NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
MARC and DENISE THORPE, No. 98-11963
v. A.P. No. 01-1061
ROBOT WARS, LLC, et al.,
Memorandum re Preliminary Injunction
Steven Plotnicki is the owner of Profile Records, Inc., which owns defendant Robot Wars, LLC.
On behalf of Profile, Plotnicki has filed several claims in the Chapter 11 proceedings of debtors Marc
and Denise Thorpe. These claims are central to the Thorpes' efforts to reorganize. As part of the plan
confirmation process, the court both estimated the amount of Profile's claims and adjudicated the rights
of Profile and the Thorpes relating to an agreement they reached while the Chapter 11 proceedings were
pending. The court's decision is now on appeal in the district court, as well as confirmation of the
Although the dispute was always a two-party affair between Plotnicki and Thorpe, there were
technically three parties to the agreement which was the subject of the litigation now on appeal: Marc
Thorpe, Profile, and Robot Wars LLC. The only reason Robot Wars was made a separate party was
that it was to be responsible for the payment of certain royalties to Thorpe.
Incredibly, Robot Wars has filed an action in federal district court in New York seeking both an
administrative priority claim in the bankruptcy proceedings and damages against Thorpe personally on
exactly the same issues decided by this court and now being appealed by Profile.
attempting to use the separate identities of Profile and Robot Wars to appeal decisions of this court on
one coast while re-litigating the same issues on the other coast. There are so many procedural flaws in
this action that the court hardly knows where to begin.
The only justification Robot Wars and its counsel have given for their actions is 28 U.S.C. §
1409(e), which specifies proper venue
for a proceeding against the representative of a bankruptcy estate
based on a claim arising after the commencement of a case from the operation of a business. Robot
Wars seems to mistakenly think
that this section is an enabling
statute, which it is not.
statute is 28 U.S.C. § 959(a), which permits debtors in possession to be sued without leave of the court
appointing them with respect to any of their acts or transactions in carrying on business connected with
estate property. The statute provides:
(a) Trustees, receivers or managers of any property, including debtors in possession, may
be sued, without leave of the court appointing them, with respect to any of their acts or
transactions in carrying on business connected with such property. Such actions shall be
subject to the general equity power of such court so far as the same may be necessary to
the ends of justice, but this shall not deprive a litigant of his right to trial by jury.
There are several problems associated with Robot Wars' reliance on § 959(a). First of all, it is
doubtful that its claims
arise out of the carrying on of business as contemplated by that statute, which
was intended to permit tort actions arising out of the debtor's business, not contract disputes at the core
of reorganization proceedings. In re Balboa Improvements
, Ltd., 99 B.R. 966, 970 (9th
Secondly, it affords Robot Wars no justification whatsoever for attempting to recover a personal
judgment against Thorpe. Thirdly, § 959(a) gives this court, as the appointing court, the power to
enjoin an action even if it is proper under that statute if the court finds the action threatens the
administration of the bankruptcy estate. Diners Club, Inc. v. Bumb,
421 F.2d 396, 398 (9th Cir.
1970)("[T]he first sentence's broad grant of permission to sue is limited by the second, which makes suits subject to the general equity power of the appointing court.").
Thus, Robot Wars and its counsel
have exposed themselves to significant liability in bringing an action which is highly questionable and
subject to injunction by this court even if proper.
Robot Wars is not immune from these bankruptcy proceedings just because it has
never filed a proof of claim. Having full knowledge of the bankruptcy at all times, it is bound by the
confirmed plan in this case, which if upheld on appeal will have res judicata
effect precluding any
dispute which was raised or could have been raised prior to confirmation.
11 U.S.C § 1141(d)(1)(A)(i);
In re Heritage Hotel Partnership I
, 160 B.R. 374, 377 (9th
Lastly, the court notes that regardless of its form the district court action brought by Robot Wars
is in substance a collateral attack on this court's judgment in the adversary proceeding involving Profile
and this court's order confirming the Thorpe plan. The proper way to contest these rulings is by appeal
to the district court for this district. An independent action in the district court of another district,
attempting an "end run" around the rulings of a bankruptcy court, is not proper. Celotex Corp. v.
, 514 U.S. 300 (1995).
Not only would prosecution of the New York action clearly interfere
with the administration of the bankruptcy estate here, but it appears that the action was calculated
Pursuant to 28 U.S.C. § 959(a), it must be enjoined.
For the above reasons,
the court will exercise its power under 28 U.S.C § 959(a) to
district court litigation. Counsel for the Thorpes shall submit an appropriate form of preliminary
Dated: May 12, 2001 ___________________________