Glenclova Investment Co. v. Trans-Resources, Inc.
874 F. Supp. 2d 292
S.D.N.Y.2012Background
- Trans-Resources is a Delaware corporation with competing factions seeking ownership control (Arie and Orly Genger; Glenclova/Investors/Trump Group; Dalia as Orly Trust trustee) across three jurisdictions.
- Derivatives of the 2001 Stockholders Agreement and 2004 transfers at issue underlie disputes over beneficial ownership.
- Delaware Chancery Court previously found 2004 transfers void and the Trump Group had ownership rights under an August 2008 side letter; Delaware Supreme Court later limited ownership determinations to plenary proceedings.
- Multiple related actions are ongoing in New York Supreme Court, Delaware Chancery Court, and the Southern District of New York, with escrowed funds and interpleader arrangements involved.
- Escrow agents Skadden, Arps and Pedowitz moved for interpleader relief under 28 U.S.C. §1335, seeking injunctions to resolve forum and ownership disputes; the court analyzes jurisdiction and abstention.
- The court ultimately dismisses the interpleader actions for lack of jurisdiction and abstains/stays certain related actions to allow state courts to resolve ownership issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pedowitz and Skadden interpleaders have jurisdiction | Arie argues lack of subject‑matter/diversity jurisdiction | Pedowitz/Skadden contend §1335 provides jurisdiction | Interpleaders dismissed for lack of jurisdiction |
| Whether the court should abstain in favor of state proceedings | Arie/Orly urge Wilton/Colorado River abstention | State courts better handle ownership and related claims | Court abstains from interpleaders; dismisses interpleaders; stays Glenclova to state resolution |
| Whether the domestic relations exception applies to Glenclova claims | Arie invokes domestic relations abstention | Glenclova argues not applicable; claims are corporate/contractual | Domestic relations exception does not apply; abstention denied on that basis |
| Whether §2361 injunction power is properly used | Parties seek injunctions to control forum and timing | Interpleader injunctions misused to affect forum preferences | §2361 relief moot after interpleaders dismissed; injunctions denied as to interpleaders |
Key Cases Cited
- Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (declaratory judgments; district court discretion to abstain)
- Brillhart v. Excess Ins. Co., 316 U.S. 491 (U.S. 1942) (abstention framework factors)
- National Union Fire Ins. Co. v. Karp, 108 F.3d 17 (2d Cir. 1997) (interpleader discretion to deny declaratory relief in some cases)
- State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (U.S. 1967) (interpleader rationale; efficiency of adjudication)
- Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1 (U.S. 1983) (Colorado River/abstention principles; avoid piecemeal litigation)
- Genger v. TR Investors, LLC, 26 A.3d 180 (Del. 2011) (Delaware Supreme Court on plenary vs. §225 limitations; ownership determinations sometimes in rem)
- Dalia Genger v. TR Investors, LLC, et al., 6906-CS (Del. Ch.) (Del. Ch. 2011) (Delaware Chancery action related to Orly Trust ownership)