In re Philadelphia Entertainment & Development Partners, LP
569 B.R. 394
E.D. Pa.2017Background
- Debtor Philadelphia Entertainment & Development Partners (PEDP) paid a $50 million slot-license fee (2007); Pennsylvania Gaming Control Board revoked its license (Dec. 2010) for failure to meet construction/milestone conditions; Commonwealth retained the fee.
- PEDP appealed the revocation to the Pennsylvania Commonwealth Court, which affirmed the revocation (final Apr. 14, 2012).
- PEDP filed Chapter 11 (Mar. 31, 2014) and an adversary complaint seeking turnover of the $50 million and asserting fraudulent-transfer, takings, unjust-enrichment, and related claims; after plan confirmation, the Liquidation Trustee prosecuted the claims.
- Bankruptcy Court (Apr. 8, 2016) dismissed the adversary complaint, holding (1) turnover/fraudulent-transfer claims either time-barred or barred by Rooker–Feldman, and (2) non‑bankruptcy claims implicated sovereign immunity; the court declined alternative abstention rulings.
- District Court reviewed de novo and affirmed/adopted the bankruptcy court opinion; cross-appeal by Commonwealth on Eleventh Amendment grounds was rendered moot by affirmance.
Issues
| Issue | Plaintiff's Argument (Trustee) | Defendant's Argument (Commonwealth) | Held |
|---|---|---|---|
| Whether bankruptcy court misconstrued Trustee’s fraudulent-transfer claims as seeking to undo the license revocation | Claims accept revocation and seek recovery of value (refund) — not attack the revocation itself | Trustee’s pleadings effectively sought relief tied to the invalidity of the revocation | Court: Bankruptcy court did not misconstrue claims; pleadings tied to revocation and court’s interpretation stands |
| Whether Rooker–Feldman bars federal review of claims that would invalidate or undo the state-court revocation | Trustee: Trustee is successor-in-interest and may litigate estate claims not barred by state judgment | Commonwealth: Rooker–Feldman bars federal review because the state court judgment caused the injury and was final | Held: Rooker–Feldman bars federal review to the extent Trustee seeks to undo the revocation; bankruptcy court properly applied the doctrine |
| Whether Trustee pleaded plausible fraudulent-conveyance claims based on any “transfer” after revocation | Trustee: There was a discrete post-revocation transfer/retention (Commonwealth kept fee) that is avoidable or actionable | Commonwealth: No transferee received new property in 2012; only two transfers existed (payment in 2007; license loss in 2012); retention is not a separate avoidable transfer | Held: Trustee failed to state a fraudulent-conveyance claim — 2007 payment time‑barred; alleged post-revocation retention is not a cognizable transfer under the statutes |
| Whether Eleventh Amendment sovereign immunity bars Trustee’s fraudulent-transfer claims (Commonwealth cross-appeal) | N/A (Trustee opposed) | Commonwealth: Claims are barred by Eleventh Amendment immunity | Court: Affirmance of bankruptcy court made immunity argument moot; cross-appeal denied as moot |
Key Cases Cited
- Phila. Entm’t & Dev. Partners, L.P. v. Pa. Gaming Control Bd., 34 A.3d 261 (Pa. Commw. Ct. 2011) (state court affirming license revocation and treating fee as nonrefundable)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (Supreme Court) (limits Rooker–Feldman to cases where federal plaintiff is a state-court loser seeking review of a state judgment)
- Majestic Star Casino, LLC v. Barden Dev., Inc., 716 F.3d 736 (3d Cir.) (fraudulent-transfer statutes presume a transferee receiving the debtor’s property)
- McNamara v. PFS (In re Personal & Bus. Ins. Agency), 334 F.3d 239 (3d Cir.) (trustee’s successor-in-interest may be barred by Rooker–Feldman where claims are tied to debtor’s prior losses)
- Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir.) (articulates Rooker–Feldman’s requirements and the ‘‘inextricably intertwined’’ test)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (pleading standard for plausibility)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (pleading standard for plausibility)