451 B.R. 373
Bankr. D. Del.2011Background
- Debtors DBSI, Inc. and affiliates filed Chapter 11 petitions; plan of liquidation confirmed October 26, 2010, appointing Trustee.
- Trustee seeks to recover allegedly fraudulent transfers to insiders including Reeve and to IRS/state taxing authorities, under §§ 548 and 544(b) of the Bankruptcy Code and Idaho statutes.
- Reeve, Idaho resident, allegedly had substantial ownership and leadership roles in DBSI entities (e.g., President of Kastera and Kastera Development; manager of DDRS, FOR 1031, Stellar).
- Complaint alleges Reeve received approximately $1.745 million in the two years pre-bankruptcy and $6.111 million in the four years pre-bankruptcy; transfers identified in Exhibit D.
- Reeve moves to dismiss for lack of personal jurisdiction under Rule 12(b)(2), asserting no Delaware contacts and no Delaware action occurred.
- Trustee argues: (a) plan retention of exclusive jurisdiction; (b) Rule 7004(d) allows nationwide service; (c) personal jurisdiction is proper due to sufficient contacts and no substantial burden on estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 7004(d) authorizes nationwide service to confer personal jurisdiction over Reeve. | Trustee leverages nationwide service under Rule 7004(d) to obtain in personam jurisdiction over Reeve. | Reeve contends nationwide service does not overcome due process limits given his Idaho residence and Delaware is inconvenient. | Yes; Rule 7004(d) provides basis for jurisdiction. |
| Whether exercising jurisdiction over Reeve in Delaware would violate due process given burdens and forum interests. | Trustee argues Delaware forum serves bankruptcy estate interests; burden on Reeve not weighty enough to defeat jurisdiction. | Reeve argues substantial burden, limited Delaware ties, and fairness concerns. | No; due process not violated; Delaware forum is appropriate. |
Key Cases Cited
- Uni-Marts, LLC, 399 B.R. 400 (Bankr. D. Del. 2009) (Rule 7004(d) nationwide service supports in personam jurisdiction)
- Tribune Co. v. Beatty, 418 B.R. 116 (Bankr. D. Del. 2009) (addressed fair play and substantial justice in nationwide service context)
- Pinker v. Roche Holdings, Ltd., 292 F.3d 361 (3d Cir. 2002) (national contacts may support jurisdiction when statute authorizes nationwide service)
- Nordberg v. Granfinanciera, S.A. (In re Chase & Sanborn Corp.), 835 F.2d 1341 (11th Cir. 1988) (discusses nationwide service authorization by statute)
- Cybergenics Corp. v. Chinery, 226 F.3d 237 (3d Cir. 2000) (trustee's duties and estate maximization in bankruptcy)