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Manufacturers and Traders Trust Co. v. Wachovia Capital Markets, LLC

United States District Court, Third Circuit

July 9, 2013

MANUFACTURERS AND TRADERS TRUST COMPANY, AS INDENTURE TRUSTEE, Plaintiff,
v.
WACHOVIA CAPITAL MARKETS, LLC, d/b/a WACHOVIA SECURITIES, et al., Defendants. No. 09-162

OPINION AND ORDER OF COURT

DONETTA W. AMBROSE, District Judge.

Pending before the court is a Motion to Dismiss filed by Defendants, Wachovia Capital Markets, LLC, d/b/a/Wachovia Securities, Wells Fargo Securities, LLC, formerly known as Wachovia Capital Markets, LLC and Wachovia Bank, National Association ("Defendants") seeking to dismiss Plaintiff's First Amended Complaint for lack of standing pursuant to Rules 12(b)(1) and 12(h)(3) of the Federal Rules of Civil Procedure. Plaintiff, Manufacturers and Traders Trust Company, as indenture Trustee ("M&T"), filed a Brief in Opposition thereto. (Docket No. 107). After careful consideration of the same and the related documents, said Motion (Docket Nos. 246) is granted as more fully set forth below.

OPINION

I. Background

Plaintiff, M&T, acts as the Indenture Trustee under the Indenture dated June 23, 2003, pursuant to which Le-Nature's publicly issued 9% Senior Subordinated Notes. (First Amended Complaint, Docket No. 238, ¶11, ¶97). According to M&T, Le-Nature's breached the terms of the Indenture at the time it entered into the September 1, 2006 Credit Facility because its Consolidated Fixed Charge Coverage Ratio was substantially less than 2.0 to 1.0. Id. at ¶99. Defendant, Wachovia Capital Markets, LLC, d/b/a/Wachovia Securities, was the principal investment banker and financial advisor to Le-Nature's, and it arranged, promoted, and performed other services in connection with multiple credit facilities and securities issuances for Le-Nature's. Id. at ¶13. Defendant, Wachovia Bank, National Association, administered hundreds of millions of dollars of loans to Le-Nature's. Id. at ¶14. M&T has sued Defendants for tortious interference with a contract. Id. To that end, M&T asserts that Defendants knowingly and actively assisted Le-Nature's in breaching the terms of the Indenture.

II. Legal Argument

A. Legal Standard

Defendants filed their Motion to Dismiss pursuant to Rule 12(b)(1) and 12(h)(3)[1] of the Federal Rules of Civil Procedure. A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges the jurisdiction of the court to address the merits of the plaintiff's suit. A Rule 12(b)(1) attack may argue that the plaintiff's federal claim is immaterial and made solely for the purpose of obtaining federal jurisdiction, is insubstantial and frivolous (collectively referred to a "facial attacks") or, alternatively, the attack may be directed at "the existence of subject matter jurisdiction in fact (referred to as a "factual attack")." Mortensen v. First Federal Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). This case is a facial attack. See, Common Cause of Pennsylvania v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009). In facial attack cases, the sufficiency of the pleadings is contested. Id. As a result, I must accept the Complaint's allegations as true.[2] Id. The Plaintiff bears the burden of establishing its standing. Id., citing, DaimlerCrysler Corp. V. Cuno, 547 U.S. 332 (2006). If I determine that this Court does not have subject matter jurisdiction over the case, I must dismiss the action. Robinson v. Dalton, 107 F.3d 1018, 1020 (3d Cir. 1997).

B. Standing

Defendants' argument is based on lack of standing. (Docket No. 246). Specifically, Defendants argue that M&T lacks standing because:1) the tort claim that M&T is attempting to assert does not belong to the current noteholders it purports to represent and, thus, does not belong to M&T as the trustee; and 2) even if it did, the Indenture does not give M&T the authority to assert a tort claim. (Docket No. 247, p. 5). I will address each argument seriatim, as necessary.

1. Standing of M&T to Bring a Tort Claim against Wachovia

"Absent Article III standing, a federal court does not have subject matter jurisdiction to address a plaintiff's claims, and they must be dismissed." Common Cause of Pennsylvania v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009), quoting, Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006).

[I]n order to have Article III standing, a plaintiff must adequately establish:

(1) an injury in fact (i.e., a "concrete and particularized" invasion of a "legally ...

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