United States District Court, D. Hawaii
PRM KAUAI, LLC and PETER R. MORRIS, Plaintiffs,
JAMES GIBSON and BANCENTRE CORP., Defendants. and PAHIO MARKETING, INC., Intervenor/Defendant.
ORDER GRANTING MOTION TO DISMISS AND DENYING AS MOOT
MOTION FOR SUMMARY JUDGMENT
Derrick K. Watson United States District Judge.
parties agree that diversity and federal question
jurisdiction, the most common bases cited for subject matter
jurisdiction before this Court, do not exist in this case.
See 28 U.S.C. §§ 1331-1332. Plaintiffs
rely instead solely on 28 U.S.C. § 1334(b), asserting
that this matter is “related to” bankruptcy
proceedings initiated by Plaintiff Morris and by PRM Realty
Group, an entity controlled by Morris, in federal bankruptcy
court in the Northern District of Texas.
Plaintiffs’ “related to” contentions have
been foreclosed by the Ninth Circuit in In re Pegasus
Gold Corp., 394 F.3d 1189, 1194 (9th Cir. 2005), leaving
this Court without a jurisdictional basis to proceed, the
Court GRANTS Pahio Marketing, Inc.’s Motion to Dismiss
for Lack of Subject Matter Jurisdiction (Dkt. No. 141).
Defendants’ Motion for Summary Judgment (Dkt. No. 130)
is DENIED AS MOOT.
factual background underlying this case was laid out in
detail in this Court’s July 23, 2015 Order (Dkt. No.
92) and need not be recounted here in full. Rather, the Court
will summarize the factual and procedural background relevant
to the threshold jurisdictional issue.
Underlying Loan Transaction
2002, PRM Kauai and Pahio formed KBV II for the purpose of
developing the Kauai Beach Villas timeshare project on a
33-acre parcel on Kauai. FAC ¶¶ 14, 17. To
facilitate the development, on or about December 12, 2005,
Bancentre loaned KBV II $4.2 million, which was personally
guaranteed by Morris. Id. ¶¶ 33, 35,
50-51. KBV II subsequently defaulted on the loan. Dkt. No.
51-1 at 11. Preempting a potential foreclosure action, Morris
and PRM Realty Group, LLC (“PRM Realty”), PRM
Kauai’s parent, filed petitions for relief under the
bankruptcy code. Dkt. No. 51-1 at 11.
in January 2010, both Morris and PRM Realty filed petitions
for bankruptcy in the Northern District of Texas. See In
re Peter Morris, No. 10-30240-HDH-11 (Bankr. N.D. Tex.)
(“Morris Bankruptcy Action”) and In re PRM
Realty Group, LLC, No. 10-30241-HDH-11 (Bankr. N.D.
Tex.) (“PRM Realty Bankruptcy Action”).
February 20, 2013, in the bankruptcy proceeding, PRM Realty
and Morris filed their Second Amended Joint Plan of
Reorganization (the “Plan”). See Dkt.
No. 138-6. Section 6.2 of the Plan concerns PRM
Realty’s Plan Assets. Id. at 15. Section
PRM Realty will assist in the sale, refinancing and/or
development of the Kauai Beach Villas Property and provide
funding for PRM Kauai’s share of the carrying costs of
the Kauai Beach Villas Property. Following payment of its
share of the first lien mortgage and other secured creditors,
revenues received by PRM Realty pursuant to its ownership in
PRM Kauai will be contributed to the Plan as Plan Funds.
Id. at 15-16.
February 21, 2013, the Bankruptcy Court entered its Findings
of Fact, Conclusions of Law and Order under 11 U.S.C. §
1129 Confirming Debtors’ Second Amended Joint Plan of
Reorganization (“Order Confirming Plan”).
See Dkt. No. 138-7.
District Court Proceedings ...