2009 Judge Gambardella - Opinions
Judge Rosemary Gambardella -- Opinions signed in 2009
The debtor in this case provided telecommunication services but became insolvent after a fairly short period of conducting operations. The Trustee’s complaint alleged, among other things, that various parties, including insiders and leasing companies, participated in a “Ponzi Scheme” that resulted in fraudulent conveyances and fraudulent transfers in violation of 11 U.S.C.S. Section 544 and 548. The leasing companies argued that the Trustee’s complaint failed to comply with Fed. R. Civ. P. 8 and 9(b). They also argued that even if they had engaged in the wrongdoing alleged by the Trustee, the doctrine of in pari delicto provided them with an affirmative defense to the adversary proceeding. The court denied the motions to dismiss the adversary complaint, but directed the Trustee to maned the complaint to add more specific facts. The court noted that a resolution to the question whether the Trustee could employ the “Ponzi Scheme” route to establish the intent prong for allegations in the complaint required findings of facts exceeding the scope of the motions to dismiss. The court similarly found that dismissal of certain counts based on the in pari delicto defense was premature and required further discovery. Lastly, the Court also recognized the tort of deepening insolvency and refused to dismiss the corresponding Count in the Trustee’s complaint.
The court denied the motions to dismiss but directed the Trustee to file and serve an amended complaint in compliance with the court’s opinion within 30 days from the date of the opinion.