Zachry Holdings, Inc. v. Omaha Public Power District

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE:
ZACHRY HOLDINGS, INC., et
al.,
Debtors.
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CASE NO: 24-90377
CHAPTER 11
ZACHRY HOLDINGS, INC.,
Plaintiff,
VS. 	ADVERSARY NO. 25-3025
OMAHA PUBLIC POWER
DISTRICT,
Defendant.
MEMORANDUM OPINION
Defendant, Omaha Public Power District (“OPPD”), moves to
transfer venue in this adversary proceeding under 28 U.S.C. §§ 1404(a)
and 1412.1 Plaintiffs, Reorganized Debtors in the above-captioned case
(‘Zachry”), oppose OPPD’s motion.2 For the reasons explained below, the
Court reserves the priority and administrative status of any judgment
as a matter to be determined in Case 24-90377. All other issues in this
adversary proceeding are transferred to the District of Nebraska.
BACKGROUND
On September 21, 2021, Zachry Industrial, Inc., and OPPD
entered into the Engineer, Procure, and Construct Contract for Omaha
1 ECF No. 13.
2 ECF No. 24.
United States Bankruptcy Court
Southern District of Texas
ENTERED
October 31, 2025
Nathan Ochsner, Clerk
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Public Power District Standing Bear Lake and Turtle Creek Generating
Stations (the “Contract”). 3 Under the Contract Zachry Industrial agreed
to engineer, procure, and construct two electric generating stations and
associated substations. 4 	These were the Standing Bear Lake Station
(“SBLS”) and the Turtle Creek Station (“TCS,” and together with SBLS,
the “Projects”). 5 	The Contract contained schedules for completing the
Projects, including Guaranteed Substantial Completion Dates. 6
The Contract contains a choice-of-law clause that provides that
the laws of the State of Nebraska will govern the Contract and any
disputes arising thereunder. 7 	The Contract also contains a forum-
selection clause, designating “the District Court of Douglas County,
Nebraska 	and 	the 	United 	States 	District 	Court 	for 	the 	State 	of
Nebraska” as the fora for any disputes. 8 	The Contract was first
amended in October 2023 to extend the Completion Dates for one of the
Projects. 9
In May 2024, Zachry commenced Chapter 11 proceedings in this
Court. 10 During the course of the bankruptcy, the parties amended the
Contract for a second time in August 2024, extending the Completion
Dates for the Projects. 11 The Second Amendment included a liquidated
damages clause.12
3 ECF No. 24, at 4.
4 Id.
5 Id.
6 ECF Nos. 13, at 5−6; 24, at 4.
7 ECF Nos. 13, at 4; 24, at 4.
8 ECF No. 13, at 4.
9 ECF No. 24, at 5.
10 Case No. 24-90377, ECF No. 1.
11 Case No. 24-90377, ECF No. 809, at 4.
12 ECF Nos. 13, at 4; 24, at 5.
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The Court approved Zachry’s assumption of the Contract, as
amended, in September 2024.13
In December 2024, OPPD sent Zachry a notice of anticipatory
breach of the Contract. 14 	And in January 2025, OPPD began issuing
Zachry invoices for liquidated damages it allegedly owed due to its
failure to meet the Completion Dates for the Projects set forth in the
Second Amendment of the Contract. 15
On February 5, 2025, Zachry initiated this adversary proceeding,
seeking a declaratory judgment that (1) Zachry did not breach the
Contract, and (2) the liquidated damages provision is unenforceable. 16
Alternatively, if Zachry did breach the Contract and the liquidated
damages provision is enforceable, Zachry seeks a declaratory judgment
that OPPD’s claim is not entitled to administrative priority. 17
On February 15, 2025, OPPD filed an administrative expense
application in the main bankruptcy case, seeking damages under the
Contract. 18 On March 21, 2025, OPPD responded to Zachry’s adversary
complaint by filing (1) a motion to dismiss for failure to state a claim,19
(2) a motion to withdraw the reference, 20 and (3) a motion to transfer
venue. 21 On March 27, 2025, the parties entered into a stipulation and
agreed order abating OPPD’s administrative expense application until
13 Case No. 24-90377, ECF No. 961.
14 ECF No. 1, at 5.
15 Id.
16 Id. at 17−20. Zachry later amended its complaint and added a breach of contract
claim against OPPD and a claim for the breach of duty of good faith and fair dealing.
ECF No. 22.
17 Id. at 20−21.
18 Case No. 24-90377, ECF No. 2176.
19 ECF No. 11.
20 ECF No. 12.
21 ECF No. 13.
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Zachry’s liability is determined on a final basis. 22 Zachry’s Chapter 11
plan became effective on April 10, 2025. 23
On July 9, 2025, the Court held a hearing on OPPD’s motion to
transfer venue and took the matter under advisement. 24 	And on
September 2, 2025, the parties entered into a stipulation and agreed
order requesting the Court to defer ruling on the motion to transfer
venue until October 31, 2025. 25
I. 	JURISDICTION & VENUE
28 U.S.C. § 1334 provides the District Courts with jurisdiction
over this proceeding. 	28 U.S.C. § 157(b)(1) states that “[b]ankruptcy
judges may hear and determine all cases under title 11 and all core
proceedings arising under title 11, or arising in a case under title 11,
referred under subsection (a) of this section, and may enter appropriate
orders and judgments, subject to review under section 158 of this title.”
This proceeding has been referred to this Court under General Order
2012-6 (May 24, 2012). 	This Court has authority over this proceeding
as it is a core proceeding which the Court can consider under 28 U.S.C.
§§ 157(b)(2)(A) and (B). The Court has constitutional authority to enter
final orders and judgments. 	Stern v. Marshall, 564 U.S. 462, 486–87
(2011). Venue is proper under 28 U.S.C. §§ 1408 and 1409.
II. 	LEGAL STANDARD
“A district court may transfer a case or proceeding under title 11
to a district court for another district, in the interest of justice or for the
convenience of the parties.” 28 U.S.C. § 1412. Motions to transfer venue
in adversary proceedings are governed by 28 U.S.C. § 1412, not 28
U.S.C. § 1404, regardless of whether the action involves a “core” or
“related to” proceeding. 	Walker v. Directory Distrib. Assocs. (In re
22 ECF No. 14.
23 ECF No. 2431.
24 ECF No. 73.
25 ECF No. 84.
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Directory Distrib. Assocs.), 566 B.R. 869, 877 (Bankr. S.D. Tex. 2017).
“Nonetheless, courts apply essentially the same factors in analyzing
transfers under §§ 1404(a) and 1412.” Campbell v. Williams, No. 1:14-
cv-097, 2015 WL 3657627, at *2 (S.D. Tex. June 12, 2015).
Both 	statutes 	consider 	“the 	interest 	of 	justice” 	and 	“the
convenience of the parties. 	28 U.S.C. §§ 1404(a); 1412. 	The only
difference is that section 1412 is disjunctive, and the movant only needs
to show that the transfer is either in “the interest of justice” or “for the
convenience of the parties.” Schouten v. GEA Farm Techs., Inc. (In re
Schouten), 657 B.R. 531, 538 (Bankr. N.D. Tex. 2024). 	And “choosing
one transfer provision over the other generally has no effect on the
ultimate transfer determination.” Campbell, 2015 WL 3657627, at *2.
Typically, when ruling on a motion to transfer venue, courts
evaluate various private and public interest factors. See Atlantic Marine
Const. Co v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49, 62 (2013).
However, when the parties’ contract contains a valid forum-selection
clause, “the calculus changes.” Id. at 63. 	By agreeing to a forum-
selection clause, a party waives their right to challenge the designated
forum as inconvenient or less convenient for them or their witnesses.
Id. at 64. 	The court does not consider arguments about the parties’
private interests and must find that the private interests weigh entirely
in favor of the parties’ preselected forum. Id.
The Supreme Court has identified the relevant public interest
factors 	as 	(1) 	the 	administrative 	difficulties 	flowing 	from 	court
congestion; 	(2) 	the 	local 	interest 	in 	having 	localized 	controversies
decided at home; and (3) the interest in having the trial of a diversity
case in a forum that is at home with the law. 26 Id. at 63 n.6. However,
26 In bankruptcy cases some courts also consider seven factors in considering whether
the transfer is in the interest of justice. 	Walker v. Directory Distrib. Assocs. (In re
Directory Distrib. Assocs.), 566 B.R. 869, 878 (Bankr. S.D. Tex. 2017). These factors
are: (1) economics of estate administration; (2) presumption in favor of the “home
court”; (3) judicial efficiency; (4) ability to receive a fair trial; (5) the state’s interest in
having local controversies decided within its borders, by those familiar with its laws;
(6) enforceability of any judgment rendered; (7) plaintiff's original choice of forum. Id.
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these factors will rarely defeat a transfer motion, and the practical
result is that a forum-selection clause should control except in unusual
circumstances. Id. at 64.
The presence of a forum-selection clause also alters the burden of
proof for a motion to transfer venue. 	Id. at 63. 	In a typical case, the
movant bears the burden of proof and must establish “good cause” for
the transfer. In re Volkswagen of America, Inc., 545 F.3d 304, 315 (5th
Cir. 2008). However, in a case where a plaintiff defies a forum-selection
clause, the plaintiff “bears the burden of establishing that transfer to
the forum for which the parties bargained is unwarranted.” 	Atlantic
Marine 571 U.S. at 63.
The Supreme Court’s jurisprudence indicates a strong policy in
favor 	of 	enforcing 	forum-selection 	clauses 	in 	contracts. 	See 	e.g.,
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991); M/S Bremen
v. Zapata Off-Shore Co., 407 U.S. 1 (1972). Indeed, absent fraud, undue
influence, 	or 	unequal 	bargaining 	power, 	freely 	negotiated 	private
agreements should be given full effect. Zapata, 407 U.S. at 12−13. And
forum-selection clauses should be “given controlling weight in all but the
most exceptional cases.” Atlantic Marine, 571 U.S. at 60.
It is noteworthy that the forum-selection clause pertains to the
Contract itself. 	The priority of any claim in a bankruptcy case is
extracontractual. The determination of the priority of a claim is within
the Bankruptcy Court’s exclusive jurisdiction. 	Jurisdiction over the
priority of claims is governed by 28 U.S.C. § 1334(a). The priority issue
will be retained as a main case issue. 	Jurisdiction over the balance of
the disputes is governed by 28 U.S.C. § 1334(b). 	Subsection (a)
jurisdiction is exclusive to the 	Bankruptcy Court. 	Subsection (b)
jurisdiction is not exclusive.
III. 	DISCUSSION
OPPD argues that transfer of this adversary proceeding under 28
U.S.C. § 1412 is required in this case due to the forum-selection clause
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in the Contract and that transfer of this adversary proceeding is in the
interest of justice. 27 	Zachry opposes transfer, arguing that the Court
should exercise its discretion and not enforce the forum-selection clause
and that the interest of justice does not support transfer. 28 The parties’
also dispute whether the adversary proceeding concerns core or non-core
matters, with Zachry arguing the former and OPPD arguing the latter. 29
As a preliminary matter, the adversary proceeding concerns core
matters. See 28 U.S.C. § 157. The Contract that is at the heart of this
dispute was amended by the parties and assumed by Zachry post-
petition.30 OPPD’s administrative expense claim in Zachry’s main case
is based on alleged breaches of the Contract. 31 	The Fifth Circuit has
instructed 	that 	“[f]ollowing 	the 	confirmation 	of 	a 	Chapter 	11
reorganization 	plan, 	bankruptcy 	jurisdiction 	is 	limited 	to 	matters
“pertaining to the implementation or execution of the plan.” 	In re
Chesapeake Energy Corp., 70 F.4th 273, 281 (5th Cir. 2023) (quoting In
re Craig’s Stores of Tex., Inc., 266 F.3D 388, 390 (5th Cir. 2001)). 	In
Chesapeake Energy, the court stated “[f]or instance, a reorganized
debtor 	often 	must 	resolve, 	post-confirmation 	. 	. 	. 	administrative
[expense] 	claims 	. 	. 	. 	all 	of 	which 	fall 	within 	‘core’ 	bankruptcy
jurisdiction.” 	Id. 	While it is undisputed the Contract is governed by
Nebraska law, the state-law basis of a claim does not per se render a
matter non-core where resolving the state-law claims is necessary to
adjudicating a proof of claim. 	In re Moore, 739 F.3d 724, 728 (5th Cir.
2014).
However, the fact that this is a core matter is not dispositive
regarding OPPD’s motion to transfer venue. 	As noted above, the
Supreme 	Court 	favors 	enforcing 	forum 	selection 	clauses 	absent
exceptional circumstances. Atlantic Marine, 571 U.S. at 60. Zachry has
27 See ECF No. 13, at 10−18.
28 ECF No. 24, at 25−32.
29 ECF Nos. 24, at 9−16; 31, at 4−8.
30 Case No. 24-90377, ECF No. 961.
31 Case No. 24-90377, ECF No. 2176.
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not alleged that the forum-selection clause was the product of fraud or
overreaching or that enforcement of the clause would be unreasonable.
The Court finds that the forum-selection clause in the Contract was the
product of arms-length negotiations by sophisticated parties. 	Thus, it
finds that the forum-selection clause is valid and enforceable.
Because the forum-selection clause is valid, Zachry bears the
burden of demonstrating that transferring venue in this adversary
proceeding is not in the interest of justice. Atlantic Marine, 571 U.S. at
63−64. And the Court does not consider Zachry’s private interests or its
arguments about the convenience of the parties. Id. at 64. Those were
decided in favor of transfer when the parties entered into the Contract
that contained a forum selection clause. Id.
The first public interest factor, the administrative difficulties
flowing from court congestion, is neutral. 	The parties briefing did not
examine this factor in depth. However, after an examination of the most
recently published judicial caseload profile statistics on the United
States Courts website, the Court finds that there are insubstantial
differences in court congestion between the Southern District of Texas
and the District of Nebraska. 32
The second public interest factor, the local interest in having
localized controversies decided at home, weighs in favor of transfer to
Nebraska. 	OPPD contends that Nebraska has a local interest in this
dispute 	because 	the 	allegedly-breached 	Contract 	is 	governed 	by
Nebraska law and concerns the construction of two power plants in the
Omaha 	metropolitan 	area.33 	Zachry 	argues 	that 	this 	adversary
proceeding “involves bankruptcy code issues and could affect Zachry’s
liability under the Plan. 34 	Zachry also argues that OPPD’s allegations
32 U.S. C TS., TABLE N/A—U.S. D ISTRICT C OURTS –C OMBINED C IVIL AND C RIMINAL
FEDERAL C OURT MANAGEMENT STATISTICS (JUNE 30, 2025),
https://www.uscourts.gov/data-news/data-tables/2025/06/30/federal-court-
management-statistics/n-a-1.
33 ECF No. 13, at 15.
34 ECF No. 24, at 31.
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that 	prompted 	this 	adversary 	proceeding 	“call 	into 	question 	the
reputation of Zachry and its employees.” 35
Zachry’s 	arguments 	are 	not 	compelling. 	This 	adversary
proceeding concerns a contract dispute between a public corporation and
political 	subdivision 	of 	the 	State 	of 	Nebraska 	and 	a 	Texas-based
engineering and construction company. The dispute centers around the
acts or omissions of the Texas company while constructing power plants
in Nebraska. 	While true that this adversary proceeding may affect
Zachry’s liability under the plan and its reputation, Nebraska has a
stronger local interest in this dispute.
The third and final public interest factor, the interest in having
the trial of a diversity case in a forum that is at home with the law, also
is neutral. While this Court is not sitting in diversity, as its jurisdiction
is founded on 28 U.S.C. § 1334, under the Contract’s choice-of-law
clause, this Court would apply state substantive law in this adversary
proceeding in a similar manner to a district court sitting in diversity.
It is undisputed that under the Contract’s choice-of-law clause
Nebraska law controls. However, federal judges routinely apply the law
of states other than the one in which they sit. 	In re TikTok, Inc., 85
F.4th 352, 365 (5th Cir. 2023). In this adversary proceeding, the breach
of contract dispute and the dispute regarding the enforceability of the
liquidated damages clause, do not contain any “exceptionally arcane
features of [Nebraska] law that are likely to defy [the] comprehension”
of this Court. Id.
While the public interest factors provided by the Supreme Court
in Atlantic Marine are relevant considerations, the underlying case was
not a bankruptcy case. Zachry argues that the Court should not enforce
the forum-selection clause because there is a strong public policy
interest in the ability of bankruptcy courts to resolve statutorily core
proceedings. 36
35 Id.
36 ECF No. 24, at 23.
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Although such a policy interest may exist in other cases under
different circumstances, it is not particularly strong in this case. 	This
is a dispute regarding a contract governed by Nebraska state law. The
Contract, including its forum selection clause, was assumed by Zachry
post-petition. 	While the Court commends Zachry and its counsel for
their diligence which has contributed to the success of its reorganization,
Zachry has not demonstrated that “transfer to the forum for which the
parties bargained is unwarranted.” Atlantic Marine 571 U.S. at 63.
IV. 	CONCLUSION
For the reasons explained above, the Court retains the priority
and administrative status disputes. Venue is transferred as to all other
matters. A separate order will issue.
SIGNED 10/31/2025
_______________________________
Marvin Isgur
United States Bankruptcy Judge
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