Craig Jalbert, trustee, o/b/o German Pellets Louisiana, L.L.C. and Louisiana Pellets, Inc. v. Peter Leibold et al.

At a glance

Parties

Craig Jalbert, Chapter 11 liquidating trustee for German Pellets Louisiana, L.L.C. and Louisiana Pellets, Inc., v. Peter Leibold, Anna Kathrin Leibold, Michael Leibold, Meranda Hyman, GP GmbH and VOV GmbH

Case no.

Civil Action 1:18-CV-00788 (W.D. La., Alexandria Division)

Court

U.S. District Court, Western District of Louisiana. Report and Recommendation of Magistrate Judge Joseph H.L. Perez-Montes; Judge Drell presiding

Treaty

New York Convention (9 U.S.C. §§ 201 et seq.), one of the grounds given for removal

Sector

Wood pellets; directors' and officers' insurance; bankruptcy

Outcome

The Magistrate Judge recommended remanding the case to the Louisiana 28th Judicial District Court in LaSalle Parish because the removal was procedurally defective, and recommended denying the motions to dismiss as moot. The published documents do not show the District Judge's final ruling.

The dispute

German Pellets Louisiana, L.L.C. (GPLA) and Louisiana Pellets, Inc. (LP) defaulted to their bondholders in 2016 and filed for Chapter 11. Their parent, GP GmbH, filed for bankruptcy in Germany. Craig Jalbert, the liquidating trustee, sued in Louisiana state court. He alleged that former officers and directors (the Leibolds) and Meranda Hyman, the most senior accountant, breached their fiduciary duties and wasted corporate assets by transferring millions of dollars to GP GmbH for no consideration. He also sought an injunction to stop VOV, a Cologne insurance association representing the D&O underwriters, from paying its policy limits to GP GmbH. VOV removed the case to federal court on three grounds: 9 U.S.C. §§ 203 and 205 (an arbitration agreement falling under the New York Convention), bankruptcy "related to" jurisdiction, and diversity. Hyman did not consent to removal, and the trustee moved to remand.

Key holdings

1. GP GmbH's consent to removal was not required because it was never served (28 U.S.C. § 1446(b)(2)(A)). p. 3
2. Under the rule of unanimity, every served defendant must give timely written consent to removal. Hyman had voluntarily appeared by answering in state court, and she did not consent to the removal of 13 June 2018. pp. 4–5
3. Hyman was not improperly joined. Taking the allegations in the light most favorable to the plaintiff, the trustee adequately alleged breach of fiduciary duty and corporate waste by her. The Magistrate Judge relied on her role in processing invoices and the transfers, the fact that she had not denied being an officer or manager of LP, Delaware law treating a chief accounting officer as an officer, and the VOV policy's cover for executive employees and senior accounting officers. The defendants did not show that there was no possibility of recovery against her. pp. 7–10
4. Because removal was procedurally defective, the Magistrate Judge recommended granting the motion to remand and denying the defendants' motions to dismiss as moot. The report does not separately analyse the New York Convention ground for removal. p. 10

Procedural history

1. 2016GPLA and LP default to their bondholders and file Chapter 11 petitions in the U.S. Bankruptcy Court for the Western District of Louisiana. Jalbert is later named trustee under the confirmed joint plan of liquidation.
2. 13 June 2018VOV removes the trustee's state-court action to federal court, relying on 9 U.S.C. §§ 203/205, 28 U.S.C. § 1334 and 28 U.S.C. § 1332.
3. 13 February 2019Magistrate Judge's Report and Recommendation: grant the motion to remand to the Louisiana 28th Judicial District Court and deny the motions to dismiss as moot.

Tribunal, counsel and experts

Decided by

• Joseph H.L. Perez-Montes Judge, U.S. District Court, Western District of Louisiana (Magistrate Judge; author of the Report and Recommendation)

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Keywords

• removal
• remand
• rule of unanimity
• improper joinder
• fraudulent joinder
• New York Convention
• 9 U.S.C. § 205
• Chapter 11 liquidating trustee
• breach of fiduciary duty
• corporate waste
• directors and officers insurance
• German Pellets
• VOV
• wood pellets
• diversity jurisdiction
• 28 U.S.C. § 1446

Summary generated with AI from the published documents — refer to the award for the authoritative text.