In Re: Skyport Global Communications Inc.
| Decision Date | 13 January 2011 |
| Docket Number | Case No. 08-36737,Adversary No. 10-03150 |
| Parties | In re: SKYPORT GLOBAL COMMUNICATIONS, INC., Debtor. JOANNE SCHMERMERHORN, JOHN K. WAYMIRE, et al., Plaintiffs, v. CENTURYTEL, INC. (a/k/a CENTURY LINK), CLARENCE MARSHALL, et al.,Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
In re: SKYPORT GLOBAL COMMUNICATIONS, INC., Debtor.
JOANNE SCHMERMERHORN, JOHN K. WAYMIRE, et al., Plaintiffs,
v.
CENTURYTEL, INC. (a/k/a CENTURY LINK), CLARENCE MARSHALL, et al., Defendants.
Case No. 08-36737
Adversary No. 10-03150
UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
Signed: January 13, 2011
The present dispute was initiated in Texas state court, where the plaintiffs named in Exhibit B (the Plaintiffs) filed a petition (the Petition) accusing the defendants named in Exhibit C (the Defendants) of certain acts and omissions in connection with investments in and
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management of two companies—SkyPort Global Communications, Inc. (SkyPort) and SkyComm Technologies, Inc. (SkyComm). SkyPort is currently operating pursuant to a Chapter 11 plan of reorganization (the Plan) which was confirmed by an order of this Court in 2009 (the Confirmation Order). After the Plaintiffs filed the Petition, the Defendants, except the law firm of Wilson Vukelich LLP, then removed the suit from state court to this Court on March 26, 2010, asserting that this Court has jurisdiction over the suit because its filing constitutes an attack on the Plan and the Confirmation Order.1 [Adv. Docket No. 1]. Specifically, the Defendants, except the law firm of Wilson Vukelich LLP, argue that the claims in the Petition are barred derivative claims on behalf of SkyPort, and the Plaintiffs' request in the Petition that a receiver be appointed to run SkyPort is an attempt to undermine the Plan.
On March 26, 2010, the Defendants, except the law firm of Wilson Vukelich LLP, also filed a Motion to Dismiss Adversary Proceeding (the Motion to Dismiss). [Adv. Docket No. 2]. On April 19, 2010, the Plaintiffs filed their Objections to the Motion to Dismiss. [Adv. Docket No. 15].
On May 27, 2010, this Court held a hearing on these issues and concluded that some of
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the claims and relief sought in the Petition do violate the terms of the Plan and the Confirmation Order.2 The Court arrived at this conclusion on the grounds that many of the claims brought by the Plaintiffs are derivative claims—which therefore belong to Skyport—and are barred from being brought under the express terms of the Plan. The Court noted in its oral ruling that distinguishing between derivative claims and direct claims (most of which are not barred by the Plan) is not an easy task. Given the numerous claims brought by the Plaintiffs, the Court thought that it would be appropriate to allow the parties and their counsel approximately one month to meet and attempt to come to an agreement as to which claims are derivative with respect to Skyport (and therefore may not be brought by the Plaintiffs) and which claims are direct, or not otherwise barred by the Plan and Confirmation Order. At a hearing held on June 22, 2010, the parties conceded that they were unable to come to such an agreement on the claims in the Petition. As a result, the Court concluded that due to the complexity and breadth of the Plaintiffs' allegations, it would issue a Memorandum Opinion specifying which claims in the Petition violate the Plan or the Confirmation Order and, therefore, must be dismissed with prejudice.
The Court has now completed its analysis of all of the claims brought by the Plaintiffs in the Petition. The Court therefore issues this Memorandum Opinion setting forth which claims in the Petition are barred and therefore must be dismissed with prejudice, and which claims are not barred and therefore may be prosecuted.
At the hearing on May 27, 2010, this Court stated that it would dismiss with prejudice
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those claims that are barred by the Plan and Confirmation Order, and that it would dismiss without prejudice those claims which are not barred by the Plan and Confirmation Order. Because it has taken the Court substantial time to analyze all of these claims, the Court has decided not to dismiss without prejudice those claims that are not barred; rather, the Court has decided to remand these claims to Texas state court.3 Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351-53 (1988) ("As many lower courts have noted, a remand generally will be preferable to a dismissal when the statute of limitations on the plaintiff's state-law claims has expired before the federal court has determined that it should relinquish jurisdiction over the case.... Even when the applicable statute of limitations has not expired, a remand may best promote the values of economy, convenience, fairness, and comity.").
Finally, to the extent that any of this Court's oral findings of fact and conclusions of law made in open court on May 27, 2010 conflict with anything set forth in this Memorandum Opinion, the latter shall govern; and to the extent that anything set forth in this Memorandum Opinion does not encompass all of this Court's oral findings of fact and conclusions of law made in open court on May 27, 2010, the latter shall supplement what is set forth in this Memorandum Opinion.
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A. Procedural History
1. On August 12, 2009, this Court entered the Order Confirming Plan of Reorganization, as Modified (the Confirmation Order) [Main Case Doc. No. 340], approving the Chapter 11 Plan of Reorganization for SkyPort Global Communications, Inc. [Main Case Doc. No. 223] and its modifications [Main Case Doc. No. 289] (collectively, the Plan).
2. The Plaintiffs had notice of the filing of SkyPort's bankruptcy petition in 2008. Moreover, the Plaintiffs had notice that SkyPort had filed a proposed plan and was seeking to confirm this proposed plan.4 Indeed, certain Plaintiffs objected to the proposed plan in its original form, only withdrawing their objections after the proposed plan was amended to explicitly state that these parties are not barred from bringing specified claims, some of which are the subject of this dispute. The actions taken by these Plaintiffs indicate that they knew a dispute existed prior to the confirmation of the proposed plan. Moreover, at the hearing held on May 27, 2010, this Court also found that, based on testimony provided by Bill McCrary, other Plaintiffs knew that they had a dispute with some of the Defendants during the pendency of SkyPort's bankruptcy. [May 27, 2010, Tr. 174:10-181:13]. For these reasons, the Plaintiffs had adequate notice of the proposed plan and disclosure statement, and they, therefore, had adequate notice of what effect confirmation of the proposed plan would have on their interests and on the dispute that they had with the Defendants. [Main Case Doc. Nos. 228 & 230]; [May 27, 2010, Tr. 273:4-17]. Stated differently, the Plaintiffs had ample opportunity to object to the
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proposed plan during the pendency of SkyPort's Chapter 11 case. However, the Plaintiffs did not take advantage of their opportunity to object to the proposed plan or conduct discovery prior to the confirmation hearing. [May 27, 2010, Tr. 273:4-17].
3. The Plan defines a variety of terms which are frequently found in the text of the Plan and the Confirmation Order. Because this Memorandum Opinion quotes both of these documents, the following definitions from the Plan will be used for the purposes of clarity and consistency.
i. "Debtor shall mean SkyPort."
ii. "Effective Date shall mean the later of the date upon which the Confirmation Order becomes a Final Order."5
iii. "Reorganized Debtor shall mean SkyPort immediately after the Effective Date." [Main Case Doc. No. 223].
4. In the Confirmation Order, and pursuant to the language of the Plan, this Court placed limitations on certain actions between various interested parties to the bankruptcy case, particularly derivative actions on behalf of the Debtor.
5. Article 6.3 of the Plan provides for a merger of SkyPort with its sole shareholder, SkyComm. [Main Case Doc. No. 289, Art. 6.3]. Pursuant to the Plan, SkyComm was to be merged into SkyPort, which would remain as the sole surviving company after the merger was consummated. [Main Case Doc. No. 289, Art. 6.3]. Once merged, all shares of stock owned by SkyComm's shareholders were to be cancelled and all shares of the Reorganized Debtor were to be re-issued to Balaton Group, Inc. [Main Case Doc. No.
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289, Art. 6.3]. The Confirmation Order mandates that this merger occur as part of the effectuation of the Plan. [Main Case Doc. No. 340, ¶ 32].
6. On October 13, 2009, the merger of SkyComm with SkyPort was enacted pursuant to the Plan and the Confirmation Order. Accordingly, all of SkyComm's shareholders lost their equity interests in SkyComm through the cancellation of their shares. All shares of the Reorganized Debtor were then issued to Balaton Group, Inc.
7. On February 12, 2010, the Plaintiffs filed the Petition against the Defendants in Texas state court. See [Adv. Doc. No. 1]. The Petition alleges fifteen counts of a variety of misdeeds. Each cause of action is on behalf of some or all of the Plaintiffs. Each cause of action is against some or all of the Defendants....
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