White v. Kubotek Corp.

487 B.R. 1, 2012 U.S. Dist. LEXIS 142247, 2012 WL 4753310
CourtDistrict Court, D. Massachusetts
DecidedOctober 2, 2012
DocketBankruptcy Appeal No. 11-11828-NMG
StatusPublished
Cited by9 cases

This text of 487 B.R. 1 (White v. Kubotek Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
White v. Kubotek Corp., 487 B.R. 1, 2012 U.S. Dist. LEXIS 142247, 2012 WL 4753310 (D. Mass. 2012).

Opinion

MEMORANDUM & ORDER

GORTON, District Judge.

In this protracted bankruptcy dispute arising from the liquidation of the assets of CADKEY Corporation (“CADKEY”), unsecured creditor Robert White (“White” or “appellant”) challenges the Bankruptcy Court’s statutory and constitutional authority to enter a final order dismissing his claims against Kubotek Corporation (“Ku-botek”) and its wholly-owned subsidiary Kubotek USA, Inc. (“Kubotek USA”) (collectively, “appellees”). This Court has jurisdiction pursuant to 28 U.S.C. § 158.

I. Facts

CADKEY is a recently-dissolved software company formerly based in Marlborough, Massachusetts. White is a software designer who developed FastSURF and FASTSolid, computer-aided design programs. In 1998, CADKEY entered into an agreement with White to purchase the rights, source code and trademarks in FastSURF and FASTSolid in exchange for royalty payments totaling 2.5% of its gross sales on those products for seven years, up to a maximum of $2.5 million. Included in the purchase agreement was an assignment clause requiring CADKEY’s successors, if any, to assume CADKEY’s obligations under the contract.

Two years before the contract’s expiration, CADKEY filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Massachusetts (“the Bankruptcy Court”). In the course [5]*5of bankruptcy proceedings, CADKEY moved for the sale of its assets to the highest bidder. An auction was held and Kubotek was the highest bidder. With the Bankruptcy Court’s approval, CADKEY entered into an Asset Purchase Agreement with Kubotek providing for the sale of CADKEY’s assets, including its interests in FastSURF and FASTSolid. White objected to the Asset Purchase Agreement on the grounds that 1) the sale had been conducted precipitately and therefore did not yield the highest price and 2) Kubotek was an insider of CADKEY. The Bankruptcy Court considered his objections but allowed the sale to proceed.

In November 2003, the Bankruptcy Court authorized the Asset Purchase Agreement pursuant to 11 U.S.C. § 363 (“the Sale Order”). Finding the statutory criteria for sale to be present, the Bankruptcy Court ruled that the purchased assets

shall be free and clear of any and all encumbrances, including, without limitation, all claims, if any, arising from the operation or cessation of the Debtor’s business, whether arising prior to or subsequent to the commencement of the Debtor’s case under chapter 11 of the Bankruptcy Code.

The Sale Order also contained a provision enjoining all persons and entities from initiating an action or proceeding against Ku-botek challenging the asset sale.

II. Background Litigation

Despite the injunction, White has burdened the federal courts with an unrelenting succession of cases and appeals over the past eight years challenging the asset sale to Kubotek.

In 2003, White objected to the Kubotek sale both before and after the transaction occurred, primarily arguing that the sale had been conducted summarily to the sellers’s detriment. The Bankruptcy Court dismissed his objections and upheld the sale. White appealed that decision but this Court upheld it. See In re Cadkey Corp., 317 B.R. 19 (D.Mass.2004). When the First Circuit Court of Appeals affirmed, White filed a petition for writ of certiorari to the United States Supreme Court. After that petition was denied, White filed a motion for rehearing and that, too, was denied.

In 2004, White filed a motion to vacate the Sale Order with the Bankruptcy Court, alleging on that occasion that counsel for CADKEY and Kubotek defrauded the Bankruptcy Court in advocating for the proposed sale. When that motion was denied, he moved for reconsideration. When that motion was denied he appealed to this Court which affirmed the decision of the Bankruptcy Court. See In re CK Liquidation Corp., 332 B.R. 72 (D.Mass.2005). White attempted to appeal directly to the Supreme Court but his appeal was rejected as improperly filed.

The saga continued. In 2006, White filed yet another motion to vacate the Sale Order, this time asserting that 1) the Sale Order violated his due process rights, 2) 11 U.S.C. § 363(f)(3) was inapplicable to his contract with CADKEY, 3) his interest was not a lien and 4) Kubotek should be required to make him whole. The Bankruptcy Court denied the motion and enjoined him from filing any further papers, pleadings or documents challenging the Sale Order. In re CK Liquidation Corp., 2006 WL 1302614 (Bkrtcy.D.Mass.2006). That ruling was upheld on appeal.

III. Procedural History

Undaunted in his quest to recover the outstanding royalty payments, White filed his Complaint for successor liability and fraudulent conveyance against Kubotek and Kubotek USA in the Massachusetts [6]*6Superior Court for Middlesex County. He sought money damages in an amount identical to his proof of claim filed in the 2003 bankruptcy proceeding. Appellees timely removed the case to federal court (for reference to Bankruptcy Court) and promptly moved to dismiss. The next day, White filed a motion to remand the case back to state court.

The Bankruptcy Court summarily dismissed the case (“the Dismissal Order”) before White had the opportunity to respond to the motion to dismiss or defendants had the opportunity to respond to the motion to remand. The Bankruptcy Court ruled that removal of the case from Massachusetts Superior Court was warranted by the retention of jurisdiction provision in the Sale Order and dismissed White’s claims on the grounds that he “admitted” he was “once again attempting to relitigate the validity of the Sale Order.” Thereafter, White filed an opposition to the motion to dismiss, a motion for reconsideration of the Dismissal Order and two “amendments” to his motion for reconsideration. The Bankruptcy Court denied the motion for reconsideration.

On October 17, 2011, White appealed to this Court, challenging the Bankruptcy Court’s Dismissal Order and its denial of his motion for reconsideration. The parties filed lengthy appellate briefs and White filed another motion to remand, which appellees opposed. In addition, White filed seven “supplemental briefs” alerting the Court to new developments in the law and wrote a personal letter to the Court requesting that it reach a decision on his appeal “sooner rather than later.”

IV. Analysis

The United States District Courts have jurisdiction to hear appeals from final orders of a bankruptcy court. See 28 U.S.C. § 158. In reviewing an appeal from an order of a bankruptcy court, a district court reviews de novo conclusions of law but must accept the bankruptcy judge’s findings of fact unless they are clearly erroneous. TI Fed. Credit Union v. DelBonis, 72 F.3d 921, 928 (1st Cir.1995).

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Cite This Page — Counsel Stack

Bluebook (online)
487 B.R. 1, 2012 U.S. Dist. LEXIS 142247, 2012 WL 4753310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/white-v-kubotek-corp-mad-2012.