494 B.R. 413
Bankr. D. Minn.2013Background
- Petters Ponzi scheme collapse; receivership/Trustee filed Chapter 11 in multiple debtor-entities; Trustee pursued fraudulent-transfer clawbacks against numerous defendants; MUFTA and §544(b) provide the Trustee’s substantive basis; the litigation adopted a consolidated, rule-of-law brief to resolve common issues across adversary proceedings; this memorandum addresses statute-of-limitations and timeliness, not pleading adequacy; the court adopts a procedures order to coordinate motions for dismissal under Rule 12(b)(6) across cases
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of statute-of-limitations applies Subd. 1(2) vs Subd. 1(6) | Subd. 1(6) applies due to fraud origin and McDaniel lineage; discovery tolling extends reachback | Subd. 1(2) controls as ‘liability created by statute’ | Subd. 1(6) governs; discovery tolling may extend reachback if facts show discovery |
| Interaction with 11 U.S.C. § 546(a)(1) timing | If §546 tolls, reachback can cover six-year base from bankruptcy filing | No aggregation beyond base period; strict timing rules | As long as action commenced by §546(a)(1) deadline, reachback covers full six-year base period dating to petition filing |
| Discovery allowance and tolling doctrines | Seek to extend reachback via discovery, fraudulent-concealment, equitable tolling, and adverse domination | Minnesota law does not recognize tolling theories beyond discovery allowance | 3A: discovery allowance governs extension; 3B: fraudulent-concealment, equitable tolling, adverse domination not available as tolling bases under MUFTA |
| Date of commencement of suit under Rule 3 and § 546 | Federal commencement under Rule 7004 governs; timely if filed by deadline | Minnesota commencement rules could govern; potential Erie concerns | Ruling: in bankruptcy, filing by the § 546(a)(1) deadline controls; actions timely commenced in this docket |
| Means of service of summons and complaint | Rule 7004(b) service by first-class mail suffices under bankruptcy practice | State-law service requirements require in-hand service | Ruling: service by mail under Rule 7004(b) is effective; not required to be personal delivery |
Key Cases Cited
- Brasie v. Minneapolis Brewing Co., 87 Minn. 456 (Minn. 1902) (fraudulent conveyance remedy rooted in common law)
- Walsh v. Byrnes, 39 Minn. 527, 40 N.W. 831 (Minn. 1888) (early fraudulent-conveyance doctrine with creditor-focused relief)
- McDaniel v. United Hardware Distrib. Co., 469 N.W.2d 84 (Minn. 1991) (distinguishes statutory vs common-law origins for limitations)
- Tuttle v. Lorillard Tobacco Co., 377 F.3d 917 (8th Cir. 2004) (statute-of-limitations for consumer-protection-type statutes; discovery rule distinction)
- Kopperud v. Agers, 312 N.W.2d 443 (Minn. 1981) (discovery-allowance concept discussed in MUFTA context)