Subranni v. Navajo Times Publ’g Co. (In re Star Group Communs., Inc.)

Subranni v. Navajo Times Publ’g Co. (In re Star Group Communs., Inc.)

Opinion

 [*618]  MEMORANDUM [**2]  DECISION

Before the court is a Motion to Dismiss Adversary Proceeding by Defendant, Navajo Times Publishing Company, Inc. (hereinafter "Navajo Times"), under Rule 12(b)(1) and (b)(6) asserting tribal sovereign immunity. Chapter 7 Trustee, Thomas J. Subranni, (hereinafter "Trustee") commenced this Adversary Proceeding to avoid and recover preferential transfers pursuant to sections 547 and 550 of the Bankruptcy Code. For the reasons that follow, the court finds that Navajo Times is a subordinate economic entity which enables it to enjoy the benefits of sovereign immunity. Thus, Navajo Times' Motion to Dismiss is granted.

JURISDICTION AND VENUE

This matter before the court is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (E), and (F), and the court has jurisdiction pursuant to 28 U.S.C. § 1334, 28 U.S.C. § 157(a), and the Standing Order of Reference issued by the United States District Court for the District of New Jersey on July 23, 1984, as amended on September 18, 2012, referring all bankruptcy cases to the bankruptcy court.

PROCEDURAL HISTORY

On August 17, 2015 creditors of Star Group Communications Inc. Media & Marketing Group (hereinafter "Debtor") filed an involuntary chapter 7 petition. (Case No. 15-25543-ABA). On September 10, 2015 (nunc pro tunc) the court entered relief against Debtor. [**3]  On September 17, 2015, Trustee was appointed interim trustee of Debtor's estate. On December 7, 2015, Trustee filed an Adversary Complaint against Navajo Times, which seeks to avoid and recover preferential transfers pursuant to sections 547¹ and 550². (Adv. No. 15-02497-ABA; Doc. 1). On January 25, 2016, Navajo Times filed a Motion to Dismiss Adversary Proceeding pursuant to Rule 12(b)(1) and (b)(6) ("Motion") on the grounds that "Navajo Times is an entity of the Navajo Nation, a federally recognized Indian tribe, who has not waived its Sovereign Immunity." (Doc. 4-1, at 4). On February 5, 2016, Trustee filed a Memorandum of Law in Opposition to [Navajo Times'] Motion to Dismiss. (Doc. 8). On February 10, 2016, Navajo Times filed a Reply in Support of Motion to Dismiss. (Doc. 10).

The matter was set down for hearing on February 16, 2016. At that hearing, the court preliminarily ruled that section 106 of the Bankruptcy Code does not abrogate sovereign immunity for Indian tribes and  [*619]  in this case, the Navajo Nation. Nevertheless, at the conclusion of the hearing, the court ordered post-hearing submissions addressing whether Navajo Times is a "subordinate economic entity"³ likewise protecting it from Trustee's suit.

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