587 B.R. 6
Bankr. D. Del.2018Background
- In 2006 SAI bought Schonfeld Securities’ clearing/back-office business under an APA that included a 10‑year exclusivity for clearing services and an unconditional guaranty from Schonfeld Group Holdings (Schonfeld). Opus Trading Fund was one of the Correspondents tied to the earn‑out.
- The APA provided for a multi‑part purchase price including a final earn‑out payment (Schonfeld filed a proof of claim for $3,783,932 as the last earn‑out).
- Plaintiff Penson Technologies (successor to SAI and Penson) alleges Schonfeld caused Opus to terminate a portfolio margining side agreement in early 2012, diverting the Opus relationship and causing >$20M in damages.
- Debtors filed Chapter 11 in 2013; plan confirmed and assets/claims transferred to Penson; Schonfeld timely filed its proof of claim.
- Penson filed this post‑confirmation adversary proceeding asserting: (I) breach of contract, (II) breach of guaranty, (III) breach of implied covenant of good faith, (IV) objection to claim, and (V) declaratory relief for setoff.
- Schonfeld moved to dismiss for lack of subject‑matter jurisdiction, or alternatively to abstain, enforce a forum‑selection clause (New York/Dallas), dismiss for forum non conveniens, or transfer venue. The court denied relief and retained the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction (bankruptcy jurisdiction over claims) | Penson: Counts are statutorily core (claims allowance/estate counterclaims) under 28 U.S.C. §§ 1334, 157. | Schonfeld: Even if statutorily core, Stern/Halper mean the bankruptcy court lacks constitutional authority to finally adjudicate these claims. | Court: Jurisdiction exists — each count is an enumerated core proceeding under §157(b)(2); bankruptcy jurisdiction is proper. |
| Constitutional authority to enter final judgment (Stern issue; whether claims "necessarily" resolved in claims process) | Penson: Plaintiff’s defenses/claims are integral to allowance/disallowance of the proof of claim and will necessarily be resolved in the claims process. Damages and materiality are intertwined. | Schonfeld: Plaintiff’s claims/damages are distinct and may not be resolved by allowance of proof of claim; thus Stern prevents final adjudication by bankruptcy court. | Court: Penson’s claims are necessarily resolved in the claims‑allowance process (like Katchen/Red Rock), so the bankruptcy court may enter final judgment consistent with Stern. |
| Enforceability of forum‑selection clause / transfer | Penson: Forum clause unenforceable here because this is a core proceeding tied to claims allowance and public policy favors centralization in bankruptcy court. | Schonfeld: Clause should be enforced; case should be dismissed/transferred to New York per APA. | Court: Forum‑selection clause not enforceable for this core objection/counterclaim; transfer/dismissal denied. |
| Permissive abstention | Penson: Abstention inappropriate because this is a core objection to a proof of claim and judicial economy favors resolving all interlinked issues here. | Schonfeld: Court should abstain in favor of state court (New York) given predominance of state law issues and forum clause. | Court: Declined to abstain — most permissive‑abstention factors weigh against abstention; centralization and inextricable link to claims resolution control. |
Key Cases Cited
- Stern v. Marshall, 564 U.S. 462 (2011) (limits bankruptcy courts’ authority to enter final judgments on certain state‑law counterclaims unless they are necessarily resolved in the claims process)
- N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (Article III limits on bankruptcy adjudicatory power)
- Katchen v. Landy, 382 U.S. 323 (1966) (claims asserted by a creditor invoking bankruptcy are subject to adjudication in bankruptcy proceedings)
- Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. Tex., 571 U.S. 49 (2013) (enforcement of forum‑selection clauses generally presumed reasonable absent strong factors)
- Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014) (bankruptcy courts may enter proposed findings and conclusions under §157(c) when they lack constitutional authority to enter final judgments)
- In re Red Rock Servs. Co., [citation="642 F. App'x 110"] (3d Cir. 2016) (bankruptcy court had authority to decide interlinked breach‑of‑contract claims because they were inextricably tied to allowance of a proof of claim)