Bank of America, N.A. v. Wilmington Trust FSB
943 F. Supp. 2d 417
S.D.N.Y.2013Background
- Bank of America served as Administrative Agent and Disbursement Agent for Fontainebleau Las Vegas project financing and held an insured title policy.
- Fontainebleau project funding stopped in 2009; borrower filed bankruptcy thereafter; Bank of America resigned as Administrative and Disbursement Agent in 2009 and Wilmington Trust became successor.
- Title Insurers (Commonwealth, Fidelity, First American) and Wilmington Trust seek information from Bank of America for defense and coverage in the Mechanics Lien Litigation in Florida bankruptcy court.
- Bank of America filed a declaratory judgment action in this district to define informational duties and cost allocations under the Successor Administrative Agent and Successor Disbursement Agent Agreements and the title policy.
- Defendants moved to dismiss for improper venue under Rule 12(b)(3); Bank of America opposed; court denied dismissal and transferred the case to the Southern District of Florida and recommended referral to the bankruptcy court.
- Appointment Order in the bankruptcy matter contains exclusive New York jurisdiction for disputes arising under the agreements, creating potential conflict with venue and jurisdiction in New York.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether venue is proper under 28 U.S.C. § 1391(b). | Bank of America asserts all defendants are subject to personal jurisdiction in New York. | Defendants contend venue is improper because not all defendants reside in New York and events did not occur there. | Yes, venue proper under §1391(b)(1) based on Wilmington Trust’s New York personal jurisdiction and the defendants’ contacts. |
| Whether the bankruptcy appointment order affects exclusive jurisdiction over counts. | BOA argues the bankruptcy order does not bind this action. | Defendants argue the Appointment Order grants exclusive NY jurisdiction over disputes relating to the agreements. | Counts 1 and 3 fall within exclusive bankruptcy jurisdiction per the Appointment Order; interpretation of the agreements within bankruptcy context is proper. |
| Whether the case is related to or arising in the Fontainebleau bankruptcy for purposes of transfer. | Case potentially relates but not strictly within core matters. | Case is related to the bankruptcy as outcomes could affect estate and indemnity; venue transfer warranted. | The case is related to the bankruptcy; transfer to SD Florida is appropriate for judicial economy and familiarity with the underlying matter. |
| Whether to transfer the case to Florida under 28 U.S.C. § 1412/1404(a). | No inherent reason to transfer given initial venue provision. | Transfer is in the interest of justice due to center of gravity in Florida bankruptcy and minimal ties to NY. | The matter is transferred to SD Florida with recommendation to refer to Judge Cristol in the bankruptcy court. |
| Whether a core vs non-core label is necessary for the transfer decision. | Not required for transfer. | Discussion of core/non-core unnecessary for transfer. | Not necessary to label; factors under §1404(a) suffice for transfer. |
Key Cases Cited
- In re Millenium Sea-carriers, Inc., 419 F.3d 83 (2d Cir.2005) (bankruptcy courts may enforce and interpret their orders; related disputes may fall under jurisdiction)
- In re Cuyahoga Equip. Corp., 980 F.2d 110 (2d Cir.1992) (tests for ‘related to’ jurisdiction in bankruptcy context require conceivable effect on the estate)
- In re WorldCom, Inc. Sec. Litig., 293 B.R. 308 (S.D.N.Y.2003) (related-to jurisdiction can arise from potential impact on estate liabilities)
- Federal Ins. Co. v. Sheldon, 167 B.R. 15 (S.D.N.Y.1994) (broad bankruptcy jurisdiction concepts; potential effects on estate suffice for relatedness)
- In re U.S. Lines, Inc., 197 F.3d 631 (2d Cir.1999) (bankruptcy court authority to issue orders necessary to carry out title 11 provisions)