Windsor Communications Group, Inc. v. Philadelphia Electric Co. (In re Windsor Communications Group, Inc.)

63 B.R. 126, 1985 Bankr. LEXIS 4921, 14 Bankr. Ct. Dec. (CRR) 682
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedNovember 22, 1985
DocketBankruptcy No. 82-03714K; Adv. No. 84-0097K
StatusPublished
Cited by1 cases

This text of 63 B.R. 126 (Windsor Communications Group, Inc. v. Philadelphia Electric Co. (In re Windsor Communications Group, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Windsor Communications Group, Inc. v. Philadelphia Electric Co. (In re Windsor Communications Group, Inc.), 63 B.R. 126, 1985 Bankr. LEXIS 4921, 14 Bankr. Ct. Dec. (CRR) 682 (Pa. 1985).

Opinion

MEMORANDUM OPINION

WILLIAM A. KING, Jr., Bankruptcy Judge.

The defendant in this adversary proceeding has filed a motion for abstention or dismissal. For the reasons stated herein, the motion will be denied.

The relevant facts are;

An involuntary petition under Chapter 7 of the Bankruptcy Code (“Code”) was filed against Windsor Communications Group, Inc. t/a Norcross-Rust Craft Greeting Card Publishers (“Windsor”) on August 5, 1982. Windsor converted the case to a case under Chapter 11 on August 25, 1982.

On February 9, 1984, Windsor commenced the instant adversary proceeding against Philadelphia Electric Company (“PECO”). The complaint alleges that a series of preferential transfers were made to PECO. Recovery of these alleged preferential payments is sought pursuant to 11 U.S.C. § 547. The complaint also seeks to avoid certain post-petition transfers pursuant to 11 U.S.C. § 549.1

[128]*128The motion to abstain or dismiss the complaint was filed by PECO on April 2, 1984.

The first issue presented is whether we should abstain from hearing the instant proceeding. In its motion, PECO argues that we should abstain from exercising jurisdiction because to do so would invade the province of a predominant state interest in regulating rates and procedures governing utilities. We are not persuaded by PECO’s argument because we do not believe that the prosecution of a preference action will have an effect on the state’s regulation of its utilities. Rather, the basic goal of the preference provision is to secure the equal distribution of the debt- or’s assets among its creditors. Cohen v. Kern (in re Kennesaw Mint, Inc.), 32 B.R. 799 (Bankr.N.D.Ga.1983). A preference action allows a debtor or trustee to recover assets for the benefit of all of the estate’s creditors, thereby ensuring that no one creditor is put in a better position than another creditor of the same class based uklpon the date when it received the transfer. The application of federal bankruptcy law in this limited context does not interfere with the state’s right to regulate rates, billing procedures, or the activities of its utility companies.

Our jurisdiction over this action is predicated upon 28 U.S.C. §§ 1334 and 157(b)(1) (1984), and 11 U.S.C. § 547 and 549. Section 1334 provides that the district courts shall have original and exclusive jurisdiction of all cases under title 11, and original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. Under 28 U.S.C. § 157, each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 shall be referred to the bankruptcy judges for that district. By Referral Order of July 25, 1984, the United States District Court for the Eastern District of Pennsylvania referred all cases and all proceedings arising under title 11 in this District, with the exception of personal injury tort and wrongful death claims, to the bankruptcy judges for this District.

Bankruptcy judges may hear and enter final orders on all “core” proceedings. 28 U.S.C. § 157(b)(1). “Core” proceedings include, but are not limited to, proceedings to determine, avoid, or recover preferences. 28 U.S.C. § 157(b)(2)(F). Therefore, this Court is the exclusive forum in which the debtor may bring this action. Because the Bankruptcy Court is the exclusive forum, abstention is clearly inappropriate.2 To deny a hearing on this complaint would preclude the debtor from availing itself of a right provided by federal law. Accordingly, PECO’s request for abstention will be denied.

The second issue for consideration is whether the complaint states a claim upon which relief may be granted.

For the purposes of ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6), applicable to this proceeding through Bankruptcy [129]*129Rule 7012 (b), the court is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof. Barr v. Freedman (In re Alstead Automotive Warehouse, Inc.) 24 B.R. 131, 132 (Bankr.E.D.N.Y.1982). Furthermore, all allegations of the complaint are deemed admitted. Dampskibsselskabet AF 1912 v. Black & Geddes, Inc. (In re Black & Geddes, Inc.), 16 B.R. 148, 151 (Bankr.S.D.N.Y.1981).

The general rule is that the complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. The factual allegations must be viewed in the light most favorable to the plaintiff. Hishon v. King & Spalding, 464 U.S. 959, 104 S.Ct. 2229, 2233, 78 L.Ed.2d 334 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); 2A Moore’s Federal Practice ¶ 12.-08 (2d ed. 1982).

Here, the complaint alleges that payments in the amount of $125,509.13 to PECO constitute preferences which may be avoided under § 547 of the Code. The complaint also alleges that transfers in the amount of $27,708.98 to PECO are subject to avoidance under § 549 of the Code. In moving for dismissal of the complaint on the basis of failure to state a claim, PECO does not challenge the sufficiency of the allegations made; rather, PECO argues that § 547 does not apply to state-regulated utilities.3

The issue of whether state-regulated utilities are subject to preference actions has already been decided in this District. See Brooks Shoe Manufacturing Company, Inc. v. Metropolitan Edison Co. (In re Naudain, Inc.), 32 B.R. 871 (Bankr.E.D.Pa.1983).4 In Naudain, our colleague, Chief Judge Goldhaber, held that two (2) payments to the defendant, Metropolitan Edison Company, could be avoided by the debt- or pursuant to § 547 (b) of the Code.

Furthermore, the legislative history of § 547 evinces a clear Congressional intent to include utilities within the class of creditors subject to the provisions of § 547, rather than exclude them. In addressing the various defenses available to creditors under § 548 (c), Congress noted that one of the statutory exceptions to the trustee’s avoidance power was enacted to protect “such non-business activities as payment of monthly utility bills.” See H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 373-374 (1977); S.Rep. No. 95-989, 95th Cong., 2d Sess. 88 (1978), U.S.Code Cong. & Admin. News 1978, pp. 5874, 6329.

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63 B.R. 126, 1985 Bankr. LEXIS 4921, 14 Bankr. Ct. Dec. (CRR) 682, Counsel Stack Legal Research, https://law.counselstack.com/opinion/windsor-communications-group-inc-v-philadelphia-electric-co-in-re-paeb-1985.