Multibank, Inc. v. Access Global Capital LLC

594 B.R. 618
CourtUnited States Bankruptcy Court, S.D. New York
DecidedNovember 27, 2018
DocketAdv. Pro. No. 18-01606 (MEW)
StatusPublished
Cited by27 cases

This text of 594 B.R. 618 (Multibank, Inc. v. Access Global Capital LLC) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Multibank, Inc. v. Access Global Capital LLC, 594 B.R. 618 (N.Y. 2018).

Opinion

Honorable Michael E. Wiles, United States Bankruptcy Judge

Access Global Capital LLC ("Access Global ") and Global Commodities Group, LLC ("Global Commodities ," and, together with Access Global, the "Debtors ") are debtors in chapter 11 cases that are pending in the United States Bankruptcy Court for the District of New Jersey. The Debtors also are defendants in a civil action that was filed in the New York State Supreme Court in February 2016, long prior to the date of the New Jersey bankruptcy filings. The plaintiff in the New York State court lawsuit is a Panamanian company named Multibank, Inc. The named defendants include the two Debtors plus an individual named James Besch and a Swiss company named Novel Commodities S.A. ("Novel "). Multibank claimed that the defendants breached certain contracts and committed fraud, made negligent misrepresentations and/or breached fiduciary duties in connection with the purchase of insured accounts receivable.

In January 2017 the New York State Supreme Court ruled that Multibank had properly pleaded a claim for breach of contract by Mr. Besch and Debtor Access Global and had also properly pleaded a claim for tortious interference of contract against Debtor Global Commodities. Although the complaint in the state court action alleged that Mr. Besch signed the relevant contracts in his individual capacity and that Mr. Besch was a contracting party, the state court held in its January 2017 ruling that Mr. Besch had not signed the contracts in his personal capacity. However, the state court permitted the contract claim to proceed against Mr. Besch based on allegations that Mr. Besch and the Debtors were "alter egos" of each other. The court dismissed other claims against the Debtors and Mr. Besch, and directed the entry of a default judgment against Novel in the amount of $4,057,693.53. See Decision & Order, Multibank, Inv. v. Access Global Capital LLC , Index No. 650637/2016, 2017 WL 162282 (N.Y. Sup. Ct. N.Y. Cnty. January 9, 2017) [Dkt No. 115 at 23-24].

One portion of the state court decision that is of particular relevance is the following statement as to the judgment to be entered against Novel:

ORDERED that the motion by plaintiff Multibank, Inc. for a default judgment against defendant Novel Commodities S.A. is granted, and the Clerk is directed to enter judgment in favor of said plaintiff, and against said defendant, in the amount of $4,057,693.53 plus 9% statutory pre-judgment interest from September 23, 2011 to the date judgment is entered; and it is further
ORDERED that such judgment is hereby severed and the action shall continue *621against the remaining defendants ...

Id. at 24. The parties disagree as to the nature and significance of the severance of the judgment against Novel, as discussed more fully below.

On June 14, 2018, Access Global and Global Commodities filed their voluntary chapter 11 petitions in New Jersey. Shortly thereafter they filed a notice of removal to remove the Multibank state court action from the New York State Supreme Court to the United States District Court for the Southern District of New York. They also filed a motion to transfer the removed Multibank state court action to the United States District Court for the District of New Jersey, where presumably it would then be transferred to the Bankruptcy Court for that District. The District Court has referred the removed action, and pending transfer motion, to this Court, pursuant to standing orders under which bankruptcy-related matters are automatically referred to the bankruptcy judges.

Multibank has opposed the transfer motion and has also urged that I return the matter to the New York State Supreme Court on various abstention and remand grounds. See 28 U.S.C. §§ 1334(c), 1452. The Debtors have suggested that I should transfer the case to the New Jersey District Court, see 28 U.S.C. §§ 1404(a), 1412, and permit that court (or the New Jersey bankruptcy court) to decide the abstention and remand issues. Multibank argues that I should decide the abstention and remand issues before considering the requested transfer.

While the parties disagree as to the order in which I should consider these issues, it is quite plain that in this particular case the issues overlap. From Multibank's perspective, for example, the consideration of whether mandatory abstention is applicable depends at least in part on whether the "action" against the Debtors and Mr. Besch has already been severed from the action against Novel. The severance issue, in turn, overlaps with some of the issues that are relevant to the transfer that the Debtors are seeking. On the other hand, the whole purpose of the removal, from the point of view of the Debtors, is to obtain a transfer of the case to New Jersey. No party has argued that any purpose would be served by keeping the case in this Court; instead, the ability to transfer the action is key to all of the Debtors' arguments as to whether I should exercise my discretion to remand the case or as to whether I should abstain on discretionary grounds. In this particular case, therefore, it is more efficient to discuss all of the issues together, while of course recognizing and giving full effect to the "mandatory abstention" provisions to the extent they are applicable.

Relevant Statutes

The Debtors argue that I should transfer the removed matter to New Jersey pursuant to section 1412 of title 28 of the United States Code or, alternatively, pursuant to section 1404(a). See 28 U.S.C. §§ 1404(a), 1412. Multibank contends that the matter is subject to mandatory abstention pursuant to section 1334(c)(2) of title 28, or alternatively that I should exercise my discretion to abstain and/or to remand pursuant to sections 1334(c)(1) and 1452(b) of title 28. See 28 U.S.C. §§ 1334(c), 1452(b).

I have previously ruled that one of the statutes cited by the parties ( section 1412 of title 28 ) is applicable only to a proceeding that arises "under" the Bankruptcy Code and is not available for a proceeding that "arises in" or is merely "related to" a pending bankruptcy case. See *622Onewoo Corp. v. Hampshire Brands, Inc.

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Cite This Page — Counsel Stack

Bluebook (online)
594 B.R. 618, Counsel Stack Legal Research, https://law.counselstack.com/opinion/multibank-inc-v-access-global-capital-llc-nysb-2018.