766 F. Supp. 2d 1188
N.D. Okla.2011Background
- TAB, a Utah bank, entered into an Accounts Receivable Purchase and Security Agreement with Arrow in 2008 to finance Arrow's receivables.
- TAB discovered irregular invoices and overbilling by Arrow, leading to an investigation and later emergency advances totaling about $1.72 million in December 2009.
- Arrow disclosed to TAB that it had failed to pay payroll taxes totaling over $9 million; Arrow ceased operations and terminated employees on December 22, 2009.
- On December 11–21, 2009, Arrow allegedly manipulated invoices and provided false financial information to TAB, culminating in an emergency $749,000 advance guaranteed by Carol Pielsticker and others.
- Arrow filed for Chapter 7 bankruptcy on January 8, 2010, with related Arrow affiliates substantively consolidated into the proceeding; TAB filed suit in January 2010 asserting sixteen claims including fiduciary duty breaches, fraudulent transfer, and unlawful dividends.
- Carol Pielsticker Bump moved to strike certain claims as derivative and thus property of Arrow's bankruptcy estate; TAB contends some claims are personal and may be pursued directly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TAB has standing to pursue fiduciary-duty and related claims. | TAB asserts claims are personal creditor claims, not derivative. | Carol argues claims are derivative and belong to the bankruptcy estate. | TAB lacks standing for derivative claims; claims are within the estate. |
| What law governs the derivative claims (fiduciary duty, fraudulent transfer, unlawful dividends). | TAB urges Utah law via contract forum selections. | Carol argues Utah law should control contractual provisions including forum clauses. | Oklahoma law applies to the derivative claims under Restatement §§302, 306. |
| Whether fiduciary-duty claims are derivative or personal against Arrow insiders. | TAB contends some fiduciary claims are personal to TAB as a creditor. | Carol contends claims are derivative and belong to Arrow’s estate. | Breach of fiduciary duty claims are derivative; TAB cannot pursue them in this court. |
| Whether the fraudulent transfer claim may be pursued in this court. | TAB seeks to press fraudulent transfer as a direct claim. | Fraudulent transfer claims belong to the bankruptcy trustee. | Fraudulent transfer claim dismissed for lack of standing. |
| Whether unlawful dividends claims are property of the estate. | TAB argues these are personal to TAB as a creditor. | Bankruptcy estate controls post-petition transfers. | Unlawful dividends claim dismissed as property of the estate. |
Key Cases Cited
- Delgado Oil Co., Inc. v. Torres, 785 F.2d 857 (10th Cir. 1986) (fiduciary duties in bankruptcy for creditors' protection)
- Fed. Deposit Ins. Corp. v. Grant, 8 F. Supp. 2d 1275 (N.D. Okla. 1998) (fiduciary duties of corporate insiders; corporation vs. creditors)
- Warner v. DMG Color, Inc., 20 P.3d 868 (Utah 2000) (distinction between derivative and direct actions; harms to corporation vs. direct injury to claimant)
- ANR Ltd. Inc. v. Chattin, 89 B.R. 898 (D. Utah 1988) (alter ego and personal vs. estate claims; bankruptcy policy considerations)
- Koch Refining v. Farmers Union Central Exch., Inc., 831 F.2d 1339 (7th Cir. 1987) (personal vs. corporate claims; bankruptcy allocation of remedies)
- Panama Processes, S.A. v. Cities Serv. Co., 796 P.2d 276 (Okla. 1990) (significance of state contacts in fiduciary duty disputes)