In re Hunt
| Decision Date | 27 November 1991 |
| Docket Number | No. 391-3331,388-35791-HCA-11,388-35725-HCA-11 and 388-35794-HCA-11,No. 388-35726-HCA-11,391-3332.,388-35726-HCA-11,391-3331 |
| Citation | 136 BR 437 |
| Parties | In re Nelson Bunker HUNT and Caroline Lewis Hunt, Debtors. In re William Herbert HUNT and Nancy Jane Broaddus Hunt, Debtors. R. Carter PATE, as Independent Trustee of the Nelson Bunker Hunt Liquidating Trust, and Steven S. Turoff, as Independent Trustee of the William Herbert Hunt Liquidating Trust, Plaintiffs, v. Houston Bunker HUNT, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
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Marty Harper, Gerald K. Smith, Lewis and Roca, Phoenix, Ariz., for plaintiffs.
Tom Thomas, Donald R. Rector, Kolodey & Thomas, Dallas, Tex., for Huddleston.
Vernon O. Teofan, Jenkens & Gilschrist, P.C., Albert G. McGrath, Jr., Holmes Millard & Duncan, P.C., Terrell W. Oxford, Susman Godfrey, Dallas, Tex., for Herbert Hunt.
H. DeWayne Hale, Hale, Spencer, Stanley, Pronske & Trust, P.C., Dallas, Tex., for Carlsbad Partners, Ltd.
The matter before the Court arises on several motions to dismiss filed by various groups of defendants pursuant to Federal Rule of Civil Procedure 12(b)(6), made applicable to this proceeding by Bankruptcy Rule 7012(b). The underlying adversary proceeding was initiated on June 11, 1991, when R. Carter Pate ("Pate"), as Independent Trustee of the Nelson Bunker Hunt Liquidating Trust, and Steven S. Turoff ("Turoff"), as Independent Trustee of the William Herbert Hunt Liquidating Trust (collectively referred to as "Plaintiffs") filed identical complaints (the "Complaints") to avoid and recover alleged fraudulent conveyances and preferential transfers pursuant to Sections 544, 547, 548 and 550 of the United States Bankruptcy Code (the "Code"). The adversary proceedings were consolidated under Adversary No. 391-3331 pursuant to the Agreed Order Consolidating Adversary Proceedings entered on July 22, 1991.
The Complaints were brought against numerous defendants. All of the individual defendants are relatives of the Debtors, or are trustees of trusts created for the benefit of the Debtors' children and grandchildren. All of the corporate, general partnership, and limited partnership defendants (with the exception of Southwestern Life Insurance Company and Paloma Corporation) are entities in which the individual defendants and/or their trusts have an ownership interest. For the sake of consistency with the pleadings that have been filed in this Adversary, the Court will refer to the groups of defendants in a similar fashion as the parties have previously referred to them. The "Herbert Hunt"1 defendants (hereinafter referred to as the "Herbert Hunt Defendants") filed their Motion to Dismiss on July 29, 1991. Carlsbad Partners, Ltd. ("Carlsbad") filed its Motion to Dismiss on August 2, 1991, alleging generally the same grounds in support of its motion as the Herbert Hunt Defendants. The Court will refer to another group of defendants that filed a dismissal motion as the "Huddleston Defendants".2
The Court finds initially that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (F), (H), (L) and (O). The findings herein, although in narrative form, are intended to comply with Federal Rule of Bankruptcy Procedure 7052. Having considered the arguments of counsel, and reviewed the relevant pleadings and law, the Court makes the following findings and conclusions.
On September 21, 1988, Nelson Bunker Hunt and William Herbert Hunt filed voluntary petitions under Chapter 11 of the Code, thereby commencing Bankruptcy Case No. 388-35726-HCA-11 and Bankruptcy Case No. 388-35725-HCA-11 respectively. On September 23, 1988, the respective spouses filed individual Chapter 11 petitions, which were administratively consolidated with their husbands' previously filed cases.
Nelson Bunker Hunt and Caroline Lewis Hunt filed their Joint Plan of Reorganization on November 21, 1989. The Order Confirming the Joint Plan of Reorganization of Nelson Bunker Hunt and Caroline Lewis Hunt was entered on December 18, 1989. William Herbert Hunt and Nancy Jane Broaddus Hunt filed their Joint Plan of Reorganization (hereinafter the Joint Plans of Reorganization in both cases shall be referred to as the "Joint Plans") on November 21, 1989. The Order Confirming the Joint Plan of Reorganization of William Herbert Hunt and Nancy Jane Broaddus Hunt was entered on December 26, 1989.
Article V, section 5.2 of the Joint Plans provides for the creation of a Liquidating Trust for each Estate. The Liquidating Trusts were created to marshal, manage, operate, and liquidate the Trust Assets for a term of six years. Title to most of the Debtors' assets3 vested in each respective Liquidating Trust free and clear of all liens, claims and encumbrances or interests of the Debtors, except for the rights of creditors as described by the Joint Plans and the Liquidating Trust Agreements, and liens of Allowed Secured Claims as described in section 4.3 of the Joint Plans.
Following respective confirmation of the Joint Plans, the NBH Liquidating Trust was established on behalf of the bankruptcy Estates of Nelson Bunker Hunt and Caroline Lewis Hunt, and the WHH Liquidating Trust was established on behalf of the bankruptcy Estates of William Herbert Hunt and Nancy Jane Broaddus Hunt. Pate was appointed Independent Trustee of the NBH Liquidating Trust by order entered on January 8, 1990. Turoff was appointed Independent Trustee of the WHH Liquidating Trust by order entered on January 12, 1990. On June 11, 1991, Pate and Turoff initiated this Adversary Proceeding by filing their Original Complaints alleging that Nelson Bunker Hunt and William Herbert Hunt (hereinafter referred to as the "Debtors" or "Debtors in Possession") made fraudulent conveyances to or for the benefit of their relatives and affiliated entities that are voidable pursuant to sections 544, 547, and 548 with recovery under section 550 of the Code.
The Herbert Hunt Defendants have moved to dismiss the Complaints for the following reasons:
1. the Complaints fail to state a claim upon which relief can be granted because:
2. the Independent Trustees have failed to aver fraud with particularity as required by Federal Rule of Civil Procedure 9(b); and
3. this Court does not have jurisdiction to consider this adversary proceeding because the exercise of jurisdiction over parties who have not filed claims in the bankruptcy cases violates their Constitutional rights.
In support of its Motion to Dismiss, Carlsbad urges that:
1. the Complaints fail to state a claim upon which relief can be granted because:
2. this Court does not have jurisdiction to consider this adversary proceeding because the exercise of jurisdiction over parties who have not filed claims in the bankruptcy cases violates their Constitutional rights.
For the purpose of discussion, the Court will treat Carlsbad with the Herbert Hunt Defendants with respect to the grounds asserted which are identical or closely related to the grounds asserted by the Herbert Hunt Defendants.
The Huddleston Defendants assert that the Complaints should be dismissed for the following reasons:
1. the Complaints fail to state a claim upon which relief can be granted because:
2. the Complaints fail to state a claim upon which relief can be granted for recovery of the alleged fraudulent transfer referred to as "YEPCO/OTS".
The Court notes initially that a motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (1969). The Fifth Circuit Court of Appeals has stated that the following two principles should guide a review of a motion to dismiss:
Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983). However, a court is not to accept as true conclusory allegations in the complaint, and a complaint may be dismissed where the relief sought is barred by an affirmative defense, such as the statute of limitations. Id.
The Herbert Hunt Defendants argue that they are entitled to adjudication by a court created under Article III of the United States Constitution since the claims alleged in the Complaints are primarily...
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