460 B.R. 592
Bankr. S.D.N.Y.2011Background
- Moelis & Company LLC seeks fees from Wilmington Trust FSB arising from Moelis's engagement related to GGP's Chapter 11 cases.
- Engagement Letter (Sept. 1, 2009) obligated Moelis to seek payment of a $9 million fee and expenses from Note Proceeds, not from Indenture Trustee personally.
- Plan and Confirmation Order designated Note Proceeds to be used to cure and reinstate Exchangeable Note Claims and to pay Indenture Trustee fees; Note Proceeds disbursed and held by the Indenture Trustee.
- Moelis filed a State Court Action (Nov. 17, 2010) seeking payment from Note Proceeds; the Indenture Trustee removed arguing related to Chapter 11.
- Moelis argues the State Court Action is non-core and should be remanded; the Indenture Trustee contends it is core or at least related to the Chapter 11 cases and necessary to interpret the Plan/Confirmation Order.
- Court has held that the State Court Action implicates the Plan/Confirmation Order and is core to interpretation/enforcement of the Plan; the Court has post-confirmation jurisdiction over the dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the State Court Action falls within the Bankruptcy Court's core jurisdiction | Moelis argues it is a state-law contract dispute between non-debtors and does not affect the Plan. | Wilmington Trust contends the dispute directly concerns Plan/Note Proceeds and requires interpretation of the Plan and Confirmation Order. | Yes; core jurisdiction exists because the State Court Action seeks to enforce/interpret the Plan and Confirmation Order. |
| Whether the Court has post-confirmation jurisdiction over the State Court Action | Moelis contends jurisdiction narrows post-confirmation. | Trust asserts continued jurisdiction is unnecessary post-confirmation. | Yes; the Court has post-confirmation jurisdiction given the Plan's retention provisions and nexus to administration. |
| Whether mandatory abstention applies under 28 U.S.C. § 1334(c)(2) | State action is not based on state law and can be timely adjudicated in state court. | Action arises in this bankruptcy case and affects estate administration, thus abstention is inappropriate. | Inapplicable; mandatory abstention does not apply here. |
| Whether permissive abstention or equitable remand is warranted | State court proceedings would be more efficient for state-law issues. | Proceedings implicate bankruptcy issues and Plan interpretation. | Not warranted; the dispute substantially involves the Plan and estate administration. |
Key Cases Cited
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (test for whether action is core/related to bankruptcy)
- In re Petrie Retail, Inc., 304 F.3d 223 (2d Cir. 2002) (core jurisdiction exists in non-debtor disputes over plan-related orders)
- In re Portrait Corp., 406 B.R. 637 (Bankr.S.D.N.Y. 2009) (interpretation of bankruptcy orders as core matter)
- Luan Inv. S.E. v. Franklin 145 Corp., 304 F.3d 254 (2d Cir. 2002) (core jurisdiction in disputes over bankruptcy orders between non-debtors)
- Mt. McKinley Ins. Co. v. Corning Inc., 399 F.3d 436 (2d Cir. 2005) (principle on core/related jurisdiction in post-confirmation context)
- In re WorldCom, Inc. Sec. Litig., 293 B.R. 308 (S.D.N.Y. 2003) (timeliness and forum considerations in abstention context)
- In re Masterwear Corp., 241 B.R. 511 (Bankr.S.D.N.Y. 1999) (factors for permissive abstention)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (bankruptcy court's authority to interpret its orders)