UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
May 10, 2011
JOHANNA FOODS, INC.,
TOOBRO HOLDINGS TBF LLC, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Mary L. Cooper United States District Judge
NOT FOR PUBLICATION
THE PLAINTIFF brings this action to recover damages for, inter alia, breach of contract against, among other defendants, (1) Toobro Holdings TBF LLC, Toobro Dag LLC, Toobro NY LLC, Toobroville, LLC, Toobros, Inc., and Toobro, LLC ("Toobro Entities"), and (2) Mendel Bistritzky and Steve Bistritzky. (Dkt. entry no. 1, Compl.) The plaintiff alleges that (1) the Toobro Entities purchased certain food products ("Products") from the plaintiff from August 2010 to October 2010, (2) a Toobro Entities' representative requested that the plaintiff invoice and ship the Products to an entity known as "FJB LLC d/b/a Toobro" ("FJB"), and the plaintiff did so, (3) FJB petitioned for bankruptcy protection ("Bankruptcy Case") in the United States Bankruptcy Court for the Southern District of New York ("New York Bankruptcy Court") on March 11, 2011, and listed the plaintiff as an unsecured creditor, (4) the business activities of the Toobro Entities and FJB are intertwined, (5) Mendel Bistritzky and Steve Bistritzky control the Toobro Entities and FJB, and (6) the Toobro Entities, Mendel Bistritzky, and Steve Bistritzky should pay for the Products. See Petition, In re FJB LLC, No. 11-11060 (Bankr. S.D.N.Y. Mar. 11, 2011). (See Compl.; see id., Exs. B & C, Pl. Invoices to FJB.) The plaintiff also alleges that in June 2010 - two months before the plaintiff initially complied with the request to invoice and ship the Products to FJB - Mendel Bistritzky and Steve Bistritzky (1) executed guaranty agreements ("Guaranty Agreements") with it, (2) guaranteed that they would be responsible for the liabilities of the Toobro Entities, and (3) agreed that any action brought by the plaintiff concerning the Guaranty Agreements may be commenced in New Jersey ("Forum Clauses"). (Compl. at 10; id., Ex. E & F, Guaranty Agreements.)
AN ACTION is "related to" bankruptcy if "the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy". Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984) (emphasis omitted); see In re Combustion Eng'g, 391 F.3d 190, 226 (3d Cir. 2004).*fn1 To be "related to" bankruptcy, the action need not be against the debtor or the debtor's property. Pacor, Inc., 743 F.2d at 994. An "action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate". Id.; see also In re Combustion Eng'g, 391 F.3d at 226.
PURSUANT TO 28 U.S.C. § ("Section") 1412, a district court "may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties". 28 U.S.C. § 1412; see 28 U.S.C. § 1409(a) (stating "proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending"); Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1212 (3d Cir. 1991) (instructing that proper method for transferring related action to bankruptcy court already hearing bankruptcy case is to change venue from non-bankruptcy forum to bankruptcy forum under Section 1412, and then refer related action to bankruptcy court); Abrams v. Gen. Nutrition Cos., No. 06-1820, 2006 WL 2739642, at *8 (D.N.J. Sept. 25, 2006) (finding Section 1412 applies to transfer of action "related to" bankruptcy case). In general, the forum where the bankruptcy case is pending is the proper venue for all actions "related to" that bankruptcy case. Abrams, 2006 WL 2739642, at *9; see Hohl v. Bastian, 279 B.R. 165, 177 (W.D. Pa. 2002); Krystal Cadillac-Oldsmobile-GMC Truck, v. Gen. Motors Corp., 232 B.R. 622, 627 (E.D. Pa. 1999).
THIS ACTION is related to the Bankruptcy Case because an outcome here could affect the estate being administered, as the plaintiff alleges that (1) the Toobro Entities and FJB are intertwined and controlled by Mendel Bistritzky and Steve Bistritzky, and (2) the Toobro Entities, Mendel Bistritzky, and Steve Bistritzky should pay for the Products. See Pacor, Inc., 743 F.2d at 994. Also, the Bankruptcy Case is being actively litigated. See Docket, In re FJB LLC, No. 11-11060 (Bankr. S.D.N.Y.). Thus, the interests of justice and the convenience of the parties favor a transfer of venue, as the New York Bankruptcy Court will be better positioned to determine how and to what extent the plaintiff's claims will affect (1) the bankruptcy estate, (2) the estate's efficient administration, and (3) asset distribution. See 28 U.S.C. § 1412; Abrams, 2006 WL 2739642, at *9; Hohl, 279 B.R. at 178.
THE DEFENDANTS may be precluded from considering a transfer of venue due to the Forum Clauses, but the Court is not. See Creekridge Capital v. La. Hosp. Ctr., 410 B.R. 623, 630-31 (D. Minn. 2009) (transferring action to Louisiana where bankruptcy case was pending, even though guaranty agreement set proper venue in Minnesota); Indep. Stationers v. Vaughn, No. 99-127, 2000 WL 1449854, at *7-8 (S.D. Ind. Jan. 3, 2000) (transferring action to Oklahoma, even though agreement set proper venue in Indiana).
THE COURT intends to transfer this action to the Southern District of New York immediately, as time is of the essence in view of the active Bankruptcy Case. For good cause appearing, the Court will issue an appropriate order.*fn2