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Winstar Holdings LLC v., 13-4713 (2015)

Court: Court of Appeals for the Third Circuit Number: 13-4713 Visitors: 12
Filed: Jan. 28, 2015
Latest Update: Mar. 02, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 13-4713 _ In re: WINSTAR COMMUNICATIONS, INC., et al, Debtors WINSTAR HOLDINGS, LLC; IDT CORP. v. BLACKSTONE ADVISORY PARTNERS LP f/k/a BLACKSTONE GROUP LP; IMPALA PARTNERS, LLC; CITIGROUP INC., successor by merger to CITICORP Winstar Holdings, LLC & IDT Corp., Appellants On Appeal from the United States District Court for the District of Delaware (D. C. No. 1-10-cv-00839) District Judge: Honorable Leonard P. Stark Submi
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                                                                 NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                       No. 13-4713
                                      ____________

                  In re: WINSTAR COMMUNICATIONS, INC., et al,
                                                         Debtors

                       WINSTAR HOLDINGS, LLC; IDT CORP.

                                             v.

   BLACKSTONE ADVISORY PARTNERS LP f/k/a BLACKSTONE GROUP LP;
  IMPALA PARTNERS, LLC; CITIGROUP INC., successor by merger to CITICORP

                          Winstar Holdings, LLC & IDT Corp.,
                                                     Appellants


                     On Appeal from the United States District Court
                               for the District of Delaware
                                (D. C. No. 1-10-cv-00839)
                      District Judge: Honorable Leonard P. Stark


                      Submitted under Third Circuit LAR 34.1(a)
                                on September 9, 2014
                Before: SMITH, SHWARTZ and ROTH, Circuit Judges

                             (Opinion filed January 28, 2015)



                                      O P I N I O N*


ROTH, Circuit Judge:
________________________
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
       IDT Corporation and Winstar Holdings, LLC (collectively, IDT) appeals the order

of the United States District Court for the District of Delaware, affirming the Bankruptcy

Court’s denial of their motion to remand to state court in New York and subsequent

dismissal of their action as time-barred under Delaware’s three-year statute of limitations.

For the reasons stated below, we will affirm.

       This case arises out of an adversary proceeding in the Bankruptcy Court, in which

IDT alleges that it was defrauded by defendants Blackstone Advisory Partners L.P.,

Impala Partners LLC, and Citigroup, Inc. (collectively, Blackstone), in connection with

the sale of assets in a 2001 bankruptcy proceeding. In May 2007, IDT filed this suit in

New York Supreme Court. Blackstone then removed to the Southern District of New

York and moved for transfer to Delaware, due to the case’s connection with the 2001

bankruptcy, while IDT moved to remand. The New York court granted Blackstone’s

motion and denied IDT’s. It found that the current dispute arose in the bankruptcy

proceedings and that accordingly the Bankruptcy Court retained exclusive jurisdiction

under its order approving the asset sale. Furthermore, the New York court found that

IDT had agreed to a forum selection clause in the asset purchase agreement, and that it

was not unjust for Blackstone to enforce that forum selection clause despite the fact that

none of the defendants were parties to it. Upon receipt, the Delaware District Court

referred the case to the Bankruptcy Court. The Bankruptcy Court then found that the

claims were time-barred, and on appeal the District Court affirmed.

       The suit was filed more than five years after the events allegedly took place.

Accordingly, the current dispute centers on whether New York’s six-year statute of

                                             2
limitations for fraud claims or Delaware’s general three-year statute for torts applies here.

Because the New York court found that the Bankruptcy Court had exclusive jurisdiction,

the venue of the initial filing was improper, and the case was transferred pursuant to 28

U.S.C. § 1406. Where a case is transferred pursuant to § 1406, rather than § 1404(a), the

statute of limitations of the transferee court, not the transferor court, applies.1

       IDT argues that the New York court did not find transfer mandatory under § 1406,

based on its alternative holding, that “even if transfer is not mandatory pursuant to 28

U.S.C. § 1406, discretionary transfer under § 1404(a) in the interests of justice is clearly

appropriate.” But even were that true, the majority of the court’s discussion of § 1404(a)

relied on the forum selection clause in the purchase agreement, not an analysis of the

public interest factors under § 1404(a). Accordingly, even if we treated the case as

transferred under § 1404(a), it would be pursuant to a forum selection clause, and the

transferee forum’s choice of law rules would apply.2 Here, as the District Courts both

found, because statutes of limitations are procedural for choice of law purposes, the law

of the forum, Delaware, applies.3




1
  Lafferty v. St. Riel, 
495 F.3d 72
, 81 (3d Cir. 2007).
2
  Atl. Marine Const. Co. v. U.S. Dist. Court, 
134 S. Ct. 568
, 583 (2013).
3
  The courts and parties discussed the Delaware “borrowing statute,” Del. Code tit. 10, §
8121 at great length. As IDT contends, this statute only applies where a plaintiff files in
Delaware rather than a foreign forum to take advantage of a more generous Delaware
statute of limitations. Here the reverse is true, and IDT sought to take advantage of New
York’s more generous statute by filing in New York. The Delaware borrowing statute
does not apply in this situation.
                                               3
      Delaware’s choice of law provision does not have an exception for fraud cases,

and began to run in December 2001. The statute expired three years later, and more than

two years prior to IDT’s commencement of this suit. This action is time-barred.

      For the foregoing reasons, we will affirm the judgment of the District Court.4




4
 We have also reviewed IDT’s appeal of the denial of equitable remand and find it
without merit.
                                          4

Source:  CourtListener

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