# Appendix — Rowland v. Goodson > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1391%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1998 - **Citation:** 524 U.S. 933 ## Text No. : Supreme Cour: - — : wrne 2 ¢ 2888 APR 1 41998 Suprene Court of the United States: OCTOBER TERM, 1997 $$$ In Re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors $$ $$ gg ——_—__—_ DAVID J. ROWLAND, JEREMY E. JAMES, DAVID L. HUDD and DEREK J. MORAN, dott ror Petitioner ‘ —y\y oo BERNARD GOODSON, FORD ELSAESSER, LOWELL FINLEY and JAY J. MILLER, as Trustees, > } Kespondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUT APPENDIX TO PETITION FOR A WRIT OF CERTIORARI Lawrence A. Blatte Counsel of Record James K. Landau ROSEN & READE, LLP 757 Third Avenue New York, New York 10017 (212) 303-9000 ( ‘oun sel fe a Pertti wrers David J. Rowland, Jeremy E. James, David L. Hudd and Derek J. Moran ho INDEX TO APPENDIX P*.GE Amended Opinion of the Court of Appeals for the Ninth Circnit, dated January 14, 1998, officially reported at 133 F.3d 1141 Pee Gpee: SIG vu is v5 s0 oka pidad een bak beac seb eees la Opinion of the Court of Appeals for the Ninth Ciscunt, filed November 3S, 0997... 6... ccc ineeess 15a Order of the Court of Appeals for the Ninth Circuit Granting Permission to Appeal to Petitioners David J. Rowland, Jeremy E. James, David L. Hudd and Derek J. Moran, filed October 11, 1996....... 27a Order of the Court of Appeals for the Ninth Circuit Granting Permission to Appeal to Petitioner Inoco Plc, filed October 11, 1996...... 29a Order of the United States District Court for the District of Idaho, filed September 16, 1996....... 31a Memorandum Decision and Order of the United States District Court for the District of Idaho, NE FAMINE. Py STG Ss seine ous heetins fawenval 34a Order of the United States District Court for the District of Idaho Consolidating Appeals, ga BL ee: MPR te pun Pie ere 58a Order of the United States Bankruptcy Court for the District of Idaho, dated January 25, 1996 ..... 62a Order of the United States District Court for the District of Idaho, dated December 11, 1995....... 66a PAGE 10. Second Amended Order of the United States Bankruptcy Court for the District of Idaho, Gates Peovewiyed 6, Tele va so cn xckasidenbscns canes: 69a 11. Amended Order of the United States Bankruptcy Court for the District of Idaho, dated Gctever:G, FOF cvs pct asserewskeen an 73a 2. Order of the United States Bankruptcy Court for the District of Idaho, dated October 2, 1995 ...... 76a 13. Memorandum of Decision of the United States Bankruptcy Court for the District of Idaho, Gated SOMUCMDeS CP, BFRe ok rk ee dseserwsndcssecas 79a 14. Former Bankruptcy Rule 7004 .................... 169a 15. Revised Bankruptcy Rule 7004.................... 174a 16. 1996 U.S. Order 96-14 (Order of the Supreme Court of the United States Adopting and Amending Rules, April 23, 1996) ................. 179a la UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 96-36062 D.C. No. CV-96-00010-EJL \ In re: PINTLAR CORPORATION; GULF USA CORP., Debtors. BERNARD GOODSON; FORD ELSAESSAR; LOWELL FINLEY; and JAY J. MILLER, as TRUSTEES, Plaintiffs-Appellees, —y\V ene Davip J. ROWLAND; JEREMY E. JAMES; DAVID L. HUDD; DEREK J. MORAN. Defendants-Appellants. 2a No. 96-36063 D.C. No. CV-96-00011-EJL In re: PINTLAR CORPORATION: GULF USA CORP., Debtors. BERNARD GOODSON; FORD ELSAESSAR;: LOWELL FINLEY; and JAY J. MILLER, as TRUSTEES, Plaintiffs-Appellees, DAVID J. ROWLAND; JEREMY E. JAMES; DAVID L. HUDD; DEREK J. MORAN. Defendants, —and— INOCO PLC, a United Kingdom corporation, Defendant-Appellant. AMENDED OPINION Appeals from the United States District Court for the District of Idaho Edward J. Lodge, Chief Judge, Presiding Argued and Submitted September 9, 1997 (No. 96-36062) Submitted on the Briefs September 9, 1997* (No. 96-36063) Seattle, Washington ys The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a) and 9th Cir. R. 34-4. 3a Filed November 3, 1997 Amended January 14, 1998 Before: Eugene A. Wright and Mary M. Schroeder, Circuit Judges, and William W Schwarzer, * Senior District Judge. Opinion by Judge Schwarzer SUMMARY Bankruptcy/Litigation and Procedure The court of appeals affirmed a judgment of the district court. The court held that a new bankruptcy rule of personal jurisdiction over foreign residents applies to an action pend- ing on its effective date if it is “just and practicable.” Appellee Bernard Goodson and other trustees of a litigation trust brought a bankruptcy adversary proceeding in 1994 against appellants Inoco Plc, David Rowland, Jeremy James, David Hudd, and Derek Moran (Rowland Directors) to recover assets of debtors Gulf USA Corporation and its sub- sidiary, Pintlar Corporation. The complaint alleged that the Rowland Directors and Inoco had looted and wasted Gulf’s assets. The Rowland Directors were foreign citizens who resided outside the United States. Inoco is a publicly traded United Kingdom corporation headquartered in England. The alleged liabilities arose out of Pintlar’s former ownership of the Bunker Hill Mine in Idaho, whose operation caused environ- mental damage. Other claims related to medical and pension benefits of retired Idaho employees. The creditors owning these claims were the beneficiaries of the litigation trust. * Honorable William W Schwarzer, Senior United States District Judge for the Northern District of California, sitting by designation. 4a The bankruptcy court granted a defense motion to dismiss certain claims. On appeal, the district court ruled that the Idaho contacts of directors Rowland, Hudd and James were sufficient to find that they purposefully availed themselves of the Idaho forum. As to Moran and Inoco, the court determined that allegations of conspiracy were sufficient to satisfy the “purposeful availment” test. The court concluded that the exercise of specific personal jurisdiction under the Idaho longarm statute would not be unreasonable, and held them subject to personal jurisdiction on all the trustees’ claims except one. On appeal, the trustees asserted that personal jurisdiction over the defendatts was provided by Bankruptcy Rule 7004(f), which became effective in 1996 while the adversary action was pending. The Rowland Directors and Inoco con- tended that to apply Rule 7004(f) to them would prejudicially revive Claims that were otherwise barred by the prior rule, which did not authorize personal jurisdiction over nonresi- dents on the basis of national contacts, in the absence of statutory authority. If the exercise of jurisdiction is consistent with the Constitution and the laws of the United States, personal juris- diction may be obtained over nonresidents sued in proceed- ings under the Bankruptcy Code who are served in conformity with Rule 7004(a) or the applicable subdivision of Fed. R. Civ. P. 4. The threshold question was whether the new Rule 7004(f) could be applied to an action commenced in 1994. The Supreme Court’s order adopting the amended rules states that insofar as just and practicable, they govern all pending bankruptcy proceedings. Applying the rule to this action was plainly practicable. Jurisdictional statutes speak to the power of the court rather than to the rights or obligations of the parties. The pre- sumption against retroactive application of new legislation to pending cases does not apply to rules conferring or with- drawing jurisdiction. ws a The argument that the defendants could not reasonably have expected being haled into court in Idaho was unpersuasive, since they had at least to reckon with application of the Idaho longarm statute to their dealings affecting Idaho creditors. None of the defendants offered facts to show that they would have behaved differently had they expected Rule 7004(f) to apply, or that they were otherwise prejudiced. Also weighing against their arguments was the policy favoring consolidation in a common forum of all litigation relating to a bankruptcy. The complaint was a civil proceeding arising under the Bankruptcy Code. The defendants were served in accordance with Rule 7004. Rowland contended that he was not properly served under pre-amendment Rule 7004(e), which states that the summons and complaint may be served as provided in Rule 4(d)(1) and (d)(3) for service in a foreign country. Row- land was served pursuant to Rule 4(i), which is made appli- cable to adversary proceedings in bankruptcy under Rule 7004(a). As it was in 1990, Rule 4(i) stated that a defendant in a foreign country could be served in any one of five spec- ified methods. The district court correctly held the service under Rule 4(i) to be sufficient. Its ruling was consistent with that of other court’s, finding Rule 7004(e) to be permissive, not mandatory. The exercise of jurisdiction was consistent with the Con- stitution and laws of the United States. The defendants reached out to Gulf in the United States and forged a con- tinuing relationship with it. The alleged looting foreseeably caused Gulf injury in the United States. The alleged injuries arose out of the defendants’ purposeful direction of their activities toward the United States. As part of the conspiracy to loot Gulf, Inoco purposefully injected itself into the United States. 6a COUNSEL Lawrence E. Carnevale, Carter, Ledyard & Milburn, New York, New York; John T. Mitchell, Mitchell & Mitchell, Coeur D’ Alene, Idaho, for the defendants-appellants. Richard W. Reinthaler, New York, New York; Dianne Coffino, New York, New York; Givens, Pursley & Huntley, Boise, Idaho, for the plaintiffs-appellees. OPINION SCHWARZER, Senior District Judge: We must decide whether the bankruptcy court had personal jurisdiction over the defendants in this adversary proceeding under Fed. R. Bankr. P. 7004(f) (“Rule 7004(f)”), as amended subsequent to the commencement of this action. I. Procedural Background Plaintiffs, the trustees (the “Trustees”) of a litigation trust (the “Litigation Trust”), brought this adversary proceeding against defendants David J. Rowland, Jeremy E. James, David L. Hudd, Derek J. Moran (the “Rowland Directors”) and Inoco Ple (“Inoco”) to recover certain assets belonging to debtors Gulf USA Corporation (“Gulf”) and its subsidiary, Pintlar Corporation (“Pintlar”). The amended complaint alleged counts for fraudulent conveyance under Bankruptcy Code §§ 544, 548 and 550, and for misrepresentation, breach of fiduciary duties, civil conspiracy, breach of contract and violation of Delaware corporation law. The bankruptcy court granted defendants’ motion to dismiss count II (corporate waste and mismanagement) for lack of personal jurisdiction but denied the motion with respect to the other counts. On interlocutory appeal, the district court affirmed the bankruptcy court’s order as to all counts except count VI (breach of contract), dismissing that count, and count II (cor- 7a porate waste and mismanagement), reinstating that count. The district court certified its order for interlocutory appeal and we granted the Rowland Directors and Inoco permission to appeal under 28 U.S.C. § 1292(b); the Trustees do not appeal the dismissal of the breach of contract count. Il. Factual Background The Rowland Directors are-foreign citizens who reside out- side of the United States. Inoco is a publicly traded United Kingdom corporation, headquartered in England. At all rel- evant times, the Rowland Directors were officers of Inoco and Rowland, through intermediaries, owned a controlling inter- est in Inoco. The Rowland Directors acquired control of Gulf in 1989 when Inoco, through a subsidiary, purchased 34% of Gulf’s outstanding shares. At the time, Gulf had assets exceeding $177 million but it also had potentially large lia- bilities. These liabilities arose out of the former ownership of the Bunker Hill mine by Gulf’s subsidiary, Pintlar. They largely involve claims for environmental damage caused by the Idaho operations of Bunker Hill and claims for medical and pension benefits by its retired Idaho employees. The cred- itors holding these claims are beneficiaries of the Litigation Trust. In their complaint, the Trustees allege that the Rowland Directors and Inoco, after taking control of Gulf, engaged in a course of conduct to loot and waste the assets of the com- pany. They allege that the defendants entered into a series of transactions by which they transferred Gulf’s assets into their control. When creditors became concerned over Gulf’s abil- ity to meet its obligations, Rowland sent a letter to former employees of Bunker Hill in Idaho, assuring them that Gulf would meet its obligations for employee benefits and envi- ronmental clean-up, assurances alleged to be false and fraud- ulent. In 1991, the Rowland Directors sold Inoco and their shares in Gulf. In 1993, involuntary bankruptcy petitions were filed against Gulf and Pintlar in the District of Idaho. This adversary proceeding followed. In it the Trustees seek to 8a recover for the benefit of the Litigation Trust the assets of Gulf and Pintlar, which they claim were looted by defendants. The district court held that the Idaho contacts of Rowland, Hudd and James were sufficient to find that they purposefully availed themselves of the Idaho forum. With respect to Moran and Inoco, the court found that, although they were not alleged to have taken actions directed at Idaho, the allegations of conspiracy were sufficient to satisfy the purposeful avail- ment test. Parsing the controlling factors, the court concluded that the exercise of specific personal jurisdiction over the defendants under the Idaho long-arm statute would not be unreasonable and held them subject to personal jurisdiction on all claims other than the contract claim. We affirm, but on a different ground. Ill. Standard of Review Plaintiffs have the burden of establishing personal juris- diction but need to make only a prima facie showing of juris- dictional facts to avoid a motion to dismiss. Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). We review the record in the district court de novo to determine whether plaintiffs have established a prima facie case for personal jurisdiction over defendants. Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Factual findings are reviewed for clear error. Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 78 n.2 (9th Cir. 1987). All factual disputes are resolved in favor of the Trustees. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987). IV. Personal Jurisdiction under Rule 7004(f) A. Application of the Rule to the Pending Action In 1994, when the Trustees commenced this action, Rule 7004 did not authorize personal jurisdiction over nonresidents on the basis of national contacts. The rule was amended, 9a effective December 1, 1996,' to add subsection (f) which provides; (f) Personal Jurisdiction If the exercise of jurisdiction is consistent with the Constitution and the laws of the United States, serving a summons or filing a waiver of service in accordance with this rule or the subdivisions of Rule 4 F.R.Civ.P. made applicable by these rules is effective to establish per- sonal jurisdiction over the person or any defendant with respect to a case under the Code, ora civil proceeding arising under the Code, or arising in or related to a case under the Code. Fed. R. Bankr. P. 7004(f). Thus, under the new rule, personal jurisdiction may be obtained in proceedings under the Bankruptcy Code over nonresidents who are served in con- formity with Rule 7004(a) or the applicable subdivisions of Fed. R. Civ. P. 4 (“Civil Rule 4”) so long as the exercise of jurisdiction is consistent with the Constitution. See Fed. R. Bankr. P. 7004(f) and advisory committee notes (1996 Amendments) (“{SJervice or filing a waiver of service in accordance with this rule or the applicable subdivisions of F.R.Civ.P. 4 is sufficient to establish personal jurisdiction over the defendant.”). The threshold question is whether the new Rule 7004(f) may be applied to an action commenced in 1994. The Supreme Court’s order adopting the amended rules states that they “shall govern all proceedings. . . thereafter commenced and, insofar as just and practicable, all proceedings in bankruptcy then pending.” Communication from the Chief Justice. Amendments to the Federal Rules of Bankruptcy Pro- cedure that Have Been Adopted by the Court, at 2, Apr. 24, 1996 (emphasis added). Application of the rule to this action therefore turns on whether it would be just and practicable. ' The district court took note of the forthcoming amendment but its order was issued before the effective date of the amendment. 10a While in some circumstances we would remand so that the district court may exercise its discretion, we see no need to do so here. Remand is not necessary where the issue has been fully briefed on appeal, the record is clear and remand would “impose needless additional expense and delay. . . .” Foster v. Skinner, 70 F.3d 1084, 1089 (9th Cir. 1995) (citing Roundtree v. United States, 40 F.3d 1036, 1040 (9th Cir. 1994)); Hoffman v. GMAC, 814 F.2d 1385, 1387 (9th Cir. 1987). This appeal is interlocutory and is limited to the issue of personal jurisdiction. Both sides have thoroughly briefed the issue, and applying the rule to this action 1s plainly practi- cable. Defendants argue, however, that to do so would be prejudicial because the claims against them would otherwise be barred by the prior rule. Their reliance on Chenault v. USPS, 37 F.3d 535 (9th Cir. 1994), is misplaced. We held there that a newly enacted statute that shortens the applicable statute of limitations may not be applied retroactively to bar a plaintiff’s claim that might otherwise be brought “because to do so would be manifestly unjust.” /d. at 539. This clearly is not such a case. As the Supreme Court stated in Landgraf v. USI Film Products, 511 U.S. 244, 274 (1994), “[wJe have regularly applied intervening statutes conferring or ousting jurisdiction, whether or not jurisdiction lay when the under- lying conduct occurred or when the suit was filed. . . Present law normally governs in such situations because juris- dictional statutes ‘speak to the power of the court rather than to the rights or obligations of the parties.’ ” See also Duldu- lao v. INS, 90 F.3d 396, 399 (9th Cir. 1996) (stating that “the ‘presumption against retroactive application of new legisla- tion to pending cases. . . does not apply to rules conferring or withdrawing jurisdiction.’ ” (citation omitted)); Arrowhead Estates Dev. Co. v. United States Trustee, 42 F.3d 1306, 1311 (9th Cir. 1994) (same); Friel v. Cessna Aircraft Co., 751 F.2d 1037, 1039 (9th Cir. 1985) (stating that “when a statute is addressed to remedies or procedures and does not otherwise alter substantive rights, it will be applied to pending cases”); lla see also Driscoll v. Gebert, 458 F.2d 421 (9th Cir. 1972) (holding that newly enacted California long-arm statute applied to previously filed pending action). Defendants’ argument that they could not reasonably have expected being haled into court in Idaho is unpersuasive since they had at least to reckon with application of the Idaho long- arm statute to their dealings affecting Idaho creditors. None of the defendants offer facts to show that they would have behaved differently had they expected Rule 7004(f) to apply or that they have been otherwise prejudiced.” See McGee v. International Life Ins. Co., 355 U.S. 220, 224 (1957) (stating that defendant “had no vested right not to be sued in Cali- fornia”). Moreover, weighing against defendants’ arguments is the policy favoring consolidation in a common forum of all litigation relating to a bankruptcy in the interest of economy and efficiency—as opposed to having the litigation dispersed across two continents. B. Applying Rule 7004(f) Defendants contend that even if Rule 7004(f) applies, per- sonal jurisdiction cannot be exercised until the court deter- mines that the defendants are “not subject to the jurisdiction of the courts of general jurisdiction of any state.” Fed. R. Civ. P. 4(k)(2). Defendants’ argument rests on the assumption that jurisdiction under Rule 7004(f) is subject to this limitation found in Civil Rule 4(k)(2). For support they rely on the introductory sentence of the advisory committee notes to the 1996 Amendment of Rule 7004 which states, “The new sub- division (f) is consistent with the 1993 amendments to FR Civ.P. 4(k)(2).” Fed. R. Bankr. P. 7004 advisory com- mittee notes (1996 Amendments). In their Petitions for Rehearing, appellants argue that they did not have an opportunity to offer facts to show “that they would have behaved differently had they expected amended Rule 7004(f) to apply.” It is difficult to see how Rule 7004(f) might have induced them into behavior that the long-arm statute did not. The argument, in any event, is not persuasive in light of their failure to give any indication in their briefs or petitions what facts they might have offered for this purpose. 12a The plain language of Rule 7004(f) refutes the argument. It omits the critical language of Civil Rule 4(k)(2) that limits application to “any defendant who is not subject to the juris- diction of the courts of general jurisdiction of any state.” That the rule is not cloned from Civil Rule 4(k)(2) is shown, as well, by other differences in the text of the two rules. First, Rule 7004 cross-references only to those subdivisions of Civil Rule 4 “made applicable by these rules” and that does not include Rule 4(k)(2). See Fed. R. Bankr. P. 7004(a) (“Rule 4(a), (b), (c)(1), (d)(1), (e)-G), (1), and (m) F.R.Civ.P. applies in adversary proceedings.”). Second, Rule 7004(f)’s appli- cation is narrower than Civil Rule 4; Rule 7004(f) is limited to cases or civil proceedings arising or related to a case under the Bankruptcy Code. Finally, the advisory committee state- ment relied on by defendant is further explained by the sen- tence immediately following which states, “[Rule 7004(f)] clarifies that service or filing a waiver of service in accor- dance with this rule or the applicable subdivisions of F.R.Civ.P. 4 is sufficient to establish personal jurisdiction over the defendant.” Fed. R. Bankr. P. 7004(f) advisory com- mittee notes. That statement confirms that the drafters’ pur- pose was to incorporate the service provisions of the amended Civil Rule 4, not its limitation on personal jurisdiction.* We therefore decline to import into Rule 7004(f) the “not subject to the jurisdiction. . . of any state” limitation of Civil Rule 4(k)(2). Applying Rule 7004(f) as written, all of the requisite ele- ments to support the exercise of jurisdiction are present. The complaint, alleging claims under 11 U.S.C. §§ 544, 548, and 550, is a “civil proceeding arising under the [Bankruptcy] Code.” Fed. R. Bankr. P. 7004(f). The defendants were served “in accordance with [Rule 7004] or the subdivisions of Rule 4 F.R.Civ.P. made appli- This makes Rule 7004(f) consistent with the expansive juris- dictional reach of the bankruptcy courts, which are empowered to exer- cise jurisdiction over a debtor’s property wherever located. See 28 U.S.C. § 1334(e). 13a cable by [Rule 7004].” Fed. R. Bankr. P. 7004(f). Rowland contends he was not properly served under pre-amendment Rule 7004(c) which states, “[t]he summons and complaint _ may be served as provided in [Civil Rule] 4(d)(1) and (d)(3)” for service in a foreign country. Fed. R. Bankr. P. 7004(e) (emphasis added). Rowland was served instead pur- suant to Civil Rule 4(i) which is made applicable to adversary proceedings in bankruptcy under Rule 7004(a). See Fed. R. Bankr. P. 7004(a). Civil Rule 4(i), as it was in 1990, contained “Alternative Provisions for Service in a Foreign Country,” and stated that a defendant in a foreign country may be served by any one of five specified methods. The district court cor- rectly held service under Rule 4(1) to be sufficient. Its ruling was consistent with that of other courts, finding Rule 7004(e) to be permissive, not mandatory. See Schwinn Plan. Comm. v. AFS Cycle & Co., 190 B.R. 599, 608 (Bankr. N.D. Ill. 1995); Official Comm. of Unsecured Creditors of Southold Dev. Corp. v Mittemyer, 148 B.R. 726, 728 (Bankr. E.D.N.Y. 1992): In re Crysen/Montenay Energy Co. v. E & C Trading Ltd., 166 B.R. 546, 548-49 (Bankr. S.D.N.Y. 1994). Finally, “the exercise of jurisdiction is consistent with the Constitution and the laws of the United States.” Fed. R. Bankr. P. 7004(f). While the Rowland Directors do not contest the constitutional basis for personal jurisdiction, Inoco con- tends that it lacked sufficient contacts with the United States. The bankruptcy judge’s findings suffice to establish defen- dants’ contacts with the United States: Thus. these alien defendants reached out to Gulf in the United States and forged a continuing relationship with it. The alleged looting of Gulf foreseeably caused Gulf injury in the United States where it was located... . [T]he alleged injures arise out of the defendants’ pur- poseful direction of their activities toward the United Stawes. .. s l4a Inoco’s sale of property located in Texas and New York to Gulf was activity directed to the United States. . . As part of the conspiracy to loot Gulf, Inoco took control of a United States corporation. . . . Inoco purposefully interjected itself into the United States. V. Conclusion The order of the district court is AFFIRMED and the matter is REMANDED for further proceedings. 15a UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 96-36062 D.C. No. CV-96-00010-EJL In re: PINTLAR CORPORATION; GULF USA CorpP., Debtors. BERNARD GOODSON; FORD ELSAESSAR; LOWELL FINLEY; and JAY J. MILLER, as TRUSTEES, Plaintiffs-Appellees, —_VY—_— DAVID J. ROWLAND; JEREMY E. JAMES; DAvID L. HUDD; DEREK J. MORAN, Defendants-Appellants. No. 96-36063 D.C. No. CV-96-00011-EJL In re: PINTLAR CORPORATION; GULF USA CorpP., Debtors. l6a BERNARD GOODSON; FORD ELSAESSAR: LOWELL FINLEY; and JAY J. MILLER, as TRUSTEES, Plaintiffs-Appellees, pumas, * Speen DAVID J. ROWLAND; JEREMY E. JAMES; DAVID L. HUDD; DEREK J. MORAN, Defendants, —and— INOCO PLC, a United Kingdom corporation, Defendant-Appellant. OPINION Appeals from the United States District Court for the District of Idaho Edward J. Lodge, Chief Judge, Presiding Argued and Submitted September 9, 1997 (No. 96-36062) Submitted on the Briefs September 9, 1997* (No. 96-36063) Seattle, Washington Filed November 3, 1997 * The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a) and 9th Cir. R. 34-4. Before: Eugene A. Wright and Mary M. Schroeder, Circuit Judges, and William W Schwarzer,* Senior District Judge. Opinion by Judge Schwarzer SUMMARY The summary, which does not constitute a part of the opin- ion of the court, is copyrighted © 1994 by Barclays Law Pub- lishers. Bankruptcy/Litigation and Procedure The court of appeals affirmed an order of the district court. The court held that a new bankruptcy rule of personal juris- diction over foreign residents applies to an action pending on its effective date if its is “just and practicable.” Appellee Bernard Goodson and other trustees of a litigation trust brought a bankruptcy adversary proceeding in 1994 against appellants Inoco Plc, David Rowland, Jeremy James, David Hudd, and Derek Moran (Rowland Directors) to recover assets of debtors Gulf USA Corporation and its sub- sidiary, Pintlar Corporation. The complaint alleged that the Rowland Directors and Inoco had looted and wasted the assets of the company. The Rowland Directors were foreign citizens who resided outside the United States. Inoco is a publicly traded United * Honorable William W Schwarzer, Senior United States District Judge for the Northern District of California, sitting by designation. 18a Kingdom corporation headquarted in England. Their alleged liabilities arose out of Pintlar’s former ownership of the Bunker Hill Mine in Idaho, whose operation caused environ- mental damage. Other claims related to medical and pension benefits of retired Idaho employees. The creditors owning these claims were the beneficiaries of the litigation trust. The bankruptcy court granted a defense motion to dismiss certain claims. On appeal, the district court ruled that the Idaho contacts of directors Rowland, Hudd and James were sufficient to find that they purposefully availed themselves of the Idaho forum. As to Moran and Inoco, the court determined that allegations of conspiracy were sufficient to satisfy the purposeful availment test. The court concluded that the exer- cise of specific personal jurisdiction under the Idaho longarm statute would not be unreasonable, and held them subject to personal jurisdiction on all the trustees’ claims except one. On appeal, the trustees asserted that personal jurisdiction over the defendants was provided by Bankruptcy Rule 7004(f), which became effective in 1996, while the adversary action was pending. The Rowland Directors and Inoco con- tended that to apply Rule 7004(f) to them would prejudicially revive claims that were otherwise barred by the prior rule, which did not authorize personal jurisdiction over nonresi- dents on the basis of national contacts, in the absence of statu- tory authority. So long as the exercise of jurisdiction is consistent with the Constitution, jurisdiction may be obtained over nonresidents sued on a federal claim who are served in conformity with Rule 7004(a) and Fed. R. Civ. P. 4(f). The threshold question was whether the new Rule 7004(f) could be applied to an action commenced in 1994. The Supreme Court’s order adopt- ing the amended rules states that insofar as just and practi- cable, they govern all pending bankruptcy proceedings. Applying the rule to this action was plainly practicable. Jurisdictional statutes speak to the power of the court rather than to the rights or obligations of the parties. The pre- sumption against retroactive application of new legislation to 19a pending cases does not apply to rules conferring or with- drawing jurisdiction. The argument that the defendants could not reasonably have expected being haled into court in Idaho was unpersuasive, since they had at least to reckon with application of the Idaho longarm statute to their dealings affecting Idaho creditors. None of the defendants offered facts to show that they would have behaved differently had they expected Rule 7004(f) to apply, or that they were otherwise prejudiced. Also weighing against their arguments was the policy favoring consolidation in acommon forum of all litigation relating to a bankruptcy. The complaint alleged claims arising under federal law. The Rowland Directors did not challenge the constitutional basis for personal jurisdiction. With respect to their contacts and those of Inoco with the United States, they reached out to Gulf and forged a continuing relationship with it. The alleged looting foreseeably caused Gulf injury in the United States. The alleged injuries arose out of the purposeful direction of their activities toward the United States. Inoco’s sale of prop- erty was actively directed to the United States. Inoco took control of a United States corporation and purposefully inter- jected itself into the United States. Rowland was served pursuant to Rule 4(i). As it was in 1990, that rule stated that a defendant in a foreign country could be served in any one of five specified methods. Rule 7004(a) stated that Rule 4(i) applied in adversary proceed- ings. The district court correctly held the service under Rule 4(i) to be sufficient. 20a COUNSEL Lawrence E. Carnevale, Carter, Ledyard & Milburn, New York, New York; John T. Mitchell, Mitchell & Mitchell, Coeur D’ Alene, Idaho, for the defendants-appellants. Richard W. Reinthaler, New York, New York; Dianne Coffino, New York, New York; Ramona S. Neal, Givens, Pursley & Huntley, Boise, Idaho, for the plaintiffs-appellees. OPINION SCHWARZER, Senior District Judge: We must decide whether the bankruptcy court had personal jurisdiction of the defendants in this adversary proceeding under Bankruptcy Rule 7004(f), as amended subsequent to the commencement of this action. I. Procedural Background Plaintiffs are the trustees of a litigation trust (the Trustees) who brought this adversary proceeding against defendants David. J. Rowland, Jeremy E. James, David L. Hudd, Derek J. Moran (the Rowland Directors) and Inoco Plc (Inoco) to recover certain assets belonging to debtors Guif USA Cor- poration (Gulf) and its subsidiary, Pintlar Corporation (Pint- lar). The amended complaint alleged counts for fraudulent conveyance under Bankruptcy Code sections 544, 548 and 550, and for misrepresentation, breach of fiduciary duties, civil conspiracy, breach of contract and violation of Delaware corporation law. The bankruptcy court granted defendants’ motion to dismiss count II (corporate waste and mismanage- ment) for lack of personal jurisdiction but denied the motion with respect to the other counts. On interlocutory appeal, the district court affirmed the bankruptcy court’s order as to all counts except count VI (breach of contract), dismissing that count, and count II (corporate waste and mismanagement), reinstating that count. The district court certified its order for 2la interlocutory appeal and we granted the Rowland Directors and Inoco permission to appeal under 28 U.S.C. § 1292(b); the Trustees do not appeal the dismissal of the breach of con- tract count. II. Factual Background The Rowland Directors are foreign citizens who reside out- side of the United States. Inoco is a publicly traded United Kingdom corporation, headquartered in England. At all rele- vant times, the Rowland Directors were officers of Inoco and Rowland, through intermediaries, owned a controlling inter- est in Inoco. The Rowland Directors acquired control of Gulf in 1989 when Inoco, through a subsidiary, purchased 34% of Gulf’s outstanding shares. At the time, Gulf had assets exceeding $177 million but it also had potentially large lia- bilities. These liabilities arose out of the former ownership of the Bunker Hill mine by Gulf’s subsidiary, Pintlar. They largely involve claims for environmental damage caused by the Idaho operations of Bunker Hill and claims for medical and pension benefits by its retired Idaho employees. The cred- itors holding these claims are beneficiaries of the plaintiff Litigation Trust. In their complaint, the Trustees allege that the Rowland Directors and Inoco, after taking control of Gulf, engaged in a course of conduct designed to loot and waste the assets of the company. They allege that the defendants entered into a series of transactions by which they transferred Gulf’s assets into their control. When creditors became concerned over Gulf’s ability to meet its obligations, Rowland sent a letter to former employees of Bunker Hill in Idaho, assuring them that Gulf would meet its obligations for employee benefits and environmental clean-up, assurances alleged to be false and fraudulent. In 1991, the Rowland Directors sold Inoco and their shares in Gulf. In 1993, involuntary bankruptcy petitions were filed against Gulf and Pintlar in the District of Idaho. This adversary proceeding followed. In it the Trustees seek to 22a recover for the benefit of the Litigation Trust the assets of Gulf and Pintlar, which they claim were looted by defendants. The district court held that the Idaho contacts of Rowland, Hudd and James were sufficient to find that they purposefully availed themselves of the Idaho forum. With respect to Moran and Inoco, the court found that, although they were not alleged to have taken actions directed at Idaho, the allegations of conspiracy were sufficient to satisfy the purposeful avail- ment test. Parsing the controlling factors, the court concluded that the exercise of specific personal jurisdiction over the defendants under the Idaho long-arm statute would not be unreasonable and held them subject to personal jurisdiction on all claims other than the contract claim. We affirm, but on a different ground. Ill. Standard of Review We review the district court’s dismissal for lack of personal jurisdiction de novo. Oneluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Factual findings under- lying the judgment are reviewed for clear error. Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 78 n.2 (9th Cir. 1987). Plaintiffs have the burden of establishing personal jurisdiction but need to make only a prima facie showing of jurisdictional facts to avoid a motion to dismiss. Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990). All factual disputes are resolved in favor of the Trust. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987). IV. Personal Jurisdiction under Bankruptcy Rule 7004(f) A. Application of the Rule to the Pending Action In 1994, when the Trustees commenced this action, Fed. R. Bankr. P. 7004(g) incorporated Fed. R. Civ. P. 4 “in effect on January |, 1990, notwithstanding any amendment. . . sub- sequent thereto.” Rule 4, as of 1990, did not authorize per- sonal jurisdiction over nonresidents on the basis of national contacts, in the absence of statutory authority. The rule was +o POS gw See ee me ) ; i : / j ; 23a amended, however, effective December 1, 1996.' The amend- ment added a new Rule 7004(f), which incorporates Rule 4 without any limitation. Rule 4 in turn had been amended in 1993 by the addition of Rule 4(k)(2) which provides: If the exercise of jurisdiction is consistent with the Con- stitution and laws of the United States, serving a sum- mons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state. Fed. R. Civ. P. 4(k)(2). Thus, so long as the exercise of juris- diction is consistent with the Constitution, personal juris- diction may be obtained over nonresidents sued on a federal claim who are served in conformity with Bankruptcy Rule 7004(a) and Fed. R. Civ. P. 4(f). See Fed. R. Civ. P. 4(k)(2) advisory committee’s note (1993 Amendments) (stating that the rule authorizes “jurisdiction over the person of any defen- dant against whom is made a claim arising under any federal law if that person is subject to personal jurisdiction in no state.”). The threshold questions is whether the new Rule 7004(f) may be applied to an action commenced in 1994. The Supreme Court’s order adopting the amended rules states that they should “govern all proceedings. . . thereafter com- menced and, insofar as just and practicable. all proceedings in bankruptcy then pending.” Communication from the Chief Justice, Amendments to the Federal Rules of Bankruptcy Pro- cedure that Have Been Adopted by the Court, at 2, Apr. 24, 1996 (emphasis added). Application of the rule to this action therefore turns on whether it would be just and practicable. While in some circumstances we would remand so that the district court may exercise its discretion, we see no need to do so here. Remand is not necessary where the issue has been ' The district court took note of the forthcoming amendment but its order was issued before the effective date of the amendment. 24a fully briefed on appeal, the record is clear and remand would “impose needless additional expense and delay. . . .” Foster v. Skinner, 70 F.3d 1084, 1089 (9th Cir. 1995) (citing Roundtree v. United States, 40 F.3d 1036, 1040 (9th Cir. 1994)); Hoffman v. CMAC, 814 F.2d 1385, 1387 (9th Cir. 1987). This appeal is interlocutory and is limited to the issue of personal jurisdiction. Both sides have thoroughly briefed the issue, and applying the rule to this action 1s plainly practi- cable. Defendants argue, however, that to do so would be prejudicial because the claims against them would otherwise be barred by the prior rule. Their reliance on Chenault v. USPS, 37 F.3d 535 (9th Cir. 1994), is misplaced. We held there that a newly enacted statute that shortens the applicable Statute of limitations may not be applied retroactively to bar a plaintiff's claim that might otherwise be brought “because to do so would be manifestly unjust.” Id. at 539. This clearly is not such a case. As the Supreme Court stated in Landgraf v. USI Film Products, 511 U.S. 244, 274 (1994), “[w]Je have reg- ularly applied intervening statutes conferring or ousting juris- diction, whether or not jurisdiction lay when the underlying conduct occurred or when the suit was filed. . . . Present law normally governs such situations because jurisdictional Statutes ‘speak to the power of the court rather than to the rights or obligations of the parties.’ ” See also Duldulao v. INS, 90 F.3d 396, 399 (9th Cir. 1996) (stating that “the ‘pre- sumption against retroactive application of new legislation to pending cases. . . does not apply to rules conferring or with- drawing jurisdiction.”” (citation omitted)); Arrowhead Estates Dev. Co. v. United States Trustee, 42 F.3d 1306, 1311 (9th Cir. 1994) (same); Priel v. Cessna Aircraft Co., 751 F.2d 1037, 1039 (9th Cir. 1985) (stating that “when a statute is addressed to remedies or procedures and does not otherwise alter substantive rights, it will be applied to pending cases”); see also Driscoll v. Gebert, 458 F.2d 421 (9th Cir. 1972) (holding that newly enacted California long-arm statute applied to previously filed pending action). ; Fe ee ee 25a Defendants’ argument that they could not reasonably have expected being haled into court in Idaho is unpersuasive since they had at least to reckon with application of the Idaho long- arm statute to their dealings affecting Idaho creditors. None of the defendants offer facts to show that they would have behaved differently had they expected Rule 7004(f) to apply or that they have been otherwise prejudiced. See McGee v. International Life Ins. Co., 355 U.S. 220, 224 (1957) (stating that defendant “had no vested right not to be sued in Cali- fornia.”). Weighing against defendants’ arguments, moreover, is the policy favoring, in the interest of economy and effi- ciency, consolidation in a common forum of all litigation relating to a bankruptcy—as opposed to having it dispersed across two continents.” B. Applicability of the Rule All of the requisite elements of Rule 4(k)(2) are present and not contested, except for Inoco’s contention that it lacks suf- ficient contacts with the United States. The complaint alleges claims arising under federal law (11 U.S.C. §§ 544, 548 and 550), and defendants’ position is that they are not subject to the jurisdiction of Idaho (and, so far as appears in the record, of any other state). The Rowland Directors do not challenge the constitutional basis for personal jurisdiction over them in the United States. With respect to their contacts and those of Inoco with the United States, the bankruptcy judge's findings are compelling: Thus, these alien defendants reached out to Gulf in the United States and forged a continuing relationship with it. The alleged looting of Gulf foreseeably caused Gulf . Inoco argues that even if the rule applied to this-action, it could not retroactively validate service that was invalid when made. Inoco’s argument confuses the effect of a change in the rule governing the pro- cedure for making service, which might not apply to service previously completed, with a change in the rule determining the presence of personal jurisdiction. As we have said, it is the law in effect at the time of the decision that normally governs the latter determination. 26a injury in the United States where it was located. .. . [T]he alleged injuries arise out of the defendants’ pur- poseful direction of their activities toward the United States. .. *x* * Inoco’s sale of property located in Texas and New York to Gulf was activity directed to the United States. . . As part of the conspiracy to loot Gulf, Inoco took control of a United States corporation. . . . Inoco purposefully interjected itself into the United States. V. Service on Rowland Rowland contends that he was not properly served under pre-amendment Bankruptcy Rule 7004(c). That rule states that for service in a foreign country, “[t]he summons and complaint. . . may be served as provided in Rule 4(d)(1) and (d)(3). . . .” (emphasis added). Rowland was served instead pursuant to Rule 4(1). That rule, as it was in 1990, contained “Alternative Provisions for Service in a Foreign Country,” and stated that a defendant in a foreign country may be served by any one of five specified methods. Rule 7004(a) further stated that Rule 4(i) applied in adversary proceedings. The district court correctly held the service under Rule 4(i) to be suffi- cient. Its ruling was consistent with that of other courts, find- ing Rule 7004(e) to be permissive, not mandatory. See Schwinn Plan. Comm. v. AFS Cycle & Co., 190 B.R. 599, 608 (Bankr. N.D. Ill. 1995); Official Comm. of Unsecured Cred- itors of Southold Dev. Corp. v. Mittemyer, 148 B.R. 726, 728 (Bankr. E.D.N.Y. 1992); In re Crysen/Montenay Energy Co. v. E&C Trading Ltd., 166 B.R. 546, 548-49 (Bankr. S.D.N_Y. 1994). CONCLUSION The order of the district court is AFFIRMED and the matter is REMANDED for further proceedings. eR ae MARCA cA Soe ei Nad Manel HP Arlen Aire, Rae ATO SR: sit bh bil ill Sil spl il I eetcs SANIT Ri Gees nE SI Sie SPAM Alka Ate Me I ta 2 Wl o68 tt at RS 27a UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 96-80357 DC# CV-96-10-EJL Idaho (Boise) Filed October 11, 1996 In re PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. BERNARD GOODSON, FORD ELSAESSER, LOWELL FINLEY, and JAY J. MILLER, as TRUSTEES, Plaintiffs-Respondents, —Vvs.— DAVID J. ROWLAND, et al. Defendants. DAVID J. ROWLAND, JEREMY E. JAMES, DaviID L. HuppD and DEREK J. MORAN, Defendants-Petitioners. 28a ORDER Before: BEEZER and KOZINSKI, Circuit Judges The petition for permission to appeal under 28 U.S.C. § 1292(b) is granted. Within 10 days from the date of this order, petitioner shall perfect the appeal pursuant to Fed. R. App. P. 5(d). 29a UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 96-80368 DC# CV-96-10-EJL Idaho (Boise) Filed October 11, 1996 In re PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. BERNARD GOODSON, FORD ELSAESSER, LOWELL FINLEY, and JAy J. MILLER, as TRUSTEES, Plaintiffs-Respondents, oS .<—— DAVID J. ROWLAND, et al. Defendants. INOCO PLC, Defendant-Petitioner. 30a ORDER Before: BEEZER and KOZINSKI, Circuit Judges The petition for permission to appeal under 28 U.S.C. § 1292(b) is granted. Within 10 days from the date of this order, petitioner shall perfect the appeal pursuant to Fed. R. App. P. 5(d). AFA AD 85 RADA a tae HA EER be RRO OR sian en sek ca Assos ie ES iE pci RRR SRR RG NG a ATE ADEE RIM WORSE ar ies bm ra de Sve ROAM RSG BR Cer eke) eT cos ia 73 = : 4 os $ 3la IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO Bk. Case Nos. 93-02986, 93-02987 Adv. Case No. 94-6016 Case No. CV 96-0+410-N-EJL In re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. BERNARD GOODSON, FORD ELSAESSER, LOWELL FINLEY, and JAY J. MILLER, as Trustees, Plaintiffs/Appellees, —_V$.— DAVID J. ROWLAND, JEREMY E. JAMES, DAVID L. HUDD, DEREK J. MORAN, ROBERT G. BOULTON, SEYMOUR GRAUBARD. HANS W. WANDERS, GRAHAM F. LACEY, F. ALEY ALLAN, WARREN C. HABER, WILLIAM C. HORN, LWRENCED R. MEHL, JOHN W. HERRING, ANTHONY WALTERS. CYRIL WARREN MCKENZIE, PETER L. WHIT- TAKER. LANE NEAVE RONALDSON, WYNN WILLIAMS & Co.. ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL CORPORATION, INTERALLIANZ BANK ZURICH, A.G. (formerly known as INTERALLIANZ BANK ZURICH, A.G. INTERALLIANZ SECURITIES CORP., BIKUBEN-WHITEFRIARS LIMITED, MONACO GROUP FUND, S.A., BRIERLEY INVESTMENTS 32a LTD., PORTFOLIO MANAGEMENT LIMITED, FELPARK LIMITED (formerly known as SINO INFOMATION SER- VICES LIMITED), FERRIS INVESTMENTS LIMITED and LAWRENCE P. HOCKEY-SWEENEY, Defendants. INOCO PLc., DAvID J. ROWLAND, JEREMY E. JAMES, DAviID L. HUDD and DEREK J. MORAN, Defendants/Appellants. Filed September 16, 1996 ORDER Pursuant to 28 U.S.C. § 1292(b), appellants-defendants David J. Rowland, Jeremy E. James, David L. Hudd and Derek J. Moran, and appellant-defendant Inoco Plc, move the court for an order certifying for appeal to the Court of Appeals for the Ninth Circuit this court's Memorandum Deci- sion and Order dated August 16, 1996 (the “Order”). Plain- tiffs-appellees oppose the motions. After careful consideration, the court concludes that issues regarding the legal standards governing the requisite juris- dictional contacts of a foreign defendant, and the extend to which such contacts may be imputed to other defendants, involve controlling questions of law as to which there is a substantial ground for a difference of opinion. Cf, e.g., Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, No. 94- 16368, slip op. 10797 (9th Cir. Aug. 28, 1996), Underwager v. Channel 9 Australia, 69 F.3d 361 (9th Cir. 1995); Ziegler v. Indian Rtver Country, 64 F.3d 470 (9th Cir. 1995); Sher v. Johnson, 911 F.2d 1357 (9th Cir. 1990). The court also con- 33a cludes that an immediate determination of these issues will materially advance the ultimate termination of the litigation. Accordingly, the court will grant the motions. ORDER Based on the foregoing, and being otherwise fully advised in the premises, the court HEREBY ORDERS that the this court’s Memorandum Decision and Order dated August 16, 1996, be and hereby is amended to include the following statement certifying ihe Order for interlocutory appeal to the United States Court of Appeals for the Ninth Circuit pursuant to 28 U.S.C. § 1292(b): This Order involves controlling questions of law as to which there are substantial grounds for difference of opinion and an immediate appeal may materially advance the ultimate termination of the litigation. Accordingly this Order is certified pursuant to 28 U.S.C. § 1292(b) for interlocutory appeal to the United States Court of Appeals for the Ninth Circuit. Dated this 13th day of September, 1996. EDWARD J. LODGE Edward J. Lodge United States District Judge 34a IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO Bk. Case Nos. 93-02986 93-02987 Adv. Case No. 94-6016 Case No. CV 96-010-N-EJL In re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. BERNARD GOODSON, FORD ELSAESSAR, LOWELL FINLEY, and JAY J. MILLER, as TRUSTEES, Plaintiffs/Appellees, ome § DAVID J. ROWLAND, JEREMY E. JAMES, DAviID L. HuUDD, DEREK J. MORAN, ROBERT G. BOULTON, SEYMOUR GRAUBARD, HANS W. WANDERS, GRAHAM F. LACEY, F. - ALEY ALLAN, WARREN C. HABER, WILLIAM C. HORN, LWRENCED R. MEHL, JOHN W. HERRING, ANTHONY WALTERS, CYRIL WARREN MCKENZIE, PETER L. WHIT- TAKER, LANE NEAVE RONALDSON, WYNN WILLIAMS & Co., ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL CORPORATION, INTERALLIANZ BANK ZURICH, A.G. (formerly known as INTERALLIANZ BANK ZURICH, A.G. INTERALLIANZ SECURITIES CORP., BIKUBEN-WHITEFRIARS LIMITED, MONACO GROUP FUND, S.A., BRIERLEY INVESTMENTS 35a LTD, PGRTFOLIO MANAGEMENT LIMITED, FELPARK LIMITED (formerly known as SINO INFORMATION SER- VICES LIMITED), FERRIS INVESTMENTS LIMITED and LAWRENCE P. HOCKEY-SWEFENEY, Defendants. INOCO PLc., DAVID J. ROWLAND, JEREMY E. JAMES, DAVID L. HUDD And DEREK J. MORAN, Defendants/Appellants. Decided August 16, 1996 MEMORANDUM DECISION AND ORDER OVERVIEW Defendants David J. Rowland, Jeremy E. James, David L. Hudd, Derek L. Moran (collectively, the “Rowland Direc- tors”), and Inoco Ple (“Inoco”) appeal the interlocutory order of the bankruptcy court denying their motions to dismiss for lack of personal jurisdiction and improper service of process the adversary action brought by trustees of a litigation trust (“the Trustees”) to recover certain assets belonging to debtors Gulf USA Corporation (“Gulf”) and Pintlar Corporation (“Pintlar”). The Trustees, in turn, cross-appeal the bankruptcy court’s decision to dismiss for lack of personal jurisdiction the Trustees’ claim alleging breach of fiduciary duties, cor- porate waste and mismanagement. The court affirms in part, reverses in part and remands.' 1 The court finds that the facts and legal arguments are adequately presented in the briefs and record, and that therefore oral argument would not aid in the resolution of the issues presented by this appeal. Fed. R. Bankr. P. 8012. 36a BACKGROUND 1. Parties Defendants Rowland, James, Hudd and Moran are foreign citizens who reside outside the United States. Defendant Inoco is a publicly traded United Kingdom corporation, head- quartered in England. At all times relevant to this action, Rowland, Hudd, James and Moran were officers of Inoco, and Rowland, through a corporate intermediate, owned a con- trolling interest in Inoco. During the same time period, Gulf was headquartered first in Boston, Massachusetts, and then in Washington, D.C. The Rowland Directors gained control of Gulf in the spring of 1989, when Downshire, N.V., a wholly owned subsidiary of Inoco, purchased 34% of Gulf’s outstanding shares from David and Frederick Barclay. At the time of the purchase, Gulf had accumulated substantial assets totaling over $177 million. This is despite the fact that by 1989 Gulf also had incurred potentially enormous debts and liabilities. The bulk of Gulf’s liabilities grew out of the former ownership of the Bunker Hill Mine by Gulf’s wholly owned subsidiary, Pintlar.” The Bunker Hill Mine is located in the State of Idaho. Although Pintlar sold the Bunker Hill Mine in 1982, Gulf remiins responsible for many of the obligations incurred by Pinti..* prior to divestment of the mining operation. First, and foremost, Gulf has been identified by the Environmental Pro- teciion Agency (“the EPA”) as a potentially responsible party for the extensive environmental damage that occurred as a result of the company’s mining operations. In this regard, Gulf’s creditors include the EPA, the State of Idaho, and the Coeur d’ Alene Indian Tribe (the “environmental creditors”). Gulf’s creditors also include retired employees of the Bunker Hill Mine who are entitled to medical and pension benefits (the “retirees”). Finally, Gulf remains indebted to certain pub- lic bondholders and other unsecured creditors. All of the above 2 Pintlar’s principal place of business is in Kellogg, Idaho. 37a named creditors are beneficiaries of the litigation trust, and it is on their behalf that the Trustees bring this adversary action. 2. Trustees’ Allegations* In their written submissions, the Trustees allege that after taking control of Gulf, the Rowland Directors and Inoco pur- posely engaged in a course of action designed to loot and waste the assets of the company. According to the Trustees, Gulf was purchased precisely for this purpose. And, as proof of this allegation, the Trustees point out that during negoti- ations for the purchase of Gulf, an investigation of Rowland, commissioned by Gulf’s Board of Directors (“Board”), char- acterized Rowland as having a “clear history of related-parts transactions” and an “uneven past.” In light of this informa- tion, before the Board would approve the proposed sale, it required Rowland, Hudd, James, Moran and Inoco to enter into a “Standstill Agreement” with the Barclays and Gulf. The agreement placed certain restrictions on the ability of an offi- cer, director or stockholder to enter into a business transaction with Gulf, or make an unauthorized business commitment on behalf of the company. The Trustees allege that after the purchase of Gulf was completed in March of 1989, and the Rowland Directors were installed as controlling members of the Board,* the defendants ignored the Standstill Agreement and entered into a series of transactions that transferred Gulf’s assets into their own pock- ets. For instance, in the fall of 1989 and spring of 1990, the Rowland Directors are alleged to have caused Gulf to buy cer- ’ As explained more fully below, when determining whether the plaintiffs have carried their burden to establish that personal jurisdiction is appropriate, the court assumes that the facts set forth in the plaintiffs’ written submissions are true. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). . Besides serving on Gulf’s Board of Directors, several of the defen- dants acted as officers of the company. In September of 1989, Rowland became President mo Chief Executive Officer; James and Hudd became Executive Vice-Presidents; and Moran became Senior Vice-President. 38a tain New Zealand real estate in a complicated scheme that resulted in the diversion of millions of dollars of company funds to the defendants and their associates.° When the New Zealand transactions became public, many of the company’s creditors became concerned that Gulf would not be able to meet its obligations. Several Idaho newspapers ran articles discussing Gulf’s activities in New Zealand and the possible effect of the transactions on the company’s Idaho creditors. On September 17, 1990, Gulf released a letter, signed by Rowland, and addressed to former employees of the Bunker Hill Mine and their families, assuring the families that the New Zealand transactions would not prevent the company from meeting its obligations to its former employees or its responsibilities to the EPA and the State of Idaho for the envi- ronmental clean-up of the former mining site. The trustees allege that the letter’s assurances were false and were made in an effort to cover-up the illicit transfers of Gulf’s assets. The Trustees also allege that while the defendants were engaged in various schemes to siphon-off Gulf’s assets for their personal use, Hudd and James were meeting with H.P. Harbert, then President of Pintlar, in an effort to sidetrack the environmental creditors. To this end, Hudd attended at least nime-meetings in Idaho, and James attended one Idaho meet- ing, to prepare for negotiations with the environmental cred- itors. In addition, Hudd participated with Harbert in at least eighteen phone calls, to and from Idaho, to discuss Gulf’s environmental problems and, at Hudd’s request, Harbert sent to Hudd Idaho newspaper articles reporting Gulf’s responses to its environmental obligations. Harbert states that Hudd and James directed him to implement strategies which he believes had the purpose of delaying any action by the creditors.° 5 ' ° | The New Zealand transactions are but one example of the alleged efforts by the Rowland Directors and Inoco to loot and waste Gulf’s assets. A complete rendition of the Trustees’ allegations are recounted in the bankruptcy court's Memorandum of Decision, Tab 67 at 11-26. 6 After the bankruptcy court issued its decision, Harbert submit- ted a supplemental affidavit wherein he withdrew his prior statement that 39a In mid-1991, the Rowland Directors arranged for the sale of Inoco and Downshire’s shares in Gulf to Nycal Corporation. Shortly after the sale was completed, Gulf’s new owners dis- covered several improprieties related to the transactions ini- tiated and carried out by the Rowland Directors during their tenure. The new owners and the defendants eventually entered into a settlement agreement resolving the discovered impro- prieties. As part of that settlement, the Rowland Directors and Inoco were released from any potential future liabilities based on their ownership and/or management of Gulf and its subsidiaries. PRIOR PROCEEDINGS 1. Claims nen In October of 1993, involuntary bankruptcy petitions were filed against both Gulf and Pintlar in the Bankruptcy Court for the District of Idaho. This adversary action is an out- growth of those bankruptcy proceedings. The Trustees seek to recover, for the benefit of the litiga- tion trust, assets of Gulf and Pintlar which they claim were looted by the defendants. The Trustees assert that at all times, each defendant that is the subject of this appeal acted in concert with, and as an agent for, all other defendants in a general conspiracy to “loot and wastes” Gulf’s assets. In their amended complaint, the Trustees base their right to relief on several discrete causes of action. Against defendants Rowland, Hudd, James, Moran and Inoco, the Trustees seek the recovery of the transferred property and/or damages based on theories of 1) fraudulent conveyances; 2) breach of fidu- ciary duties, corporate waste and mismanagement; 3) mis- representation; 4) civil conspiracy; and 5) breach of contract. Hudd had attended a meeting with then Governor Andrus. Tab 83 at 2-3. In the supplemental affidavit, Harbert also corrected the place and dates of the meetings that James attended. Jd. These admitted errors by Harbert are not grounds for discounting his remaining declarations. 40a 2. Motions to Dismiss The defendants moved the bankruptcy court for dismissal of the Trustees’ action for lack of personal jurisdiction and improper service of process. In a 121-page Memorandum of Decision, the bankruptcy court granted the defendants’ motions to dismiss for lack of personal jurisdiction the count alleging breach of fiduciary duties, corporate waste and mis- management, but denied the defendants’ motions with respect to all other counts. The bankruptcy court also denied the motions of Hudd, James and Moran to quash service. Row- land’s motion to quash service was granted in part and con- tinued in part. Following the bankruptcy court’s entry of judgment, the Rowland Directors and Inoco each filed a motion with this court for leave to file an interlocutory appeal. Relying on 28 U.S.C. § 158(a), and employing the standard set forth in 28 U.S.C. § 1292(b), the court granted the defendants’ motions.’ The appeals were then consolidated and briefing followed. With the submission of all the parties’ filings complete, the court rules as follows. DISCUSSION 1. Standard of Review Where, as here, the personal jurisdiction determination is made on the basis of written submissions, the Trustees need only make a prima facie showing of jur sdictional facts to avoid the defendants’ motions to dismiss. Data Disc, Inc. v Systems Technology Assocs., Inc., 557 F.2d 1280, 1284-85 (9th Cir. 1977). The court reviews the materials presented to the bankruptcy court de novo to determine whether the For purposes of this appeal, the court assumes, as did the bankruptcy court below, that each claim asserted in the amended com- ptaint either is a “core proceeding” or, at a minimum, is related to the underlying bankruptcy cases. See Diamond Mortgage Corp. v. Sugar, 913 F.2d 1233, 1237-39 (7th Cir. 1990), cert. denied, 498 U.S. 1089 (1991). 4la Trustees have met their burden. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987). Because the bankruptcy court did not hold an evidentiary hearing, and thus did not reach issues of credibility, all factual disputes are resolved in the Trustees favor. Id.; Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990); Metropolitan Life Ins. Co. v. Neaves, 912 F.2d 1062, 1064 n.1 (9th Cir. 1990). 2. Personal Jurisdiction Requirements Before a court may properly exercise personal jurisdiction over a nonresident defendant, it must be satisfied that two independent requirements have been met: first, that an appli- cable rule or statute affirmatively authorizes the assertion of personal jurisdiction over the defendant, and second, that the assertion of such jurisdiction “accords with constitutional principles of due process.” Data Disc, Inc., 557 F.2d at 1285, Petrik v. Public Serv. Mut. Ins. Co., 879 F.2d 682, 684 (9th Cir. 1989). Although the two requirements are independent, they are often interrelated. For example, where federal sub- ‘ect matter jurisdiction is predicated on diversity, Rule 4 of the Federal Rules of Civil Procedure incorporates the state’s long-arm statute as the authorizing source for service of pro- cess. In such a case, the defendant's amenability to suit in federal district court is limited by the state’s rule or statute. Because a state’s ability to authorize service of process 1s restricted by the due process clause to cases in which the defendant has certain minimum contacts with the state, a fed- eral district court sitting in diversity will analyze the due pro- cess inquiry by assessing the defendant's contacts with the forum state. Neaves, 912 F.2d at 1065; Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). In contrast, where the federal court’s subject matter juris- diction is predicated on a federal question and service is accomplished pursuant to a federal law authorizing nation- wide or worldwide service of process, and not by reference to the state’s long-arm statute, the court is no longer restricted by the due process limitations inhérent to a state's autho- 42a rization of service. Go-Video, Inc. v. Akai Elec. Co., Ltd., 885 F.2d 1406, 1414-15 (9th Cir. 1989); Securities Investor Pro- tection Corp. v. Vigman, 764 F.2d 1309, 1315-16 (9th Cir. 1985). Under these circumstances, then, due process concerns may be satisfied by a determination that the defendant has sufficient contacts with the United States as a whole. Go- Video, Inc., 885 F.2d at 1414-16; Vigman, 764 F.2d at 1315- 16: Kramer Motors, Inc. v. British Leyiand Ltd., 628 F.2d 1175, 1177 (9th Cir.), cert. denied, 449 U.S. 1062 (1980). The more difficult case, and a potential issue here, occurs when the federal court’s jurisdiction is based on a federal question bur incorporation of the state’s long-arm statute pro- vides the only authorizing source of service. The Trustees argue, and the bankruptcy court concluded, that in such a sit- uation, the due process analysis should not be limited to a consideration of the defendants’ contacts with the forum state, but instead, should be expanded to consider the defendants’ “aggregated national contacts.” This conclusion, however, has not been accepted by the vast majority of courts addressing the question, and more importantly, has not been accepted by the Ninth Circuit. Courts have recognized the “anomalous situation” created by a “federal court in a nondiversity case being limited by due process restrictions imposed on the states by the fourteenth amendment as opposed to those imposed on the federal gov- ernment by the fifth amendment.” DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3rd Cir.), cert. denied, 454 U.S. 1085 (1981). Nonetheless, they have generally concluded that “it would be equally anomalous to utilize a state long- arm rule to authorize service of process on a defendant in a manner that the state body enacting the rule could not con- stitutionally authorize.” /d. Accordingly, in a suit involving a federal question, where the absence of a federal service of process statute requires the use of the state’s long-arm statute, the cases direct the federal district court to make the due pro- cess determination by assessing the defendant's contacts with the forum state. /d. at 283-84; accord Cable/Home Commu- 43a nication Corp. v. Network Prods., Inc., 902 F.2d 829, 855-56 (11th Cir. 1990); Point Landing, Inc. v. Omni Capital Int'l, Ltd., 795 F.2d 415, 422-27 (Sth Cir. 1986) (en banc), aff'd, 484 U.S. 97 (1987); Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 294-97 (3rd Cir.), cert. denied, 474 U.S. 980 (1985); Johnson Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947, 950 (Ist Cir. 1984); Textor v. Board of Regents of N. Il. Univ., 711 F.2d 1387, 1392 (7th Cir. 1983). But see Handley v. Indiana & Michigan Elec. Co., 732 F.2d 1265, 1268-72 (6th Cir. 1984) (applying a less demanding due pro- cess inquiry where subject matter jurisdiction is predicated on federal law); United Rope Distrib., Inc. v. Seatriumph Marine Corp., 930 F.2d 532, 534-36 (7th Cir. 1991) (noting that the panel’s “sympathies” lie with Handley). Consistent with the majority rule, the Ninth Circuit has, in cases where service is accomplished by reference to the state’s long-arm statute, required that due process be satisfied by a review of the defendant's contacts with the forum state, regardless of the fact that a federal question is in issue. See, e.g., Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 414-19 (9th Cir. 1977) (declining to apply a “aggregated national contacts” test in suit brought pursuant to the Lanham Act where service of process was accomplished under the state’s long-arm statute); Pacific Atlantic Trading Co., Inc. v. M/V Main Express, 758 F.2d 1325, 1327 (9th Cir. 1985) (cit- ing DeJames, 654 F.2d at 283, and holding that in an admi- ralty case, where service is accomplished pursuant to the state’s long-arm statute, due process requires that the defen- dant have certain minimum contacts with the forum state); T.M. Hylwa, M.D., Inc. v. Palka, 823 F.2d 310, 312-13 (9th Cir. 1987) (analyzing defendant’s contact with forum state in ERISA action): Rano v. Sipa Press, Inc., 987 F.2d 580, 587- 88 (9th Cir. 1993) (analyzing defendant's contact with forum state in federal copyright action); Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1484 (9th Cir. 1993) (analyzing defendants contact with forum state in federal antitrust action); Reebok Int'l Ltd. v. McLaughlin, 49 F.3d 1387, 1393- 44a 94 & n.7 (9th Cir.) (analyzing defendant’s contact with forum state in Lanham Act action), cert. denied, 116 S. Ct. 276 (1995).§ Moreover, as one Ninth Circuit opinion noted, “a recent Supreme Court decision implies that a national [or world- wide] service provision is a necessary prerequisite for a court even to consider a national contacts approach.” Go-Video, Inc., 885 F.2d at 1416 (citing Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104-05 & n.5 (1987)). Thus, even though the present action involves a federal question, the determination of whether personal jurisdiction “accords with constitutional principles of due process,” turns in large part on whether the “applicable rule or statute” that affirma- tively authorizes service on the foreign-based defendants is a federal law or, instead, the state’s long-arm statute. Accord- ingly, the court first addresses this issue. a. Applicable Rule or Statute In all instances, the service of the summons and complaint on the defendants bringing this appeal occurred outside the United States. The current version of the Federal Rules of Bankruptcy Procedure provides for service on any person in . The Trustees contend that in Ballard v. Savage, 65 F.3d 1495 (9th Cir. 1995), the Ninth Circuit adopted an “aggregated national con- tacts” test for cases that involve a federal question. The Ballard court inexplicably failed to identify the source of the court's subject matter jurisdiction or the statute authorizing service. There is no way of know- ing, therefore, if the case involved a federal question and, if so, whether service was made pursuant to federal law or the state’s long-arm statute. The defendants have submitted a copy of the complaint filed in the underlying district court case, which suggests that service occurred under a federal] statute allowing worldwide service of process. If this is so, Bal- lard falls in line with other Ninth Circuit decisions, such as Go-Video, that permit the use of the national contacts test when service is accom- plished pursuant to a federal law authorizing nationwide or worldwide service of process. 885 F.2d at 1413-16. In any event, when a federal dis- trict court is forced to look outside the circuit court’s discussion in order to divine the meaning of the opinion, the decision ceases to act as a meaningful source of guidance and cannot serve as binding precedent. 45a a foreign country that is “authorized by a federal or state law referred to in Rule 4(c)(2)(C)(i) or (e) F.R.Civ.P.” Fed. R. Bankr. P. 7004(e). Bankruptcy Rule 7004(g) incorporates the version of Rule 4 of the Federal Rules of Civil Procedure (hereinafter “Rule 4”) in effect on January 1, 1990, “notwith- standing any amendment to Rule 4 F.R.Civ.P. subsequent thereto.” The version of Rule 4(e) in effect on January |, 1990, per- mits service on a party not an inhabitant of or found within the state which the district court is held, “[w]henever a statute of the United States or an order thereunder provides for ser- vice of a summons,” or “[w]henever a statute or rule of court of the state in which the district court is held provides . for service of a summons.” Similarly, Rule 4(c)(2)(C)(i) allows service upon a party not found within the state when- ever a summons and complaint may be served upon a defen- dant “pursuant to the law of the State.” Taken together, the applicable rules permit the bankruptcy court to exercise jurisdiction over a alien defendant residing outside the United States only when a federal statute or order, or a State statute, rule or law, authorizes service in a foreign country. The Trustees argue that in this case, service was properly accomplished under a federal statute or order referred to by Rule 4(e). The Trustees contend that Rule 4(e) can be read to refer to Bankruptcy Rule 7004(d), which autho- rizes nationwide service of process, and that in conjunction with Federal Rule of Civil Procedure 4(i)(1), which sets forth an alternative manner for service in a foreign country, service upon the defendants was properly accomplished pursuant to a federal law that authorizes worldwide service of process. . A substantially revised version of the Federal Rules of Civil Procedure became effective December 1, 1993. Rule 4 was amended to expressly permit the exercise of personal jurisdiction over an individual in a foreign country. Fed. R. Civ. P. 4(f), (k)(2). As explained above, this amended version does not presently apply to bankruptcy cases, although a proposed amendment of Bankruptcy Rule 7004, due to take effect December 1, 1996, will, inter alia, incorporate the current version of Rule 4. 46a The Trustees’ argument is bolstered somewhat by the Eleventh Circuit case Nordberg v. Granfinanciera (In re Chase & Sanborn Corp.), 835 F.2d 1341, 1344 (11th Cir. 1988), rev'd on other grounds, 492 U.S. 33 (1989), in which the court seems to conclude that the authorization of nation- wide service by Bankruptcy Rule 7004(d) somehow also per- mits worldwide service. The Nordberg court reached its conclusion with little analysis, and its decision has not been well received. See, e.g., In re Old Elec. Inc., 142 B.R. 189, 190-92 (Bankr. N.D. Ohio 1992). This court also rejects Nordberg, and refuses the Trustees’ invitation to adopt the tortured construction they suggest. Even assuming, arguendo, that Bankruptcy Rule 7004(d) is a statue or order within the meaning of Rule 4(e), its autho- rization allows nationwide, not worldwide, service of process. And Rule 4(i)(1) is not a proper source of authorization as that provision is expressly limited by its own terms to the manner of service. Wells Fargo & Co., 556 F.2d at 414; In re Old Elec. Inc., 142 B.R. at 191-92. In sum, after careful con- sideration, the court concludes that no federal statute or order provides authorization for the assertion of personal jurisdic- tion over the foreign-based defendants and service must be accomplished, if at all, pursuant to the applicable state long- arm statute as provided for by Rule 4(e) and/or Rule 4(c)(2)(C)(i)."° b. Idaho’s Long-Arm Statute'! Under Idaho’s long-arm statute a person is subject to per- sonal jurisdiction “if, among other things, he transacts busi- 10 The similarities between Rule 4(e) and Rule 4(c)(2)(C)(1) result in an identical analysis under either rule. Kina v. McAllister Bros., Inc., 659 F. Supp. 39, 41-42 & n. 1 (S.D. Ala. 1987). uN The face that Bankruptcy Rule 7004(d) authorizes nationwide service, and that a national contacts test could be employed if the defen- dants had been properly served in the United States, may make the analysis of the defendants’ contacts with Idaho under that state's long- arm statute seem somewhat incongruous. An inverse, but equally incon- sistent result, is obtained under the current version of Rule 4. L.H. 47a ness or commits a tortuous act in Idaho and the alleged cause of action arises from that transaction or act.” Lake, 817 F.2d at 1420 (citing Idaho Code § 5-514). However, because the Idaho legislature “intended to exercise all the jurisdiction available to the State of Idaho under the due process clause of the United States Constitution,” the question of whether per- sonal jurisdiction is appropriate under the Idaho statute can be answered by deciding whether the exercise of jurisdiction over the defendants “accords with constitutional principles of due process.” /d. (citing Doggett v. Electronics Corp. of Am., 454 P.2d 63, 67 (Idaho 1969)."* 3. Due Process Requirements Consistent with due process principles, a state may assert either general or specific jurisdiction over a nonresident defendant. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995); Haisten v. Grass Valley Medical Reimburse- ment Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). Here, the Trustees do not argue that the defendants are subject to general jurisdiction. Accordingly, jurisdiction is only proper in this case if the defendants’ forum-related activities gave rise to the claims asserted against them by the Trustees. Hais- ten, 784 F.2d at 1397 (defining specific jurisdiction). To help Carbide Corp. v. Piece Maker Co., 852 F. Supp. 1425, 1428-32 (N.D. Ind. 1994) (noting that in a patent case, under current version of Rule 4, national contacts tests may be used when nonresident alien is served in a foreign country, but not when service is accomplished in the United States pursuant io a state’s long-arm statute). As has often been stated, anomalies of this sort are for Congress to correct. Omni Capital Int'l, 484 U.S. at 413. 2 The parties in their briefing, and the bankruptcy court in its decision, spend a considerable amount of effort discussing state court decisions construing the state’s long-arm statute. the interpretation of a state statute is, of course, a matter of state law. However, in Lake v. Lake, 817 F.2d at 1420, the Ninth Circuit conclusively determined the scope of the state’s long-arm statute as construed by the Idaho Supreme Court. Absent an intervening change in state law, not present here, the Lake decision is binding on the lower federal courts. Cf. In re Visness, 57 F.3d 775, 778 (9th Cir. 1995), cert denied, oe S. Ct. 828 (1996). ae 48a the courts determine whether specific jurisdiction is present, the Ninth Circuit has articulated a three-part test: (1) the non- resident defendants must have purposefully availed them- selves of the privilege of conducting activities in Idaho, thereby invoking the benefits and protections of the state’s laws; (2) the claims must arise out of the defendants’ state- related activities; and (3) the exercise of jurisdiction must be reasonable. Ziegler, 64 F.3d at 473; Lake, 817 F.2d at 1421. a. Purposeful Availment When conducting the purposeful availment analysis, the court must be careful to distinguish between claims sounding in tort and those based on a breach of contract. Ziegler, 64 F.3d at 473; Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir. 1991). Where tort, and tort-like, claims are in issue, the purposeful availment prong may be satisfied by showing the defendant's efforts were intentionally directed toward the forum state residents. Hirsch v. Blue Cross, Blue Shield, 800 F.2d 1474, 1478 (9th Cir. 1986); Lake, 817 F.2d at 1421. Actual physical contact with the forum state is not necessary, and personal jurisdiction may be exercised over a defendant “whose only ‘contact’ with the foreign state is the ‘purpose- ful direction’ of a foreign act having effect in the forum state.” Haisten, 784 F.2d at 1397, 1399; Lake, 817 F.2d at 1423; Neaves, 912 F.2d at 1065. Relying on the above prin- ciples, the Ninth Circuit has reduced the purposeful availment inquiry in tort cases to a minimum of three elements: “(1) intentional action; (2) aimed at the forum state; and (3) caus- ing harm that the defendant should have anticipated would be suffered in the forum state.” Ziegler, 64 F.3d at 474. Although contending throughout that the present action is all about a general conspiracy to “loot and waste, Gulf’s assets, the Trustees’ amended complaint asserts several dis- crete causes of action against the defendants that are tort, or tortlike, claims. These claims include the count alleging fraudulent conveyances of funds or property (“count I’); the count alleging breach of fiduciary duties, corporate waste and 49a mismanagement (“count II”); the count alleging misrepre- sentation (“count III”); the count alleging a civil conspiracy (“count V"); and the count seeking to avoid fraudulently pro- cured releases (“count IX”). The bankruptcy court distin- guished between the corporate waste and mismanagement count and all other tort counts, on the basis that such a claim is grounded on negligent, rather than intentional, conduct. The court disagrees. “3 As set forth in the complaint and other written submissions, the Trustees allege that the defendants breached their fidu- ciary duties, and committed corporate waste and misman- agement, by “using their positions of trust and confidence to further their private interests,” instead of acting in the best interest of Gulf and its creditors. In this regard, the Trustees’ claim is based on the defendants’ alleged willful self-dealing and conflict of interests. The court sees no reason to treat this count differently than the other tort claims. The Trustees’ also assert a claim alleging breach of contract (“count VI"). Ninth Circuit case law requires the court to sub- ject the breach of contract count to a somewhat stricter stan- dard than that employed to test the tort claims. Roth, 942 F.2d at 621-22. To satisfy the purposeful availment prong, the Trustees must show a significant nexus between the defen- dants’ contacts with the forum state and the formation of the contractual relationship. /d. (1) Rowland Assuming, as it must, that the allegations contained in the Trustees’ written submissions are true, the court has no trou- ble concluding that Rowland intentionally directed his actions into Idaho, knowing that the brunt of the injuries alleged in the tort counts would fall on the resident creditors. Allegedly, Rowland purposefully directed his letter to the former employees of the Bunker Hill Mine to placate Idaho creditors, including the retirees and the environmental creditors. Thus, by furthering the deceptions necessary to complete the torts committed by the defendants, Rowland intended for the let- 50a ter’s alleged misrepresentations to have effect in the forum state. Cf. Lake, 817 F.2d at i423 (nonresident attorney who “directed” a California ex parte order at Idaho is subject to personal jurisdiction in that state); Neaves, 912 F.2d at 1065 (nonresident defendant who mailed fraudulent information to forum state resident is subject to personal jurisdiction in that State). On the other hand, Rowland’s contacts with Idaho appear unrelated to the Trustees’ breach of contract claim in count VI. That claim is concerned with the defendants’ alleged fail- ure to abide by the Standstill Agreement. The agreement was negotiated and entered into outside of Idaho, between parties who were not Idaho residents, and the agreement created no continuing relationship with the forum state. See Roth, 942 F.2d at 622. Under the Ninth Circuit’s purposeful availment test for analyzing contract claims, jurisdiction 1s not appro- priate on count VI.'° (2) Hudd Similar to Rowland, Hudd’s alleged effort to conceal the defendants’ illicit transfers was intentionally directed at the environmental creditors through delay tactics implemented at various meetings held in Idaho. The Trustees allege that Hudd sought to stall Idaho creditors until the defendants could safely abscond with Gulf’s assets. The alleged wrongful con- duct was aimed at idaho and was intended to be felt in the forum state. Therefore, Hudd, like Rowland, purposefully availed himself of the privilege of conducting activities in the state of Idaho. “ The Trustees ask the court to exercise “pendent personal juris- diction” over any claim that cannot stand by itself. The Ninth Circuit has never adopted the doctrine, Data Disc, Inc., 557 F.2d at 1289 n.8, and a recent Supreme Court’s decision, Omni Capital Int'l, 484 U.S. at 108- 111, appears to foreclose this avenue. The court therefore rejects the Trustees’ request. a aan SS Re NEL nae ado see a x & Sla However, as discussed above, Hudd’s activity in Idaho is not sufficient to support jurisdiction on count VI, alleging breach of contract. (3) James Although James attended only one meeting in Idaho, at that meeting he is alleged to have directed Pintlar President, H.P. Harbert, to implement strategies to delay any action by the environmental creditors. The trustees allege that James inten- tionally aimed his conduct at Idaho in the hopes of side- tracking any inquiry by Idaho creditors that might have upset the looting of Gulf. If proved, such conduct satisfies the pur- poseful avaiiment prong." As with Rowland and Hudd, exercise of personal jurisdic- tion over James for the breach of contract claim, count VI, is not appropriate. (4) Moran and Inoco Neither Moran nor Inoco are alleged to have personally directed any action at Idaho that caused harm within the state. However, each is alleged to have acted in concert with the other defendants in a joint effort to mislead Idaho creditors and loot Gulf’s assets. Accordingly, the Trustees urge the court to impute to Moran and Inoco, as co-conspirators, the jurisdictional contacts of the other defendants-conspirators. is The bankruptcy court erroneously stated that James “did not make any misrepresentation in Idaho,” and that he did not “perform any acts in furtherance of the conspiracy to loot Gulf in Idaho.” Mem. of Decision, Tab 67 at 56. The bankruptcy court reached this conclusion by relying on the affidavit submitted by James. At this stage of the litiga- tion, where there has not been an evidentiary hearing to resolve issues of credibility, the “documents submitted by the plaintiff ‘are construed in the light most favorable to the plaintiff and all doubts are resolved in its favor.’ Neaves, 912 F.2d at 1062 n.1; see also Sher, 911 F.2d at 1361 (plainuff’s allegations are assumed to be true). Thus, the bankruptcy court erred as a matter of law in referring to the James declaration and ignoring the Trustees’ written submissions. 52a Until recently the Ninth Circuit had not determined whether due process concerns would permit the forum contacts of one conspirator to be imputed to a co-conspirator. However, cases indicated that where positive law created an agency-type rela- tionship, the jurisdictional contacts of the “agent” could be attributed to the “principal.” See, e.g., Wells Fargo & Co.., 556 F.2d at 419-20, 422-24 (concluding that under case law a corporation can be an “agent” and therefore its contacts with forum state can be imputed to the “principal”); Sher, 911 F.2d at 1362 (holding that under state law a partner is an agent of the partnership and therefore the partner’s contacts with forum state can be imputed to the partnership). Consistent with these decisions, the Ninth Circuit has now expressed its willingness to accept a conspiracy theory of jurisdiction, so long as the jurisdictional facts are adequately alleged. Under- wager v. Channel 9 Australia, 69 F.3d 361, 364-65 (9th Cir. 1995). The court finds that, as required by Underwager, the Trustees have alleged facts which satisfy their burden to make a prima facie showing of a conspiracy, sufficient to support the purposeful availment test. The Trustees have alleged that the Rowland Directors controlled Inoco, which in turn con- trolled Gulf; that the Rowland Directors voted as a block and knowingly acted in concert with each other and Inoco; that certain overt acts in furtherance of the conspiracy occurred in Idaho; that all defendants knew of the efforts to loot Gulf; and that all benefited from the wrongful conduct. Because the court concludes that the above allegations meet the require- ments of the “conspiracy theory of jurisdiction,” each of the contacts that support jurisdiction over Rowland, Hudd and James also support the exercise of persoual jurisdiction over Moran and Inoco. Cf. Sher, 911 F.2d at 1362. b. Arising Out Of “The second prong of the specific jurisdiction test is met if ‘but for’ the contacts between the defendant and the forum State, the cause of action would not have arisen.” Jerracom v. as Aa ae a gee Pe DELETE ABA Sip GES Vth Liisa Saba 53a Valley Nat. Bank, 49 F.3d 555, 561 (9th Cir. 1995). The defen- dants appear to argue that at least as to count IX, alleging fraudulent procurement of releases, the “but for” test has not been satisfied because the releases were obtained after the Idaho contacts, and after the defendants ceased to be owners and directors of Gulf.'> The Trustees contend, in turn, that the defendants’ successful effort to mislead Idaho creditors was a necessary step to the completion of all of the alleged torts, including the fraudulent procurement of the releases. Accord- ing to the Trustees, had the defendants not deceived Idaho creditors, the resident creditors would have prevented the defendants from “looting” Gulf and fraudulently obtaining the subsequent releases, which potentially shield the defendants from any action to recover the company’s assets. The court believes the Trustees’ argument is supported by case law and therefore concludes that “but for” the contacts with Idaho, the claims would not have arisen. See Shute v Carnival Cruise Lines, 897 F.2d 377, 385-86 (9th Cir. 1990) (explaining “but for” test and concluding that test is satisfied if the defendant’s forum-related activities put the parties within “tortious striking distance”), rev'd on other grounds, 499 U.S. 585 (1991); see also Ziegler, 64 F.3d at 474; Bal- lard, 65 F.3d at 1500. c. Reasonableness of Exercising Jurisdiction Once the first two prongs of the test are satisfied, the bur- den is on the defendants to “present a compelling case that the presence of some other considerations would render juris- diction unreasonable.” In evaluating reasonableness the court should consider: the extent of the defendants’ purposeful interjection into the forum state; the defendants’ burdens from litigating in the forum; the extent of the conflict with the sovereignty of the defendants’ state; the forum state’s inter- est in adjudicating the dispute; the most efficient forum for 15 mas 2 : : ‘ The defendants present a related argument with regard to the breach of contract claim, count VI. In light of the court’s disposition of count VI, it need not address this argument. 4 ™“, &. 54a judicial resolution of the controversy; the Trustees’ interests in convenient and effective relief; and the availability of an alternative forum. Ziegler, 64 F.3d at 475;-Sher, 911 F.2d at 1364. The court must balance the seven factors to determine whether the exercise of jurisdiction would be reasonable. (1) Extent of Purposeful Injection As discussed above, the defendants purposefully directed their activities into Idaho by attempting to influence resident creditors. They directed their actions at creditors they knew resided in Idaho with the alleged intention of causing harm to those creditors. Thus, the extent of purposeful injection into Idaho was significant. See Ziegler, 64 F.3d at 475 (conclud- ing that agent’s actions, and thus actions imputed to principal, constituted significant purposeful injection into forum state where actions were directed at a person known to be in the forum, with the intended purpose of causing harm in the forum state). (2) Burden on the Defendants To succeed on this factor, the defendants must show that the inconvenience of litigating this action in Idaho is so great that it would amouni to a due process violation. Roth, 942 F.2d at 623; Sher, 911 F.2d at 1365. The defendants fail to make this showing. Moreover, the court notes that “modern advances in communications and transportation have significantly reduced the burden of litigating in another country.” Roth, 942 F.2d at 623; see also Sher, 911 F.2d at 1365. Finally, the defendants can hardly complain that they would be unduly burdened by travel to this country when they “had no problems in [their] globetrotting endeavors” to control and manage the far-flung enterprises associated with Gulf. See Roth, 942 F.2d at 623. (3) Extent of Conflict with Sovereignty of Foreign State ; Given that the defendants are foreign citizens, the present action in Idaho will no doubt conflict to some degree with 55a another country’s sovereignty. However, this consideration “is not dispositive because, if given controlling weight, it would always prevent suit against a foreign national in a United States Court.” /d. And although the defendants argue that because cer- tain of the Trustees’ claims may implicate English law, liti- gation in Idaho is inappropriate, “competing sovereignty interests are best addressed through choice-of-law rules rather than jurisdictional tests.” Sher, 911 F.2d at 1365 n.5. (4) Forum State’s Interest in Adjudication Idaho has a substantial interest in the litigation of this action. The fraudulent conveyance claims are “core pro- ceedings,” tied to the Idaho bankruptcy cases and controlled by federal bankruptcy law. As part of the action, the Trustees, on behalf of the environmental creditors, seek the recovery of assets to remedy environment damage in the State of Idaho. Similarly, retirees of the Bunker Hill Mine seek benefits related to their past employment in Idaho. Finally, Idaho has a strong interest in litigating claims alleged to have caused tortious injury to its residents. (5S) Most Efficient Judicial Resolution As the bankruptcy court noted, much of the evidence regarding Gulf’s solvency, and most of Gulf’s corporate records are located in Idaho. Otherwise, witnesses and addi- tional evidence are not concentrated in one forum. (6) Convenience and Effectiveness of Relief for the Plaintiffs Unquestionably, this factor weighs heavily in favor of the Trustees. Both debtors are now located in Idaho, as are many of the creditors. Furthermore, the Trustees’ action is related to other Idaho bankruptcy proceedings, and involves addi- tional defendants who have conceded to Idaho’s jurisdiction. 56a (7) Availability of an Alternative Forum In light of the fact that the Trustees’ action implicates fed- eral bankruptcy law and involves additional defendants who are United States citizens, there appears to be no other forum outside the United States that could accommodate this case. d. Summary After balancing all the factors, the court concludes that the defendants have not demonstrated that the exercise of per- sonal jurisdiction would be unreasonable. Accordingly, per- sonal jurisdiction exists over all the defendants as to all counts except count VI, the breach of contract claim.'® 4. Service on Rowland Pursuant to Rule 7004(e) Rowland argues that he was not properly served because service was made pursuant to Rule 4(1). According to Row- land, service in a foreign country must be accomplished in the manner prescribed by Bankruptcy Rule 7004(e), which refers only to Rule 4(d)(1) and (d)(3). The court cannot agree. Bankruptcy Rule 7004(a) expressly incorporates the appli- cation of Rule 4(1) to adversary proceedings. Rule 4(1) is con- cerned solely with the manner of service “upon a party in a foreign country.” Thus, by its very terms, Bankruptcy Rule 7004 permits service pursuant to Rule 4(i) where, as here, that rule pertains to the case. - On appeal, the defendants challenge the Trustees’ standing to bring certain claims. Standing is a distinct component of a federal court's ability to hear a case. See Medina v. Clinton, 86 F.3d 155, 157 (9th Cir. 1996). Its focus is on the plaintiff, and whether he has suffered an “injury in fact.” /d. On the other hand, personal jurisdiction is concerned with the defendant, and whether he can be required to litigate in the chosen forum. In the bankruptcy court, the defendants based their motions to dismiss on lack of personal jurisdiction and improper service of process. Leave to appeal was granted on these same issues and only these issues. Because the defendants did not raise the standing challenge in the bankruptcy court, the court will not address the issue. TN Tn i ee ee 57a ORDER Based on the foregoing, and being otherwise fully advised in the premises, the court HEREBY ORDERS that: The bankruptcy court’s decision to deny the defendants’ motions to dismiss for lack of personal jurisdiction and improper service of process is AFFIRMED as to all counts except count VI. As to count VI, regarding breach of contract, the bankruptcy court’s decision to deny the defendants’ motions to dismiss for lack of personal jurisdiction 1s REVERSED. IT IS FURTHER ORDERED that the bankruptcy court's deci- sion to grant the defendants’ motions to dismiss for lack of personal jurisdiction count II, regarding breach of fiduciary duties, corporate waste and mismanagement, is REVERSED. The case is REMANDED for further proceedings consistent with this opinion. Each party shall bear its own costs. Dated this 16th day of August, 1996. EDWARD J. LODGE EDWARD J. LODGE United States District Judge 58a IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO Bk. Case Nos. 93-02986 93-02987 Adv. Case No. 94-6016 Case No. CV 96-010-N-EJL PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. PINTLAR CORPORATION, GULF USA CORPORATION, and H.P. HARBERT, as TRUSTEE, Plaintiffs/Appellees, —against— DAVID J. ROWLAND, et al., Defendants. INOCO PLC, Defendant/Appellant. 59a Bk. Case Nos. 93-02986 93-02987 Adv. Case No. 94-6016 Case No. CV 96-011-N-EJL PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. PINTLAR CORPORATION, GULF USA CORPORATION, and H.P. BARBERT, as TRUSTEE, Plaintiffs/Appellees, —against— DAVID J. ROWLAND, et al., Defendants. DAVID J. ROWLAND, JEREMY E. JAMES, DAVID L. HUDD, and DEREK J. MORAN, Defendants/Appellants. Decided February 16, 1996 ORDER CONSOLIDATING APPEALS Having read the Stipulation among the plaintiffs/appellees and the defendants/appellants dated February , 1996, IT Is HEREBY ORDERED that: |. The two above-captioned appeals shall be consolidated. 60a 5 The appellants may file a joint record for the consoli dated appeals 3. The “lead case” in which all filings shall be made shall be Case No. CV 96-010-N-EJL. 4. The Bankruptcy Court, by order dated January 25, 1996, having substituted “Bernard Goodson, Ford Elsaessar, Low- ell Finley, and Jay J. Miller, as Trustees” for the prior plain tiffs in Adversary Proceeding No. 94-6016, said substitution shall also apply to these appeals 5. The caption for the consolidated appeals shall be Bk. Case Nos. 93-02986 93-02987 Adv. Case No. 94-6016 Case Nos. CV 96-010-N-EJL CV 96-011-N-EJL PINTLAR CORPORATION and GULF USA CORPORATION, Debtors BERNARD GOODSON, FORD ELSAESSAR, LOWELL FINLEY, and JAY J. MILLER, as TRUSTEES, Plaintiffs/Appellees, —against-— DAVID J. ROWLAND. et al.. Defendants. 6la INOCO PLC, DAvipD J. ROWLAND. JEREMY E. JAMES DAVID L. HUDD, and DEREK J MORAN, Defendants/Appellants DATED this 16th day of February, 1996 EDWARD J. Lopat! U.S.D.J Dewey Ballantine 1301 Avenue of the Americas New York, New York 10019-6092 (212) 259-8000 John M. Friedman, Jr., Esq. Dianne Coffino, Esq Givens, Pursley & Huntley Suite 200, Park Place 277 North Sixth Street Boise, Idaho 83701 (208) 342-6571 David R. Lombard, Esq Ramona S. Neal, Esq Counsel to Plaintiffs IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Chapter 11 Case Case Nos. 93-02986 93-02987 Adversary Proceeding No. 94-6016 , O54 In re PINTLAR CORPORATION and GULF USA CORPORATION. Debtors PINTLAR CORPORATION, et al.. Plaintiffs. DAVID J. ROWLAND. et ai.. Defendants Decided and Filed January 25, 1996 ORDER, UNDER BANKRUPTCY RULE 7025, (A) SUBSTITUTING BERNARD GOODSON, FORD ELSAESSAR, LOWELL FINLEY AND JAY J. MILLER. TRUSTEES, AS PLAINTIFFS, AND (B) AMENDING CAPTION TO REFLECT THE SUBSTITUTION OF PARTIES Upon the motion dated December 11, 1995 (the “Motion”) of Bernard Goodson, Ford Elsaessar, Lowell Finley and Jay J Miller (collectively, the “Trustees”), as trustees of a litigation trust (“Trust”) created on November 17, 1994 and approved by this Court by Order dated June 29, 1995, for an order. under Fed. R. Civ. P. 25(c), as made applicable to these pro ceedings by Bankruptcy Rule 7025, directing that (a) the Trustees, not in their individual capacities but solely as trustees of the Trust, be substituted for Pintlar Corporation, Gulf USA Corporation and H. P. Harbert, as pla:ntiffs in this adversary proceeding and (b) the caption for pleadings filed in this adversary proceeding be amended to reflect the sub- 64a stitution of parties; and adequate notice of the Motion having been given to all parties to this adversary proceeding; and no other or further notice of the Motion being necessary or required; and after due deliberation and for cause shown; it is | hereby ORDERED, that Bernard Goodson, Ford Elsaessar, Jay J. Miller and Lowell Finley, are substituted, not in their indi- vidual capacities but solely as trustees of the Trust, for Pint- lar Corporation, Gulf USA Corporation and H. P. Harbert, as plaintiffs in this adversary proceeding; and it is further ORDERED, that, commencing seven (7) days after the date hereof, any party filing a pleading in this adversary pro- ceeding shall use the following caption in its papers: IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Chapter 11 Case Case Nos. 93-02986 93-02987 Adversary Proceeding No. 94-6016 In re PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. 6Sa BERNARD GOODSON. FORD ELSAESSAR. LOWELL FINLEY AND JAY J. MILLER. as Trustees. Plaintiffs. DAVID J. ROWLAND. et al.., Defendants. and it is further. ORDERED, the Trustees Shall, within five ( 5) business days after the date hereof. serve a copy of this Order on each defendant in this adversary proceeding. Dated: Boise, Idaho January 25, 1996 ALFRED C. HAGAN UNITED STATES BANKRUPTCY JUDGE 66a IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO Bk. Case Nos. 93-02986 93-02987 Adv. Case No. 94-6016 Case No. CV 95- In re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. PINTLAR CORPORATION, et al., Plaintiffs, —vVsS.— DAVID J. ROWLAND, et al., Defendants. Decided December 11, 1995 ORDER GRANTING LEAVE TO APPEAL On November 1, 1995, David J. Rowland, Jeremy E. James, David L. Hudd, and Derek L. Moran, defendants to an adver- sary proceeding in the bankruptcy court, filed a motion for leave to appeal from the October 6, 1995, amended order of the bankruptcy court denying their motions to dismiss for lack ’ t 67a of personal jurisdiction and improper service of process. Sep- arately, on November |, 1995, defendant Inoco Plc also filed a motion for leave to appeal from the bankruptcy court's October 6, 1995, amended order denying Inoco’s motion to dismiss for lack of personal jurisdiction. On November 13, 1995, the d«” ndants filed an amended motion for leave to appeal from the second amended order of the bankruptcy court issued November |, 1995. The plaintiffs to the adver- sary proceeding filed a notice of cross-appeal November 13, 1995. The parties agree that the bankruptcy court’s second amended order is an interlocutory decision. Under 28 U.S.C. § 158(a), a district court may properly exercise appellate jurisdiction over an interlocutory order of the bankruptcy court. The determination whether to accept such an appeal is within the court’s discretion. See Bankruptcy Rule 8003. In granting leave to appeal pursuant to 28 U.S.C. § 158, several courts have followed the standard set out in 28 U.S.C. § 1292(b). which governs interlocutory appears from the dis- trict courts to the courts of appeal. See, e.g., In re Sperna, 173 B.R. 654, 658 (Bankr. 9th Cir 1994). Under § 1292(b), grant- ing leave is appropriate if the interlocutory order involves a controlling question of law as to which there is a substantial ground for difference of opinion and an immediate appeal may materially advance the ultimate termination of the liti- gation. /d. Here, the defendants challenge the bankruptcy court’s choice of legal standards in making the personal jurisdiction determination. As the bankruptcy court’s memorandum of decision demonstrates, there is substantial ground for a dif- ference of opinion on this issue. Finally, a resolution of this issue now will advance the ultimate termination of the liti- gation. Accordingly, the court concludes that the motions for leave to appeal should be granted. 68a ORDER Based on the foregoing, and the court being otherwise fully advised in the premises; IT 1S HEREBY ORDERED that the motion and amended motion of defendants David J. Rowland, Jeremy E. James, David L. Hudd, and Derek J. Moran for leave to appeal to the district court from the amended order of the bankruptcy court dated October 6, 1995, and the second amended order of the bankruptcy court dated November 1, 1995, is GRANTED. IT IS FURTHER ORDERED that the motion and amended motion of defendant Inoco Plc for leave to appeal to the dis- trict court from the amended order of the bankruptcy court dated October 6, 1995, and the second amended order of the bankruptcy court dated November |, 1995, is GRANTED. Dated this 11th day of December, 1995. EDWARD J. LODGE EDWARD J. LODGE UNITED STATES DISTRICT JUDGE 69a IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Adversary No. 93-6016 Case No. 93-02986 Case No. 93-02987 5 | In re: PINTLAR CORPORATION and GULF USA CORPORATION. Debtors. PINTLAR CORPORATION, GULF USA CORPORATION and H.P. HARBERT, as TRUSTEE. Plaintiffs, —_—VS—_— DAVID J. ROWLAND, JEREMY E. JAMES, Davip L. Hupp. DEREK J. MORAN, ROBERT G. BOULTON, SEYMOUR GRAUBARD, HANS W. WANDERS, GRAHAM F. LACEY, F. ALEY ALLAN, WARREN C. HABER, WILLIAM C. Horn. LAWRENCE R. MEHL, JOHN W. HERRING, ANTHONY WALTERS, CYRIL WARREN MCKENZIE, PETER L. WHITTAKER, LANE NEAVE RONALDSON, WYNN WILLIAMS & Co., ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL CorRPo- 2. RATION, INTERALLIANZ BANK A.G. formerly known as INTERALLIANZ BANK ZURICH, A.G.), INTERALLIANZ SECURITIES CORP., BIKUBEN-WHITEFRIARS LIMITED. MONACO GROUP FUND, S.A., BRIERLEY INVESTMENTS LTD., PORTFOLIO MANAGEMENT LIMITED, FELPARK | 70a LIMITED (formerly known as SINO INFORMATION SERVICES LIMITED), FERRIS INVESTMENTS LIMITED, and LAWRENCE P. HOCKEY-SWEENEY, Defendants. Decided and Filed November 1, 1995 SECOND AMENDED ORDER Upon the Plaintiffs’ motion for clarification and reconsid- eration of the Amended Order of October 13, 1995, filed in this case, the Amended Order is amended and restated as fol- lows: ORDERED: 1. The motions to dismiss for lack of personal jurisdiction of the following defendants are GRANTED: Monaco Group Fund, Interallianz Bank A.G., Interallianz Securities Corp., Bikuben-Whitefriars Limited, Cyril Warren McKenzie, Peter L. Whittaker, Wynn Williams & Co., Olly R. Matson, Brierley Investments LTD., Lawrence P. Hockey-Sweeney, and Graham F. Lacey. 2. The remaining motions filed by Monaco Group Fund, Interallianz Bank A.G., Interallianz Securities Corp., Bikuben-Whitefriars Limited, Cyril Warren McKenzie, Peter L. Whittacker, Wynn Williams & Co., Olly R. Matson, Brierley Investments LTr.. Lawrence P. Hockey-Sweeney, and Graham F. Lacey are DENIED as moot. 3. The motions to dismiss for lack of personal jurisdiction of Defendants INoco, PLc., David J Rowland, Jeremy E. James, David L. Hudd, and Derek J. Moran are GRANTED as to the torts of corporate waste and mismanagement and DENIED with respect to all other counts. PRI Ie Tla 4. The motion to dismiss of William C. Horn to dismiss for lack of personal jurisdiction is DENIED. 5. Defendant William C. Horn’s motion to quash service and his motion to dismiss for failure to make timely service are GRANTED and this proceeding is dismissed without prej- udice as to Defendant Horn. 6. The remaining motions filed by William C. Horn are DENIED as moot. 7. The motions to quash service of Jeremy E. James, David L. Hudd and Derek J. Moran are DENIED. 8. David J. Rowland’s motion to quash service is GRANTED in PART and CONTINUED in PART: a. David J. Rowland’s motion to quash service in Monaco is GRANTED. b. With regard to David J. Rowland’s motion to quash ser- vice in London, England: David J. Rowland shall have until November 15, 1995 to submit copies of the legal authority relied upon by affiant Paul Mallalieu Stanley; and the Plain- tiffs shall have until November 15, 1995 to submit copies of the legal authority relied upon by affiant Peter John Fitzpatrick. The motion shall remain under advisement pend- ing the submission of the above mentioned legal authority. 9. The Plaintiffs’ motion for reconsideration of this Court's order of October 6, 1995 (as amended October 13. 1995) is DENIED as to its request for reconsideration of the following: a. The granting the motions to dismiss for lack of personal jurisdiction of Defendants Graham F. Lacey, Interallianz Bank A.G., Interallianz Securities Corp. and Bikuben-Whitefriars Limited; b. The granting of the motions to dismiss for lack of per- sonal jurisdiction of Defendants David J. Rowland. Jeremy E. James, David L. Hudd, and Derek J. Moran: and 72a c. The granting of Defendant William C. Horn’s motion to quash service. 10. The Plaintiffs shall have until November 15, 1995 to submit briefs and other material in support of their motion for reconsideration of this Court’s order quashing service on Defendant David J. Rowland in Monaco and Defendant Rowland shall have thirty days thereafter to submit briefs and other legal materials in opposition to the Plaintiffs’ motion to reconsider this Court’s order quashing service on Rowland in Monaco. Dated this Ist day of November, 1995 ALFRED C HAGAN ALFRED C . HAGAN U.S . BANKRUPTCY JUDGE 73a IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Adversary No. 93-6016 Case No. 93-02986 Case No. 93-02987 In re: PINTLAR CORPORATION and GULF USA CORPORATION. Debtors. PINTLAR CORPORATION. GULF USA CORPORATION and H.-P. HARBERT, as TRUSTEE, Plaintiffs, —VS.— DAVID J. ROWLAND, JEREMY E. JAMES, Davin L. Hupp, DEREK J. MORAN, ROBERT G. BOuLton, SEYMOUR GRAUBARD, HANS W. WANDERS, GRAHAM F. LACEY, F. ALEY ALLAN, WARREN C. HABER, WILLIAM C. HORN, LAWRENCE R. MEHL, JOHN W. HERRING, ANTHONY WALTERS, CYRIL WARREN MCKENZIE, PETER L. WuitT- TAKER, LANE NEAVE RONALDSON, WYNN WILLIAMS & Co., ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL CORPORATION. INTERALLIANZ BANK A.G. formerly known as INTER- ALLIANZ BANK ZURICH. A.G.), INTERALLIANZ SECU- RITIES CORP., BIKUBEN-WHITEFRIARS LIMITED, MONACO Group FuNp. S.A., BRIERLEY INVESTMENTS LTD., PORTFOLIO MANAGEMENT LIMITED. FELPARK 74a LIMITED (formerly known as SINO INFORMATION SERVICES LIMITED), FERRIS INVESTMENTS LIMITED, and LAWRENCE P. HOCKEY-SWEENEY, Defendants. Decided and Filed October 6, 1995 AMENDED ORDER In accordance with the contents of the memorandum of decision entered on September 29, 1995, it is hereby, ORDERED: 1. The motions to dismiss for lack of personal jurisdiction of the following defendants are GRANTED: Monaco Group Fund, Interallianz Bank A.G., Interallianz Securities Corp., Bikuben-Whitefriars Limited, Cyril Warren McKenzie, Wynn Williams & Co., Olly R. Matson, Brierley Investments LTD., Lawrence P. Hockey-Sweeney, and Graham F. Lacey. 2. The remaining motions filed by Monaco Group Fund, Interallianz Bank A.G., Interallianz Securities Corp., Bikuben-Whitefriars Limited, Cyril Warren McKenzie, Wynn Williams & Co., Olly R. Matson, Brierley Investments LTD., Lawrence P. Hockey-Sweeney, and Graham F. Lacey are DENIED as moot. 3. The motions to dismiss for lack of personal jurisdiction of the following defendants are DENIED: INOCO, PLC., David J. Rowland, Jeremy E. James, David L. Hudd, Derek J. Moran and William C. Horn. 4. Defendant William C. Horn’s motion to quash service and his motion to dismiss for failure to make timely service are GRANTED. ee f at q % 2 Z 75a 5. The remaining motions filed by Villiam C. Horn are DENIED as moot. 6. The motions to quash service of Jeremy E. James, David L. Hudd and Derek J. Moran are DENIED. 7. David J. Rowland’s motion to quash service is GRANTED in PART and CONTINUED in PART: a. David J. Rowland’s motion to quash service in Monaco is GRANTED. b. With regard to David J. Rowland’s motion to quash ser- vice in London, England: David J. Rowland shall have thirty (30) days from the date of this order to submit copies of the legal authority relied upon by affiant Paul Mallalieu Stanley; and the Plaintiffs shall have thirty (30) days from the date of this order to submit copies of the legal authority relied upon by affiant Peter John Fitzpatrick. The motion shall remain under advisement pending the submission of the above men- tioned legal authority. Dated this 6th day of October, 1995. ALFRED C. HAGAN ALFRED C. HAGAN U.S. BANKRUPTCY JUDGE 76a IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Adversary No. 93-6016 Case No. 93-02986 Case No. 93-02987 In re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. PINTLAR CORPORATION, GULF USA CORPORATION and H.P. HARBERT, as TRUSTEE, Plaintiffs, = 5 DAVID J. ROWLAND, JEREMY E. JAMES, DAviID L. HUDD, DEREK J. MORAN, ROBERT G. BOULTON, SEYMOUR GRAUBARD, HANS W. WANDERS, GRAHAM F. LACEY, F. ALEY ALLAN, WARREN C. HABER, WILLIAM C. HORN, LAWRENCE R. MEHL, JOHN W. HERRING, ANTHONY WALTERS, CYRIL WARREN MCKENZIE, PETER L. WHIT- TAKER, LANE NEAVE RONALDSON, WYNN WILLIAMS & Co., ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL CORPORATION, INTERALLIANZ BANK A.G. formerly known as INTER- ALLIANZ BANK ZURICH, A.G.), INTERALLIANZ SECU- RITIES CORP., BIKUBEN-WHITEFRIARS LIMITED, MONACO GROUP FUND, S.A., BRIERLEY INVESTMENTS LTD., PORTFOLIO MANAGEMENT LIMITED, FELPARK arrester a ere a erie uC Re rae 77a LIMITED (formerly known as SINO INFORMATION SERVICES LIMITED), FERRIS INVESTMENTS LIMITED. and LAWRENCE P. HOCKEY-SWEENEY, Defendants. Decided and Filed October 2, 1995 ORDER In accordance with the contents of the memorandum of decision entered on September 29, 1995, it is hereby, ORDERED: 1. The motions to dismiss for lack of personal jurisdiction of the following defendants are GRANTED: Monaco Group Fund, Interallianz Bank A.G.. Interallianz Securities Corp., Bikuben-Whitefriars Limited. Cyril Warren McKenzie, Wynn Williams & Co., Olly R. Matson. Brierley Investments LTp.. Lawrence P. Hockey-Sweeney, and Graham F. Lacey. 2. The remaining motions filed by Monaco Group Fund, Interallianz Bank A.G.. Interallianz Securities Corp., Bikuben-Whitefriars Limited. Cyril Warren McKenzie, Wynn Williams & Co., Olly R. Matson. Brierley Investments LTp.. Lawrence P. Hockey- Sweeney, and Graham F. Lacey are DENIED as moot. 3. The motions to dismiss for lack of personal jurisdiction of the following defendants are DENIED: David J. Rowland, Jeremy E. James, David L. Hudd, Derek J. Moran and William C. Horn. 4. Defendant William C Horn’s motion to quash service and his motion to dismiss for failure to make timely service are GRANTED. 78a 5. The remaining motions filed by William C. Horn are DENIED as moot. 6. The motions to quash service of Jereme E. James, David L. Hudd and Derek J. Moran are DENIED. 7. David J. Rowland’s motion to quash service is GRANTED in PART and CONTINUED in PART: a. David J. Rowland’s motion to quash service in Monaco is GRANTED. b. With regard to David J. Rowland’s motion to quash ser- vice in London, England: David J. Rowland shall have thirty (30) days from the date of this order to submit copies of the legal authority relied upon by affiant Paul Mallalieu Stanley; and the Plaintiffs shall have thirty (30) days from the date of this order to submit copies of the legal authority relied upon by affiant Peter John Fitzpatrick. The motion shall remain under advisement pending the submission of the above men- tioned legal authority. Dated this 2nd day of October, 1995. ALFRED C. HAGAN ALFRED C. HAGAN U.S. BANKRUPTCY JUDGE 2 ORS. Senet: va OR, Sag etaelatentick ars 79a IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF IDAHO Adversary No. 93-6016 Case No. 93-02986 Case No. 93-02987 In re: PINTLAR CORPORATION and GULF USA CORPORATION, Debtors. PINTLAR CORPORATION, GULF USA CORPORATION and H.P. HARBERT, as TRUSTEE, Plaintiffs, —vs.— DAVID J. ROWLAND, JEREMY E. JAMES, DAVID L. HUDD, DEREK J. MORAN, ROBERT G. BOULTON, SEYMOUR GRAUBARD, HANS W. WANDERS, GRAHAM F. LACEY. F. ALEY ALLAN, WARREN C. HABER, WILLIAM C. HORN, LAWRENCE R. MEHL, JOHN W. HERRING. ANTHONY WALTERS, CYRIL WARREN MCKENZIE, PETER L. WHITTAKER, LANE NEAVE RONALDSON, WYNN WILLIAMS & Co., ALISTER G. MCDONALD, OLLY R. MATSON, EDWARD LYNCH, INOCO PLC., NYCAL Cor- PORATION, INTERALLIANZ BANK A.G. formerly known as INTERALLIANZ BANK ZURICH, A.G.), INTERALLIANZ SECURITIES CORP., BIKUBEN-WHITEFRIARS LIMITED, MONACO GrRouP FUND, S.A.. BRIERLEY INVESTMENTS LTD., PORTFOLIO MANAGEMENT LIMITED, FELPARK LIMITED (formerly known as SINO INFORMATION 80a SERVICES LIMITED), FERRIS INVESTMENTS LIMITED, and LAWRENCE P. HOCKEY-SWEENEY, Defendants. Decided and Filed September 29, 1995 MEMORANDUM OF DECISION John M. Friedman, Jr. and Dianne F. Coffino, DEWEY BAL- LANTINE, New York, New York and Terry L. Meyers, GIVENS PURSLEY WEBB & HUNTLEY, Boise, Idaho, for plaintiff. H. Jim Magnuson, Coeur d’Alene, Idaho, for William C. Hern. Susan A. Cahoon, KILPATRICK & Copy, Atlanta, Georgia, for Interallianz Bank A.G. & Interallianz Securities Corporation. John F. Kurtz, Jr.,. HAWLEY TROXELL ENNIS & HAWLEY, Boise, Idaho, for Bikuben-Whitefriars Limited, Wynn Williams & Company, Olly R. Matson, Cyril Warren McKenzie, Peter L. Whittaker and Brierley Investments Ltd. John T. Mitchell, MITCHELL & MITCHELL, Coeur d’Alene, Idaho, and Lawrence F. Carnevale, CARTER LEDYARD & MIL- BURN, New York, New York, for David J. Rowland, Derek J. Moran, David L. Hudd, Jeremy E. James, and INOCO PLC. Barry M. Okun, ROSENMAN & COLIN, New York, New York, for INOCO, PLC. Robert L. Dell Angelo, Los Angeles, California, for Brierley Investments. Richard S. Taffet, GOLENBOCK EISEMANN ASSOR & BELL, New York, New York, for Bikuben-Whitefriars Limited. Scott D. Hess, EBERLE BERLIN KADING TURNBOW & MCKLVEEN, Boise, Idaho, for Graham F. Lacey. Patrick J. Kole, MOFFATT THOMAS BARRETT ROCK & FIELDS, Boise, Idaho, for Lawrence P. Hockey-Sweeney. Rr sree on eam arc =. oe TH ere he ea) 8la TABLE OF CONTENTS NATURE OF THE ACTION FACTUAL BACKGROUND The Sale to Rowland The Rowland Era I. Il. Il. IV. Ow > ae Qn 7AMOOWS>AO> GS The Bermuda Proposal Stock Speculation Storehouse Excessive Compensation and Employment of I [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1391%3A2. Public record. Not legal advice.