United States District Court, W.D. Pennsylvania
November 21, 2005.
IN RE: WORLDCLASS PROCESSING, INC. WORLDCLASS PROCESSING, INC., Appellant,
AT&T CAPITAL CORPORATION, AT&T COMMERCIAL FINANCE CORPORATION, NEWCOURT FINANCIAL CORPORATION and CIT CORPORATION, Appellees.
The opinion of the court was delivered by: DONETTA AMBROSE, District Judge
MEMORANDUM OPINION and ORDER
This action arises out of a series of events relating to Debtor
Worldclass Processing, Inc.'s ("WCP") loan transaction with
Defendants ("CIT").*fn1 On appeal is the February 10, 2005
Order of the Bankruptcy Court dismissing with prejudice WCP's
Amended Complaint, and denying WCP's Motion for Summary Judgment.
Broadly speaking, WCP challenges two aspects of the bankruptcy
court's decision: first, the dismissal of claims based on events
occurring after November 7, 1995, as well as those before that
date, as barred by a previous state court order; and second, the dismissal of WCP's objection to CIT's proof of
claim, which was based on the doctrine of recoupment.
All parties appear to agree that the state court decision at
issue required dismissal of WCP's claims resting on events prior
to November 7, 1995. They further acknowledge that the Amended
Complaint makes factual allegations regarding events occurring
after that period.
For example, the Amended Complaint alleges that in early 1997
AT&T caused WCP's board of directors to approve a particular
resolution; that in May of 1996, AT&T caused WCP to default on
its payments to another entity; that, some time after November of
1996, AT&T reneged on an agreement to loan WCP money; that AT&T
prevented WCP from accepting an offer of purchase in 1997; and
that AT&T otherwise caused WCP to file for bankruptcy as the
result, in part, of AT&T's actions in 1998.
It is not entirely clear why the Bankruptcy Court found these
allegations insufficient to sustain any cause of action asserted.
For example, in its otherwise thorough opinion, the court does
not explicitly identify the standard of review or burdens applied
to the motion before it, nor does it set forth the elements or
other law defining the pertinent causes of action, or applicable
preclusion principles. Moreover, the parties refer to various
hearing transcripts before the Bankruptcy Court, the contents of
which are not recounted or expressly relied on in the disputed
Under the circumstances present here, I am not satisfied that
the record permits a competent review of the order under appeal.
It would be significantly more efficient, and would avoid a needlessly confused record, to
seek clarification from the Bankruptcy Court regarding the bases
for its holdings. Cf., Hager v. Gibson, 109 F.3d 201, 208
(4th Cir. 1997).
I will, therefore, remand this matter to the Bankruptcy Court
for clarification and explication of the grounds for and
standards applied to the Order under appeal.*fn2 I will
retain jurisdiction of this matter and the appeal, and remand for
the sole purpose enumerated herein. Following the Bankruptcy
Court's action, I will assess the need for further briefing.
AND NOW, this 21st day of November, 2005, it is ORDERED
that this matter is remanded to the Bankruptcy Court for
clarification and explication of the grounds for and standards
applied to the Order of Court dated February 10, 2005, denying
Motion for Summary Judgment and Granting Motion to Dismiss
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