McGrath RentCorp v. TCI Triangle, Inc. (In re Providence Wireless, LLC), CASE NO. 18–11940–RAM
| Decision Date | 22 June 2018 |
| Docket Number | CASE NO. 18–11940–RAM,MISC. PRO. NO. 18–00001–5–SWH |
| Citation | 587 B.R. 858 |
| Court | U.S. Bankruptcy Court — Eastern District of North Carolina |
| Parties | IN RE: PROVIDENCE WIRELESS, LLC McGrath RentCorp d/b/a TRS–RenTelco, Plaintiff, v. TCI Triangle, Inc. and TowerComm, LLC, Defendants TCI Triangle, Inc., Third–Party, Plaintiff v. Banyan Equity Investors II, Inc., Banyan Mezzanine Fund II, L.P., James "Jim" Davidson, ACM Capital Fund I, LLC, ACM Capital Advisors GP, LLC, ACM Aviation Staffing, LLC, James "Jim" Martin, DA Three, De Anda Capital, LLC, Central Illinois Anesthesia Services Ltd. Profit Sharing Plan, Michael De Anda, and Providence Wireless, LLC, Third–Party Defendants, McGrath RentCorp d/b/a TRS–RenTelco, Plaintiff, v. Banyan Equity Investors II, Inc., Banyan Mezzanine Fund II, L.P., James "Jim" Davidson, ACM Capital Fund I, LLC, ACM Capital Advisors GP, LLC, ACM Aviation Staffing, LLC, James "Jim" Martin, DA Three, De Anda Capital, LLC, Central Illinois Anesthesia Services Ltd. Profit Sharing Plan, Michael De Anda, and Providence Wireless, LLC, Third–Party Defendants. |
George M. Oliver, The Law Offices of Oliver & Cheek, PLLC, New Bern, NC, Camden R. Webb, Williams Mullen, Raleigh, NC, for Plaintiff.
Brian D. Darer, Melanie Black Dubis, Parker, Poe, Adams, Bernstein, LLP, Lauren E. Fussell, Williams Mullen, Raleigh, NC, Arthur Halsey Rice, Rice Pugatch Robinson Storfer & Cohen, Fort Lauderdale, FL, for Defendants.
(A Chapter 11 Case Pending in the U.S. Bankruptcy Court for the Southern District of Florida)
ORDER GRANTING MOTIONS TO REMAND AND DENYING MOTION FOR LEAVE TO AMEND
The matters before the court are the Motion to Remand and Abstain filed by TCI Triangle, Inc. ("TCI") on March 29, 2018, Dkt. 17 and the Motion to Remand filed by McGrath RentCorp ("McGrath") on March 29, 2018, Dkt. 22 (collectively, the "Motions to Remand"). A response in opposition was filed by twelve third-party defendants on April 19, 2018, Dkt. 27 (the "Response"). A hearing was held in Raleigh, North Carolina on April 27, 2018, following which the court took the matter under advisement and invited the parties to file supplemental briefs on the issues raised at the hearing. TCI, McGrath, and the third-party defendants filed briefs in support of their positions on May 2, 2018, Dkts. 37, 38, and 40. The third-party defendants filed a Motion for Leave to Amend Notice of Removal on May 2, 2018, Dkt. 39 (the "Motion for Leave"). After a review of the case record, supplemental memoranda filed by the parties, and the parties' arguments, the Motions to Remand will be granted, and the Motion for Leave will be denied.
It is useful to first discuss the procedural history of the underlying state court lawsuit that Providence Wireless, LLC seeks to remove. McGrath initiated a breach of contract action against TCI and TowerComm, LLC ("TowerComm") in Wake County Superior Court on April 11, 2017 (the "State Court Lawsuit"). McGrath properly served TCI and TowerComm with the complaint. TCI accepted service of process on May 10, 2017 and filed its answer to the complaint on June 23, 2017.1
On January 10, 2018, TCI filed an amended answer, in which it asserted defenses as to McGrath's claims, crossclaims against TowerComm, and third-party claims2 against thirteen additional defendants (the "Amended Answer"), including an entity named "Providence Wireless, LLC." TCI's Amended Answer identifies Providence Wireless, LLC as a "Delaware limited liability company with its principal place of business in Miami–Dade County, Florida." TCI served the Amended Answer on all of the third-party defendants via Federal Express, and TCI served Providence Wireless, LLC at the following address: "Corporation Service Company, Registered Agent, 251 Little Falls Drive, Wilmington, DE 19808."
On January 16, 2018, McGrath filed an amended complaint in Wake County Superior Court (the "Amended Complaint"). In the Amended Complaint, McGrath brought claims against third-party defendants identical to those named in TCI's Amended Answer. Importantly, McGrath also served the summons and complaint upon "Providence Wireless, LLC" at the address of its registered agent, which is listed on the certificate of service as "Corporation Service Company, Registered Agent, 251 Little Falls Drive, Wilmington, DE 19808."
On February 13, 2018, TCI filed a second amended answer (the "Second Amended Answer." The certificate of service attached to the Second Amended Answer indicates that Providence Wireless, LLC's registered agent was served with process via United States Mail at the following address: "Corporation Service Company, Registered Agent, 251 Little Falls Drive, Wilmington, DE 19808."
There are three Providence Wireless, LLC entities: (1) a Delaware limited liability company named ACM Capital Advisors, GP, LLC, which existed as "Providence Wireless, LLC" from September 18, 2017 until February 2, 2018; (2) a Delaware limited liability company; and (3) a Florida limited liability company.
First, a limited liability company named Providence Wireless, LLC existed in Delaware beginning on September 18, 2017. This entity was previously ACM Capital Advisors GP, LLC, but a name change was effectuated by James F. Martin on September 18, 2017, such that ACM Capital Advisors GP, LLC became Providence Wireless, LLC. The entity's registered agent and address of record did not change from Corporation Service Company with an address of 251 Little Falls Drive, Wilmington, Delaware. However, a certificate of nullification of the name change was filed on February 2, 2018. As a result of the nullification, the entity's name reverted back to ACM Capital Advisors, GP, LLC on February 2, 2018. TCI served its Amended Answer upon "Providence Wireless, LLC" on January 11, 2018 at its registered agent's listed address, which is 251 Little Falls Drive, Wilmington, Delaware, during the interim period after the name change but before the filing of the certificate of nullification.
The second Providence Wireless, LLC ("Providence Delaware") is a Delaware limited liability company with its principal place of business in Miami–Dade County, Florida. It was formed on February 1, 2018 by James F. Martin. Its registered agent is Corporation Service Company, and its registered agent's address of record is 251 Little Falls Drive, Wilmington, Delaware 19808.
Finally, Providence Wireless, LLC ("Providence Florida") is a Florida limited liability company. Providence Florida was previously ACM Capital Holdings, LLC,3 but a name change was effectuated on February 12, 2018. Providence Florida's registered agent is James F. Martin. Its registered agent's address of record is 2103 Coral Way, Suite 604, Miami, Florida, and its principal place of business is in Miami–Dade County, Florida.
Providence Florida filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Florida on February 21, 2018. See Case No.18–11940–RAM. On Official Form 201 of its petition, Providence Florida listed its address and principal place of business as "2103 Coral Way, Suite 604, Miami, FL, 33145." Mr. James Martin signed the petition as the debtor's authorized representative.
Providence Florida filed a Notice of Removal of Action to this court on February 27, 2018, Dkt. 1 (the "Notice of Removal"). The Notice of Removal states the following:
Providence Wireless, LLC, by and through undersigned counsel, pursuant to 28 U.S.C. § 1452 and Rule 9027 of the Fed. R. Bank. P., files the instant Notice of Removal of that certain state court action designated Case Number 17 CVS 4340 pending in the County of Wake, North Carolina Superior Court....
In the Notice of Removal, Providence Florida sets forth two jurisdictional bases for removing the matter from the state court. First, Providence Florida, as the removing party, contends that the third-party claims by TCI and the direct claims by McGrath come within the bankruptcy court's jurisdictional ambit contained in 28 U.S.C. § 1334 because they are "related to" its pending bankruptcy. Specifically, Providence Florida alleges that "the outcome of the ... [a]ction has a direct effect on the value, extent, and use of the [bankruptcy] estate...." Dkt. 1 at 2. Second, Providence Florida, as a chapter 11 debtor, asserts that the bankruptcy court has "related to" jurisdiction over the State Court Lawsuit based upon the alter ego claims alleged by TCI and McGrath. Providence Florida contends that the alter ego claims could render it liable for the debts of TowerComm and could render the third-party defendants, as alter egos of Providence Florida, liable for TowerComm's debts as well.
In its Motion to Remand and supplemental brief, TCI primarily argues that Providence Florida was not named and served with process and is therefore not a "party" to the State Court Lawsuit, such that its removal under 28 U.S.C. § 1452(a) was improper. For that reason, TCI contends that the court lacks subject matter jurisdiction over the claims, and remand of the State Court Lawsuit is therefore required. Alternatively, TCI asks the court to mandatorily or permissively abstain from hearing the claims in the State Court Lawsuit pursuant to 28 U.S.C. § 1334(c). TCI also requests reimbursement of its fees and costs related to the removal to this court pursuant to 28 U.S.C. § 1447. In its Motion to Remand, McGrath adopts TCI's position.
In their Response, the twelve third-party defendants assert that: (1) this court has subject matter jurisdiction over the State Court Lawsuit; (2) the underlying claims are core in nature; (3) and that mandatory abstention is not necessary. In their supplemental brief, the third-party defendants first contend that the "misnomer principle" applies to these facts,...
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