VeraSun Energy Corp. v. W. Plains Co. (In re VeraSun Energy Corp.)
| Decision Date | 28 June 2013 |
| Docket Number | Adv. No. 11-53143,Related to Adv. Docket No. 46,Related to Adv. Docket No. 51,Related to Adv. Docket No. 49,Case No. 08-12606 (BLS) |
| Parties | In re: VeraSun Energy Corporation, et al., Reorganized Debtors. VeraSun Energy Corporation, et al., Plaintiffs, v. West Plains Company, Defendant. |
| Court | U.S. Bankruptcy Court — District of Delaware |
(Jointly Administered)
THE ROSNER LAW GROUP LLC
Frederick B. Rosner, Esq.
Scott J. Leonhardt, Esq.
-and-
SILVERMANACAMPORA LLP
Lon J. Seidman, Esq.
KLEHR HARRISON HARVEY
BRANZBURG LLP
Domenic E. Pacitti, Esq.
-and-
HUSCH BLACKWELL LLP
Robert V. Ginn, Esq.
Michael S. Degan, Esq.
Before the Court is a motion by West Plains Company ("West Plains")2 to dismiss, or alternatively, to transfer (the "Motion") the Complaint. The Reorganized Debtors initiated this adversary action against West Plains to recover prepetition debts allegedly owed to the Debtors. The Complaint alleges that the amount owed is a matured debt, and West Plains' failure to pay constitutes a breach of contract. The Debtors also seek turnover of the amounts owed.
By this Motion, West Plains moves to dismiss the Complaint in its entirety pursuant to Fed R. Bank. P. 7012 and Fed. R. Civ. P. 12(b), or alternatively, to transfer pursuant to 28 U.S.C. §§ 1404(a) and 1412. West Plains argues that this Court lacks subject matter jurisdiction over this non-core proceeding and does not have personal jurisdiction over the Defendant. Alternatively, West Plains argues that this proceeding should be transferred to a more convenient forum, specifically the United States District Court for the District of Nebraska. For the reasons that follow, the Court will grant the Defendant's Motion and dismiss this adversary proceeding for lack of subject matter jurisdiction.
VeraSun Marketing, LLC ("Marketing") and U.S. Bio Marion, LLC ("Marion") (together with the other reorganized debtors, the "Reorganized Debtors") and the Plan Administrator of the Reorganized Debtors (the "Plan Administrator" and together with the Reorganized Debtors, the "Plaintiffs") brought this action against West Plains.
Prior to filing for relief under Chapter 11 of the Bankruptcy Code, Marketing and Marion focused primarily on the production and sale of ethanol and ethanol co-products.3 For reasons unrelated to this Motion, Marketing and Marion (along with a number of their affiliates) filed petitions for relief under Chapter 11 of the Bankruptcy Code on October 31, 2008. On October 23, 2009, the Court entered an Order under §§ 1129(a) and (b) of the Bankruptcy Code and Fed. R. Bank. P. 3020 confirming the Joint Plan of Liquidation of VeraSun EnergyCorporation and its Affiliated Debtors (the "Plan").4 Plaintiffs subsequently commenced this action by filing this complaint (the "Complaint")5 against West Plains on August 23, 2011-nearly three years after the petition date and almost two years after confirmation of the Debtors' Plan.6
The Plaintiffs are seeking to recover $991,720.21 plus interest and costs from West Plains which the Plaintiffs allege West Plains has failed to remit.7 On April 7, 2008, Marketing and West Plains entered into an agreement whereby Marketing would provide West Plains with DDGS8 for a payment of $1,003,302.26.9 On November 11, 2008, West Plains paid $23,554.70 in freight charges owed by the Plaintiffs for transporting the DDGS.10 Plaintiffs subsequently credited West Plains' account for the freight charges, resulting in an outstanding balance with the Plaintiffs for $979,747.56.11 On April 9, 2009, April 7, 2010, and August 24, 2010, the Plaintiffs sent letters to West Plains demanding payment for the balance owed on the account.12 Additionally, Marion and West Plains entered into an agreement whereby Marion was to provide West Plains with DDGS.13 Marion delivered the DDGS between October 23, 2008 and October 30, 2008.14 As of the date of the Complaint, West Plains has failed to pay the $979,747.56 balance owed to Marketing and the $11,972.65 owed to Marion.15
As a threshold matter, West Plains argues that this matter should be dismissed for lack of subject matter jurisdiction. West Plains asserts that the Plaintiffs' contract claims are non-core proceedings. WestPlains alleges that the Plaintiffs' claims are pre-petition claims based on state law that do not invoke a substantive right under Chapter 11 or address an issue that arises solely in the realm of bankruptcy. West Plains also argues that the Plaintiffs' claims are non-core proceedings that are not otherwise related because this a post-confirmation claim based on pre-petition conduct that was not expressly or specifically provided for in the Plan. Second, West Plains argues that this matter should be dismissed for lack of personal jurisdiction because West Plains does not have the sufficient contacts with the state of Delaware to support the assertion of personal jurisdiction and such an exercise would violate the traditional notions of fair play and substantial justice. Third and finally, West Plains argues that if this matter is not dismissed for lack of jurisdiction, then the matter should be transferred to a more convenient forum. West Plains argues that the District Court of Nebraska would be more convenient because a substantial amount of the dealings between West Plains and the Plaintiffs occurred in the Midwest.
In turn, the Plaintiffs first respond that the Court has subject matter jurisdiction over these proceedings. In particular, the Plaintiffs allege that these are core proceedings because of the two claims for turnover included in the Complaint. Even if these matters were non-core, the Plaintiffs assert that these claims have close connections to the Plan and therefore, are significantly related to the bankruptcy proceedings. Second, the Plaintiffs argue that the Court has personal jurisdiction. The Plaintiffs argue that West Plains has waived any defense of lack of personal jurisdiction. Waiver aside, the Plaintiffs argue that West Plains had sufficient contacts to satisfy personal jurisdiction and cannot show a lack of fair play and substantial justice. Third, the Plaintiffs argue that West Plain's request for transfer of venue should be denied because this Court is the most appropriate forum. The Plaintiffs allege that evidence will be easily accessible in this Court, few witnesses will be necessary, and other courts will not possess the requisite knowledge about the Plan.
The Court has jurisdiction to determine whether it has subject matter jurisdiction over this matter. 28 U.S.C. §§ 157(a) and 1334(b); see also Chicot Cnty. Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 376-77 (1940) (). Additionally, the Court has jurisdiction over motions to transfer venue,which are considered core proceedings. DHP Holdings II Corp. v. Home Depot, Inc. (In re DHP Holdings II Corp.), 435 B.R. 264, 268 (Bankr. D. Del. 2010).
Under Fed. R. Civ. P. 12(b)(1), 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 the case. Petruska v. Gannon Univ., 462 F.3d 294, 302 (3d Cir. 2006). When a court determines that it lacks subject matter jurisdiction, the court is barred from taking any further action relating to the case other than to promptly dismiss the matter. See Jorge Mata v. Eclipse Aerospace, Inc. (In re AE Liquidation, Inc.), 435 B.R. 894, 900 (Bankr. D. Del. 2010).
Motions under Rule 12(b)(1) can challenge subject matter jurisdiction through either a facial attack or a factual attack. See Mortensen v. First Fed. Savs. and loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A "facial attack" challenges the sufficiency of the pleadings. Id. When there is a "facial attack," the court accepts as true all well-pleaded factual allegations, viewing them in the light most favorable to the non-moving party. Id. In comparison, under a "factual attack," the pleadings facially satisfy jurisdictional prerequisites, but one or more of the allegations is demonstrably untrue, removing the controversy from the court's jurisdiction. In re AE liquidation, Inc., 435 B.R. at 900. When there is a "factual attack," the court must evaluate the merits of the disputed allegations because the court's power to hear the case is contested. Id. In such circumstances, the court is allowed to look beyond the four corners of the complaint and weigh evidence outside of the pleadings to determine if it has jurisdiction. Gould Elecs. Inc. v. United States, 220 F.3d 169, 177 (3d Cir. 2000).
When there is a motion under Rule 12(b)(1), the non-moving party bears the burden of demonstrating that the court has jurisdiction. Id. at 178. A motion to dismiss for lack of subject matter jurisdiction will be granted only if it is beyond doubt that the plaintiff cannot prove any set of facts which would demonstrate subject matter jurisdiction. Id.
In the context of a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), the plaintiff has the burden to present sufficient facts that demonstrate jurisdiction is proper. Machulsky v. Hall, 210 F.Supp.2d 531, 537 (D.N.J. 2002). In ruling on the motion to dismiss, the court must accept all allegations in the complaint as trueand view disputed facts in a light most favorable to the plaintiff. Id. If the plaintiff presents evidence outside of the pleading to resolve factual issues, "the plaintiff must sustain its burden...through sworn affidavits or other competent evidence." Patterson v. FBI, 893 F.2d 595, 603-04 (3d Cir. 1990) (citation omitted). Bare pleadings alone are insufficient. Id. at 604 (citation omitted). A plaintiff can...
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