Liquidating Trustee of the App Fuels Creditors Trust v. West Virginia Alloys, Inc. et al
Filing
36
MEMORANDUM OPINION AND ORDER denying the Trustee's 11 MOTION to remand; granting conditionally defendant Dow Corning Corporation's 17 Motion to Dismiss; the Trustee is given leave to plead anew its claims against Dow under the Act by 5/10/2014. Signed by Judge John T. Copenhaver, Jr. on 4/24/2014. (cc: attys; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
LIQUIDATING TRUSTEE OF THE
APP FUELS CREDITORS TRUST,
Plaintiff,
v.
Civil Action No. 2:13-30266
WEST VIRGINIA ALLOYS, INC. and
GLOBE METALLURGICAL, INC. and
GLOBE SPECIALTY METALS, INC. and
WVA MANUFACTURING, LLC and
DOW CORNING CORPORATION
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is the plaintiff’s motion “FOR JUDICIAL
DETERMININATION OF SUBJECT MATTER JURISDICTION OR, IN THE
ALTERNATIVE, TO REMAND FOR LACK OF DIVERSITY OF CITIZENSHIP
[(‘motion to remand’)],” filed December 20, 2013, and the motion
to dismiss filed January 10, 2014, by defendant Dow Corning
Corporation (“Dow”).
On March 18, 2014, the court directed the parties to
submit supplemental briefing.
That briefing concluded with a
reply brief filed April 7, 2014.
I.
A.
The Parties and the Underlying and Present Litigation
This is an action to recover and avoid alleged
fraudulent transfers between defendants West Virginia Alloys,
Inc. (“WV Alloys”), WVA Manufacturing, LLC (“WVA”), Globe
Metallurgical, Inc. (“GMI”), Globe Specialty Metals, Inc.
(“GSM”), and Dow Corning Corporation, pursuant to the West
Virginia Uniform Fraudulent Transfers Act (“Act”), West Virginia
Code 40-1A-1 et seq.
Plaintiff is the Liquidating Trustee (“Trustee”) of
the App Fuels Creditors Trust (“Creditors Trust”).
The Trustee
oversees the Creditors Trust, which was established under the
Joint Plan of Orderly Liquidation and Distribution (the "Plan")
in certain bankruptcy cases jointly administered with
Appalachian Fuels, LLC, (the "bankruptcy case”) in the United
States Bankruptcy Court for the Eastern District of Kentucky.
The Trustee is an Illinois citizen.
The Creditors
Trust beneficiaries are citizens of multiple states, including
West Virginia, Ohio, New York, and Michigan.
WV Alloys is a
Delaware corporation with its principal office in West Virginia.
GMI is a Delaware corporation with its principal office in Ohio.
2
GSM is a Delaware corporation with its principal office in New
York.
WVA is a Delaware corporation with its principal office
in West Virginia.
Dow is a Michigan entity.
On June 11, 2009, three creditors of debtor
Appalachian Fuels, LLC, filed the bankruptcy case through an
involuntary petition for relief under Chapter 7.
At that time,
the debtor’s estate held claims against WV Alloys for avoidance
and recovery of preferential transfers ("claims").
On July 14,
2009, the United States Trustee appointed an Unsecured Creditors
Committee ("Committee").
At all relevant times WV Alloys, WVA, GMI, and GSM
were controlled, directly or indirectly, by three individuals.
They are Jeff Bradley, Malcolm Appelbaum, and Stephen Lebowitz.
On September 25, 2009, after the claims arose, WVA was formed.
It is owned and controlled by these same three individuals.
On
October 28, 2009, WV Alloys entered into an Asset Contribution
Agreement and Membership Interest Subscription Agreement
("agreement") with GMI and WVA.
Pursuant to the agreement, WV
Alloys transferred all, or substantially all, of its operating
assets to WVA in exchange for 89.36 percent of the aggregate
total of all membership interests in WVA (“membership
interests”).
GMI received the other 10.64 percent of the
membership interests. Pursuant to the agreement, WVA did not
3
assume any liability related to any pending or threatened
litigation or other claim, action, or proceeding against GMI or
WV Alloys.
On October 30, 2009, the Board of Directors for WV
Alloys declared a "dividend" to its sole shareholder, GMI, in
the form of all the membership interests, which, as noted,
comprised all or substantially all of WV Alloys' assets as of
the membership interest transfer date.
WV Alloys received no
consideration in exchange for the membership interest transfer
to GMI.
Also on October 30, 2009, the Board of Directors of
GMI declared a dividend to its sole shareholder, GSM, in the
form of 100% of the membership interests it earlier received in
WVA.
On November 5, 2009, GSM sold 49% of its newly acquired
membership interests in WVA to Dow.
Additionally, Dow was
listed as a party to receive notices under the October 28, 2009,
agreement.
The Trustee alleges that the transfers described above
were made in contravention of the Act.
Specifically, it
contends that the transactions recited above had the effect of
unlawfully removing substantially all of the assets of WV
Alloys.
An offshoot of that effect was that WV Alloys became
4
insolvent.
On April 11, 2011, the bankruptcy court entered an
agreed order in the bankruptcy case conferring standing on the
Committee to pursue recovery actions, including the claims, on
behalf of the debtor's estate.
On June 28, 2011, consistent with that grant of
authority, the Committee instituted an adversary proceeding to
avoid the alleged unlawful transfers.
On January 24, 2012, the
Trustee was substituted as the plaintiff in the adversary
proceeding.
On June 29, 2012, the bankruptcy court entered an
agreed judgment for the Trustee and against WV Alloys in the
amount of $125,000.
On October 25, 2013, the Trustee instituted this
action in the Circuit Court of Fayette County.
The second
amended complaint alleges two claims under the Act.
It
requests, inter alia, the following relief: (1) a declaration
that the transfers made by WV Alloys be annulled and set aside,
along with the "dividends” paid by WV Alloys and GMI, (2) an
award of exemplary damages, and (3) prejudgment attachment of
the assets transferred.
On November 26, 2013, the defendants
removed based upon diversity grounds.
On December 20, 2013, the Trustee moved for remand.
It asserts that there is a substantial legal issue respecting
5
subject matter jurisdiction.
That issue concerns who the court
counts for diversity purposes in the trust context.
As more
fully discussed below, the courts of appeal have reached three
different conclusions on the point when a trust sues or is sued.
The disputed legal issue actually turns on the authority of the
Trustee.
The Creditors Trust Agreement sets up the Trustee’s
powers, which are enumerated in the following section.
B.
The Trust Architecture Respecting Trustee Powers
The Creditors Trust Agreement discloses the scope of
the Trustee’s powers.
The applicable sections are set forth
below:
Section 1.1:
“[T]he Liquidating Trust, through the Liquidating Trustee, will
do the following: . . . (b) litigate and enforce all Causes of
Action, claims and interests belonging to the Debtors, Debtors
in Possession and/or the Estates . . . .”
Section 1.3:
“In connection with the exercise of its powers, the Liquidating
Trustee may use the name or such variation thereof as it sees
fit, and may transact the affairs of the Liquidating Trust in
such name.”
Section 1.4:
“Debtors hereby grant, release, transfer, convey and deliver to
the Liquidating Trustee and its successors the Debtors’ Assets,
to be held in trust and to be applied as specified in the Plan,
the Confirmation Order, and this Liquidating Trust Agreement,
the Liquidating Trust Assets.”
6
Section 1.5:
“The Liquidating Trustee agrees to receive, hold, administer and
distribute the Liquidating Trust Assets and the income derived
therefrom, and to reconcile, administer and satisfy Claims
pursuant to the terms of the Plan, the Confirmation Order and
this Liquidating Trust Agreement.”
Section 3.4:
“The Liquidating Trustee will distribute at least annually to
the Beneficiaries the net income of the Liquidating Trust plus
all net proceeds from the liquidation of the Liquidating Trust
Assets in excess of the amounts reasonably necessary to maintain
the value of the Liquidating Trust Assets or to meet claims or
contingent liabilities (including Disputed Claims).”
Section 4.2:
“The Liquidating Trustee’s rights and authority include, without
limitation, all of the following:
(a) to hold legal title to any and all rights of the
holders of Liquidation Trust Interests in or arising
from the Liquidation Trust Assets, including, without
limitation, collecting and receiving any and all money
and other property belonging to the Liquidation Trust
. . . .
(b) in consultation with the Trust Representative, to
perform the duties, exercise the powers, and assert
the rights of a trustee under sections 704 and 1106 of
the Bankruptcy Code, including, without limitation,
(i) commencing, prosecuting or settling causes
of action, . . . (iii) asserting claims, defenses,
offsets and privileges, . . . .
. . . .
(d) receive, control, manage and dispose of all
Liquidating Trust Assets for the benefit of the
Beneficiaries who may receive distributions under the
Plan;”
(e) act as custodian of the Liquidating Trust Assets
7
and liquidate and reduce such assets to cash at such
time as the Liquidating Trustee deems appropriate to
accomplish the purpose of the Liquidating Trust, in
accordance with the terms of the Plan and the
Liquidating Trust Agreement;
. . . .
(h) employ, supervise and compensate attorneys,
accountants, financial advisors and other
professionals or other persons retained to represent
the interests of and serve on behalf of the
Liquidating Trust (the ‘Trust Professionals’) and
waive any conflicts of interest as deemed necessary or
appropriate in its discretion.
. . . .
(m) prosecute, settle, dismiss, abandon or otherwise
dispose of any and all Causes of Action of the Debtors
or their Estates constituting Assets . . . .
. . . .
(r) exercise all powers and rights, and take all
actions contemplated by or provided for under this
Liquidating Trust Agreement; and
(s) take any and all other actions necessary or
appropriate to implement or consummate the Plan and
the provisions of this Liquidating Trust Agreement.
Section 6.5: “Except
Trust Agreement, the
Beneficiary does not
Trustee to do or not
proceeding at law or
Liquidating Trustee)
Trust Assets.”
as expressly provided in the Liquidating
Plan or the Confirmation Order, a
have standing to direct the Liquidating
to do any act or to institute any action or
in equity against any party (other than the
upon or with respect to the Liquidating
These provisions reflect precisely what one would
expect in this setting.
The Trustee is imbued with a broad
8
swath of authority to gather up, hold, and distribute trust
assets.1
The Trustee -- the superintendent of the operative
pleading and its style -- curiously questions in its reply brief
whether it is authorized to proceed.
(See, e.g., Pl.’s Reply at
7 (“[I]t appears that the App Fuels Creditors Trust is the real
party in interest in this civil action, and not the Liquidating
Trustee.”)).
It notes the Plan contains a provision that
“inconsistencies” between the Creditors Trust Agreement and the
Plan are resolved by the Plan.
It then notes Plan provisions
that, inter alia, appear to (1) vest title to trust assets in
the trust, (2) impart supervisory authority to the Trust
Representative, and (3) create trust asset ownership rights in
the beneficiaries as well.2
The court notes references in the Creditors Trust
Agreement to an entity known as the Trust Representative. The
Trust Representative is The Dayton Power & Light Company, an
Ohio citizen. The Trustee retains “the sole discretion to make
decisions on behalf of the” Trust “and is not bound to follow
any recommendations made by the Trust Representative.” (Sec.
8.2). If an action involves more than $500,000 or any officers,
directors, or other insiders of the debtors or their respective
professionals, the Trust Representative has enhanced authority.
Neither of those circumstances are present here and, in any
event, the Trustee may still proceed in good faith with the
approval of the bankruptcy court in the event of a disagreement
between the Trustee and the Trust Represenative. For these
reasons, the court does not consider the Trust Representative’s
citizenship.
1
2
The court need not reach the issue of whether the
9
While the Plan does appear to control when
interpretive conflicts arise, two considerations overcome the
Trustee’s implicit misgivings about its ability to proceed.
First, the Trustee’s authority concerning trust assets and its
ability to prosecute this action are, as noted, clearly spelled
out in the Creditors Trust Agreement.
Second, and of utmost
importance, the Creditors Trust Agreement is “incorporated into
th[e] Plan as if set out fully” therein.
(Plan Sec. 6.3).
This
incorporation by reference means that the Creditors Trust
Agreement and the Plan are not two separate documents with one
paramount over the other.
They are one and the same.
Inasmuch
as the Trustee possesses the authority set out heretofore, it is
authorized to proceed with this action and is properly deemed to
be the real party in interest.
The choice, in this jurisdictional setting, to proceed
with the Trustee as the proper party is also consistent with
binding precedent, especially where the incorporation by
reference discussed above has resulted in a hopelessly muddled
quagmire concerning who, or what, is vested with authority to
sue.
See, e.g., Hartley v. CSX Transp., Inc., 187 F.3d 422, 425
Trustee’s institution of this action, followed by its apparent
change of course on the real party in interest issue, warrants
application of judicial estoppel principles.
10
(4th Cir. 1999) (“Jurisdictional rules direct judicial traffic.
They function to steer litigation to the proper forum with a
minimum of preliminary fuss. The best way to advance this
objective is to accept the parties joined on the face of the
complaint unless joinder is clearly improper.”) (emphasis
added).
II.
A.
Motion to Remand
As noted by the parties, there presently exists a
split of authority concerning the citizenship of a trust for
diversity purposes.
The discussion begins with the decision in
Navarro Sav. Ass'n v. Lee, 446 U.S. 458 (1980).
In Navarro, the
question was whether the trustees of a business trust could
invoke diversity jurisdiction on the basis of their own
citizenship rather than that of the trust's beneficial
shareholders.
The declaration of trust provided the trustees
exclusive authority over the res “‘free from any power and
control of the Shareholders, to the same extent as if the
Trustees were the sole owners of the Trust Estate in their own
right. . . .’”
Id. at 459.
They were also authorized to
compromise lawsuits relating to the trust's affairs.
11
The trustees lent $850,000 to a firm in return for a
promissory note payable to the trustees.
Part of the security
for the note was a bank commitment letter from Navarro Savings
Association agreeing to lend the firm $850,000 to cover its
obligation to the trustees.
The trustees were ultimately forced
to demand Navarro make good on the promised loan.
was refused.
The demand
A breach of contract action followed by the
trustees against Navarro in a federal action based upon
diversity of citizenship.
While the trustees and Navarro were
diverse, subject matter jurisdiction was at risk if the trust
shareholders citizenship was considered in the mix.
The Supreme Court first recited the now-familiar rule
respecting unincorporated associations:
Although corporations suing in diversity long have
been “deemed” citizens, . . . unincorporated
associations remain mere collections of individuals.
When the “persons composing such association” sue in
their collective name, they are the parties whose
citizenship determines the diversity jurisdiction of a
federal court. Great Southern Fire Proof Hotel Co. v.
Jones, 177 U.S. 449, 456, 20 S.Ct. 690, 693, 44 L.Ed.
842 (1900) (limited partnership association); see
Steelworkers v. Bouligny, Inc., 382 U.S. 145, 86 S.Ct.
272, 15 L.Ed.2d 217 (1965) (labor union); Chapman v.
Barney, 129 U.S. 677, 9 S.Ct. 426, 32 L.Ed. 800 (1889)
(joint stock company).
Id. at 461.
Based upon this line of authority, Navarro asserted
that the real parties to the lawsuit were the shareholders and
not the trustees.
12
The Supreme Court, however, observed that a trustee is
a real party in interest for diversity purposes when it holds
the customary powers to keep, manage, and dispose of assets for
the benefit of others.
powers.
The trustees in Navarro possessed those
Additionally, the shareholders were deemed to lack
control over the disposition of the case or the power to
intervene in the affairs of the trust except in extraordinary
situations.
Those observations led to the following ruling:
We conclude that these respondents are active trustees
whose control over the assets held in their names is
real and substantial. . . . The respondents are not
“naked trustees” who act as “mere conduits” for a
remedy flowing to others. They have legal title; they
manage the assets; they control the litigation. In
short, they are real parties to the controversy. For
more than 150 years, the law has permitted trustees
who meet this standard to sue in their own right,
without regard to the citizenship of the trust
beneficiaries. We find no reason to forsake that
principle today.
Id. at 465-66.
The next step development arose in Carden v. Arkoma
Associates, 494 U.S. 185 (1990).
In Carden, Arkoma Associates
(“Arkoma”), an Arizona limited partnership, sued two Louisiana
citizens in federal court based upon diversity grounds.
The
Louisiana citizens moved to dismiss, asserting that one of
Arkoma's limited partners shared their Louisiana citizenship.
The Supreme Court considered whether the citizenship of the
limited partners counted for diversity purposes.
13
The majority opinion noted that Supreme Court
precedent “firmly resisted” extending the single entity
treatment of corporations as citizens to other entities.
It
noted multiple instances where that reluctance was displayed,
including Chapman v. Barney, 129 U.S. 677 (1889).
Id. at 189.
In Chapman, the court found the citizenship of a joint stock
company subject to the rules governing partnerships, the
citizenship of which consists of the citizenship of all of its
members.
The analysis led to an application of settled law:
In sum, we reject the contention that to determine,
for diversity purposes, the citizenship of an
artificial entity, the court may consult the
citizenship of less than all of the entity's members.
We adhere to our oft-repeated rule that diversity
jurisdiction in a suit by or against the entity
depends on the citizenship of “all the members,”
Chapman, 129 U.S., at 682, 9 S.Ct., at 427, “the
several persons composing such association,” Great
Southern, 177 U.S., at 456, 20 S.Ct., at 693, “each of
its members,” Bouligny, 382 U.S., at 146, 86 S.Ct., at
273.
Carden, 494 U.S. at 195-196.
When Arkoma attempted to rely upon Navarro as an
exception to the “Chapman tradition,” the majority opinion
categorically rejected the attempt:
Navarro, in short, has nothing to do with the Chapman
question, except that it makes available to respondent
the argument by analogy that, just as business reality
is taken into account for purposes of determining
whether a trustee is the real party to the
controversy, so also it should be taken into account
for purposes of determining whether an artificial
14
entity is a citizen. That argument is, to put it
mildly, less than compelling.
Navarro had nothing to do with the citizenship of the
“trust,” since it was a suit by the trustees . . . .
Carden, 494 U.S. at 191-92, 193.
The interpretation of these cases has led to the
development of three varying approaches to trust citizenship.
The first approach commands a bare majority.
It results in the
court treating the citizenship of the trustee as conclusive on
the matter.
See Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346,
348 (7th Cir. 2006); Johnson v. Columbia Props. Anchorage, LP,
437 F.3d 894, 899 (9th Cir. 2006).
The second approach, adopted only by the United States
Court of Appeals for the Eleventh Circuit, treats the
citizenship of the beneficiaries as conclusive. Riley v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 292 F.3d 1334, 1338 (11th
Cir. 2002).
The third approach, adopted only by the United
States Court of Appeals for the Third Circuit, treats the
citizenship of both the trustee and the beneficiaries as
controlling the citizenship of a trust.
Emerald Investors Trust
v. Gaunt Parsippany Partners, 492 F.3d 192, 203 (3rd Cir. 2007).
It is noteworthy here, however, that the Trustee
instituted this action in its own name.
15
As noted in Emerald,
“the test with respect to the citizenship of an entity is
distinct from the test applied with respect to the citizenship
of trustees if they sue in their own names. When trustees sue in
their own names it is critical that they be the real parties to
the controversy.”
Emerald, 492 F.3d at 198 n.10.
In further
elaborating upon the impact of both Navarro and Carden in this
trustee-as-plaintiff setting, the panel in Emerald accurately
summed up the state of the law:
[I]n light of Navarro and Carden, the Supreme Court
has established the following rules. In a suit by or
against the individual trustees of a trust, where the
trustees “possess[ ] certain customary powers to hold,
manage and dispose of assets,” their citizenship, and
not that of the trust beneficiaries, is controlling
for diversity of citizenship purposes. The rule,
however, is different when an artificial entity sues
or is sued in its own name. In that situation, because
artificial entities, unlike corporations, are not
“citizens” under 28 U.S.C. § 1332, diversity
jurisdiction by or against an artificial entity
depends on the citizenship of “all the members.”
Id. at 200-01 (citations omitted).
It is thus apparent that the court need not choose
among the three approaches for arriving at the citizenship of a
trust.
Inasmuch as the Trustee instituted this action in its
own name, and that it possess the customary powers to hold,
manage and dispose of assets, its citizenship is controlling
under Navarro for diversity-of-citizenship purposes.
16
As noted, the Trustee is an Illinois citizen.
It does
not share citizenship with any of the Creditors Trust
beneficiaries, WV Alloys, GMI, GSM, WVA, or Dow.
Inasmuch as
the parties are diverse, the court ORDERS that the motion to
remand be, and hereby is, denied.
The notice of removal
properly alleges subject matter jurisdiction on diversity
grounds pursuant to 28 U.S.C. §§ 1332 and 1441.
B.
Motion to Dismiss
Federal Rule of Civil Procedure 8(a)(2) requires that
a pleader provide “a short and plain statement of the claim
showing . . . entitle[ment] to relief.”
Fed. R. Civ. P.
8(a)(2); Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007).
Rule
12(b)(6) correspondingly permits a defendant to challenge a
complaint when it “fail[s] to state a claim upon which relief
can be granted . . . .”
Fed. R. Civ. P. 12(b)(6).
The required “short and plain statement” must provide
“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957),
overruled on other grounds, Twombly, 550 U.S. at 563); see also
Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007).
17
In order to survive a motion to dismiss, “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’”
Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S.
at 570); see also Monroe v. City of Charlottesville, 579 F.3d
380, 386 (4th Cir. 2009).
Application of the Rule 12(b)(6) standard requires
that the court “‘accept as true all of the factual allegations
contained in the complaint . . . .’”
Erickson, 127 S. Ct. at
2200 (quoting Twombly, 127 S. Ct. at 1965); see also South
Carolina Dept. Of Health And Environmental Control v. Commerce
and Industry Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004)
(quoting Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002)).
The court must also “draw[] all reasonable . . . inferences from
th[e] facts in the plaintiff's favor . . . .”
Edwards v. City
of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
Claims under the Act sound in fraud.
concede as much.
The parties
Those claims are thus subject to the
heightened pleading standards of Federal Rule of Civil Procedure
9(b).
Rule 9(b) requires a pleader to allege “’with
particularity the circumstances constituting fraud.’” Fed. R.
Civ. P. 9(b).
The referenced circumstances “include ‘“the time,
place, and contents of the false representations, as well as the
18
identity of the person making the misrepresentation and what he
obtained thereby.”’”
Spaulding v. Wells Fargo Bank, N.A., 714
F.3d 769, 781 (4th Cir. 2013) (quoting, in part, Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.
1999)).
Foremost among several arguments, Dow asserts that the
second amended complaint fails to state a claim against it.
It
contends that the Trustee’s sole allegation against it stems
from Dow’s acquisition of a portion of the membership interests
in WVA Manufacturing from GSM.
At the same time, it notes that
Dow’s acquisition of the WVA Manufacturing interest was not a
transfer without consideration but rather a sale.
The Trustee responds that it has pled its claims
against Dow with the requisite degree of particularity.
The
rhetoric in its brief, however, must yield to the actual
allegations found in the operative pleading.
Those allegations,
as they relate to Dow, are as follows:
Dow “was listed as a party to receive notices under
the” agreement. (Sec. Am. Compl. ¶ 18).
Before the transfers under the agreement, Dow “knew or
should have known that the [c]laims were going to be
asserted against WV Alloys.” (Sec. Am. Compl. ¶ 21).
The transfers “were engaged in by the Defendants to
shield WV Alloys’ assets from the [c]laims while, at
the same time, maintaining ownership and control of
19
those very same assets in WVA, an affiliated legal
entity.” (Sec. Am. Compl. ¶ 23).
“The Defendants engaged in a series of structured and
orchestrated transactions . . . to transfer and shield
assets of WV Alloys from” the claims in violation” of
the Act. (Sec. Am. Compl. ¶¶ 38).
At the outset, the generic use of the term
“Defendants” is troubling.
Elsewhere in the operative pleading
the term is plainly directed only toward WV Alloys, GMI, GSM and
WVA.
(See, e.g., Sec. Am. Compl. ¶¶ 4, 5).
Assuming the term
was intended to refer to Dow as well, however, the well-pleaded
factual allegations of the operative pleading would only give
rise to a belief that Dow was entitled to receive notices of the
transfers.
That minimalistic contention will not suffice for
purposes of pleading a claim under the Act, especially in light
of the rigorous Rule 9(b) standards.
The court, accordingly, ORDERS that the motion to
dismiss be, and hereby is, granted conditionally, with the
Trustee given leave to plead anew its claims against Dow under
the Act on or before May 10, 2014.
20
III.
Based upon the foregoing discussion, it is ORDERED as
follows:
1.
That the Trustee’s motion to remand be, and hereby is,
denied;
2.
That Dow’s motion to dismiss be, and hereby is,
granted conditionally;
3.
That the Trustee be, and hereby is, given leave to
plead anew its claims against Dow under the Act on or
before May 10, 2014.
The Clerk is requested to transmit this written
opinion and order to all counsel of record and to any
unrepresented parties.
DATED: April 24, 2014
John T. Copenhaver, Jr.
United States District Judge
21
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