Pixius Communications LLC - Adversary Proceeding

CourtUnited States Bankruptcy Court, D. Kansas
DecidedJune 11, 2020
Docket19-05110
StatusUnknown

This text of Pixius Communications LLC - Adversary Proceeding (Pixius Communications LLC - Adversary Proceeding) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Pixius Communications LLC - Adversary Proceeding, (Kan. 2020).

Opinion

Bank xes LY Or” Fey □□ 3 oo) 2 = WY eS □□ *\ ee AN SIGNED this 11th day of June, 2020. UGS EAE, □ District SE

Robert E. Noceni United States Bankruptcy

DESIGNATED FOR ONLINE PUBLICATION IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF KANSAS

IN RE: PIXIUS COMMUNICATIONS, LLC, Case No. 19-11749 Chapter 11 Debtor. IN RE: WISPer VENTURES LEASING, LLC, Adv. No. 19-5110 Plaintiff, VS. PIXUS COMMUNICATIONS LLC; ROBERT G. HANSON; JAY S. MAXWELL, individually and as trustee of Jay S. Maxwell Trust; JAMES R. VOSBURGH, individually and as trustee of Vosburgh Family Revocable Trust; CAROL L. MURRAY, individually and as Trustee of the Carol L. Murray Living Trust; LIES INVESTMENTS, LP; LV PROPERTIES, GP; JOHN

DOES 1-10; JANE DOES 1-10; ABC ENTITIES 1-10,

Defendants.

ORDER DENYING PLAINTIFF’S MOTION TO REMAND and TO ABSTAIN

Claims related to bankruptcy cases may be removed to district courts who may hear them or refer them to bankruptcy courts. The district or bankruptcy court can hear a removed state court action if the action is a core proceeding, arises out of a bankruptcy case, or is related to a bankruptcy case pending in their district.1 The removed-to court must determine whether the removal is procedurally proper and decide whether to equitably remand the proceeding.2 That court also has discretion to abstain from hearing a state court proceeding.3 Pixius’s removal of WISPer Ventures Leasing’s Arizona state court case against it and some of its members, and WISPer’s motion for remand and alternatively, to abstain, presents about every issue a removal-remand controversy could but in the end, the equities favor this Court’s retention of the removed case and denying WISPer’s motion to remand and to abstain. Background Vastly simplified, WISPer Ventures Leasing LLC, (“WVL”) leased or sold equipment to internet service provider Pixius, a limited liability company. A group

1 28 U.S.C. § 1452(a). 2 28 U.S.C. § 1452(b). 3 28 U.S.C. § 1334(c)(1). of Pixius’s members, including Robert G. Hanson, Carol L. Murray as trustee of the Carol L. Murray Living Trust, James R. Vosburgh as trustee of the James R. Vosburgh Living Trust, Jay S. Maxwell as trustee of the Jay S. Maxwell Living

Trust, Lies Investments L.P., and LV Properties, GP (“the Subordinated Members”) executed subordination agreements whereby they agreed not to receive any payments from Pixius until WVL’s debt was paid in full. Those members, save LV Properties, acquired Pixius’s debt to CrossFirst Bank and are secured creditors of Pixius (the “CrossFirst Members”). The CrossFirst Members’ rights to payment as creditors under the CrossFirst loan documents were likewise subordinated to

payment of WVL’s debt. When Pixius filed its chapter 11 petition on September 13, 2019, it requested leave to use the CrossFirst Members’ cash collateral. That request was granted, conditioned on Pixius adequately protecting the group’s interests by permitting them to retain their liens in Pixius’s property, some of which was leased or sold to Pixius by WVL, and all of which has subsequently been sold in the bankruptcy case. Controversies remain concerning who is to be paid what from the sale proceeds. WVL concedes that it is a secured creditor of Pixius, not a lessor.4

In August of 2019, before Pixius filed its chapter 11 case, WVL sued it and the Subordinated Members in Arizona state court. Against Pixius, WVL sought to collect its debt. Against the Subordinated Members, it sought to collect payments made by Pixius to them in various amounts before WVL was paid in full. As to the CrossFirst Members, WVL sought repayment of all funds paid by Pixius either to

4 No. 19-11749, Doc. 324, ¶ 8; Doc. 345, ¶s 3-4, 9. CrossFirst or the CrossFirst Members. After Pixius filed bankruptcy, it removed the Arizona case on October 7, 2019 directly to this Court.5 WVL voluntarily dismissed Pixius from the removed action and moved to remand the case to Arizona state

court.6 Recently, Pixius filed an adversary proceeding against WVL in this Court seeking a determination that WVL is a secured creditor rather than a lessor and the value of WVL’s security interests.7 Pixius has also filed a motion in its bankruptcy case to distribute the sale proceeds that implicates the same issues.8 WVL has objected to the values Pixius has assigned its collateral. WVL has also filed proofs of claims related to its collateral and the subordination agreements.9 The presence of

these intertwined issues in three matters now pending in two courts requires that I determine where all of the WVL-Pixius-Member Groups10 disputes should be resolved. Analysis WVL’s “Late” Remand Motion is not Fatal to Addressing its Merits. WVL moved to remand or abstain (the “Motion”) on the 30th day after Pixius’s notice of removal.11 It argues that Pixius (1) improperly removed the case to

5 Adv. Doc. 1. The Notice of Removal was filed with the Arizona state court on October 16, 2019 pursuant to Fed. R. Bankr. P. 9027(c). See Adv. Doc. 5. 6 Adv. Doc. 8 (Notice of voluntary dismissal filed November 5, 2019 pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), made applicable in adversary proceedings by Fed. R. Bankr. P. 7041); Adv. Doc. 9 (WVL’s motion for remand, or alternatively, motion to abstain, filed November 6, 2019). 7 See Pixius Communications LLC v. WISPer Ventures Leasing LLC, Adv. No. 20-5065 (Bankr. D. Kan.) filed April 13, 2020. 8 Doc. 311 and 312. 9 See Claim 49-1 filed January 16, 2020, and Claim 63-1 filed January 20, 2020. 10 As used in this Order the term “Member Groups” refers collectively to the CrossFirst Members and the Subordinated Members as described previously. 11 The notice of removal was filed in this Court on October 7, 2019 and the remand Motion was filed on November 6, 2019. this Court rather than the U.S. District Court for the District of Arizona under the bankruptcy removal statute, 28 U.S.C. § 1452(a); and (2) that this Court should equitably remand under § 1452(b) or abstain under 28 U.S.C. § 1334(c)(1). Pixius

and the Member Groups argue that WVL’s Motion was late under this District’s local bankruptcy rule, D. Kan. L.B.R. 9027.1. That rule provides that a remand motion from a § 1452 removal should be filed within 21 days of the notice of removal. Fed. R. Bankr. P. 9027 controls removals. Rule 9027(d) governs remands from bankruptcy removals but provides no time limit for filing a motion for remand or abstention under § 1334.12 This Court imposed the 21-day rule to prompt

removed parties to seek remand with dispatch. A court may always consider the nature and extent of its jurisdiction, even if no party requests it.13 Moreover, the Court always retains the discretion to permit a motion to remand a case removed under § 1452 so long as the motion complies with the terms of Fed. R. Bankr. P. 9027.14 This one does.

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