442 B.R. 852
Bankr. S.D. Florida2010Background
- Debtors TOUSA, Inc. and related entities filed bankruptcy; TOUSA Homes, Inc. is plaintiff in an adversary against Palm Beach Newspapers, Inc. seeking recovery of preferential transfers under 11 U.S.C. § 547.
- Proceeding in the United States Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division; Judge John K. Olson presiding; decision issued December 27, 2010.
- Defendant moved to dismiss under Fed. R. Bankr.P. 7012 and Fed. R. Civ. P. 12(b)(6) asserting failure to meet heightened pleading standards under Twombly and Iqbal as interpreted by Caremerica.
- Court declines to adopt Caremerica in toto, and holds that the plaintiff’s complaint satisfies the Twombly/Iqbal pleading standards, denying the motion to dismiss.
- There is discussion of conflicting authorities on Valley Media and Caremerica within bankruptcy courts; the court avoids full Caremerica adoption and emphasizes notice pleading with possible discovery-based elaboration.
- Conclusion: Plaintiff’s complaint sufficiently identifies transfers and parties to survive a Rule 12(b)(6) motion; no requirement to negate affirmative defenses in pleading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Twombly/Iqbal apply to preference actions in this district | Plaintiff contends Twombly/Iqbal apply;Caremerica not adopted in full. | Defendant argues Caremerica should be applied in full for heightened pleading. | Court rejects full Caremerica; Twombly/Iqbal applied with more balance. |
| Whether the complaint adequately identifies the source/payor of the alleged transfers | Plaintiff asserts sufficient identification to survive notice pleading. | Defendant argues lack of precise source/payor identification renders pleading deficient. | Not fatal; identification of sources is not required to the level articulated in Valley Media. |
| Whether the court adopts Caremerica’s heightened pleading on the entire complaint | Plaintiff seeks liberal pleading under Rule 8(a)(2). | Defendant urges Caremerica's heightened requirements overall. | Court adopts a middle-ground; rejects Caremerica in toto but acknowledges some limitations. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (heightened pleading standard; plausibility review)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (28-level plausibility standard; standard for pleading)
- Angell v. BER Care, Inc. (In re Caremerica, Inc.), 409 B.R. 737 (Bankr.E.D.N.C.2009) (applies Valley Media approach to pleadings in some contexts)
- In re Valley Media, Inc., 288 B.R. 189 (Bankr.D.Del.2003) (heightened pleading standard for §547 preference claims)
- In re The IT Group, Inc., 313 B.R. 370 (Bankr.D.Del.2004) (notice pleading sufficient when fair notice provided)
- In re Levitt and Sons, LLC, No. 09-02273-RBR, 2010 WL 1539878 (Bankr.S.D.Fla. Apr. 16, 2010) (Judge Ray limited Caremerica’s application to certain aspects)