bankruptcy estate and allocated among NewWorldAir’s creditors.” (Lunn’s Mem. of Law in
Support of Mot. to Dismiss, at 5), The Trustee presents no argument to the contrary. Therefore,
Counts V, VI, and VII are related to NewWorldAir’s bankruptcy matter.

The Trustee also argues that jurisdiction over Counts V, VI, and VII is proper in the
district court based on supplemental jurisdiction, pursuant to 28 U.S.C. § 1367. However,
instead of exercising supplemental jurisdiction, a district court should defer jurisdiction of claims
“related to cases under title 11” to bankruptcy courts under 28 U.S.C. § 157. See Nat'l Tax
Credit Partners v. Havlik, 20 F.3d 705, 709 (7th Cir. 1994).

Dismissal of these claims, though, is not warranted. Instead, claims related to a
bankruptcy proceeding under § 1334(b) are automatically referred to the bankruptcy court for this
district. 28 U.S.C. § 157(a); Internal Operating Procedure 15(a) for the Northern District of
Illinois; Cho, 2002 WL 31101658, at *2; Citibank v. Park-Kenilworth, 109 B.R. 321, 325 (N.D.
Ill. 1989). Accordingly, Counts V, VI, and VII are referred to the bankruptcy court.

CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is granted. Counts V, VI, and

VI are referred to the bankruptcy court. Count IV is voluntarily dismissed.

Dated: 2A, 2004

J W. DAI H
ited States District Judge


In response, the Trustee contends Federal Rule of Bankruptcy Procedure 6009 allows him
to prosecute pending claims on behalf of NewWorldAir in any forum. See Cable v. Ivy Tech
State College, 200 F.3d 467, 472 (7th Cir. 1999).

“Tt has long been held that rights of action against officers, directors and shareholders of a
corporation for breaches of fiduciary duties, which can be enforced by either the corporation
directly or the shareholders derivatively before bankruptcy, become property of the estate which
the trustee alone has the right to pursue after the filing of a bankruptcy petition.” Koch Ref. v.
Farmers Union Cent. Exch., Inc., 831 F.2d 1339, 1343 (citations omitted). Here, NewWorldAir
filed for bankruptcy before Piser filed his Complaint asserting the derivative claims; therefore,
those claims were not pending before the bankruptcy court. Accordingly, only the Trustee has
the right to pursue those claims.

Moreover, Counts V, VI, and VII are related to NewWorldAir’s bankruptcy case. Under
28 U.S.C. § 1334(b), “the district courts shall have original but not exclusive jurisdiction of all
civil proceedings arising under title 11, or arising in or related to cases under title 11.” “A
‘related’ claim is a claim involving the debtor or a third party that is based on non-bankruptcy
law, typically a state law claim, which will impact the estate of the debtor or the allocation of
property among creditors,” Bear Stearns Sec. Corp. v. Cho, No. 02 C 4419, 2002 WL 31101658,
at *2 (N.D. Ill. Sept. 17, 2002) (Cho).

In this case, Defendants argue that “[t]here can be no dispute that, should the Trustee

recover on his [derivative] claims, that recovery would become property of NewWorldAir’s



Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge rg Sitting Judge if Other
or Magistrate Judge John W. Darrah than Assigned Judge
CASE NUMBER 03 C 5816 DATE 9/22/2004
CASE Piser, et. al. Vs. Lunn Partners, LLC, et. al.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (6) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) o Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) im) Answer brief to motion due . Reply to answer brief due.
(4) Q Ruling/Hearing on setfor_____at
(5) Oo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) oO Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) a Trial[set for/re-set for] on at
(8) a) (Bench/Jury trial] [Hearing] heid/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CiLocal Rule 41.1 OFRCP41(a)\(1) OC FRCP41(a)(2).
(0) 44 [Other docket entry] For the reasons stated in the attached memorandum opinion and order,
defendants’ motion to dismiss is granted. Counts V, VI, and VII are referred to the bankruptcy court,
Judge Jacqueline Cox, case no. 03 B 34195. Count IV is voluntarily dismissed. Enter Memorandum
Opinion and Order.
(11) a (For further detail see order attached to the original minute order.)
No notices required, advised in open court
No notices required, ‘oumber of notices
Notices mailed by judge's staff. SEP
Notified counsel by telephone. ~ 2 ae
UY | Docketing to mail notices.
Mail AO 450 form. Lad SITS A
Copy to judge/magistrate judge.
courtoom date mailed notice
MF deputy's
initials
Date/time received in
central Cterk’s Office mailing deputy initials



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JONATHAN H. PISER, individually;and
R. SCOTT ALSTERDA, as Trustee for the
Bankruptcy Estate of NEWWORLDAIR
HOLDINGS, INC., a Delaware corporation,

Plaintiffs,

v. No: 03 C 5816
LUNN PARTNERS, LLC, a Delaware
limited liability company; INDIGO D-2
INVESTORS, LLC, a Delaware limited
liability company; INDIGO D-2
INVESTORS, INC., a Delaware corporation;
and ROBERT J. LUNN, individually,

Judge John W. Darrah

ww SS SH Ee Se Se SH SH SS SS SE SY

Defendants,

MEMORANDUM OPINION AND ORDER

Plaintiffs, Jonathan H. Piser and R. Scott Alsterda, as Trustee (the “Trustee”) for the
Bankruptcy Estate of NewWorldAir Holdings, Inc. (“NewWorldAir”), filed a seven-count
Second Amended Complaint against Defendants, Lunn Partners, LLC (“Lunn Partners”); Indigo
D-2 Investors, LLC (“Indigo LLC”); Indigo D-2 Investors, Inc. (“Indigo Inc.”); and
Robert J. Lunn. Presently before the Court are two motions: (1) Robert J. Lunn’s Motion to
Dismiss Counts IV, V, VI, and VII of Plaintiffs’ Verified Second Amended Complaint; and
(2) the remaining Defendants’ Motion to Dismiss Counts VI and VII of Plaintiffs’ Verified
Second Amended Complaint.

Lunn seeks to dismiss Count IV of Plaintiffs’ Second Amended Complaint for failure to

state a claim; in response, Plaintiffs have voluntarily dismissed this cause of action. Defendants

A



also seek to dismiss Counts V, VI, and VII. These counts are all state law claims originally
brought by Piser, a NewWorldAir stockholder, as derivative claims on behalf of NewWorldAir
and arise out of Lunn’s efforts to direct the assets of NewWorldAir and its stockholders to Lunn
and entities under Lunn’s control. Counts V, VI, and VII are now asserted by the Trustee.
BACKGROUND

The facts, for the purposes of this motion, are as follows. On August 19, 2003,
NewWorldAir, which owned and operated a commercial-scheduled charter airline service, filed a
bankruptcy petition. Later that same day, Piser filed his Complaint against Defendants and
brought a number of claims, including the derivative claims at issue in these motions, against
Defendants. Thereafter, amended complaints were filed in this action, and the Trustee replaced
Piser as Plaintiff in connection with Counts V, VI, and VII. NewWorldAir’s bankruptcy matter
is currently pending.

ANALYSIS

Defendants argue that Counts V, VI, and VII should be dismissed because once
NewWorldAir filed for bankruptcy, the bankruptcy court, and not the district court, obtained
jurisdiction over the derivative claims at issue in this motion. Specifically, Defendants contend
that Piser had no standing to bring his derivative claims because NewWorldAir filed for
bankruptcy before Piser filed his claims. Defendants further argue that because the derivative
claims are related to the bankruptcy matter, jurisdiction over these claims lies in the bankruptcy

court.