587 B.R. 445
Bankr. D. Del.2018Background
- Chapter 7 trustee (Beskrone) sued former OpenGate-related employees and entities seeking avoidance/recovery of transfers made by jointly-administered PennySaver LLC debtors after OpenGate acquired them. Trustee alleges multiple categories of challenged transfers: closing expenses/distribution, tax payment, monthly management fees, salary payments to defendants, a loan/sublease to a portfolio company (Fusion), and an IT fee. Total challenged salary payments ≈ $845,076.29.
- Trustee alleges Debtors were insolvent from acquisition and received little or no value for many transfers; Defendants are alleged to have been OpenGate employees who directed or benefited from transfers, but complaint often lumps OpenGate entities and fails to identify which specific Debtor made each transfer.
- Procedural posture: defendants moved to dismiss Counts X–XII (fraudulent transfers), XIV (preferential transfers), XV–XVI (breach of fiduciary duty), XVII (accounting), and XVIII (disallowance under §502(d)) for failure to state a claim under Fed. R. Civ. P. 12(b)(6).
- Court applied Twombly/Iqbal pleading framework, Rule 8 for constructive fraud claims, Rule 9(b) (liberally) for actual fraud claims, Delaware law (internal affairs doctrine) for fiduciary-duty issues, and noted trustee’s burden to identify specific transferor for preference claims where multiple debtors exist.
- Outcome summary: Court DENIED dismissal of constructive and actual fraudulent-transfer claims (Counts X–XII); GRANTED dismissal of preferential-transfer claim (Count XIV) for failure to identify specific debtor transferors; GRANTED dismissal of fiduciary-duty claims (Counts XV and XVI), with Count XVI dismissed with prejudice (futile); GRANTED dismissal of accounting (Count XVII) and §502(d) disallowance claim (Count XVIII); Trustee given leave to amend except as to Count XVI.
Issues
| Issue | Trustee's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Validity of constructive fraudulent-transfer claims (§ 548(a)(1)(B) and state equivalents) | Trustee pled dates, amounts, transferees and insolvency; transfers lacked reasonably equivalent value | Defs: trustee must meet Rule 9(b) particularity; salary payments presumed reasonably equivalent value; trustee failed to identify which Debtor made transfers | Denied dismissal — constructive claims survive under Rule 8; factual issues (value, insolvency) reserved for discovery |
| Validity of actual fraudulent-transfer claims (§ 548(a)(1)(A)) | Trustee alleges badges of fraud (relationship/control, lack of consideration, insolvency, large transfers) supporting intent to hinder creditors | Defs: insufficient particularized allegations of fraudulent intent as to each defendant | Denied dismissal — trustee alleged multiple badges of fraud (three of six) and met Rule 9(b) (liberally applied) for actual fraud |
| Preferential-transfer claim (§ 547) | Trustee seeks avoidance of salary payments as preferences | Defs: complaint fails to identify the specific Debtor transferor(s) and antecedent debt particulars required where multiple debtors exist | Granted dismissal — trustee must identify the particular debtor transferor; failure to do so defeats preference claim at pleading stage |
| Breach of fiduciary duty (Delaware LLC law) | Trustee: defendants controlled Debtors or otherwise owed duties and breached them by causing transfers | Defs: only managers/members owe fiduciary duties; trustee fails to plead that defendants were managers/members or exercised actual control; claims on behalf of creditors lack standing | Granted dismissal — trustee failed to plead existence of fiduciary duties or specific facts showing each defendant caused transfers; creditor-based fiduciary claims dismissed for lack of standing; Count XVI dismissed with prejudice |
| Accounting (equitable remedy) | Trustee seeks accounting tied to alleged fiduciary breaches | Defs: accounting unavailable absent plausible fiduciary-duty claim | Granted dismissal — accounting dismissed because fiduciary claim inadequately pled |
| Disallowance of claims under § 502(d) | Trustee seeks disallowance of claims held by OpenGate/defendants | Defs: §502(d) requires prior judicial determination of liability on underlying avoidance claims | Granted dismissal — trustee had not yet obtained judicial determination; §502(d) claim premature |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (discrimination between factual allegations and legal conclusions at pleading stage)
- Stern v. Marshall, 564 U.S. 462 (2011) (limits on bankruptcy courts’ Article III authority over certain state-law counterclaims)
- Gheewalla, 930 A.2d 92 (Del. 2007) (Delaware law on creditors’ rights and derivative standing in corporate/insolvency context)
- USACafes, 600 A.2d 43 (Del. Ch. 1991) (extension of fiduciary-duty principles where a party exercised actual domination and control)
- Cargill, Inc. v. JWH Special Circumstance LLC, 959 A.3d 1096 (Del. Ch. 2008) (what constitutes control sufficient to impose duties in LLC context)
- Feeley v. NHAOCG, LLC, 62 A.3d 649 (Del. Ch. 2012) (Delaware Chancery Court discussion of when non-managers may owe fiduciary duties)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) (standard for reasonably equivalent value in certain transfer contexts)