ITS to appeal loss in frivolous $1B Kentucky lawsuit
On September 30th, 2026, West Gateway sublessee Insight Terminal Solutions (ITS), owned by hedge fund mogul Jon Brooks, suffered a stinging defeat in its frivolous and forum-shopped bid to impose a claim for hundreds of millions of dollars on the City of Oakland.
US District Court Judge Benjamin Beaton issued his scolding decision in an 18-page ruling that laid out in exacting detail why ITS had no business filing its case in a Kentucky bankruptcy court. Judge Beaton ruled:
the absence of any identifiable pre-confirmation claim or post-confirmation distribution dooms the jurisdictional basis for ITS to return to bankruptcy court. This litigation doesn’t involve application of the Bankruptcy Code, the interpretation of the reorganization plan, or any potential effects on creditors….The only relevant nexus between this case and ITS’s bankruptcy is the one linking its current owners to a potential future recovery. And that does not suffice…. Even the expansive reach of related-to bankruptcy jurisdiction doesn’t stretch this far.
Judge Beaton then went on to make clear that if his decision were overruled on “related to” jurisdiction, he would nonetheless abstain from hearing the case, as “tort claims between a California-based plaintiff and a California municipality, involving alleged misconduct in California that violated California state law” ought to be litigated in a California court. In his discussion on the question of abstention, Judge Beaton wrote, “Particularly given the degree to which the state-law issues bear on sensitive questions of sovereignty and finality, however, principles of federalism and comity counsel deference to California courts.”
ITS filed notice on October 13, 2026 that it would nonetheless appeal the case to the Sixth Circuit Court of Appeals. The developers’ opening appeal brief will be filed in the coming months.
No Coal in Oakland’s Ted Franklin, in his October 6 analysis of Judge Beaton’s dismissal, wrote that – despite the narrow chance ITS has of prevailing in this case – they might choose to appeal or refile in California for “the nuisance value of holding formally unresolved claims over the City’s head.”
No Coal in Oakland continues to assume that’s the game the would-be coal developers are playing. It’s unfortunate that the Sixth Circuit Court of Appeals judges are being asked to direct their time and attention to a lawsuit that never should have been filed.
Image: Map of the Sixth Circuit United States Court of Appeals. Image credit: Marginal Cost, via Wikimedia (CC BY-SA 4.0)