521 B.R. 134
Bankr. N.D. Tex.2014Background
- TRBP filed a Chapter 11; Paradigm timely asserted multiple breach claims and a fraudulent transfer defense related to an aircraft charter; Agreement #1 (2007 Charter) and Agreement #2 (SCSA) governed payments for aircraft charter services; Agreement #3 (Amendment to SCSA) attempted to terminate in 2010 and was found invalid; TRBP’s plan and APA with Baseball Express and HSG involved prepackaged and post-confirmation transactions affecting the aircraft contracts; Paradigm’s proof of claim and the Adversary Proceeding were consolidated, leading to competing injunctions and notices regarding retention of estate claims; the court granted Paradigm’s Second Motion for Summary Judgment, holding that TRBP’s Avoidance Counterclaim is barred by equitable estoppel/contract-assumption principles.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TRBP may avoid Agreement #2 as a fraudulent transfer under section 548(a)(1)(A). | Paradigm argues TRBP lacked standing and failed to preserve avoidance rights. | TRBP contends Agreement #2 was a valid avoidance target and properly pled elements. | No; counterclaim barred by equitable estoppel/contract-assumption defense. |
| Whether Paradigm’s 548(c) defense bars the Counterclaim as a matter of law. | Paradigm asserts value exchanged justified protection under 548(c). | TRBP contends Paradigm provided value via long-term charter rights. | Not; factual disputes exist; issues for trial remain, but defense insufficient to grant summary judgment. |
| Whether TRBP is judicially/equitable estopped from pursuing the Counterclaim due to plan disclosures. | Paradigm claims TRBP’s amended disclosures/plan language create estoppel. | TRBP contends no estoppel should bar its claim. | Equitable estoppel applies to treat Agreement #2 as assumed, barring the Counterclaim. |
| Whether the HSG Settlement Release bars Paradigm from the Avoidance Claim. | Paradigm argues the Release releases all related claims. | TRBP contends the Release does not clearly extend to Agreement #2 or Paradigm. | Release issues are fact-intensive; summary judgment denied on this defense. |
Key Cases Cited
- In re Nat'l Gypsum Co., 208 F.3d 498 (5th Cir. 2000) (contractual 'ride through' and retention of claims under plan)
- In re Jazzland, Inc., N/A (N.D. La. 2004-2005) (contract assumption defense recognized in related contexts)
- In re MPF Holding U.S. LLC, 701 F.3d 449 (5th Cir. 2012) (contract assumption defense applied to avoidance actions)
- In re Centrix Fin., LLC, 434 B.R. 880 (D. Colo. 2010) (contract assumption defense bars avoidance actions when contract assumed)
- Adelphia Recovery Trust v. HSBC Bank USA, 634 F.3d 678 (2d Cir. 2011) (equitable estoppel/judicial estoppel considerations in 548 actions)
- U.S. Bank Nat'l Ass'n v. Verizon Commc'ns, Inc., 817 F. Supp. 2d 934 (N.D. Tex. 2011) (standing and burdens in avoidance actions)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (constitutional authority in bankruptcy proceedings; limits discussed)