Veros Energy, LLC v. Gcube Ins. Servs., Inc. (In re Veros Energy, LLC), BK No. 15-70470-JHH11
Decision Date | 01 June 2018 |
Docket Number | BK No. 15-70470-JHH11,AP No. 16-70021-JHH |
Parties | In re: VEROS ENERGY, LLC, Debtor. VEROS ENERGY, LLC, Plaintiff, v. GCUBE INSURANCE SERVICES, INC. and KILN SYNDICATE 510, Defendants. |
Court | U.S. Bankruptcy Court — Northern District of Alabama |
This matter is before the court on the defendants' motion to stay all proceedings related to the AP1 (AP Doc. 106) (the "Motion for Stay"). The Motion for Stay is brought pursuant to Rule 8007(a) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and requests a stay of all proceedings in the AP pending resolution of the defendants' appeal of this court's order (AP Doc. 97) (the "Venue Order") denying their motion to dismiss or transfer venue of the AP (AP Doc. 13) (the "Venue Motion"). The plaintiff opposes the relief requested in the Motion for Stay. (See AP Doc. 110.) The court held an evidentiary hearing on the Motion for Stay on May 29, 2018 (the "Stay Hearing"). Appearances were noted on the record of the Stay Hearing. No evidence was offered in support of the Motion for Stay other than the Jurisdiction Clause in the Certificate. Based on the filings, evidence, arguments and representation of counsel, and all other matters before the court, and for the reasons stated on the record of the Stay Hearing (which are incorporated by reference) and those set forth below, the Motion for Stay is due to be denied, without prejudice.
On April 26, 2018, this court entered the Venue Order, denying the relief requested by GCube and Kiln in the Venue Motion based on the findings of fact, stipulations, analysis, and legalconclusions set forth in the Venue Opinion. (See Venue Order, passim; Venue Opinion, passim.) The findings of fact and stipulations relevant to this court's analysis and legal conclusions are set forth on pages one through eight of the Venue Opinion and need not be reiterated herein. Among other things this court concluded: (1) the Service of Suit Clauses are properly characterized as limited consents to litigate in Veros's chosen forum under both New York state law and federal law;2 (2) even if they are merely permissive forum provisions, the Service of Suit Clauses are entitled to weight in a forum non conveniens analysis;3 (3) the existence of multiple forum provisions alters the post-Atlantic Marine,4 forum non conveniens analysis;5 and (4) under the modified analysis, the Underwriters are not entitled to dismissal of the AP, as public interest factors weigh against dismissal.6
As an alternative basis for the court's denial of the Underwriters' request to dismiss the AP for forum non conveniens, the court concluded, as a matter of contract interpretation, that the Jurisdiction Clause does not apply to the Claims in their present procedural posture, and, therefore, dismissal is not appropriate (since the truncated Atlantic Marine analysis does not apply and there is no dispute that dismissal is not warranted under a traditional forum non conveniens analysis).7 The court's contract interpretation analysis considered principals of contract interpretation under both New York law and federal law and concluded that the applicable principals were substantially the same.8
Because the Jurisdiction Clause that the Underwriters seek to enforce provides for jurisdiction in the New York state courts, not the New York federal courts, and because the Underwriters made no showing that transfer to the SDNY was otherwise appropriate, the Underwriters' alternative request to transfer venue of the AP to the SDNY also was denied.9
Although raised on the record of the Hearings or in the Venue Filings, the court did not reach the following issues (or, for those issues that present mixed questions of law and fact, include in its Venue Opinion the factual findings and stipulations necessary to resolve the issues): (1) whether the court, in construing the Service of Suit Clauses, must apply New York law or federal law;10 (2) whether the Claims in the AP are core or non-core;11 (3) whether enforcement of the Jurisdiction Clause would contravene federal public policy;12 (4) whether the Underwriters are bound by the terms of the Plan under 11 U.S.C. § 1141;13 (5) whether the Alabama federal courts have exclusive jurisdiction of the Claims under the terms of the Plan (or the retention of jurisdiction provision in the Plan otherwisemodifies the Certificate);14 (6) whether the Plan otherwise enjoins litigation of the Claims in New York;15 and (7) whether the Alabama federal courts have exclusive jurisdiction of the Claims under 28 U.S.C. § 1334(e).16
Within the time prescribed by Bankruptcy Rule 8002(a)(1), GCube and Kiln filed a notice of appeal of the Venue Order (AP Doc. 101) (the "Notice of Appeal") along with a motion for leave to appeal (AP Doc. 102) (the "Motion for Interlocutory Appeal"), pursuant to Bankruptcy Rule 8004 and 28 U.S.C. § 158(a)(3). The Motion for Interlocutory Appeal presents five questions:
(1) Did this court err in characterizing the Service of Suit Clauses as forum selection clauses that conflict with the Jurisdiction Clause?
(2) Did this court err in ruling that the Service of Suit Clauses permit the AP to be litigated in an Alabama federal court?
(3) Did this court err in concluding that the Underwriters "waived their rights to seek dismissal of" the AP?
(4) Did this court err in applying a forum non conveniens analysis notwithstanding the Jurisdiction Clause and Atlantic Marine?17
(5) Did the court err in concluding that, as a matter of contract interpretation, the Service of Suit Clauses foreclosed dismissal of the AP as a means to enforce the Jurisdiction Clause?
The court disagrees with the movants' characterizations of certain of its holdings. The court did not, for instance, hold that the Underwriters had waived the right to seek dismissal of the AP. (See Venue Opinion, passim.) In fact, the Venue Opinion expressly concludes that a party cannot contractually waive a right to dismiss for forum non conveniens on public interest grounds. (See Venue Opinion at 13.) Instead, the court held that since the Underwriters had not commenced their own suit in New York state court, the Court could not (applying well settled principals of contract interpretation and construing the Certificate as a whole) construe the Certificate as giving the Underwriters the contractual right to dismiss the AP under the Jurisdiction Clause without rendering the Service of Suit Clauses meaningless. (See id. at 19-20.) Adopting the reasonable reconciliation ofthe conflicting "jurisdiction" clauses most favorable to the insured (Veros), the court determined that, given the procedural posture of the Claims, the Service of Suit Clauses operated as a very limited exception to the Jurisdiction Clause. (See id. at 18-22.)
Setting aside the movants' framing of the questions on appeal, the crux of GCube and Kiln's argument is that this court erroneously "equated" the Service of Suit Clauses with the Jurisdiction Clause and failed to give effect to "well-settled" New York law construing a service of suit clause as "no more than a consent to personal jurisdiction." (See Motion for Interlocutory Appeal at 9-10.) GCube and Kiln posit that had the court properly treated the Services of Suit Clauses as consents to personal jurisdiction only, then the court necessarily would have reconciled the "jurisdiction" provisions in the Certificate differently and found that the Certificate unambiguously requires litigation of the Claims to proceed in New York state court. (See id. at 8-10.) Relying on their interpretation of the Certificate provisions, GCube and Kiln maintain that the court did not give due weight to the Jurisdiction Clause in its forum non conveniens analysis (as the court gave limited effect to the clause under its modified Atlantic Marine analysis and, in its alternative contract interpretation analysis, the court employed a traditional forum non conveniens analysis based on its finding that the Claims were not subject to the Jurisdiction Clause). (Id.)
Ultimately, the appeal rises and falls on whether the court erred in both its construction of the Service of Suit Clauses and its reconciliation of the three "jurisdiction" clauses in the Certificate. If GCube and Kiln are correct that the Certificate mandates, without exception, that Veros file the Claims in New York state court and that the Services of Suit Clauses are not properly characterized as at least permissive forum provisions, then the court's forum non conveniens analyses were flawed (provided the Jurisdiction Clause is enforceable). There is no question that the truncated Atlantic Marine analysis applies if the Certificate contains a single, valid (and enforceable) forum selection clause that mandates litigation of the Claims in New York state court. (See Venue Opinion at 10-12.) Conversely, if the Service of Suit Clauses are properly characterized as forum provisions, or the Service of Suit Clauses otherwise limit application of the Jurisdiction Clause to the Claims in their present procedural posture, the movants do not provide any basis for concluding that both of the court's alternative, forum non conveniens analyses were wrongly decided.
Veros opposes the Motion for Interlocutory Appeal. (See AP Doc. 109.) The Motion for Interlocutory Appeal presently is pending before the District Court. A little more than a week after filing the Motion for Interlocutory Appeal, GCube and Kiln filed their answer in the AP (AP Doc. 105) (the "Answer") and the Motion for Stay.
Also pending before the District Court is the Motion to Withdraw, in which GCube and Kiln, pursuant to 28 U.S.C. § 157(d), request that the District Court withdraw the reference of the AP to this court—the court where Veros filed its Bankruptcy Case and where the Bankruptcy Case remainspending—for cause. Although the Motion...
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