r2 advisors, llc, as Plan Agent for the Red Eagle v. Suncor Energy (U.S.A.) Inc.

In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
RED EAGLE OIL, INC.,
Debtor.
)
)
) 	Case No. 	11-20857
) 	Chapter 11
)
)
r 2 advisors, llc 	)
)
Plaintiff, 	)
)
v. 	) 	Adv. No. 	13-2017
)
SUNCOR ENERGY (U.S.A), INC. 	)
)
Defendant. 	)
OPINION ON MOTION TO DISMISS COMPLAINT
On March 6, 2014, the above-captioned matter, filed by the defendant Suncor
Energy (U.S.A.), Inc. ("Suncor"), came before the court for a telephonic hearing. The
plaintiff, r 2 advisors, llc ("r2 advisors") filed an objection. The parties were represented
as stated on the record. At the conclusion of the hearing, the court took the matter under
advisement. Having reviewed the record, parties' arguments and applicable law, the
court is prepared to rule.
The adversary proceeding relates to a bankruptcy case filed by Red Eagle Oil, Inc.
("Red Eagle") under chapter 11 of the Bankruptcy Code. The adversary complaint seeks
to avoid and recover a preferential transfer pursuant to 11 U.S.C. § 547. 	Suncor moved
for the dismissal of the complaint alleging that r 2 advisors: (1) did not timely serve
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Suncor within the 120 days from the date the adversary complaint was filed; (2) that
good cause does not exist to allow r 2 advisors an after-the-fact extension to serve the
summons and complaint; and, (3) a permissive extension is not warranted.
Red Eagle filed its voluntary bankruptcy petition on August 1, 2011. Prior to that
Red Eagle had several retail convenience stores in Wyoming and Montana and sold fuel
on a wholesale basis. 	Sun cor was an authorized supplier of Shell branded fuel and
supplied fuel to Red Eagle's convenience stores which was sold to the public. Red Eagle
alleged that on May 20, 2011, Red Eagle transferred $1,085,587.31 to Suncor on account
of an antecedent debt which constitutes a preferential transfer.
On July 31, 2013, Red Eagle initiated this adversary proceeding by filing the
complaint. A summons was issued on that same date. Thereafter, the adversary
proceeding stalled. During that time, Red Eagle sold its assets; filed a proposed plan for
confirmation; and, administered the case as debtor-in-possession. The court entered an
Order Confirming Joint Chapter 11 Plan ofLiquidation Proposed by Debtor and the
Official Committee of Unsecured Creditors on October 10, 2013. Through the plan, r 2
advisors was appointed as the plan agent "to administer the Estate Assets in accordance
with the terms of the Plan."
The court's review of the docket reflects that in response to the court's issuance of
a Notice of Intent to Dismiss entered on December 10, 2013, r 2 advisors filed a notice of
Substitution ofPlain tiff on December 31, 2013. An Alias Summons was issued on that
Page2
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same date and served on Suncor. Thereafter, on January 30, 2014, Suncor filed this
motion to dismiss the complaint.
Discussion
The Federal Rules of Bankruptcy Procedure, incorporating by reference Federal
Rule of Civil Procedure 1 in adversary proceedings, states,
If a defendant is not served within 120 days after the complaint is
filed, the court, on motion or on its own after notice to the plaintiff- must
dismiss the action without prejudice against that defendant or order that
service be made within a specified time. But if the plaintiff shows good
cause for the failure, the court must extend the time for service for an
appropriate period. 2
Service within 120 days
In order for a federal court to exercise personal jurisdiction over a defendant, the
procedural requirement of service of summons must be satisfied. 3 The court finds that r 2
advisers served Suncor 153 days after the adversary complaint was filed. 	Suncor was not
served within the 120 days required by Rule 7004.
Extension of time of service for good cause
Page 3
The United States Bankruptcy Court for the District of Kansas, stated,
"The United States Court of Appeals for the Tenth Circuit has
construed Fed. R. Civ. P. 4(m) as providing for a mandatory extension of
1 With exceptions that are not applicable in this matter.
2 Fed. R. Bankr. P. 7004(m).
3 Kadleckv. Ferguson (In re Furguson), 204 B.R. 202, (Bankr. N.D. III., 1997).
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time if good cause is shown and permitting a discretionary extension even
in the absence of good cause. Courts are directed to proceed as follows:
The preliminary inquiry to be made under Rule 4(m) is whether the
plaintiff has shown good cause for the failure to timely effect service. If
good cause is shown, the plaintiff is entitled to a mandatory extension of
time. If the plaintiff fails to show good cause, the district court must still
consider whether a permissive extension of time may be warranted. At that
point the district court may in its discretion either dismiss the case without
prejudice or extend the time for service." 4
The Johnson bankruptcy court also stated, "A plaintiff who seeks to rely on good
cause must show meticulous effort to comply with the rule. r 2 advisors argued that as
Suncor had filed a claim, it had already submitted to the jurisdiction of this court; that
Suncor had actual notice of the filing of the adversary proceeding through the electronic
filing and noticing process of the court; and, that Sun cor is attempting to dismiss a
million dollar preference action which will prejudice the bankruptcy estate's creditors.
The court finds that r 2 advisors did not carry its burden showing a meticulous effort to
comply with this rule and serve Suncor within the 120 days or request an extension as the
rule provides.
Permissive extension time.
2011).
Page4
The Johnson bankruptcy court stated,
"The factors to consider when evaluating whether to grant a
discretionary extension are not authoritatively established. It has been said
that such an extension is particularly appropriate where a defendant has not
been prejudiced by the delay of service and the statute of limitations might
4 In re Johnson, Case No. 09-22874, Adv. No. 09-6165, 2011 Bankr. LEXIS 374 (Bankr. D. Kan. Feb. 7,
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bar any refiled action."
Suncor argues that it will be prejudiced if the adversary proceeding is allowed to
proceed as parties have since left Suncor. However, the court finds that a permissive
extension is appropriate in this case, as the statute of limitations would bar refiling any
action if the court dismissed the adversary proceeding without prejudice. 	Therefore,
the court finds there is cause to allow the permissive extension of time to serve Suncor.
This opinion constitutes the Court's findings of fact and conclusions oflaw. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
DATED this 3P1 day ofMarch, 2014.
Service to:
Page 5
Thomas Hartl
Jeffrey Cawdrey
By the Court
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