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Eli Global, LLC v. Univ. Directories, LLC

United States District Court, M.D. North Carolina

May 15, 2015

ELI GLOBAL, LLC, et al., Plaintiffs,
v.
UNIVERSITY DIRECTORIES, LLC, et al., Defendants

For ELI GLOBAL, LLC, UDX, LLC, SOUTHLAND NATIONAL INSURANCE CORPORATION, UD HOLDINGS, LLC, SNA CAPITAL, LLC, AROUND CAMPUS, LLC, GREG LINDBERG, SCOTT HALL, Plaintiffs: J. SETH MOORE, LEAD ATTORNEY, ANDERSON TOBIN, PLLC, DALLAS, TX; LINDSEY E. POWELL, LEAD ATTORNEY, ANDERSON JONES, PLLC, RALEIGH, NC.

For UNIVERSITY DIRECTORIES, LLC, PRINT SHOP MANAGEMENT, LLC, VILCOM, LLC, VILCOM INTERACTIVE MEDIA, LLC, VILCOM PROPERTIES, LLC, VILCOM REAL ESTATE DEVELOPMENT, LLC, Defendants: JOHN A. NORTHEN, VICKI L. PARROTT, LEAD ATTORNEYS, NORTHEN BLUE, L.L.P., CHAPEL HILL, NC.

For WILLIAM P. MILLER, Interested Party: WILLIAM P. MILLER, LEAD ATTORNEY, U.S. Bankruptcy Administrator, Greensboro, NC.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This action, filed as an adversary proceeding in the bankruptcy court, is before this court on the motion of Plaintiffs Eli Global, LLC, UDX, LLC, Southland National Insurance Corporation, UD Holdings, LCC, SNA Capital, LLC, Around Campus, LLC, Greg Lindberg, and Scott Hall (collectively, " Plaintiff Creditors" ) to withdraw reference under 28 U.S.C. § 157(d). (Doc. 2.) Defendants University Directories, LLC (" UD" ), Print Shop Management, LLC (" PSM" ), Vilcom LLC (" Vilcom" ), Vilcom Interactive Media, LLC (" VIM" ), Vilcom Properties, LLC (" VP" ), Vilcom Real Estate Development, LLC (" VRD" ), William Miller, (collectively, the " Defendant Debtors" ) oppose the motion. (Doc. 4.) For the reasons set forth below, the motion will be granted.

I. BACKGROUND

This adversary proceeding arises out of a dispute following the failed purchase of several companies. Sometime before August 22, 2014, Eli Global began negotiating the possible acquisition of UD. (Doc. 5 ¶ 22.) Shortly thereafter, UD and Eli Global, represented by Plaintiff Greg Lindberg (CEO of Eli Global), executed both (1) a " Letter of Agreement" regarding Eli Global's purchase of UD and a provision of confidential information from

Page 250

UD to Eli Global; and (2) a " Term Sheet," which " indicated that Eli Global, through a new company, would acquire ownership of 100% of UD" and provided a closing date of October 1, 2014, along with other purchasing details. (Id. ¶ ¶ 23, 25.)

Following the execution of those documents, a series of events unfolded in quick succession. First, certain undisclosed Plaintiff Creditors formed three North Carolina limited liability companies -- UDX, UD Holdings, and Around Campus. (Id. ¶ ¶ 29, 31-32.) Eli Global then signed a " Confidentiality Agreement" with Bank of North Carolina to evaluate the possible sale of UD and VRD debt.[1] (Id. ¶ 33.) On October 10, 2014, not long after Eli Global contacted Bank of North Carolina, UDX bought one of UD's loans from Bank of North Carolina, and Southland National Insurance Corporation -- listed as one of Eli Global's " Portfolio Companies" -- bought VRD's loan from Bank of North Carolina. (Id. ¶ ¶ 38-39.)

Less than a week after those debt purchases, on October 15, 2014, Lindberg, now representing UD Holdings, proposed two transactions for the purchase of UD and VP, which were rejected. (Id. ¶ ¶ 41-42.) That same day, following those rejections, UDX gave notice of default and acceleration of indebtedness on UD's loans and of the intended disposition of collateral securing UD's loans. (Id. ¶ 43.) UDX also then purchased VRD's loan held by Southland National Insurance Corporation and sent a notice of default and acceleration of indebtedness on VRD's loan. (Id. ¶ 45.) On October 22, 2014, UDX brought suit in State court against UD, Vilcom, VIM, VP, VRD, and James Heavner -- CEO of UD. (Id. ¶ ¶ 27, 45.)

On October 24, 2014, the Defendant Debtors filed a voluntary petition for relief under Chapter 11 in the Bankruptcy Court of the Middle District of North Carolina. (Id. ¶ 3.) Pursuant to 28 U.S.C. § 157(a) and Local Rule 83.11, the matter was referred to the bankruptcy court in this district. The Defendant Debtors bring twelve claims against the Plaintiff Creditors: breach of fiduciary duty; breach of contract seeking injunctive relief; breach of contract seeking damages; breach of implied covenants of good faith and fair dealing; unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1 et seq.; trademark infringement; equitable subordination; avoidance of a " Gimghoul lien" ; two claims of avoidance of guaranty obligations, " Determination of the extent and Validity of VIM Security Interest," and " Alternative Claim for Avoidance of VIM Security Interest." (Id. ¶ ¶ 70-145.) Plaintiff Creditors responded with the current motion to withdraw the reference of the adversary proceeding to the bankruptcy court and to have the case litigated in this court. (Doc. 2.) The motion has been fully briefed and is now ripe for consideration.

II. ANALYSIS

Plaintiff Creditors raise several arguments for withdrawal of reference. One contention is that this court must withdraw its reference of the proceeding to the bankruptcy court under 28 U.S.C. ยง 157(d) because the adversary proceeding involves consideration of both Title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce. Because the court finds that it must ...


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