In re DeLorean Motor Co.

Decision Date03 June 1985
Docket NumberBankruptcy No. 82-06031-G,Adv. No. 84-1032-G.
Citation49 BR 900
PartiesIn re DeLOREAN MOTOR COMPANY, a Michigan corporation, Debtor. David W. ALLARD, Jr., Trustee in Bankruptcy, Plaintiff, v. Robert Weld BENJAMIN; Van Ginkel & Benjamin, a partnership; Henry I. Bushkin; Cristina Ferrare DeLorean, a/k/a Cynthia Cristina Ferrare, individually and as trustee u/t/a dated July 29, 1982, as amended January 25, 1983; Mary Jacqueline Feddock; Ted M. Gans; Thomas W. Kimmerly, individually and as trustee u/t/a dated July 29, 1982, as amended January 25, 1983; Thomas W. Kimmerly, P.C., a Michigan professional corporation; Kimmerly, Gans & Shaler, P.C., a Michigan professional corporation; Robert S. Gay; Midland Insurance Company, a corporation; Roy S. Nesseth; Dennis H. Patouhas; Joseph H. Penrose; Scarborough and Company, a division of Ryan Services Corporation, an Illinois corporation; James H. Season; Edward L. Smith; James G. Stark; Richard C. Swanson, d/b/a Swanson Insurance Agency; Mary A. Thoman; Thoman & Co., P.C., a Michigan professional corporation, Defendants.
CourtU.S. Bankruptcy Court — Eastern District of Michigan

COPYRIGHT MATERIAL OMITTED

Sheldon S. Toll, Honigman, Miller, Schwartz and Cohn, Detroit, Mich., for plaintiff.

Robert W. Benjamin, Fenwick, Stone, Davis & West, Richard A. Anderman, Christy & Viener, Louis E. Black, Zimet, Haines, Moss & Friedman, William H. Horton, Jr., Towne, Dolgin, Sawyer & Horton, Eric C.P. Van Ginkel, Rogers, Hoge & Hills, Robert P. Wessely, Quaslia Richter Schneider & Wessely, Frank H. Wohl, Lankler Siffert & Wohl, New York City, for Van Ginkel & Benjamin.

Henry I. Bushkin, Bushkin, Gaims & Gaines, Jerome L. Goldberg, Los Angeles, Cal., for Cristina Ferrare DeLorean.

Ted M. Gans, Thomas W. Kimmerly, Bloomfield Hills, Mich., Albert A. Miller, Garan, Lucow, Miller, Lehman, Seward & Cooper, P.C., David Griem, Detroit, Mich., for Mary A. Thoman.

B. Ward Smith, Cozadd, Shangle, Smith & Andrews, Dearborn, Mich., for Robert S. Gay and Richard A. Swanson.

Hyman, Gurwin, Nachman, Friedman & Winkelman, J. Leonard Hyman, Irwin J. Alterman, Richard Biasio, Southfield, Mich., for Henry I. Bushkin.

Garan, Lucow, Miller, Seward, Cooper & Becker, P.C., Albert A. Miller, Detroit, Mich., for Ted M. Gans.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C., J.V. Walker, Detroit, Mich., for Robert Weld Benjamin.

Schlussel, Lifton, Simon, Rands, Kaufman, Galvin & Jackier, Donald B. Lifton & Douglas E. Busbey, Southfield, Mich., for Edward L. Smith.

Rubenstein, Isaacs, Lax & Bordman, Erwin A. Rubenstein, Southfield, Mich., for Mary A. Thoman & Thoman & Co.

Hardig, Goetz, Heath, Merritt & Reebel, Joseph L. Hardig, Jr., Birmingham, Mich., for James G. Stark.

Keywell and Rosenfeld, Phillip B. Maxwell, Troy, Mich., for Joseph H. Penrose.

Garan, Lucow, Miller, Seward, Cooper & Becker, P.C., Albert A. Miller, Detroit, Mich., for Thomas W. Kimmerly, Thomas W. Kimmerly, P.C. and Kimmerly, Gans & Shaler, P.C.

Tyler & Thayer, P.C., David M. Tyler, Michael J. Walter, Detroit, Mich., for Midland Ins. Co.

AMENDED ORDER DENYING MOTION TO DISMISS FOR SUBJECT MATTER JURISDICTION, DENYING MOTIONS FOR DISCRETIONARY AND MANDATORY ABSTENTION, DENYING MOTIONS TO WITHDRAW REFERENCE, AND DENYING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

RAY REYNOLDS GRAVES, Bankruptcy Judge.

Plaintiff in this adversary proceeding, David W. Allard Jr., Trustee, seeks recovery of punitive and actual damages, and property in excess of $100,000,000 from various officers, directors, professional persons and insurance companies employed by the DeLorean Motor Company (DMC). The trustee contends the Defendants breached their fiduciary duty to DMC causing property of the estate to be, inter alia, fraudulently transferred and mismanaged prior to the filing of a Chapter 11 petition in bankruptcy on October 25, 1982. From October 25, 1982 through December 21, 1983, DMC operated as Debtor-in-Possession. The case was subsequently converted to Chapter 7.

Named in the 45 page 12 count complaint are: Robert W. Benjamin, a nonresident of the State of Michigan, who was a director of DMC, member of the executive committee of DMC and chairman of the audit committee of the board of DMC; Van Ginkel and Benjamin (VGB), a law firm and nonresident partnership with its principal place of business in the State of New York. Benjamin acted as a partner, agent and member of VGB. Benjamin and VGB were employed and retained by DMC for legal counsel; Henry Bushkin, a nonresident of the State of Michigan and licensed to practice in the State of California, director of DMC and a member of the audit committee of the board, retained by DMC for legal counsel; Cristina Ferrare DeLorean, a nonresident of the State of Michigan, and wife John Z. DeLorean, a director of DMC and trustee under an agreement of trust between John Z. DeLorean, Thomas W. Kimmerly and Cristina DeLorean, dated July 29, 1982, as amended on January 25, 19831; Mary J. Feddock, a nonresident of the State of Michigan and residing in the State of New York. Prior to April 19, 1982, Feddock was employed by DMC as a legal assistant; from April 16, 1982, Feddock was the assistant secretary for DMC, and after October 25, 1982, Feddock performed duties for the debtor-in-possession; Thomas W. Kimmerly, a resident of the State of Michigan, licensed to practice law and a certified public accountant in the State of Michigan. Kimmerly was a director of DMC, a member of the executive committee of the board, secretary and executive vice president of DMC, and trustee under the trust, dated July 29, 1982, as amended; Kimmerly was also director of DeLorean Motor Company Limited (DMCL) from 1979 to 1981; on April 16, 1982, Kimmerly resigned his position as director and executive vice president of DMC but is alleged to have continued to attend meetings of the board and worked at the office of DMC and performed as a de facto officer and director of DMC; Thomas W. Kimmerly, P.C., (TWKPC), a professional corporation operating in the State of Michigan in which Thomas Kimmerly was a shareholder, officer, agent and director, acting within the scope of his various capacities; Ted M. Gans, a resident of the State of Michigan and licensed to practice law in the State of Michigan, and secretary of DMC; Kimmerly, Gans, & Shaler, P.C., (KGSPC), a law firm and a Michigan professional corporation in which Gans and Kimmerly were shareholders, officers, agents, directors and acted consistent with their capacities. KGSPC, TWKPC, Kimmerly and Gans were each retained by DMC to provide legal services; Robert S. Gay, an individual residing in the State of Michigan who was a director of DMC and a member of the audit committee of the board; Midland Insurance Company, a New York corporation with its principal place of business in the State of New York, authorized in doing business in the State of Michigan and holder of one or more policies for DMC; Roy S. Nesseth, a nonresident of the State of Michigan and resident of the State of California, and who served as assistant to the chairman of the board of directors and vice president and director of DMC; Dennis H. Patouhas, a nonresident of the State of Michigan and a resident of the State of Connecticut and the controller for DMC; Joseph H. Penrose, a resident of the State of Michigan and employed as a vice president of the DMC; Scarborough and Company, a division of Ryan Services Corporation, an Illinois corporation, authorized to do business in Michigan; James H. Season, a nonresident of the State of Michigan, and a resident of the State of Connecticut, a director of DMC and assistant treasurer of DMC; Edward L. Smith, a resident of the State of Michigan and president of Composite Technology Corporation, a subsidiary of DMC; James G. Stark, a nonresident of the State of Michigan, and a resident of Connecticut, a director of DMC, member of the executive committee, vice president-finance and executive vice president of DMC, director of DMCL, a subsidiary of DMC; Richard C. Swanson, a resident of the State of Iowa, director of DMC and a member of the audit committee of the board, d/b/a Swanson Insurance Agency, and acting as an agent for DMC and its affiliates; Mary A. Thoman, a resident of the State of Michigan, a certified public accountant in Michigan, employed by Kimmerly, TWKPC and KGSPC, as a legal assistant and corporate officer of same; and Thoman & Company, P.C., (TCPC), an accounting firm, a Michigan professional corporation in which Thoman was a shareholder, officer, and director acting within those capacities. Both Thoman and TCPC provided accounting services to DMC.

Defendants object to the Court's authority to enter a final judgment in these proceedings. Separate or concurrent motions have been filed to dismiss for personal jurisdiction; subject matter jurisdiction; discretionary and mandatory abstention, withdrawal of reference, quash summons and summary judgment. Defendants argue counts I-IV, VI, VIII, IX, X, and XII are non-core proceedings limiting the Court to findings of fact and conclusions of law. Specifically, counts I-IV seek damages from various officers and directors of DMC for breach of their fiduciary duties. Counts VI prays damages from VGB, TWKPC and KGSPC for breach of their professional duty to DMC. Count VIII seeks recovery from TCPC for breach of fiduciary duty to DMC. Count IX alleges Defendants Benjamin, Feddock, Kimmerly, Gans, CFD, and Nesseth exercised wrongful and unauthorized dominion and control over property owned of DMC depriving DMC of the use, benefit, of the property. Count X alleges Benjamin, Feddock, Kimmerly, CFD, Gans & Nesseth united or conspired to commit various wrongs specified in the complaint. In addition, count XII seeks a declaratory judgment against Midland. Defendants agree count V, an action to recover property of the estate, and count VII, a preference action under 11 U.S.C. § 547 are core...

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