Saipan Air, Inc. v. Stukes

• Decision Date: 06 February 2014
• Docket Number: No. 1:12–CV–00015.,1:12–CV–00015.
• Citation: 505 B.R. 305
• Court: U.S. District Court — Northern Mariana Islands
• Parties: SAIPAN AIR, INC., Plaintiff v. Donald A. STUKES, Jeffry Conry, and Boris Van Lier, Defendants.

505 B.R. 305

SAIPAN AIR, INC., Plaintiff

v.Donald A. STUKES, Jeffry Conry, and Boris Van Lier, Defendants.

No. 1:12–CV–00015.

District Court for the Northern Mariana Islands.

Feb. 6, 2014.

Steven P. Pixley, Saipan, MP, Vincent Joseph Seman, Attorney at Law, Saipan, MP, for Plaintiff.

J. Nathan Duggins, III, Pro Hac Vice, Michael A. White, The Law Offices of Michael A. White, LLC, Saipan, MP, for Defendants.

MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

RAMONA V. MANGLONA, Chief Judge.

I. INTRODUCTION

Defendants Donald A. Stukes, Jeffry Corny, and Boris Van Lier (collectively “Defendants”) assert that Plaintiff Saipan Air, Inc. (“Saipan Air”) is enjoined from continuing this lawsuit against them by force of the confirmed Chapter 11 reorganization plan (“the Plan”) of Swift Air, Inc. (“Swift Air”). Their Motion for Permanent Injunction (ECF No. 44) has been converted, with the parties' consent, into a motion for summary judgment. See Order, Dec. 18, 2013 (ECF No. 59.) The matter has been fully briefed. Without objection, all exhibits that the parties submitted in support their respective positions have been admitted for purposes of the motion. The matter was heard on December 19, 2013, and taken under advisement. Having considered all the papers and the oral arguments of counsel, the Court denies Defendants' motion for summary judgment.

II. BACKGROUND

The essential facts bearing on the motion are undisputed. At all times relevant, Defendants were employees, officers, or advisers of Swift Air, an Arizona corporation. Defendant Corny was Chief Executive Officer. (Corny Declaration, ECF 45–2, ¶ 35.) Defendant Van Lier was Director of Operations. ( Id.) Defendant Stukes was Swift Air's Chief Restructuring Officer and was also an employee of ASI Advisors, LLC. (Stukes Decl., ECF No. 9, ¶ 13.)

In early April 2012, Saipan Air and Swift Air entered into an agreement (“the Agreement”) for Swift Air to provide Saipan Air with aircraft, crew, maintenance, and insurance. Over the next two months, Saipan Air wired a total of $1.267 million to Swift Air and provided a $524,000 letter of credit to secure delivery of the aircraft by July 1. On June 21, Defendant Van Lier, acting on behalf of Swift Air, sent a letter to Saipan Air purporting to terminate the Agreement. (Answer to FAC ¶ 34.) Less than a week later, on June 27, Swift Air filed for bankruptcy in the District of Arizona under chapter 11 of the Bankruptcy Code.

In response, Saipan Air took action on two fronts. In Arizona, it participated actively in the bankruptcy case. In the initial filings, Saipan Air was listed as Swift Air's second-largest unsecured creditor. ( See List of Creditors Holding 20 Largest Unsecured Claims, In re Swift Air, 2:12–bk–14362–DPC (Bankr. D. Ariz. June 27, 2012), Dkt. Entry 2.) Swift Air's chief operating officer, Adam Ferguson, chaired the creditors' committee. On July 8, Ferguson swore out a declaration in support of its $1.276 million claim. ( See Declaration of Adam Ferguson (“Ferguson Declaration”), ECF No. 44–3.) Ferguson alleged that a series of broken promises, misrepresentations, and outright lies by Corny, Van Lier, and other agents of Swift Air induced Saipan Air to enter into the Agreement. ( See Ferguson Decl. ¶¶ 5–12.)

Around the same time, Saipan Air brought an action in this District against the individual Defendants for fraud, unjust enrichment, and violations of the Racketeer Influenced and Corrupt Organization Act (“RICO”). The complaint, filed July 12, 2012, alleged that Defendants fraudulently induced Saipan Air to transfer money and other assets to Swift Air. For the most part, the facts alleged in the Ferguson Declaration in support of Saipan Air's claim against Swift Air in the bankruptcy case also serve as the basis for the complaint against the individual Defendants in the civil action.

On August 21, 2013, in the bankruptcy case, Swift Air filed a Third Amended Plan of Reorganization (“the Plan”). ( In re: Swift Air, Dkt. Entry 620–1; also ECF No. 44–5.) Section 9.7 of the Plan enjoins all persons asserting any claims “against any of the released parties based upon, attributable to, arising out of or relating to any Claim against or Equity Interest in the Debtor” from “[c]ommencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claims ...” ( Id.) On October 1, 2013, the bankruptcy court entered an order confirming the Plan. ( In re: Swift Air, Dkt. Entry 662; also ECF No. 44–4.) Saipan Air did not appeal the confirmation order, and the time for filing notice of appeal, pursuant to Rule 8002 of the Bankruptcy Code, expired on October 15.

III. LEGAL STANDARD

A court must grant summary judgment if there is no genuine issue of material fact for trial and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The movants must support their position that a material fact is or is not genuinely disputed by either “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motion only), admissions, interrogatory answers, or other materials”; or “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c).

An issue is “genuine” if a reasonable jury could return a verdict in favor of the non-moving party on the evidence presented; a mere “scintilla of evidence” is not sufficient. Rivera v. Philip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir.2005) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A fact is “material” if it could affect the outcome of the case. Id.

The court views the evidence in the light most favorable to the non-moving party and draws “all justifiable inferences” in that party's favor. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.2006) (quoting Hunt v. Cromartie, 526 U.S. 541, 552, 119 S.Ct. 1545, 143 L.Ed.2d 731 (1999)). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When the moving party has met its burden, the non-moving party must present “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.1989) (quoting Angel v. Seattle–First Nat'l Bank, 653 F.2d 1293, 1299 (9th Cir.1981)).

IV. ANALYSIS

The outcome of this motion turns on whether the individual Defendants are “released parties” within the meaning of § 9.7 of the Plan. Section 9.7 enjoins Swift Air's creditors from continuing to pursue “against any of the released parties” any action related to a claim against Swift Air. Indisputably, Saipan Air was an unsecured creditor of Swift Air, and its claims against Defendants arise out of and are related to its claims against Swift Air. If Defendants are released parties, they are shielded from this action by § 9.7's supplemental injunction.

Even if the injunction applies to this action, however, this Court would not necessarily have the authority to enforce it. Typically, enforcement authority lies with the court that issued the injunction—in this instance, the Bankruptcy Court of the District of Arizona. See Baker v. GMC, 522 U.S. 222, 236, 118 S.Ct. 657, 139 L.Ed.2d 580 (U.S.1998) (“Sanctions for violations of an injunction ... are generally administered by the court that issued the injunction.”); cf. Ramirez–Juarez v. INS, 633 F.2d 174, 175 n. 2 (9th Cir.1980) (declining to address whether circuit court had jurisdiction to enforce another court's injunction upon review of deportation order). Indeed, the Arizona court expressly retained jurisdiction over the chapter 11 case after the Plan's effective date. See Plan (ECF No. 44–5), art. 10.1.

Nevertheless, the injunction effectively ends this lawsuit if it shows that Saipan Air's claims against the individual Defendants have already been settled in the Arizona bankruptcy case. This result comes about through application of the doctrine of claim preclusion, or res judicata. Claims are precluded when there has been a final judgment on the merits by a court of competent jurisdiction involving the same parties and the same claims. See Rein v. Providian Financial Corp., 270 F.3d 895, 898–99 (9th Cir.2001). A confirmed reorganization plan “operates as a final judgment with res judicata effect.” Unsecured Creditors' Comm. v. Southmark Corp. (In re Robert L. Helms Constr. & Dev. Co.), 139 F.3d 702, 704 (9th Cir.1998). Where a creditor has released all claims against a nondebtor under the terms of a confirmed reorganization plan, “res judicata precludes collateral attack” through a separate lawsuit. Trulis v. Barton, 107 F.3d 685, 691 (9th Cir.1995). However, unless the applicable provisions of the confirmed plan are clear and unambiguous, “the principles of res judicata do not bar [the claim].” Miller v. United States, 363 F.3d 999, 1004 (9th Cir.2004).

To determine whether § 9.7 of the Plan clearly and unambiguously enjoins related claims against the individual Defendants, the rules of contract interpretation must be applied. Id.; also Hillis Motors v. Hawaii Auto. Dealers' Ass'n (In re Hillis Motors), 997 F.2d 581, 588 (9th Cir.1993) (superseded by statute on other grounds) (“A reorganization plan ... should be construed basically as a contract.”). “Although contract interpretation involves mixed questions of law and fact, the application of...