A federal judge in the Western District of Pennsylvania has transferred a case stemming from a wind turbine project in Cambria County, Pa., to the Eastern District of Tennessee.
Because a debt owed to one of the four separate companies involved in the project will likely weigh on the bankruptcy proceedings of another that are already under way in Tennessee, that district is a better venue for the case, said U.S. District Judge Kim Gibson of the Western District of Pennsylvania.
“Because of the pending bankruptcy proceeding to which this case is related, the factual nexus from which this dispute emerges favors administration of all related matters in Tennessee,” Gibson said in Siskin Steel & Supply v. Highland North.
The four companies, two of which are based in Tennessee and none of which are based in Pennsylvania, are linked by a paper chain of contracts. At the top of the chain is Highland North, which had a lease on the Adams Township, Pa., property for the wind farm and contracted with Nordex USA to supply the turbines. Nordex subcontracted some of the fabrication work to SIAG Aerisyn, which entered into purchase-order contracts with Siskin Steel & Supply Co. for steel plates to be used in making the turbines, according to the opinion.
Siskin filed a mechanic’s lien in the Court of Common Pleas of Cambria County, which was later removed to the Western District of Pennsylvania, after SIAG filed for bankruptcy in Tennessee. Siskin claims that it is owed nearly $1 million for its part in the project.
According to SIAG’s bankruptcy petition, Siskin is one of its largest creditors, listed at $998,659, Gibson said.
Siskin resisted the move to a new federal venue, asking the court instead to remand its case to Pennsylvania state court, arguing that the mechanic’s lien is unrelated to SIAG’s bankruptcy proceedings. Gibson wasn’t convinced.
“Applying the Pacor test and its progeny here, the court concludes that determining whether judgment should be entered in favor of Siskin on the mechanic’s lien complaint with the lien being satisfied through Nordex’s security interest is a question ‘related to’ the SIAG bankruptcy proceeding,” Gibson said.
She referred to the U.S. Court of Appeals for the Third Circuit’s 1984 opinion in Pacor v. Higgins, which has set the standard for what courts are to consider “related to” bankruptcy proceedings for the purposes of transfer.
The parties in the case disagreed as to whether the mechanic’s lien was sufficiently related to SIAG’s bankruptcy. Gibson held that it is.
“Any recovery by Siskin in the mechanic’s lien claim would necessarily reduce Siskin’s claim against SIAG in the bankruptcy estate for contribution by the same amount, thus altering the liability of the SIAG bankruptcy estate,” Gibson said.
Later, after finding that case would be properly removed, Gibson held that the Eastern District of Tennessee would be the appropriate venue for several reasons.
“While it is true that the mechanic’s lien complaint is based on Pennsylvania law and the ownership of property is in Pennsylvania, Nordex’s substitution of the letter of credit as security for the Pennsylvania property balances this concern. … It is also more likely to be in the interest of the state of Tennessee than that of Pennsylvania to resolve this controversy because of its significant connection to not only the SIAG bankruptcy proceeding, but also the pending litigation between Siskin and SIAG in Tennessee state court,” Gibson said.
Neither Kevin McKeon of Watt, Tieder, Hoffar & Fitzgerald in McLean, Va., who represented Siskin, nor Jonathan Young of Edwards Wildman Palmer in Chicago, who represented Highland, could be reached for comment.
(Copies of the 24-page opinion in Siskin Steel & Supply v. Highland North, PICS No. 13-0050, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •