American Petrofina, Inc. v. Seatrain Lines, Inc. (In re Seatrain Lines, Inc.)

16 B.R. 540, 1981 Bankr. LEXIS 3545, 8 Bankr. Ct. Dec. (CRR) 821
CourtUnited States Bankruptcy Court, D. New Jersey
DecidedJune 16, 1981
DocketBankruptcy No. 81-0209
StatusPublished

This text of 16 B.R. 540 (American Petrofina, Inc. v. Seatrain Lines, Inc. (In re Seatrain Lines, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Petrofina, Inc. v. Seatrain Lines, Inc. (In re Seatrain Lines, Inc.), 16 B.R. 540, 1981 Bankr. LEXIS 3545, 8 Bankr. Ct. Dec. (CRR) 821 (N.J. 1981).

Opinion

OPINION

D. JOSEPH DeVITO, Bankruptcy Judge.

The Court considers two motions, that of the above plaintiff American Petrofina, Incorporated (Petrofina), seeking a remand of the above proceeding to the District Court for the District of New Jersey, the other the motion of the defendant Seatrain Lines, Inc. (Seatrain), seeking a transfer of the above proceedings to the Bankruptcy Court for the Southern District of New York. There follows the immediate procedural history essential to these considerations.

On December 9,1980, American Petrofina filed a complaint in the United States District Court for the District of New Jersey, naming as defendants Seatrain Lines, Inc. and eight other corporate and individual defendants. In its complaint Petrofina alleges, inter alia, antitrust and contractual violations against the named defendants.

On March 6, 1981, upon application of defendant Seatrain to the United States District Court for the District of New Jersey, the above proceeding was, pursuant to 28 U.S.C. § 1478[a], removed to this Court.

On March 20, 1981, Seatrain filed its motion for change of venue pursuant to 28 U.S.C. § 1475, specifically seeking a transfer of the above entitled proceeding to the Bankruptcy Court for the Southern District of New York.

On April 3, 1981, plaintiff Petrofina filed its motion to remand the above proceeding to the District Court for the District of New Jersey, similarly pursuant to 28 U.S.C. § 1478[b],

Factually, it appears that Seatrain is a debtor in possession in an involuntary Chapter 11 proceeding now pending before Judge Edward Ryan in the Bankruptcy Court for the Southern District of New York. Pending in those proceedings is a [542]*542civil action commenced by Petrofina prior to the commencement of the instant suit entitled American Petrofina, Inc. v. East River Steamship Corp., General Electric Credit Corp. and Seatrain Lines, Inc., No. 79-6692. The factual background of that litigation coincides in part with that of the instant controversy.

Petrofina offers two equitable grounds in support of its requested remand. Specifically, counsel contends that notwithstanding the expanded jurisdiction of the bankruptcy court, a matter such as this, involving as it does extremely complex antitrust considerations, should be left to a court possessing particular expertise in that area. Counsel suggests that such course of action is clearly within the contemplation of the provision of 28 U.S.C. § 1471[d], permitting the bankruptcy court to abstain from hearing a particular proceeding under Title 11 or arising in, or related to a case under Title 11. Avoidance of bifurcated litigation is the second equitable ground advanced in support of remand, which Petrofina contends will occur because of the Court’s lack of jurisdiction over the subject matter of Count 5 of the complaint.

Addressing Count 5 of the instant complaint, the allegations therein are directed not against Seatrain, but against East River Steamship Corp. (East River) and Kings-way Tankers, Inc. (Kingsway), each alleged to have breached their respective contracts with plaintiff Petrofina. In considering the jurisdictional challenge relating to Count 5, this Court briefly probes the nature of the relationship between Seatrain and the two corporate defendants named in the fifth count and their relationship with the plaintiff.

East River and Kingsway had bareboat charters for two vessels, the Brooklyn and the Williamsburgh, respectively, each built by a subsidiary of Seatrain. The vessels were, in turn, time-chartered by East River and Kingsway to Petrofina. Seatrain has guaranteed East River’s obligations under the bareboat charter of the Brooklyn and has guaranteed Kingsway’s obligations under the bareboat charter of the Williams-burgh. Except for their respective rights under the bareboat charters and the time charters of the aforenoted vessels, neither company has any assets or potential earning capacity. At present neither company is conducting any business operations. East River has a working capital deficiency of 10 million dollars and a deficit net worth of 17 million dollars. Kingsway has a working capital deficiency of 12 million dollars and a deficit net worth of 16 million dollars.

Because of the foregoing, compounded by the provisions of their agreements with Seatrain restricting each from engaging in other businesses, the likelihood of either resuming business operations is extremely remote. Because of Seatrain’s guarantee of obligations contracted between East River, Kingsway and Petrofina, Seatrain will be liable to pay any judgments obtained by Petrofina against either company.

We begin by noting that the jurisdiction of the bankruptcy court under 28 U.S.C. § 1471 has been given an expansive interpretation in decisions under the Code. See Hurt v. Cypress Bank, 9 B.R. 749, 4 C.B. C.2d 26, 29 (Bkrtcy N.D. Ga.1981).

Section 1471, granting extensive jurisdiction of matters connected with cases under Title 11 to federal district courts, provides that such jurisdiction shall be exercised by the federal bankruptcy courts. 28 U.S.C. § 1471[b], [c]; In re Clawson Medical, Rehabilitation and Pain Care Center, 9 B.R. 644, 4 C.B.C.2d 73, 77 (Bkrtcy E.D.Mich.1981). Noteworthily,

the original jurisdiction of the district courts granted by section 1471[b] is vested ‘notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts’ .... This provision is in accordance with the intent of Congress to bring all litigation within the umbrella of the bankruptcy court, irrespective of congressional statements to the contrary in the context of certain specialized litigation.

1 Collier on Bankruptcy 3-39 to 3-40 (15th ed. 1980) (construing 28 U.S.C. § 1471[b]).

Under 28 U.S.C. § 1471, the bankruptcy court has jurisdiction over all civil proceed[543]*543ings arising under or related to cases under the Bankruptcy Code. In re Clawson, supra, 9 B.R. 644, 4 C.B.C.2d at 77; In re Colegrove, 9 B.R. 337, 3 C.B.C.2d 839, 842 (Bkrtcy N.D. Cal.1981). As stated in Collier:

The jurisdiction of the Bankruptcy Court has been transmuted from one which was basically in rem to one which is all-encompassing, limited only by whether the civil proceeding arises under, arises in, or is related to, the title 11 case.

1 Collier on Bankruptcy 3-49 (15th ed. 1980) (construing 28 U.S.C. § 1471[c]).

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16 B.R. 540, 1981 Bankr. LEXIS 3545, 8 Bankr. Ct. Dec. (CRR) 821, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-petrofina-inc-v-seatrain-lines-inc-in-re-seatrain-lines-njb-1981.