Motors Liquidation Co. Avoidance Action Trust v. JPMorgan Chase Bank, N.A. (In re Motors Liquidation Co.)
| Decision Date | 16 February 2017 |
| Docket Number | Case No. 09–50026 (MG) (Jointly Administered),Adversary Proceeding Case No. 09–00504 (MG) |
| Citation | 565 B.R. 275 |
| Parties | IN RE: MOTORS LIQUIDATION COMPANY, f/k/a General Motors Corporation, et al., Debtors. Motors Liquidation Company Avoidance Action Trust, by and through the Wilmington Trust Company, solely in its capacity as Trust Administrator and Trustee, Plaintiff, v. JPMorgan Chase Bank, N.A., et al., Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
LEWIS BAACH PLLC, Attorneys for Defendant immigon portfoliobbaug ag, 1899 Pennsylvania Avenue, N.W., Suite 600, Washington, DC 20006, BY: Bruce R. Grace, Esq.
BINDER & SCHWARTZ LLP, Attorneys for Plaintiff, 366 Madison Avenue, 6thFloor, New York, NY 10017, By: Eric B. Fisher, Esq., Neil S. Binder, Esq., Lindsay A. Bush, Esq., Lauren K. Handelsmann, Esq.
Defendant immigon portfolioabbau ag (formerly known as Österreichische Volksbanken Aktiengesellschaft ("OEVAG") (together, "Immigon"), has moved to dismiss this adversary proceeding pursuant to Rules 12(b)(2), 12(b)(4), and 12(b)(5) of the Federal Rules of Civil Procedure, made applicable to this adversary proceeding by Federal Rules of Bankruptcy Procedure 7012(b). In support of its motion, Immigon submitted a memorandum of law (ECF Doc. # 823–1), together with the Declaration of Dr. Stefan Süssenbach, dated December 22, 2016 (the "Süssenbach Declaration," ECF Doc. # 823–2). The Motors Liquidation Company Avoidance Action Trust1 (the "Plaintiff" or "AAT"), submitted a memorandum of law in opposition to the motion (ECF Doc. # 831), together with the Declaration of Eric B. Fisher in Support of Plaintiff's Opposition to Immigon's Motion to Dismiss the Amended Complaint (the "Fisher Declaration," ECF Doc. # 832). The Fischer Declaration, in turn, attaches the Declaration of Karina Shreefer in Support of Plaintiff's Opposition to Immigon's Motion to Dismiss the Amended Complaint (the "Shreefer Declaration," ECF Doc. # 832, Ex. O). Immigon filed a reply memorandum of law ("Reply," ECF Doc. # 840).
Immigon is domiciled in Vienna, Austria. In September 2007, OEVAG purchased from JPMorgan Chase Bank, N.A. ("JPMorgan" or "JPMC"), on the secondary market, a $10 million interest in General Motor's ("GM") syndicated $1.5 billion Term Loan, secured by a Collateral Agreement, in which GM and Saturn granted to JPMC a first priority security interest in certain equipment and fixtures in its U.S. manufacturing facilities. After GM filed its chapter 11 cases in June 2009, the Term Loan was repaid under the terms of the DIP Order entered by the Court. OEVAG received $9,893,347.29, paid by JPMC into OEVAG's New York account at the Bank of New York Mellon. OEVAG made no objection and accepted the payment.
After it was determined that the lien securing most of the collateral for the $1.5 billion Term Loan was released by mistake before the petition date, the AAT succeeded to the rights of the official committee of unsecured creditors and brought this adversary proceeding to clawback the funds repaid to the holders of interests in the Term Loan.
Immigon contends that this Court lacks personal jurisdiction over it,2 requiring dismissal under Rule 12(b)(2). Immigon further argues that the AAT did not timely serve Immigon with the summons and complaint, requiring dismissal under Rules 12(b)(4) and 12(b)(5). The AAT disputes both contentions. Therefore, the issue is whether the Court would have had personal jurisdiction over OEVAG. The AAT argues that specific personal jurisdiction exists on several different theories: (i) consent to jurisdiction based on a provision in the Loan Agreement; (ii) consent to jurisdiction included in the DIP Order by receipt of the repayment; and (iii) recognized principles of specific jurisdiction. Each theory will be separately addressed below. The AAT also argues that, despite a lengthy delay in service (primarily attributed to the United States Department of State (the "State Department"), timely service by means of letter rogatory was made on September 23, 2016.
The Court heard argument of the motion on February 14, 2017. For the reasons explained below, the motion to dismiss is DENIED.
Immigon is a wind-down company formed pursuant to section 162 of the Austrian Federal Act on the Restructuring and Resolution of Banks (Bundesgesetz über die Sanierung und Abwicklung von Banken ("BaSAG")). See Süssenbach Decl. ¶ 5. Until July 4, 2015, the corporate name of the company was Österreichische Volksbanken–Aktiengesellschaft, id. ¶ 6, abbreviated as OEVAG. Id. ¶ 7. The motion to dismiss uses the names Immigon and OEVAG interchangeably.
OEVAG was the central institute of the Austrian co-operative banks named Volksbanken. Id . ¶ 8. OEVAG had its seat in Vienna, Austria. Id . OEVAG, a licensed bank, operated under the authority of the Austrian banking authorities. Id. OEVAG did not have offices, employees, or property in the United States. Id. ¶ 11. It did not hold itself out as doing business in New York ( or anywhere e l s e in the United States). Id. ¶ 12. OEVAG did not have a postal address or a telephone number in the United States. Id. ¶ 13. It was not registered to and, it contends, it did not conduct business in the United States. Id. ¶ 14. OEVAG did not offer any financial or other services in the United States. Id. ¶ 15. Nor did it advertise in the United States. Id. ¶ 16. These statements are equally true for Immigon. Id . ¶ 17.
As of July 4, 2015, OEVAG's function as a central organization and central institution of the association of Austrian Volksbanken (Volksbanken–Verbund) was transferred by way of a de-merger to Volksbank Wien AG (formerly, Volksbank Wien–Baden AG). Id. ¶ 18. The de-merger, with regulatory approval, was the result of a reorganization plan implemented by OEVAG. The de-merger was undertaken largely as a result of a 2014 comprehensive assessment showing a large capital shortfall for future years. This led to a belief that the conditions to ensure OEVAG's continued existence as a bank were no longer in place. Id. The de-merger became effective on July 4, 2015, and involved the transformation of OEVAG from a credit institution into a pure wind-down company pursuant to the BaSAG without a banking license. Id. ¶ 19. The company's plan is to wind down its assets (including the repayment of liabilities) by the end of 2017, with the ultimate goal of liquidation. Id. ¶ 20.
On November 29, 2006, GM obtained a $1.5 billion seven-year term loan (the "Term Loan") evidenced by a note pursuant to the Term Loan Agreement (ECF Doc. # 428). The Term Loan was secured by a collateral agreement, in which GM and Saturn granted to JPMC a first priority security interest in certain equipment and fixtures in its U.S. manufacturing facilities. The Term Loan was a syndicated loan, through which several large financial institutions (the "Bank Lenders"), including JPMC, committed up front to provide funding. The Bank Lenders had the right to sell interests on the secondary market, typically by assignment of interests to qualified investors. ECF Term Loan Agreement at § 10.06. OEVAG is a qualified investor in the Term Loan.
In September 2007, OEVAG purchased interests in the Term Loan in two separate trades of $5 million each on the secondary market. Def. Br. at 4. OEVAG's records show that the two transactions were arranged by an employee of OEVAG in Vienna, Austria with JPMC as counterparty. Id. Immigon disputes whether OEVAG purchased its interest through "assignments" or "participations." However, documents submitted to the Court show that these purchases were formal assignments, executed under the standard LSTA Par/Near Par trade confirmations between OEVAG and JPMC employees in New York through Bloomberg, email and fax. See Fisher Decl., Ex. A (IMMIGON 000001). JPMC's Secondary Loan Trading desk in New York verified that OEVAG was on JPMC's "approved assignee list." Id. Ex. B (JPMCB–5–000019693); Ex. C (JPMCB–5–00019329).
Assignments are governed by § 10.06 of the Term Loan Agreement, which required the parties to "execute and deliver to [JPMC] an Assignment and Acceptance" agreement in the form annexed as Exhibit A to the Term Loan Agreement. ECF No. 428–2 (Term Loan Agreement) at § 10.06(b)(ii)(B) & Ex. A. Form of Assignment and Acceptance ("Assignment Agreement"). Upon the execution and recording of the Assignment Agreement, the assignee (here, OEVAG), became a party to the Term Loan Agreement and "to the extent of the interest assigned by such Assignment ... [had] the rights and obligations of a Lender under this Agreement." Id . at § 10.06(b)(iii) & Ex. A Assignment Agreement §§ 3(v); 6(i). The Trade Confirmations include checked boxes showing that these trades to OEVAG were accomplished by assignments; separate Assignment and Acceptance forms signed by OEVAG have not been located. Nevertheless, as explained below, for purposes of considering the motion to dismiss for lack of personal jurisdiction, the Court concludes that the Trade Confirmations are sufficient evidence to show that the OEVAG transactions were assignments.
JPMC, as administrative agent, recorded each assignment and updated a register of lenders and outstanding principal amounts owing to each lender. The entries in the register are prima facie evidence of the existence and amounts of the obligations of the borrower, and the borrower, the agent and the lenders may treat each person whose name is recorded in the register as a lender. Id. § 10.06(b)(iv). JPMC confirmed that on June 30, 2009, OEVAG was a lender of record under the Term Loan Agreement, ECF No. 12 ¶ 270 (the "JPMC Answer"), and that it received the specified payoff amount. ECF No. 761–9, at AAT00056667 (...
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