In re Geauga Trenching Corp.
Decision Date | 21 February 1990 |
Docket Number | Bankruptcy No. 883-31386-21,Adv. No. 088-0067-21. |
Citation | 110 BR 638 |
Parties | In re GEAUGA TRENCHING CORP., Debtor. Ronald LIPSHIE, Trustee for Geauga Trenching Corp., Plaintiff, v. AM CABLE TV INDUSTRIES, INC., Defendant. |
Court | U.S. Bankruptcy Court — Eastern District of New York |
E. Holtzman and B. Levantino, Hauppauge, N.Y., for defendant, AM Cable TV Industries, Inc. (AM Cable).
F. Scharf, New York City, for plaintiff, Ronald Lipshie, Trustee, for Geauga Trenching Corp. (Trustee).
The Trustee sued AM Cable for breach of a Chapter 11 post-petition contract with Debtor. AM Cable moved1 for an order dismissing the Trustee's complaint on grounds that: (a) we lack subject matter jurisdiction over this proceeding; (b) both the Bankruptcy Court and the U.S. District Court for the Eastern District of New York lack in personam jurisdiction over AM Cable; (c) improper venue; and, (d) further proceedings in the Bankruptcy Court will impinge on its Constitutional right to a jury trial.
We determine that: this proceeding is a core matter over which we have subject matter jurisdiction; we have in personam jurisdiction over AM Cable; and, proper venue of this proceeding is in the Bankruptcy Court for the Southern District of Florida. We defer the issue of a Bankruptcy Court's power to conduct a jury trial over a core matter to the Bankruptcy Court for the Southern District of Florida.
For purposes of this Memorandum of Decision, we pen only those averments and general background information necessary for an understanding of the proceeding. We make no findings about the correctness or incorrectness of the facts alleged by the parties.
Debtor filed for reorganization under Chapter 11 of Title 11, 11 U.S.C. §§ 101 et seq., on or about July 15, 1983 in the Eastern District of New York and continued to operate as a debtor-in-possession, 11 U.S.C. §§ 1101, et seq., until it was converted to a case under Chapter 7 on April 10, 1985.
The Trustee alleges Debtor is an Ohio corporation with its principal place of business being in the Eastern District of New York at the time it filed for Chapter 11 relief. AM Cable disputes the Trustee's averment that Debtor did business in New York. Rather, it claims Debtor did business in Massachusetts and Florida. AM Cable, in its answer, admitted it is a Delaware corporation with its principal place of business being in Pennsylvania at all times material to the matters herein.
The Trustee's claim hinges on an alleged oral agreement or representation, and partial performance, between Debtor and AM Cable for work on a cable television project in Vero Beach, Florida, in the Southern District of Florida. Both parties allege unhappiness about each other's performance in Vero Beach, and thus, this breach of contract adversary proceeding filed by the Trustee.
Of key importance to our decision is AM Cable's averment that it did not know Debtor was under Chapter 11 protection, and had it known this fact, it would not have negotiated with or hired Debtor. The Trustee, by affidavit, disputes AM Cable lacked knowledge of the bankruptcy.
In its answer, AM Cable raised eleven (11) affirmative defenses, paraphrased as follows:
In the event we determine that we have subject matter jurisdiction, AM Cable demands a trial by jury.
AM Cable filed a "Notice of Motion," and "Defendant's (AM Cable's) Memorandum of Law" together with supporting affidavits for its motion to dismiss this proceeding upon the following paraphrased grounds:
The Trustee countered with an "Affidavit in Opposition" from Debtor's contract liaison officer. In reference to venue and in personam jurisdiction, the affidavit stated that Debtor had maintained a business operation on a continuous basis in the Eastern District of New York. "Affidavit in Opposition," pp. 2-3. The affidavit further stated that aside from New York as the residence of Debtor's most important witnesses, most of the non-party witnesses on the underlying claims of performance, non-performance, defective workmanship, wrongful stop work, and supporting documentary evidence are situated in Florida. "Affidavit in Opposition," pp. 14-17; see, "Plaintiff's Memorandum of Law In Opposition to Defendant's Motion," pp. 11-14.
In his memorandum, the Trustee argues that AM Cable's knowledge of Debtor's bankruptcy status should not affect our determination that Debtor's post-petition activity with AM Cable is within our subject matter jurisdiction as a core matter under 28 U.S.C. § 157(b)(1).3 "Plaintiff's Memorandum of Law In Opposition to Defendant's Motion," pp. 15-22.
The Trustee consents to AM Cable's demand for a trial by jury in the event such consent is necessary to support our jurisdiction over the subject matter. "Plaintiff's Memorandum of Law In Opposition to Defendant's Motion," page 22.
As for AM Cable's objection to in personam jurisdiction, the Trustee points out that even if we were to find that we have "related to" jurisdiction, nationwide service of process was properly had over AM Cable. "Plaintiff's Memorandum of Law In Opposition to Defendant's Motion," page 23.
Lastly, the Trustee argues that in the event we determine AM Cable has met its burden of proof that the New York venue was improper, then the appropriate forum is Vero Beach, Florida, under 28 U.S.C. § 1391(c), because this is where the parties were to perform significant obligations under their oral contract. "Plaintiff's Memorandum of Law In Opposition to Defendant's Motion," pp. 23-26.
AM Cable filed its response and argued that despite the Trustee's consent to a trial by jury, Grandfinanciera, S.A. v. Nordberg, 492 U.S. ___, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989), requires this proceeding, with AM Cable's jury demand, be tried before an Article III Court. Moreover, the Trustee's breach of a post-petition contract action is not a core proceeding because it does not concern the administration of Debtor's bankruptcy estate or, at best, is a "related to" proceeding and must be decided by an Article III Court. "Defendant's Reply Memorandum of Law In Support of Motion To Dismiss Adversary Proceeding," pp. 1-13.
AM Cable submitted reply affidavits to bolster its position that it had no knowledge of Debtor's bankruptcy status during the parties' contract negotiations and, had it known, it would not have engaged the Debtor as its sub-contractor. AM Cable counters the Trustee's position that Debtor maintained a "continuous" business presence in New York when Debtor's "Operating Statements" and "Statement of Financial Affairs for Debtor Engaged in Business," paragraph 1,...
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