurisdiction, failure to state a claim on which relief can be granted, and failure to plead fraud with particularity. The second, brought jointly by Boston Technologies Powered by Forexware LLC, f/k/a Forexware LLC ("Forexware") and FXDirectDealer, LLC ("FXDD US") (together, "the U.S. Defendants"), both domestic entities, seeks dismissal for failure to state a claim on which relief may be granted.
The Debtor filed a petition for relief under chapter 11 of the Bankruptcy Code on March 2, 2015. The Debtor and the Official Committee of Unsecured Creditors filed a joint liquidating chapter 11 plan (as supplemented and then confirmed, "the Plan"), and on May 11, 2016, the Court confirmed the Plan. The Plan vested all assets of the Debtor, including all its causes of action, in the Debtor as reorganized; effected the resignation of all the Debtor's then-existing officers and directors; created the position of Liquidating Supervisor, an individual authorized and obligated to (among other things) liquidate the Debtor's assets and distribute them in accordance with the Plan; and appointed a Liquidating Supervisor.
On October 19, 2016, BT Prime, now as the Reorganized Debtor, filed the complaint commencing the present adversary proceeding. The complaint states some sixteen counts, many against multiple defendants. Ten arise under the Bankruptcy Code: four under each of §§ 547 and 548 of the Bankruptcy Code to avoid and recover preferential and fraudulent transfers, one under § 542 for turnover of property of the estate, and one under § 543(b) for an accounting. The remainder arise under state law: for breach of contract, breach of fiduciary duty, conversion, and declaratory relief to the effect that the defendants (one or more) are joint venturers with the Debtor or successors to or effectively merged with the Debtor, such that each is jointly liable with the Debtor for its debts.
The defendants responded with the present motions to dismiss. The Debtor filed oppositions to both and, in support of its oppositions, filed also the affidavit of one George Popescu ("Popescu" and "Popescu Affidavit") and what appear to be certain corporate records of the Malta Defendants. The Malta Defendants promptly moved to strike the Popescu Affidavit. After a hearing on the motions to dismiss, the Court denied the motion to strike but noted that the Debtor had agreed and clarified that the Popescu Affidavit had been offered and should be considered solely with respect to the Malta Defendants' motion to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2), not with respect to the Malta Defendants' motion to dismiss pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) or with respect to the other defendants' motion to dismiss. The Court also permitted the Malta Defendants to submit an affidavit of their own and to submit further briefing, to which the Debtor could reply. Accordingly, the Malta Defendants filed, in support of the personal jurisdiction portion of their motion, a further brief and the affidavit of Emil Assentato ("Assentato Affidavit"), and the Debtor filed a supplemental brief on personal jurisdiction and a further affidavit, of Andrea MacIver ("MacIver Affidavit"). Later, the Debtor moved for leave to file the sworn statement of one Joseph Botkier in support of its opposition to dismissal on the basis of personal jurisdiction, together with a supplemental brief. The Malta Defendants opposed this relief, and the Court, agreeing with the Malta Defendants that the sworn statement was not admissible, denied the requested leave to file.
The various counts arise in a bankruptcy case, and some arise under the Bankruptcy Code; for both reasons, they fall within the jurisdiction given the district courts in 28 U.S.C. § 1334(b). By the District Court's standing order of reference, the matter is referred to the bankruptcy court pursuant to 28 U.S.C. § 157(a). See L.R. 201 (D. Mass.). The counts arising under §§ 542, 543, 547, 548, and 550 of the Bankruptcy Code are core proceedings. 28 U.S.C. § 157(b)(2)(E), (F), (H), and (O). The remaining counts, which do not arise under the Bankruptcy Code and which might have been brought by the Debtor before the bankruptcy case was commenced, are not core proceedings. The Court will await the Defendants' answers to determine its authority to enter final judgment as to the various counts. See Fed. R. Bankr. P. 7012(b) ().
Where, as here, a defendant asserts that the complaint should be dismissed both for failure to state a claim and for want of jurisdiction, the jurisdictional question must be resolved first. Bell v. Hood , 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946). I therefore begin with the Malta Defendants' challenge to personal jurisdiction under Rule 12(b)(2), Fed R. Civ. P., made applicable here by Rule 7012(b), Fed R. Bankr. P.
The plaintiff bears the burden of proving the existence of personal jurisdiction. Massachusetts Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998). "Faced with a motion to dismiss for lack of personal jurisdiction, a district court ‘may choose from among several methods for determining whether the plaintiff has met [its] burden.’ " Id. The most common method is the prima facie approach, under which the court accepts the specific facts that the plaintiff alleges so far as the record evidence supports them. The prima facie method "requires no differential fact finding; rather, this method requires only that a plaintiff proffer evidence which, taken at face value, suffices to show all facts essential to personal jurisdiction." Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc. , 825 F.3d 28, 34 (1st Cir. 2016). "For the purpose of examining the merits of such a jurisdictional proffer [the court] take[s] the facts from the pleadings and whatever supplemental filings (such as affidavits) are contained in the record, giving credence to the plaintiff's version of genuinely contested facts," id ., citing Sawtelle v. Farrell , 70 F.3d 1381, 1385 (1st Cir. 1995), and construing the plaintiff's properly documented evidentiary proffers in the light most favorable to [its] jurisdictional claim. A Corp. v. All American Plumbing, Inc. , 812 F.3d 54, 58 (1st Cir. 2016). However, a court "will not draw argumentative inferences in the plaintiff's favor" and need not "accept as true a legal conclusion couched as a factual allegation." In re Terrorist Attacks on Sept. 11, 2001 , 714 F.3d 659, 673 (2d Cir. 2013). The court also accepts the facts that the defendants offer, but only to the extent that they are uncontradicted.
Cossaboon v. Maine Medical Center , 600 F.3d 25, 31 (1st Cir. 2010). I apply the prima facie approach here; no party has urged otherwise.
This adversary proceeding arises in a bankruptcy case, which is a federal proceeding. And for the most part—albeit not in every count against the Malta Defendants—it arises under a federal law, the Bankruptcy Code, 11 U.S.C. §§ 542, 543, 547, 548, and 550. The applicable rules provide for nationwide service of process for adversary proceedings in bankruptcy cases. Fed. R. Bankr. P. 7004(d) (). And they further extend the personal jurisdiction of federal courts in bankruptcy proceedings to the extent permitted by the Constitution:
If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service ... is effective to establish personal jurisdiction over the person of any defendant with respect to a case under the Code or a civil proceeding arising under the Code, or arising in or related to a case under the Code.
Fed. R. Bankr. P. 7004(f). "When the personal jurisdiction of a federal court is invoked based upon a federal statute providing for nationwide or worldwide service, the relevant inquiry is whether the respondent has had sufficient minimum contacts with the United States." Application to Enforce Admin. Subpoenas Duces Tecum of S.E.C. v. Knowles , 87...
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