Opinion
22-14240-mkn Adv. Proc. 22-01166-mkn
07-11-2023
In re: MIOMNI GAMING LTD, Debtor. v. MIOMNI HOLDING CO., a Foreign holding company, et al., Defendants. SBC NEVADA, LLC, as Successor in Interest to the Estate Claims of Miomni Gaming, Limited, Plaintiff,
INCORP SERVICES, INC. c/o MIOMNI LTD. INCORP SERVICES, INC. c/o MIOMNI SPORTS LTD. MATTHEW C. ZIRZOW, ESQ. LARSON & ZIRZOW c/o MIOMNI GAMING LTD. VERDEMAR HOUSE c/o MIOMNI HOLDINGS LIMITED WHITLEY BAY TYNE AND WEAR TROY FOX
Date: March 29, 2023
Chapter 7
INCORP SERVICES, INC. c/o MIOMNI LTD.
INCORP SERVICES, INC. c/o MIOMNI SPORTS LTD.
MATTHEW C. ZIRZOW, ESQ. LARSON & ZIRZOW c/o MIOMNI GAMING LTD.
VERDEMAR HOUSE c/o MIOMNI HOLDINGS LIMITED WHITLEY BAY TYNE AND WEAR TROY FOX
ORDER ON DEFENDANT MIOMNI SPORTS LTD. ['S] MOTION TO DISMISS
In this Order, all references to "ECF No." are to the number assigned to the documents filed in the above-captioned bankruptcy case as they appear on the docket maintained by the Clerk of Court. All references to "AECF No." are to the number assigned to the documents filed in the above-captioned adversary proceeding as they appear on the docket maintained by the Clerk of Court. All references to "Section" are to provisions of the Bankruptcy Code, 11 U.S.C. §§ 101, et seq. All references to "FRBP" are to the Federal Rules of Bankruptcy Procedure. All references to "FRCP" are to the Federal Rules of Civil Procedure. All references to "FRE" are to the Federal Rules of Evidence.
Pursuant to FRE 201(b), the court takes judicial notice of all materials appearing on the docket in the above-captioned adversary proceeding and the above-captioned Bankruptcy Case See Bank of Am., N.A. v. CD-04, Inc. (In re Owner Mgmt. Serv., LLC Trustee Corps.), 530 B.R. 711, 717 (Bankr. C.D. Cal. 2015) ("The Court may consider the records in this case, the underlying bankruptcy case and public records.").
Honorable Mike K. Nakagawa United States Bankruptcy Judge
On March 29, 2023, the court heard Defendant Miomni Sports Ltd.['s] Motion to Dismiss ("Sports Dismissal Motion") brought in the above-captioned adversary proceeding. The appearances of counsel were noted on the record. After the hearing, the matter was taken under submission.
BACKGROUND 2
On November 30, 2022, Miomni Gaming LTD ("Debtor" or "Gaming") filed a voluntary Chapter 7 "skeleton" petition. (ECF No. 1). Attached to the petition is a "Certificate of Resolutions of MIOMNI GAMING LIMITED (Company No. 7730346)" dated November 30, 2022, that is signed by Michael Venner and Andrew Watt as directors. Also attached to the petition is a list stating the names and addresses of certain creditors, including SBC Nevada, LLC ("SBC"). No schedules of assets and liabilities ("Schedules") or statement of financial affairs ("SOFA") is attached to the petition. The Chapter 7 case was assigned to Troy S. Fox to serve as the Chapter 7 bankruptcy trustee ("Trustee"). Notice of the Chapter 7 bankruptcy was entered and served, setting a meeting of creditors under Section 341(a) for December 28, 2022 ("341 Meeting"). (ECF No. 2).
On December 14, 2022, Debtor filed a motion to extend to January 4, 2023, the deadline to file its Schedules and SOFA. (ECF No. 11). That motion was noticed to be heard on January 18, 2023. (ECF No. 12).
On December 23, 2022, SBC commenced the above-captioned adversary proceeding ("SBC Adversary") against four separate defendants: Miomni Holding Co. ("Holding"), Miomni Sports LTD. ("Sports"), and Miomni LTD. ("Limited"), as well as the Debtor. (ECF No. 16). SBC's complaint ("Adversary Complaint") is styled as six separate claims: recovery of intentional fraudulent transfers under Section 548(a)(1)(A), recovery of constructive fraudulent transfers under Section 548(a)(1)(B), recovery based on successor liability, imposition of injunctive relief, relief from the automatic stay to pursue the SBC Adversary, and a determination of alter ego status between the Debtor, Holding, Sports, and Limited. (AECF No. 1).
It is not quite clear whether the Adversary Complaint seeks relief from stay to commence the very same SBC Adversary (in which case filing the complaint without prior relief might be void as a violation of the automatic stay) or if SBC might actually seek relief from stay to continue prosecution of certain prepetition litigation that was pending in the Eighth Judicial District Court, Clark County, Nevada, at the time the Chapter 7 petition was filed.
On December 23, 2022, SBC filed an Emergency Request for Temporary Restraining Order, Preliminary Injunction and Stay Relief on Order Shortening Time ("First TRO Motion") along with a supporting declaration of John A. Fortin, Esq. ("First Fortin Declaration"). (AECF Nos. 3 and 5).
On January 4, 2023, an order was entered granting SBC's request to shorten time so that the First TRO Motion could be heard on January 19, 2023. (AECF No. 13).
On January 4, 2023, a Certificate of Service was filed by SBC attesting that the Adversary Complaint and Summons were served by first class mail on January 4, 2023, along with the First TRO Motion and supporting documents ("January 4 Certificate"). (AECF No. 16).
On January 11, 2023, Debtor filed its Schedules and SOFA. (ECF No. 18).
On January 13, 2023, Debtor filed an opposition to the First TRO Motion. (AECF No. 17). Attached to that opposition ("First TRO Opposition") are separate documents marked as exhibits 1 through 8.
On January 16, 2023, the Trustee filed a response to the First TRO Motion. (AECF No. 18).
On January 17, 2023, Debtor filed the Declaration of Andrew Watt ("First Watt Declaration") in support of its opposition to the First TRO Motion. (AECF No. 24).
On January 17, 2023, SBC filed an omnibus reply ("SBC First TRO Reply") in support of the First TRO Motion. (AECF No. 25).
On January 19, 2023, an order was entered granting the Debtor's motion to extend time, authorizing its Schedules and SOFA to be filed on January 11, 2023. (ECF No. 21).
On January 19, 2023, SBC filed the Declaration of Ryan J. Works, Esq. ("First Works Declaration") (AECF No. 26) to authenticate the exhibits attached to the First TRO Motion, or to obtain judicial notice of certain documents. Additionally, the declaration includes a revised Exhibit 8 purportedly consisting of a final version of the 2004 Examination transcript of Andrew Watt. After the First TRO Motion was heard on January 19, 2023 ("First TRO Hearing"), the matter was taken under submission.
On January 25, 2023, an order was entered denying the First TRO Motion ("TRO Denial") primarily because SBC lacked standing to assert causes of action belonging to the Chapter 7 estate. (AECF No. 27).
On January 26, 2023, the Trustee brought a Motion to Sell Causes of Action Free and Clear of All Claims, Encumbrances, and Interests ("Sale Motion") to which the Trustee attached his supporting declaration ("Trustee Sale Declaration") along with an executed Purchase and Sale Agreement ("Sale Agreement"). (ECF No. 24). By the motion, the Trustee sought to sell he Estate Claims to SBC.
The Trustee's declaration attached to the Sale Motion attested, inter alia, that "I have determined that the assets of this estate include certain potential avoidance and recovery claims including but not limited to preferential transfers, fraudulent transfers, unauthorized post-petition transfers, and related alter ego claims (the "Estate Claims")." Trustee Sale Declaration at ¶ 4. The Sale Motion sought to transfer the bankruptcy estate's claims to SBC and to divide their proceeds, if any, with the Chapter 7 estate pursuant to a specific formula. See Sale Agreement at Section 1.03.
Any cause of action or other property of the bankruptcy estate that is not administered by the Trustee likely would be administratively abandoned under Section 554(c) when the Chapter 7 case is closed. A bankruptcy debtor that does not receive a discharge may be revested with property of the bankruptcy estate that is abandoned. Under such circumstances, neither the automatic stay nor a discharge injunction would prevent a prepetition creditor from pursuing alter ego or similar derivative claims.
On January 27, 2023, the court entered an order shortening time ("OST") so that the Sale Motion could be heard on February 8, 2023. (ECF No. 27). The OST and the Sale Motion were served on the initial and additional lists of creditors filed by the Debtors, including the Debtor and its bankruptcy counsel of record. (ECF No. 29).
On February 8, 2023, the court heard the Sale Motion ("Sale Hearing").
On February 8, 2023, SBC filed in the SBC Adversary a Three Day Notice of Intent to Take Default ("Three Day Notice") and a Certificate of Service with respect to all of the named defendants except the Debtor. (AECF Nos. 30 and 31).
On February 9, 2023, an order was entered authorizing the Trustee to sell the Estate Claims to SBC ("Sale Order"). (ECF No. 34).
On February 15, 2023, SBC filed and served a Notice of Dismissal of Miomni Gaming Ltd. Without Prejudice From Adversary Proceeding, dismissing Miomni Gaming Ltd from SBC's Verified Complaint filed in the SBC Adversary. (AECF No. 32 and 33). The Notice of Dismissal did not apply to any of the remaining defendants named in the Adversary Complaint, i.e., Holdings, Sports, and Limited.
On February 16, 2023, Sports filed in the SBC Adversary its Motion to Dismiss ("Sports Dismissal Motion") which was noticed to be heard on March 29, 2023. (AECF Nos. 34 and 42).
On February 17, 2023, SBC filed another Emergency Request for Temporary Restraining Order, Preliminary Injunction on Order Shortening Time ("Second TRO Motion"), along with another supporting declaration of Ryan J. Works, Esq. ("Second Works Declaration") (AECF Nos. 35 and 36). A request to have the Second TRO Motion heard on shortened time was filed, along with the supporting declaration of John A. Fortin ("Second Fortin Declaration"). (AECF Nos. 37 and 38).
On February 17, 2023, Debtor filed opposition to having the Second TRO Motion heard on shortened time, along with the supporting Declaration of A.J. Kung, Esq. ("First Kung Declaration"), asserting that there is no basis for an expedited hearing. (AECF No. 40).
On February 22, 2023, Sports, as an asserted "party-in-interest," filed a Motion for Reconsideration of the Court's Order Granting Trustee's Motion to Sell Causes of Action Free and Clear of All Claims, Encumbrances, and Interests; Alternatively, Motion for Relief from Order Pursuant to FRCP 60(b) ("Sale Reconsideration Motion"). (ECF No. 42). By that motion, Sports seeks relief from the Sale Order. Attached to the motion are copies of ten separate documents marked as Exhibits "A" through "K," as well as a supporting Declaration of Michael Venner ("First Venner Declaration") and a separate Declaration of Andrew Watt ("Second Watt Declaration").
The court heard the Sale Reconsideration Motion on March 29, 2023. At the hearing, Sports argued that it is a party-in-interest in this bankruptcy case even though Sports is not a creditor. While Sports certainly is interested in whatever claims of the bankruptcy estate may hold against it and the other Miomni Entities, status as an interested observer does not necessarily equate to status as a party-in-interest. If every potential target defendant of a claim held by a bankruptcy estate is a party-in-interest, then each such defendant would have standing to seek dismissal of the bankruptcy case or other relief purely as a litigation strategy. Thus, it is unclear whether Sports even has standing to seek reconsideration of the Sale Order.
Sports alleges that it tendered an offer to the Trustee to purchase the Estate Claims for the total amount of $50,000, which was not contingent upon any outcome. The absence of a contingency is not surprising given the unlikelihood that Sports would pursue the Estate Claims against itself or the other Miomni Entities.
On February 23, 2023, SBC filed a "Notice of Change of Caption and Notice of Dismissal of Debtor From Adversary Proceeding." (AECF No. 44).
On February 23, 2023, SBC filed a Request for Entry of Default Against Miomni Holding Co. and Miomni Ltd. Under Local Bankruptcy Rule 7055 ("SBC Adversary Default Request") along with a supporting Affidavit of John A. Fortin, Esq. ("Third Fortin Declaration") (AECF Nos. 45 and 46).
On February 23, 2023, a document was filed styled as "Miomni Sports, Ltd.'s Response to Request for Entry of Default Against Miomni Holdings Co. and Miomni Ltd. Under Local Bankruptcy Rule 7055 ("Sports Default Response") to which is attached a supporting Declaration of A.J. Kung, Esq. ("Second Kung Declaration") (AECF No. 47).
On February 24, 2023, the SBC Adversary Default Request was granted by the clerk of the court pursuant to Local Rule 7055 with respect to defendants Holdings and Limited ("Entry of Default"). (AECF No. 48).
On February 24, 2023, SBC filed in the SBC Adversary a Notice of Entry of Default ("Default Notice") along with a Certificate of Service. (AECF Nos. 49 and 50).
On February 28, 2023, Sports filed a Motion for Stay of Sale Order [ECF 34] on Requested Shortened Time ("Sale Stay Motion"). (ECF No. 45).
On February 28, 2023, a "Defendants' Miomni Ltd.'s & Miomni Holdings Limited (Erroneously Named as 'Miomni Holding Co.") Special Appearance for the Limited Purpose of Moving to Set Aside Defaults & Motion to Dismiss Adversary Complaint as to Miomni Holdings Limited" was filed in the SBC Adversary ("Holdings & Limited Dismissal Motion"). (AECF No. 53). Attached to the motion is a declaration of A.J. Kung, Esq. ("Third Kung Declaration"), a declaration of Michael Venner ("Second Venner Declaration"), and a declaration of Andy Watt ("Third Watt Declaration"). (AECF No. 53). The Holdings & Limited Dismissal Motion was noticed to be heard on April 12, 2023. (AECF No. 54).
On March 2, 2023, Holdings and Limited filed in the SBC Adversary an amended motion for stay of proceedings related to defaults ("Holdings & Limited Default Stay Motion"), to which is attached another declaration of A.J. Kung, Esq. ("Fourth Kung Declaration"). (AECF No. 62). An amended request to have the Holdings & Limited Default Stay Motion heard on shortened time was also filed. (AECF No. 63).
On March 2, 2023, orders were entered shortening time so that the Second TRO Motion filed by SBC and the amended Holdings & Limited Default Stay Motion could be heard on March 29, 2023. (AECF Nos. 65 and 66).
On March 8, 2023, a stipulated order was entered granting a continuance of the reply deadline for the Sports Dismissal Motion from March 22, 2023, to March 25, 2023. (AECF No. 70).
On March 10, 2023, the Trustee filed a timely response in connection with the Sale Reconsideration Motion ("Trustee Reconsideration Response"). (ECF No. 53).
On March 15, 2023, SBC filed its opposition to the Sale Reconsideration Motion ("SBC Reconsideration Opposition"). (ECF No. 54).
On March 15, 2023, Holdings, Sports, and Limited filed opposition to the Second TRO Motion. (AECF No. 72).
On March 15, 2023, SBC filed opposition to the Sports Dismissal Motion ("SBC Sports Dismissal Opposition") as well as to the Holdings & Limited Default Stay Motion ("SBC Holdings & Limited Default Opposition"). (AECF Nos. 73 and 74).
On March 22, 2023, SBC filed a reply in support of its Second TRO Motion along with a supporting declaration of Ryan J. Works, Esq. ("Third Works Declaration"). (AECF Nos. 77 and 78).
On March 24, 2023, Sports filed a reply to the SBC Sports Dismissal Opposition ("Sports Dismissal Reply"). (AECF No. 79).
On March 24, 2023, Holdings and Limited filed its reply to the SBC Holdings & Limited Default Opposition. (AECF No. 80).
On March 24, 2023, Sports filed an omnibus reply in support of its Sale Reconsideration Motion ("Sports Reconsideration Reply"). (ECF No. 57).
On March 29, 2023, the court held a combined hearing regarding the Sports Dismissal Motion, as well as the Sale Reconsideration Motion, the Sale Stay Motion, the Holdings & Limited Default Stay Motion, and the Second TRO Motion. The court took all of the matters under submission.
Separate orders with respect to all of the matters are entered contemporaneously herewith.
DISCUSSION
By its current motion, Sports seeks to dismiss the SBC Adversary on ground that SBC lacked standing to prosecute the Estate Claims at the time the SBC Adversary was commenced on December 23, 2022. There is no dispute that the court reached the same conclusion when it entered the TRO Denial on January 25, 2023, i.e., that SBC lacked standing to pursue those claims. There is no dispute that the Trustee filed the Sale Motion on January 26, 2023. There is no dispute that the Sale Motion was heard on February 8, 2023. There is no dispute that SBC filed its Three Day Notice on February 8, 2023. There is no dispute that the Sale Order authorizing the Trustee to sell the Estate Claims to SBC was not entered until February 9, 2023. There is no dispute that the Sports Dismissal Motion was not filed until February 16, 2023. There is no dispute that the Sale Reconsideration Motion was not filed until February 22, 2023. There is no dispute that a stay of the Sale Order has not been entered.
In response to the current motion, SBC maintains that it already had constitutional standing to pursue the Estate Claims when it commenced the SBC Adversary and that any prudential standing deficiency has been cured by its purchase of the Estate Claims from the Trustee. SBC argues that ratification, joinder or substitution under FRCP 17(a) allows it to proceed with on the Adversary Complaint as the real party in interest. It maintains that relief from any standing deficiency under FRCP 17 is appropriate if (1) the requesting party makes a request within a reasonable time, (2) the requesting party made an understandable mistake rather than a strategic decision, and (3) the opposing party would not be prejudiced. See SBC Sports Dismissal Opposition at 9:17 to 14:23, citing Dunmore v. U.S., 358 F.3d 1107, 1112 (9th Cir. 2004) (emphasis added). In this instance, SBC maintains that by acquiring the Estate Claims from the Trustee, it now has standing to pursue the claims by ratification or substitution under FRCP 17. Compare Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707, 713 (9th Cir. 1992) ("A proper ratification pursuant to Rule 17(a) requires the ratifying party to: 1) authorize continuation of the action; and 2) agree to be bound by the lawsuit's results.")
In Dunmore, the Ninth Circuit panel discussed whether an individual who originally lacked standing to prosecute a claim could become the real party in interest pursuant to FRCP 17. The decision involved an individual Chapter 7 debtor (Dunmore) who commenced an administrative action to obtain a federal income tax refund. He intentionally did not schedule the action in his bankruptcy proceeding. After he received his Chapter 7 discharge and after his administrative claim was denied by the Internal Revenue Service ("IRS"), Dunmore filed a civil action in a U.S. district court to obtain his income tax refund. The IRS sought dismissal of the refund action on grounds that the refund claims were undisclosed property of the Chapter 7 estate over which Dunsmore lacked standing. By stipulation, the district court transferred the civil action to the bankruptcy court which reopened the Chapter 7 case. Thereafter, the Chapter 7 trustee abandoned the tax refund claims to Dunmore and the tax refund action proceeded to trial in the bankruptcy court. Due to Dunmore's failure to prosecute the refund claims at trial, the bankruptcy court dismissed the claims with prejudice. On appeal, the Ninth Circuit concluded that Dunmore had constitutional standing because his alleged overpayment of taxes and denial of a refund constituted an injury in fact caused by the defendant that could be addressed by a favorable court decision. 358 F.3d at 1111-12. The circuit panel reversed and remanded the case, however, because there were inadequate factual findings on whether Dunmore would have prudential standing as a real party in interest under FRCP 17(a) to pursue the refund claims in light of the Chapter 7 trustee's abandonment. Id. at 1112. The circuit observed: "We assume without deciding that when the bankruptcy trustee abandoned the refund claims…the abandonment could constitute the estate's ratification of Dunsmore's lawsuit. This ratification would have the same effect as if the estate itself had originally commenced the action, so long as Dunmore's decision to sue in his own name represented an understandable mistake and not a strategic decision." Id. (Emphasis added.)
In its reply, Sports argues that a lack of standing at the inception of the proceeding cannot be rectified by resort to FRCP 17. See Sports Dismissal Reply at 7:7-16, citing United States for Use & Benefit of Wulff v. CMA, Inc., 890 F.2d 1070, 1074-75 (9th Cir. 1989). Additionally, Sports reiterates arguments as to the merits of the Estate Claims that it has raised in connection with its Sale Reconsideration Motion. Id. at 11:18 to 13:15.
In Wulff, the Ninth Circuit panel addressed whether the assignment of a claim for relief under FRCP 17(a) could relate back under FRCP 15(a) to revive a claim that was barred by the applicable statute of limitations. 890 F.2d at 1075. After Wulff was decided in 1989, however, the Ninth Circuit later clarified that the holding in Wulff did not supersede the relief available under FRCP 17(a) that permits a real party in interest to assign a claim or ratify a third party's pursuit of a claim. See Arab Monetary Fund v. Hashim (In re Hashim), 379 B.R. 912, 924 (B.A.P. 9th Cir. 2007), citing Mutuelles Unies v. Kroll & Linstrom, supra. In the instant case, there is no suggestion that prosecution of the Estate Claims otherwise would be barred by the statute of limitations, or that another exception to the application of FRCP 17 would apply.
The court has considered the written and oral arguments presented by counsel. For the reasons stated below, the court will granted the Sports Dismissal Motion without prejudice to the filing and service of an amended Adversary Complaint.
First, the court previously concluded that the SBC commenced the SBC Adversary without having standing to prosecute the Estate Claims for which injunctive relief was sought. See TRO Denial at 7:14-22. Of the six claims for relief framed by the Adversary Complaint, five of them concerned claims held by the Chapter 7 estate or arising from the commencement of the bankruptcy case. Id. at 2:20 to 3:4. Because the successor liability claim alleged in the Adversary Complaint might not be controlled by the Trustee, the court simply denied the TRO Motion rather than addressing SBC's standing to pursue the successor liability claim.
Relief based on "alter ego" status is not the equivalent of the determination of successor liability. Compare Gardner v. Eighth Judicial District, 133 Nev. 730, 736 (Nev. 2017) (alter ego analysis for limited liability company) with Village Builders 96, L.P. v. U.S. Laboratories, Inc., 121 Nev. 261, 268 (Nev. 2005) (application of doctrine of successor liability). See also Evervictory Electronic (B.V.I.) Co., Ltd. v. Invision Industries Inc., 2012 WL 2030177, at *2 (C.D.Cal. June 4, 2012), citing Butler v. Adopts Media, LLC, 486 F.Supp.2d 1022, 1063-71 (N.D.Cal. 2007) ("Successor liability, agency, and alter ego are three distinct concepts that arise in distinct circumstances.").
Sports argues that in absence of standing, the court lacked subject matter jurisdiction over the SBC Adversary, requiring dismissal under FRCP 12(h)(3). See Sports Dismissal Reply at 14:15 to 15:5.
Second, before the Sale Order was entered, SBC filed the Three Day Notice when it still did not have standing to prosecute the Estate Claims. Although SBC was not required by FRCP 55(a) to provide the Three Day Notice, see Hawaii Carpenters' Trust Funds v. Stone, 794 F.2d 508, 512 (9th Cir. 1986), the Three Day Notice was premature. Like its initial commencement of the SBC Adversary, SBC jumped the gun.
Rule 3.5A of the Nevada Rules of Professional Conduct directs Nevada attorneys not to cause a default to be entered without first inquiring about the intentions of opposing counsel to proceed. It is not clear from the record whether prior to the filing of the Three Day Notice SBC's counsel was aware that Holdings, Sports or Limited were attempting to retain Nevada counsel to respond to the Adversary Complaint. Regardless of whether the Three Day Notice was required in this matter, however, it was transmitted by SBC before it had prudential standing to pursue the Estate Claims.
Third, SBC's reliance on FRCP 17 for a ratification, substitution or joinder is misplaced. It appears that SBC's "request" for relief under FRCP 17 has been made within a reasonable time and that little prejudice would result. At the First TRO Hearing, however, SBC previously acknowledged that it intentionally commenced the adversary proceeding without cooperation of the Trustee because it believed it had no choice. Instead of obtaining that cooperation or acquiring the Estate Claims, SBC made a strategic decision to pursue fraudulent transfer claims under Section 548 without standing to do so. Additionally, at the Sale Hearing, SBC represented that it could be substituted as the real party in interest pursuant to "Rule 7017(f)" simply by amending the caption to the Adversary Complaint. That representation was incorrect because it ignored the circuit's guidance under Dunmore on which SBC now relies. As a result, FRCP 17 does not apply and cannot rectify the prudential standing deficiency that existed when the SBC Adversary was commenced.
It is uncertain whether SBC expressed to the Trustee that there were post-petition actions being taken by the named defendants that necessitated an imminent commencement of the SBC Adversary. While Debtor did not include its Schedules and SOFA when it filed its Chapter 7 petition on November 30, 2022, it is not clear whether SBC even contacted the Trustee before filing the Adversary Complaint on December 23, 2022.
The court expressly inquired whether SBC would bring a separate motion under FRCP 17 but was informed by SBC that a separate request would not be necessary.
Fourth, the Estate Claims have been acquired by SBC pursuant to the Sale Order and the Sports Reconsideration Motion has been denied. Subject to the requirements of the Sale Agreement, SBC now may pursue the Estate Claims without reliance on FRCP 17. SBC now has standing to prosecute the Estate Claims directly in its own name for the benefit of itself as well as the Chapter 7 estate. In other words, SBC is now has the real party in interest standing that it lacked when it initially commenced the Adversary Proceeding.
Under these circumstances, dismissal of the Adversary Complaint is appropriate, but without prejudice. SBC may file an amended adversary complaint as the real party in interest to assert the Estate Claims. Nothing prohibits the Trustee from seeking to join in the amended complaint, if any.
IT IS THEREFORE ORDERED that Defendant Miomni Sports Ltd.['s] Motion to Dismiss, Adversary Docket No. 34, be, GRANTED WITHOUT PREJUDICE TO THE FILING OF AN AMENDED COMPLAINT.
IT IS FURTHER ORDERED that an amended complaint, if any, must be filed no later than fourteen calendar days from the entry of this order.