COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
July 30, 2021
Via U.S. Mail Via File & ServeXpress
Janusz Kecki Tiffany M. Shrenk, Esquire
9050 Cherry Avenue MacElree Harvey, Ltd.
Orangevale, CA 95662 5721 Kennett Pike
Centreville, DE 19807
Via U.S. Mail
Derek Chabrowski
43021 North 43rd Drive
Phoenix, AZ 85087
RE: Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
Dear Mr. Kecki, Mr. Chabrowski, and Counsel,
I write to address the motion for summary judgment and to dismiss
(the “Motion”) filed by defendant Texas Enterprises, LLC (“Enterprises,” or
the “Company”), which has been deemed unopposed by plaintiffs Janusz Kecki
and Derek Chabrowski (collectively, “Plaintiffs”).1 The Motion presents the
question of whether Plaintiffs may ask this Court to revisit the accuracy of the
Company’s equityholders as of March 2, 2015, as presented to the United States
Bankruptcy Court for the Eastern District of Texas (the “Bankruptcy Court”) with
1
Docket Item (“D.I.”) 77.
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
Page 2 of 9
the Company’s petition for bankruptcy. I conclude this Court lacks subject matter
jurisdiction to do so, and grant the Motion and dismiss Plaintiffs’ claim.
I. BACKGROUND
On March 2, 2015, Enterprises filed a voluntary petition for Chapter 11
proceedings in the Bankruptcy Court.2 The petition included a “List of Equity
Security Holders” (the “List”) listing four individuals, including Kecki with a 15%
stake3 Chabrowski was not on the List, and was instead identified as a creditor.4
On March 17, 2016, the Bankruptcy Court entered an Order Confirming the First
Amended Plan of Reorganization of the Company.5
On December 14, 2017, Plaintiffs filed a pro se complaint in this Court
seeking a declaratory judgment to identify the equity owners of the Company at the
time it entered into the Chapter 11 proceedings.6 Specifically, Plaintiffs challenge
the accuracy of the List; Chabrowski contends he held a 15% stake in the
Company on March 2, 2015,7 when the bankruptcy petition was filed (the “Petition
2
D.I. 78. The bankruptcy case is Case No. 15-20032.
3
Id.
4
Id.
5
See D.I. 21 Ex A.
6
See D.I. 1 [hereinafter “Compl.”].
7
D.I. 11 at 10.
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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Date”). Plaintiffs allege the List and bankruptcy petition were submitted “for the
sole purpose of defrauding the shareholders of their investments in the company.”8
On April 17, 2018, Plaintiffs moved for summary judgment, which I denied
at the November 14 hearing and in an order that same day.9 While Kecki’s interest
appeared undisputed, Chabrowski’s interest was disputed and other issues
precluded summary judgment.10 In particular, I asked the parties to provide
supplemental briefing on “(i) whether the confirmation plan in the Chapter 11
proceedings released or barred any of Plaintiffs’ claims, [and] (ii) whether the
Bankruptcy Court made any factual or legal findings regarding the Company’s
equity ownership as of March 2, 2015.”11 No supplemental briefing followed; the
Company’s counsel withdrew; and the case languished.
On May 16, 2019, Petitioners filed what I deemed another motion for
summary judgment.12 The Company failed to retain new counsel by the Court’s
deadline, and so the motion went unopposed. On August 20, I granted summary
judgment on the narrow undisputed issue that Kecki was a 15% equity holder in
8
Compl. ¶ 16.
9
D.I. 28; D.I. 29.
10
D.I. 29.
11
Id. ¶ 6.
12
D.I. 39.
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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the Company on the Petition Date.13 I denied summary judgment as to
Chabrowski’s equity interest in the Company on that date, and again sought the
parties’ views on the effect of the bankruptcy proceedings on this case.14
Neither party addressed those issues until February 2021, when the
Company, represented by new counsel, filed the Motion.15 Plaintiffs did not timely
respond to the Motion, so it was deemed unopposed.16 The Motion contends
Chabrowski’s claim challenging the accuracy of the List are “pre-bankruptcy
claims not properly before this Court” under several theories, including a lack of
subject matter jurisdiction, preclusion under bankruptcy law and the bankruptcy
bar date, res judicata and issue preclusion, and overripeness.17 The Motion is
granted.
II. ANALYSIS
I address subject matter jurisdiction first, as I can only substantively review
the claims if I have jurisdiction to do so.18 “When considering a motion to dismiss
13
D.I. 48.
14
Id.
15
D.I. 77.
16
D.I. 89.
17
Op. Br. at 6–7.
18
See K & K Screw Prods., L.L.C. v. Emerick Cap. Invs., Inc., 2011 WL 3505354, at *6
(Del. Ch. Aug. 9, 2011) (“Because the issue of subject matter jurisdiction is a potentially
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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under Court of Chancery Rule 12(b)(1), the Court’s first task, when appropriate, is
to assess whether the fundamental predicates to subject matter jurisdiction exist.”19
“The plaintiff ‘bears the burden of establishing this Court's jurisdiction,’ and when
determining whether that burden has been met, the Court may consider the
pleadings and matters ‘extrinsic to the pleadings.’”20 This Court does not have
subject matter jurisdiction to hear a claim if there is an adequate remedy at law.21
And, consistent with that principle and principles of comity and federalism, where
bankruptcy courts have been granted exclusive jurisdiction, this Court lacks subject
matter jurisdiction.22
This Court lacks jurisdiction to assess the accuracy of the List as presented
with the Company’s bankruptcy petition.
dispositive threshold issue, I consider first whether the Complaint pleads a justiciable
case or controversy.”).
19
Hall v. Coupe, 2016 WL 3094406, at *2 (Del. Ch. May 25, 2016) (citing Dover Hist.
Soc’y v. City of Dover Plan. Comm’n, 838 A.2d 1103, 1110 (Del. 2003)).
20
Id. (quoting Pitts v. City of Wilm., 2009 WL 1204492, at *5 (Del. Ch. Apr. 27, 2009)).
21
10 Del. C. § 342.
22
Anderson v. Pa. Mfr.’s Ass’n Ins. Co., 2007 WL 1248490, at *1 (Del. Com. Pl.
Feb. 23, 2007).
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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Filings of bankruptcy petitions are a matter of exclusive federal
jurisdiction. State courts are not authorized to determine whether a
person’s claim for relief under a federal law, in a federal court, and
within that court’s exclusive jurisdiction, is an appropriate one. Such
an exercise of authority would be inconsistent with and subvert the
exclusive jurisdiction of the federal courts by allowing state courts to
create their own standards as to when persons may properly seek relief
in cases Congress has specifically precluded those courts from
adjudicating. The ability collaterally to attack bankruptcy petitions in
the state courts would also threaten the uniformity of federal
bankruptcy law, a uniformity required by the Constitution. U.S. Const.
art. I, § 8, cl. 4.23
“Congress’ grant to the federal courts of exclusive jurisdiction over bankruptcy
petitions precludes collateral attacks on such petitions in state courts . . . .”24 Even
if the bankruptcy court has not addressed the issue presented to the state court, the
state court lacks jurisdiction: “[i]n state cases concerning proper notice or other
bankruptcy matters never addressed by the bankruptcy courts, courts have ruled
that subject matter jurisdiction is exclusively federal.”25
To the extent Chabrowski claims he failed to receive adequate notice of the
Company’s bankruptcy proceeding, as a creditor or otherwise, the adequacy of that
23
Gonzalez v. Parks, 830 F.2d 1033, 1035 (9th Cir. 1987) (citation omitted).
24
Id. at 1035–36.
25
Anderson, 2007 WL 1248490, at *3 (citing In re McGhan, 288 F.3d 1172, 1180 (9th
Cir. 2002)).
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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notice is also an issue exclusively for the Bankruptcy Court.26 “Determination of
the adequacy of notice required for automatic discharge is a core proceeding over
which [Delaware] Court[s] lack authority.”27 “Determination of whether a creditor
was listed and whether notice was adequate are core proceeding[s] over which I
should not exercise jurisdiction.”28
Indeed, it appears Plaintiffs have already pursued the avenue available to
them: petitioning the Bankruptcy Court for relief. That Court denied
Chabrowski’s motion to reopen the proceedings after the Chapter 11 plan was
confirmed.29 This Court cannot disturb that order. “[B]ankruptcy court orders are
not subject to collateral attack in other courts.”30 A state court modification of a
bankruptcy court order “would constitute an unauthorized infringement upon the
bankruptcy court’s jurisdiction.”31 And “[a] Bankruptcy Court’s order of
confirmation is treated as a final judgment. If the Bankruptcy Court had
26
See McGhan, 288 F.3d at 1178 (addressing a state court’s consideration of notice to a
listed creditor, like Chabrowski, and noting state courts have statutory concurrent
jurisdiction to adjudicate the adequacy of notice to unlisted creditors).
27
Anderson, 2007 WL 1248490, at *2; see McGhan, 288 F.3d at 1190.
28
Anderson, 2007 WL 1248490, at *2.
29
D.I. 21, Ex. A, at D.I. 134-35.
30
Anderson, 2007 WL 1248490, at *2; McGhan, 288 F.3d at 1179 (quoting Gruntz v.
Cty. of L.A., 202 F.3d 1074, 1082 (9th Cir. 2000)).
31
Gruntz, 202 F.3d at 1082.
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jurisdiction to render that judgment, a party bound by that judgment cannot attack
that judgment in a collateral proceeding.”32
Finally, I note Plaintiffs’ allegation that the Company filed for bankruptcy
as part of a scheme to defraud Chabrowski and Kecki of their investments in the
Company and net the Company’s president sole ownership of the Company for a
low price.33 Federal authority appears split on the question of whether state courts
may entertain a claim that filing for bankruptcy was improper because it was part
of a fraudulent scheme or an abuse of process.34 Plaintiffs’ claim does not require
me to wade into this issue today; they seek only declaratory relief “identifying the
names and the percentage of ownership in the company, held by each shareholder
at the time that the company was entered into voluntary Chapter 11 bankruptcy.”35
I read Plaintiffs to allege that the bankruptcy proceeding was part of a fraudulent
scheme only for color and context, not as a standalone claim for abuse of process
32
In re Bally’s Grand Deriv. Litig., 1997 WL 305803, at *7 (Del. Ch. June 4, 1997);
accord Anderson, 2007 WL 1248490, at *2 (“[A]ny state judicial proceeding that
modifies a discharge order would also be void.”).
33
Compl. ¶ 16.
34
Nelson v. Emerson, 2008 WL 1961150, at *8 n.51 (Del. Ch. May 6, 2008). Since then-
Vice Chancellor Strine noted the split of authority in 2008, the split has deepened.
Compare In re Bral, 622 B.R. 737, 744–47 (9th Cir. 2020), with Rosenberg v. DVI
Receivables XVII, LLC, 835 F.3d 414 (3d Cir. 2016), and Robbins v. Fulton Bank, N.A.,
2018 WL 1693386 (E.D. Pa. Apr. 6, 2018).
35
Compl. ¶ 23.
Janusz Kecki, et al. v. Texas Enterprises, LLC,
Civil Action No. 2017-0892-MTZ
July 30, 2021
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or similar. Today, I hold only that this Court lacks subject matter jurisdiction over
collateral attacks on the bankruptcy petition itself, including the List, and the
Bankruptcy Court’s order denying Chabrowski’s motion to reopen the proceedings
to challenge that List. That holding disposes of Plaintiffs’ claim.
III. CONCLUSION
For the foregoing reasons, the Company’s motion to dismiss for lack of
subject matter jurisdiction is GRANTED. The August 20, 2019, order granting
summary judgment on Kecki’s interest is VACATED as having been entered
without subject matter jurisdiction.36 IT IS SO ORDERED.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
36
D.I. 48.