Seagate Tech. (Us) Holdings, Inc. v. Global Kato HG, LLC (In re Solyndra, LLC.)
| Decision Date | 16 October 2015 |
| Docket Number | Adv. Proc. No. 15-50925 (MFW),Case No. 11-12799 (MFW),Adv. Proc. No. 15-50268 (MFW) |
| Parties | In re: SOLYNDRA, LLC., et al., Debtors. SEAGATE TECHNOLOGY (US) HOLDINGS, INC., Plaintiff, v. GLOBAL KATO HG, LLC, Defendants. GLOBAL KATO HG, LLC, a California limited liability company, Plaintiff, v. SEAGATE TECHNOLOGY (US) HOLDINGS, INC., a Delaware corporation; and DOES 1-10, inclusive, Defendants. |
| Court | U.S. Bankruptcy Court — District of Delaware |
(Jointly Administered)
Before the Court are two motions filed by Global Kato HF, LLC ("Global Kato"): The first is a motion to dismiss, for lackof subject matter jurisdiction or for failure to state a claim, the adversary proceeding commenced by Seagate Technology (US) Holdings, Inc. ("Seagate"). The second is a motion to remand an action initiated by Global Kato against Seagate in California state court that was subsequently removed to this Court. Because the Court concludes it has no subject matter jurisdiction over either adversary proceeding, both motions will be granted.
In September 2003, Global Kato, as landlord, and Maxtor Corporation ("Maxtor"), as tenant, entered into an industrial lease (the "Lease") for a manufacturing facility in Fremont, California (the "Premises"). (Adv. 1 at D.I. 1, ¶ 18.)2 The Lease was for a term of eight years, ending on September 29, 2011. (Id.) On December 1, 2006, Maxtor assigned the Lease to Seagate. (Id.) Shortly thereafter, on January 24, 2007, Seagate subleased the Premises to 360 Degree Solar Holdings, Inc. (the "Debtor") pursuant to a sublease agreement (the "Sublease"). At that time, the Debtor also entered into a lease with Global Kato for a term immediately following the expiration of the Seagate Lease (the "Direct Lease"). (Id.)
On September 6, 2011, the Debtor and its affiliate, Solyndra LLC, filed chapter 11 bankruptcy petitions. The Debtor also filed a motion to reject both the Sublease and the Direct Lease. (Id. at ¶ 23.) Global Kato and Seagate both objected to the motion. (Id.) In settlement of Global Kato's objection, the Debtor and Global Kato entered into a stipulation authorizing the rejection (the "Stipulation"). (Id. at ¶ 24.)
Under the Stipulation, Global Kato's rejection damages claim was allowed in the amount of approximately $17.5 million. (D.I. 905, ¶ 11.) The Stipulation further provided that Global Kato would retain and pay the Debtor's environmental contractor an amount up to $848,318 (the "Work Cap") to remediate environmental damages at the Premises. (Id. at ¶ 9.) In the Stipulation, Global Kato agreed to credit Seagate up to the Work Cap for any claims Global Kato may have against Seagate as it related to the Debtor's occupancy. (Id. at ¶ 15.)
On October 22, 2012, the Court entered an order confirming the Debtor's Amended Joint Plan (the "Plan"), which became effective on November 7, 2012. (D.I. 1224.) As a component of the Plan, the Solyndra Settlement Trust (the "Trust") was established for the purpose of collecting, liquidating, and distributing certain of the Debtor's assets. (D.I. 1124.)
On March 8, 2013, Global Kato served a demand letter on Seagate requesting that Seagate: (i) reimburse Global Kato for environmental closure costs in excess of the Work Cap, (ii)remove certain equipment from the Premises left behind by the Debtor, and (iii) pay damages for lost rent caused by the environmental contamination. (Adv. 1 at D.I. 1.) In response to the demand letter, Seagate hired its own firm to complete remediation efforts at the Premises. (Id. at ¶ 29.) Seagate alleges that the remediation of the Premises was completed by October 2014. (Id. at ¶ 30.) Seagate further alleges that because of Global Kato's gross negligence and commercial unreasonableness, remediation of the Premises lasted far longer than necessary and resulted in inflated costs. (Id. at ¶ 31.) Seagate contends that under its supervision, remediation of the Premises was successfully completed at a cost to Seagate of at least $1.1 million, far less than what Global Kato proposed. (Id.)
On April 20, 2015, Seagate filed a complaint in this Court (the "Seagate Complaint") against Global Kato and the Trust alleging: (1) breach of contract, (2) equitable indemnity, (3) unjust enrichment, and (4) declaratory relief. (Adv. 1 at D.I. 1.)
On May 19, 2015, Global Kato filed an action against Seagate for breach of the Lease in the California Superior Court for the County of Alameda (the "California Action"). (Adv. 2 at D.I. 1, ¶ 1). In the California Action, Global Kato has alleged the following causes of action against Seagate: (1) breach of the Lease, (2) express contractual indemnity, (3) breach of theimplied covenant of good faith, and (4) declaratory relief. (Adv. 2 at D.I. 26.) On July 9, 2015, Seagate removed the California Action which was thereafter transferred to this Court. (Adv. 2 at D.I. 22.)
On May 20, 2015, Global Kato filed a motion to dismiss the claims against it in the Seagate Complaint, or, in the alternative, to abstain. (Adv. 1 at D.I. 5.) In the removed adversary proceeding, Global Kato filed a motion to remand. (Adv. 2 at D.I. 26.) Notices of completion of briefing on both motions were filed and those matters are now ripe for decision. (Adv. 2 at D.I. 29; Adv. 1 at D.I. 31.)
A bankruptcy court has the authority to determine whether it has subject matter jurisdiction over an adversary proceeding. See, e.g., MPC Liquidating Trust, LLC v. Granite Fin. Solutions (In re MPC Computers, LLC), 465 B.R. 384, 386 (Bankr. D. Del. 2012) (citation omitted) ( that a federal court has authority to determine whether it has subject matter jurisdiction over a dispute).
Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a federal court may dismiss a complaint for lack of subject matter jurisdiction. A motion to dismiss under Rule 12(b)(1) challenges the power of the federal court to hear a claim or case. See, e.g., Democracy Rising PA v. Celluci, 603 F. Supp. 2d 780, 788 (M.D. Pa. 2009).
Courts may consider subject matter jurisdiction at any time and must dismiss an action if subject matter jurisdiction is lacking. Fed. R. Civ. P. 12(h)(3). The issue can be raised in any manner, including on motion of one of the parties or by the court sua sponte. See, e.g., Enterprise Bank v. Eltech, Inc. (In re Eltech, Inc.), 313 B.R. 659, 662 (Bankr. W.D. Pa. 2004).
In addition, a party may make a "factual" attack arguing that, although the pleadings facially satisfy jurisdictional prerequisites, one or more of the allegations is untrue, thereby rendering the controversy outside the court's jurisdiction. See, e.g., Democracy Rising PA, 603 F. Supp. 2d at 788. In such circumstances, a court is required to evaluate the merits of the disputed allegations because "the trial court's . . . very power to hear the case" is at issue. Id. In a factual attack, a court's analysis of the merits is not confined to the allegations in the complaint; it can consider evidence outside the pleadings to resolve the factual issues bearing on jurisdiction. See, e.g., Davis v. Soc. Sec. Admin., No. Civ. A. 02-1595-SLR, 2003 WL 21219821, at *1 (D. Del. May 20, 2003).
In a Rule 12(b)(1) motion to dismiss, the party invoking the federal court's jurisdiction bears the burden of establishing that the court has jurisdiction. See, e.g., Common Cause of Pa. v. Pa., 558 F.3d 249, 257 (3d Cir. 2009). A motion to dismiss for want of subject matter jurisdiction will be granted only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. See, e.g., Calhoun v. United States, 475 F.Supp. 1, 2-3 (S.D. Cal. 1977).
Federal bankruptcy jurisdiction extends to four types of matters: (1) cases under title 11, (2) proceedings arising under title 11, (3) proceedings arising in a case under title 11, and (4) proceedings related to a case under title 11. 28 U.S.C. §§ 157, 1334. See also Stoe v. Flaherty, 436 F.3d 209, 216 (3d Cir. 2006); In re Combustion Eng'g Inc., 391 F.3d 190, 225 (3d Cir. 2004).
A case under title 11 is merely the bankruptcy petition itself. In re Marcus Hook Dev. Park Inc., 943 F.2d 261, 264 (3d Cir. 1991).
Proceedings arising under title 11 refer to the steps within the bankruptcy case and any action within the case that may raise a disputed or litigated matter. See, e.g., Michigan Emp'r Sec. Comm'n v. Wolverine Radio Co., Inc. (In re Wolverine Radio Co., Inc.), 930 F.2d 1132, 1141 n.14 (6th Cir. 1991). "Arising under"proceedings encompass actions based on any express provision of the Bankruptcy Code; for example, a sale of assets under section 363.
Proceedings arising in a case under title 11 refer to proceedings that are not based on any right expressly created by title 11, but nevertheless would have no existence outside the bankruptcy case. Stoe, 436 F.3d at 216. See, e.g., Nelson v. Welch (In re Repository Techs., Inc.), 601 F.3d 710, 719 (7th Cir. 2010) ().
Proceedings "related to" a case under title 11 constitute "the broader universe of all proceedings that are not core proceedings but are nevertheless 'related to' a bankruptcy case." Halper v. Halper, 164 F.3d 830, 837 (3d Cir. 1999).
Seagate asserts that the Court has "arising under," "arising in," and "related to" jurisdiction for each count in the Seagate Complaint. Global Kato argues that subject matter jurisdiction is lacking for all counts.
Seagate argues that the Court has "arising in" jurisdiction because the Stipulation and the Order approving the Stipulation granted relief under several provisions of the Bankruptcy Code. Seagate next argues the Court has "arising...
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