Asselin-connolly LLC v. Rubenstein, CASE NO. 09-22124 (ASD)

• Decision Date: 20 September 2010
• Docket Number: ADV. PRO. NO. 09-02056,CASE NO. 09-22124 (ASD),RE: ECF NO. 43
• Court: U.S. Bankruptcy Court — District of Connecticut
• Parties: ASSELIN-CONNOLLY, LLC, PLAINTIFF v. BONNIE RUBENSTEIN, DEFENDANT

ASSELIN-CONNOLLY, LLC, PLAINTIFF

v.BONNIE RUBENSTEIN, DEFENDANT

CASE NO. 09-22124 (ASD)

ADV. PRO. NO. 09-02056

RE: ECF NO. 43

United States Bankruptcy Court District Of Connecticut

Dated: September 20, 2010

Anthony S. Novak, Esq., Attorney for Plaintiff

David F. Falvey, Esq., Attorney for Debtor

MEMORANDUM OF DECISION AND ORDER

DENYING PLAINTIFF'S MOTION TO REMAND PLAINTIFF'S CLAIMS

OF NON-DISCHARGEABILITY TO STATE COURT

I. INTRODUCTION

ALBERT S. DABROWSKI, J.

Presently before the Court is the motion of the Plaintiff, Asselin-Connolly, LLC (hereafter, the "Plaintiff") to remand to the Superior Court of the State of Connecticut its claims of non-dischargeability of certain guardian ad litem fees owed by the Debtor, Bonnie Rubenstein (hereafter, the "Debtor"). See Motion to Remand the Plaintiff's Claims of Non-Dischargeability Against Debtor Bonnie Rubenstein to State Court (hereafter, the "Motion"), ECF No. 43.¹ The Plaintiff seeks a remand of this proceeding to the State Court and/or abstention by this Court pursuant to 28 U.S.C. §1334(c), 28 U.S.C. §1452(b), 11 U.S.C. §305, and 11 U.S.C. §105. For the reasons stated hereafter, the Court declines to exercise its discretion to remand or abstain, and retains jurisdiction over the single issue at the heart of this adversary proceeding-whether guardian ad litem fees are a "domestic support obligation" as defined by the Bankruptcy Code² and therefore non-dischargeable under §523(a)(5)-an issue of federal law particularly amenable to a determination by this Court. Accordingly, the Plaintiff's Motion shall be DENIED.

II. JURISDICTION

The United States District Court for the District of Connecticut has jurisdiction over the instant matter by virtue of 28 U.S.C. § 1334(b); and this Court derives its authority to hear and determine this proceeding on reference from the District Court pursuant to 28 U.S.C. §§ 157(a), (b)(1) and the District Court's General Order of Reference dated September 21, 1984. This is a "core proceeding" pursuant to 28 U.S.C. §157(b)(2)(A) &

(I).

III. PROCEDURAL AND FACTUAL BACKGROUND

The record reflects that since 1997, the Debtor and her former spouse, Jeffrey Rubenstein, have been involved in protracted litigation in the Superior Court for the State of Connecticut, Judicial District of New London (heretofore and hereafter, the "State Court"), in a family matter captioned Jeffrey Rubenstein v. Bonnie Rubenstein (hereafter, the "State Court Action"), Docket No. FA-96-4108659, concerning, inter alia, their marital dissolution. In connection with the State Court Action and pursuant to Connecticut General Statutes §45a-132, the State Court appointed Susan Asselin-Connolly, a member of the Plaintiff Law Firm, as guardian ad litem (hereafter, "GAL") of Bonnie Rubenstein's minor child in or around October 1997. The Plaintiff³ represented both in her Motion and orally before this Court that since January 1, 2000, she has expended over $80,000.00 in performing her duties as GAL in the State Court Action. See Motion, Exh. B, "Interlocutory Orders on Fees... of the Guardian Ad Litem," at p. 6; Plaintiff's Supplement to Motion to Remand..., (hereafter, the "Motion Supplement"), ECF No. 54, at p. 5.

Jeffrey Rubenstein commenced a bankruptcy case, Docket No. 05-34257, by filing a voluntary petition under Chapter 7 of the Bankruptcy Code on August 26, 2005. In the bankruptcy case of Mr. Rubenstein, the undersigned judge granted the same GAL, Ms. Asselin-Connolly, relief from the automatic stay of Section 362(a) to prosecute the amount, apportionment, and dischargeability of the GAL fees in State Court. In granting relief from stay therein, the undersigned judge recognized that the State Court was the proper forumfor adjudication of the multitude of issues present at the time.⁴

The Debtor concedes that the State Court Judge, Boland, J., determined reasonable GAL fees and costs in the amount of $77,208.30, and responsibility to pay the GAL fees, allocating one-third to the Debtor's former spouse, Jeffrey Rubenstein, and twothirds to the Debtor. SeeObjection to Plaintiff's Motion to Remand... (hereafter, the "Objection"), ECF No. 47, ¶ 3; Motion, Exhs. B, E, G & H.⁵

On July 29, 2009, the Debtor commenced the instant bankruptcy case by filing a voluntary petition under Chapter 7 of the Bankruptcy Code. She received her discharge on November 2, 2009. On October 8, 2009, the Plaintiff commenced the instant adversary proceeding by filing a complaint against the Debtor seeking a determination of nondischargeability of debt related to her GAL fees pursuant to Bankruptcy Code Section 523(a)(5), which excepts from discharge debts arising from a "domestic support obligation." See 11 U.S.C. § 523(a)(5); 11 U.S.C. § 101(14A).

Notwithstanding that the Plaintiff commenced the instant adversary proceeding in this Court and failed to initially request relief from the automatic stay to pursue the matter in the State Court as she did previously in the bankruptcy case of Mr. Rubenstein, the Plaintiff now seeks to have this Court remand the determination of nondischargeability of the GAL fees to the State Court. As the statutory basis for the authority of this Court toremand or abstain, the Plaintiff, in her Motion and Motion Supplement, relies upon 28 U.S.C. §§ 1334(c) and 1452(b), as well as 11 U.S.C. §§ 305 and 105. The Debtor filed her Objection on April 7, 2010, urging this Court to retain jurisdiction over whether the GAL fees at issue are non-dischargeable under Bankruptcy Code §523(a)(5).

IV. DISCUSSION

The Court will address separately each statutory basis upon which the Plaintiff relies.

A. Abstention Under 28 U.S.C. §1334(c)

The Plaintiff first urges this Court to abstain from hearing the issue of nondischargeability pursuant to 28 U.S.C. §1334(c), which provides:

(1) Except with respect to a case under chapter 15 of title 11, nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11.

(2) Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.

11 U.S.C. §1334(c)(1), (2) (2008).

Two types of abstention are implicated by this statute-permissive or discretionary abstention under Section 1334(c)(1), and mandatory abstention under Section 1334(c)(2). The instant nondischargeability proceeding is a core proceeding pursuant to 28 U.S.C. §157(b)(2)(I). In addition, "[t]he determination of whether to abstain is a core proceeding, pursuant to 28 U.S.C.A. § 157(b)(2)(A)," In re Best Reception Systems, Inc., 220 B.R. 932, 941 (Bankr. E.D.Tenn. 1998). Because "abstention is only mandated with respect to non-core matters," In re S.G. Phillips Constructors, Inc., 45 F.3d 702, 708 (2d Cir. 1995)(citation omitted), mandatory abstention under Section 1334(c)(2) is inapplicable to the present matter. "When a district court abstains from hearing cases involving 'core' proceedings, the abstention decision can only be made pursuant to § 1334(c)(1), which leaves abstention to the district judge's discretion." Id.

While the parties agree that both bankruptcy courts and the state courts enjoy concurrent jurisdiction over dischargeability under §523(a)(5), the matter is presently before this Court, and concerns a single issue of federal law, an issue which appears to turn upon only one of the four elements comprising a domestic support obligation under 11 U.S.C. § 101(14A).⁶ As a threshold matter, "there is a presumption in favor of the exercise of federal jurisdiction and against abstention." Rahl v. Bande, 316 B.R. 127, 135 (S.D.N.Y. 2004)(citing Woodford v. Cmty. Action Agency, Greene County, 239 F.3d 517, 522 (2d Cir.2001)). Abstention is an "extraordinary and narrow exception[] to a federal court's duty to exercise its jurisdiction." In re Joint Eastern and Southern District Asbestos Litigation, 78 F.3d 764, 775 (2d Cir.1996)(quoting Colorado Riber Water Conservation District v. U.S., 424 U.S. 800, 813, 96 S.Ct. 1236 (1976).

In determining whether permissive abstention is proper, bankruptcy courts may consider, but need not apply in every instance, a number of factors. See In re Horowitz, 2010 WL 814103 at *4 (Bankr. E.D.N.Y, March 1, 2010). These factors include⁷:

(1) whether issues of state law predominate; (2) whether judicial economy would be served by abstention or equitable remand; (3) whether § 1334(b) is the sole basis for exercising federal jurisdiction; (4) whether the proceeding involves non-debtors; (5) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; and (6) the likelihood that the proceeding was commenced in a particular forum because of forum shopping on the part of one of the parties.

Master-Halco, Inc. v. DAngelo, 351 B.R. 267, 272 (D.Conn. 2006) (quoting Rahlv. Bande, 316 B.R. at 135).

The decision to exercise discretionary abstention ultimately "turns on whether the administration of the bankruptcy case would be served best by that procedure." In re Raytech Corp., 238 B.R. 241, 244 (Bankr. D.Conn. 1999) (citing In re Texaco, 77 B.R. 433, 438 (Bankr. S.D.N.Y.1987)). "Permissive abstention from core proceedings under 28 U.S.C. § 1334(c)(1) is left to the bankruptcy court's discretion" after considering one or more of the relevant factors. In re Petrie Retail, Inc., 304 F.3d 223, 232 (2d Cir. 2002) (citing In re S.G. Phillips Constructors., Inc., 45 F.3d at 708).

1. Whether...