In re Insilco Technologies, Inc.

• Decision Date: 18 September 2006
• Docket Number: Bankruptcy No. 02-13672 (KJC).,Adversary No. 05-52403 (KJC).
• Citation: 351 B.R. 313
• Court: U.S. Bankruptcy Court — District of Delaware
• Parties: In re INSILCO TECHNOLOGIES, INC., et al., Debtor. Amphenol Corporation and Amphenol Technical Products International Co., Plaintiff, v. Chad Shandler, as Trustee of the Insilco Liquidating Trust — Unsecured Creditors Series, Defendants.

351 B.R. 313

In re INSILCO TECHNOLOGIES, INC., et al., DebtorAmphenol Corporation and Amphenol Technical Products International Co., Plaintiff, v.Chad Shandler, as Trustee of the Insilco Liquidating Trust — Unsecured Creditors Series, Defendants.

Bankruptcy No. 02-13672 (KJC).

Adversary No. 05-52403 (KJC).

United States Bankruptcy Court, D. Delaware.

September 18, 2006.

COPYRIGHT MATERIAL OMITTED

Maureen D. Luke, Pauline K. Morgan, Alfred Villoch, III, Sharon M. Zieg, Young Conaway Stargatt & Taylor, LLP, Warren T. Pratt, Drinker Biddle & Reath LLP, Wilmington, DE, Jack R. Pigman, Porter Wright Morris & Arthur PLL, Columbus, OH, for Debtor.

MEMORANDUM¹

KEVIN J. CAREY, Bankruptcy Judge.

Background

On December 14, 2004, DefendantChad Shandler, as Trustee("Trustee") for the Insilco Liquidating Trust ("Trust"), commenced an adversary proceeding against Precision Cable de Mexico ("PCM")(Adv.No. 04-57713)(the "Preference Adversary") seeking to recover payments totaling $1,176,582.10 allegedly made by the Debtor (Insilco Technologies, Inc., et al.) to PCM, which, at the time of such payment, was a subsidiary of the Debtor, but which did not seek chapter 11 relief with the Debtor.In 2003, during the course of this chapter 11 case, the plaintiffs, Amphenol Corporation and Amphenol Technical Products International Co.(jointly referred to herein as "Amphenol"), acquired from the Debtor, among other assets, the capital stock of PCM (the "PCM Shares").On August 24, 2005, Amphenol commenced this adversary proceeding ("Declaratory Relief Action"), seeking, inter alia, to enjoin the Preference Adversary.Amphenol asserts that the December 15, 2002 Stock and Asset Purchase Agreement ("Sale Agreement") under which the PCM Shares were purchased and the Order dated March 7, 2003("Sale Order") approving the Sale Agreement preclude such a claim.

Now before the Court is the Trustee's Motion to Dismiss under Fed.R.Civ.P. 12(b)(6), or, in the alternative, for judgment on the pleadings under Fed.R.Civ.P. 12(c)(DocketNo. 14)("Motion").For the reasons which follow, the Motion will be granted.Standards — Motion to Dismiss and Judgment en the Pleadings

A motion to dismiss for failure to state a claim upon which relief can be granted is governed by Fed.R.Civ.P. 12(b)(6), made applicable by Fed.R.Bankr.P. 7012(b).In considering a Rule 12(b)(6) motion to dismiss, the court"must accept as true all allegations in the complaint, and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non-moving party."Rocks v. City of Philadelphia,868 F.2d 644, 645(3rd Cir.1989)."The complaint will be deemed to have alleged sufficient facts if it adequately put the defendants on notice of the essential elements of the plaintiffs' cause of action."Higgins v. Beyer,293 F.3d 683, 688(3d Cir.2002), citingNami v. Fauver,82 F.3d 63, 65(3d Cir.1996).

A complaint should be dismissed only if the plaintiffs can prove no set of facts in support of their claim that would entitle them to relief.Conley v. Gibson,355 U.S. 41, 45, 78 S.Ct. 99, 2 L.Ed.2d 80(1957).The relevant record under consideration consists of the complaint and any "document integral or explicitly relied on in the complaint."U.S. Express Lines, Ltd. v. Higgins,281 F.3d 383, 388(3d Cir.2002), citingIn re Burlington Coat Factory Sec. Litig.,114 F.3d 1410, 1426(3d Cir.1997).When considering a motion to dismiss, "it is axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss."Commonwealth of Pa., ex rel. Zimmerman v. PepsiCo, Inc.,836 F.2d 173, 181(3d Cir.1988), citingCar Carriers, Inc. v. Ford Motor Co.,745 F.2d 1101, 1107(7th Cir.1984).

Fed.R.Civ.P. 12(c), also made applicable hereto by Fed.R.Bankr.P. 7012, provides that: "After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings."Judgment on the pleadings will be granted only if the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.In ruling upon motion for judgment on the pleadings, court must accept all well-pleaded factual allegations in the complaint as true, and must draw all inferences in the light most favorable to the non-moving party, but need not accept unsupported or sweeping legal conclusions.The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.In re Roberson,262 B.R. 312, 318(Bankr. E.D.Pa.2001)(citation omitted);Greer v. Shapiro & Kreisman,152 F.Supp.2d 679, 682(E.D.Pa.2001).

Whether a motion should be considered as a motion to dismiss under Rule 12(b)(6) or a motion for judgment on the pleadings under Rule 12(c) depends upon the timing of the motion.Yanes v. Minute Maid Co.,2006 WL 1207992, *2(D.N.J.May 3, 2006).Rule 12(b)(6) motions should be filed before any responsive pleading, while Rule 12(c) motions may be filed after a responsive pleading is filed.Id.In this case, the Motion was filed before the Trustee filed an answer to the complaint, but after Amphenol's motion for a preliminary injunction and the Trustee's response opposing the motion.Regardless of which motion is appropriate, the same standard applies.Id.Because no answer to the complaint has been filed yet, the Court will consider the Motion as one to dismiss for failure to state a claim under Rule 12(b)(6).

Factual Allegations and Relief Requested

The complaint filed in the Declaratory Relief Action ("Complaint") alleges, in pertinent part, as follows:

(1) Prior to the Petition Date [December 16, 2002], the Plaintiffs, as buyers, and Insilco Technologies, Inc.T.A.T. Technology Inc., Insilco International Holdings, Inc., and Precision Cable Mfg. Co., Inc., as sellers, entered into the Sale Agreement [dated as of December 15, 2002].Pursuant to the Sale Agreement, Plaintiffs agreed to purchase certain Purchased Assets as well as all the issued and outstanding PCM Shares, subject to this Court's entry of an order pursuant to Bankruptcy Code § 363(b) authorizing the transfer of the Purchased Assets and Shares free and clear of all liens, claims and encumbrances, other than Closing Encumbrances (as defined in the Sale Agreement).

Complaint, ¶ 11.

(2) On December 19, 2002, the Debtor filed a motion pursuant to Bankruptcy Code §§ 363(b),365, and105(a) and Bankruptcy Rules 2002,6004,6006, and9014, requesting this Court's approval of, inter alia, bidding procedures and the form and manner of the sale of the Purchased Assets and the Shares.The Court entered an order on January 30, 2003, and an amended order on February 20, 2003, approving the Sale Motion, and an auction was held on March 3, 2003.The Plaintiffs were the "stalking horse" bidder.The Debtor, after reviewing all offers, concluded that the Plaintiffs' offer was the highest and best offer for the Purchased Assets and the Shares.The Court conducted a hearing regarding the proposed sale on March 7, 2003, and on that same day entered the Sale Order approving the sale of the Purchased Assets and the Shares to the Plaintiffs.

Complaint, ¶ 12.

(3) Pursuant to the express terms of the Sale Order, the Court found as a matter of fact that:

The transfer of the Purchased Assets and the Shares to the Buyers under the Sale and the Sale Agreement will be a legal, valid, and effective transfer of the Purchased Assets and the Shares and will, ... subject to the last sentence of Paragraph 16 of this Sale Order, vest in the Buyers all right, title and interest of the Debtor in the Purchased Assets and the Sharesfree and clear of any and all liens(including mechanics', materialmen's and other consensual and nonconsensual liens and statutory liens), security interests, encumbrances and claims(including, but not limited to, any "claim" as defined in § 101(5) of the Bankruptcy Code), ... preferences, ... causes of action and claims, to the fullest extent of the law, in each case whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or unrecorded, perfected or unperfected, allowed or disallowed, contingent or non-contingent, liquidated or unliquidated, matured or unmatured, material or nonmaterial, disputed or undisputed, known or unknown, whether arising prior to, on, or subsequent to the Petition Date, whether imposed by agreement, understanding, law, equity or otherwise (collectively, the "Interests") other than the Closing Encumbrances and the claims and interests described in the last sentence of Paragraph 16 of this Sale Order ....Except as specifically provided in the Sale Agreement or this Sale Order, the Buyers shall not assume or become liable for any Interests relating to the Purchased Assets and the Shares Being sold by the Sellers E.

Sale Order at ¶ J(emphasis added by Amphenol).

The Court also concluded as a matter of law that:

Pursuant to Bankruptcy Code sections 363and105, title to the Purchased Assets and the Shares shall pass to the Buyers at closing, free end clear of all Transferred Interests, with all Transferred Interests to be unconditionally released, discharged and terminated as to the Purchased Assets and the Shares, and with all Transferred Interests to attach only to the proceeds of the transaction.

Sale Orderat ¶ 4(emphasis added by Amphenol).

The Sale Order includes the word "preferences" in its definition of "Transferred Interests."Sale Order at ¶ J.The Sale Order also provides that its terms "shall be binding on the Debtor and the Debtor's estates (including ... any chapter 7 or chapter 11trustees appointed in these cases.)"Sale Orderat ¶¶ 12, 19.

Complaint, ¶ 13.

(4) Shortly after the entry of the Sale Order, the Plaintiffs and the Debtor closed the sale and transfer of the Purchased Assets and the...