Opinion ID: 2648670
Heading Depth: 2
Heading Rank: 2

Heading: California Action & Stipulated Order

Text: On or about August 7, 2009 – after the involuntary bankruptcy petition was filed against AGR but before any relief was ordered by the Bankruptcy Court – 21st Capital filed a complaint (the “California Action”) against Bayer in the Superior Court of California, County of Los Angeles, Central District, to recoup payment from Bayer for the Bayer Debt based on two “legal theories under the laws of the State of California”: (1) Money Had and Received and (2) Goods and Services Sold and Delivered. (Appellant’s Opening Br. at 8.) At about the same time, Bayer initiated an Adversary Proceeding in the Bankruptcy Court against AGR’s Trustee and 21st Capital to resolve “possible conflicting claims concerning, inter alia, payments due and owing by Bayer to [AGR] on or before about July 20, 2009, for certain invoiced and uninvoiced amounts for services rendered by or on behalf of [AGR] before [AGR] ceased operations, in the approximate amount of $302,057.81 (the ‘Bayer Receivable’).” (J.A. at 141 (Stipulated Order at 2).) In its initial response to Bayer’s motion, 21st Capital “expressly argued that the Bankruptcy Court had no jurisdiction to decide the matters at bar in the California Action.” (Appellant’s Opening Br. at 9.) Nonetheless, rather than fully litigate the Adversary Proceeding, 21st Capital decided to temporarily stay the California Action and enter a stipulation with Bayer and the Trustee in the Bankruptcy Court. After “at least six hearings” and discovery (Appellee’s Br. at 3), the parties – 21st Capital, Bayer, and the Trustee – signed a Stipulated Order, which expressly defined the terms “Accounts 6 Receivable” and “Bayer Receivable” as follows: (1) “Accounts Receivable” are “an asset of the Debtor’s estate,” which includes “any amount owed with respect to services actually performed by or on behalf of the Debtor for Bayer which Bayer has not paid”; and (2) the “Bayer Receivable” is the payment “due and owing by Bayer to Debtor on or before about July 20, 2009, for certain invoiced and uninvoiced amounts for services rendered by or on behalf of Debtor before Debtor ceased operations, in the approximate amount of $302,057.81.” (J.A. at 141 (Stipulated Order at 2).) The Order also stated, in part: WHEREAS, Bayer has averred herein that the payment of $302,057.81 into the custody of this Court represents the full and complete payment of any and all valid and owing invoices, accounts receivable or other amount due from Bayer for any and all services performed or provided by the Debtor for Bayer, and said payment fully satisfied its obligations to the Debtor regarding all services provided or performed by the Debtor for Bayer through and including the date of said payment; and ... WHEREAS, 21st Capital contends in the California Action that Bayer’s alleged liability to 21st Capital is the result of alleged specific contractual agreements; and WHEREAS, notwithstanding Bayer’s payment of said $302,057.81 and Bayer’s contentions set forth above, 21st Capital contends in the California Action (which Bayer denies) that Bayer, as the result of alleged specific contractual agreements is independently liable to 21st Capital for the principal amount of $2,156,194.91 (the “21st Capital Claim”) ... WHEREAS, the 21st Capital Claim is not an asset of the Debtor’s estate. NOW, THEREFORE, it is hereby stipulated by, between and among the Parties ... 3. Within a reasonable time after this final Stipulated Order becomes nonappealable, 21st Capital shall amend its Complaint in the California Action to assert the 21st Capital Claim; 7 4. That 21st Capital shall not pursue any claim in the California Action against Bayer for the recovery of the Bayer Receivable as defined herein or the Accounts Receivable, as defined herein; 5. If it is discovered in the course of the California Action, that Bayer owes additional sums to the Debtor for services actually performed by the Debtor and/or its personnel or representatives, that is, if any Accounts Receivable actually exist, 21st Capital shall promptly notify the Trustee and at the request of Bayer or the Trustee, this Court shall enter an appropriate order as to the disposition of said assets; … 8. This Stipulated Order shall close this adversary proceeding; however, the Court shall retain jurisdiction to enforce this Stipulated Order … . (J.A. at 141-444 (Stipulated Order at 2-5).) In essence, the Order re-opened the door to the California Action. While the Order expressly prohibited 21st Capital from pursuing in the California Action any “Accounts Receivable” or the “Bayer Receivable” – as expressly defined in the Order – it also gave 21st Capital the green light to pursue the “21st Capital Claim,” which appears to have reference to “alleged specific contractual agreements” between 21st Capital and Bayer as embodied in the ICAs. The Order also made clear that the 21st Capital Claim was not a part of the Debtor’s estate. All parties have agreed that the outstanding, unpaid invoices that 21st Capital relied upon in paying AGR – outside of what Bayer has already paid to the estate in the Adversary Proceeding – were a complete fabrication. In a purported attempt to abide by the Order, 21st Capital filed its First Amended Complaint (the “FAC”) in the California Action, adding a cause of action for “Breach of Written Contract,” but maintaining its two earlier causes of action for “Money Had and Received” and “Goods and Services Sold and Delivered.” (J.A. at 159-61 (FAC at 4-6).) For the “Goods and Services Sold and Delivered” claim, 21st Capital amended the 8 Complaint to clarify that Bayer “became indebted to [21st Capital] in the sum of $2,156,194.81 for services allegedly sold and delivered by AGR,” (J.A. at 161 (FAC at 6) (emphasis added)), in contrast to the original language of the Complaint that had stated Bayer “became indebted to [21st Capital] … for services sold and delivered to defendant” (J.A. at 740 (Original Complaint at 3-4)). 21st Capital considered the FAC as being consistent with the requirements of the Stipulated Order.