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Prm Kauai, LLC v. Gibson

United States District Court, D. Hawaii

May 18, 2016

PRM KAUAI, LLC and PETER R. MORRIS, Plaintiffs,
v.
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.

         The 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.

         Because 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.[1]

         BACKGROUND

         The 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.

         I. Underlying Loan Transaction

         In June 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.

         II. Bankruptcy Proceedings

         Specifically, 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”).

         On 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 6.2(d) provides:

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.

         On 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.

         III. District Court Proceedings ...


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