Bartenfelder v. Bartenfelder (In re Bartenfelder)
| Decision Date | 31 March 2023 |
| Docket Number | 19-18119-NVA,Adversary 20-00255-NVA |
| Parties | In re: KIMBERLY BARTENFELDER, Debtor. v. THOMAS BARTENFELDER, et al., Defendants. KIMBERLY BARTENFELDER, Plaintiff, |
| Court | U.S. Bankruptcy Court — District of Maryland |
MEMORANDUM ORDER GRANTING, IN PART, DEFENDANT'S MOTION TO DISMISS [ECF NO. 16] AND MOTION TO ABSTAIN [ECF NO 22], AND STAYING FURTHER PROCEEDINGS
Defendant Thomas Bartenfelder seeks dismissal of plaintiff Kimberly Bartenfelder's Second Amended Complaint (the "SAC") and abstention from consideration of any causes of action that are not dismissed. [ECF Nos. 11, 16 22]. Ms. Bartenfelder opposes both dismissal and abstention. [ECF Nos. 17, 23]. The Court held a hearing (the "Hearing") on Mr. Bartenfelder's motion to dismiss and Ms. Bartenfelder's opposition thereto. [ECF No. 21]. No hearing has been held on the motion to abstain and the Court concludes that a hearing is not necessary. For the reasons that follow, Mr Bartenfelder's motion to dismiss will be granted in part; Mr. Bartenfelder's motion to abstain will be granted in part; and consideration of the counts which are not resolved by dismissal or abstention will be stayed as set forth herein.[1]
This adversary proceeding, which was filed in Ms. Bartenfelder's now-dismissed bankruptcy case, is part of a long-running series of disputes involving Ms. Bartenfelder and Mr. Bartenfelder, all of which have spawned acrimonious and heavily contested litigation. A detailed version of the background and events leading up to this Order can be found in the SAC. [ECF No. 11]. A more concise version follows here.
For approximately the last six years, exclusive of this adversary proceeding, Ms. Bartenfelder and Mr. Bartenfelder have been embroiled in litigation spanning four (4) state court cases concerning disputes over three business entities,[2] their divorce, and allegations by Mr. Bartenfelder of malicious prosecution by Ms. Bartenfelder. The cases involving the Bartenfelder Entities (the "State Court Business Cases")[3] and the divorce case[4] (collectively with the State Court Business Cases, the "State Court Cases") are relevant to the claims asserted in this adversary proceeding, in that those cases involve disputes about ownership interests and marital property and would therefore determine what, if any, property interests and/or rights Ms. Bartenfelder had as of the petition date.[5] The State Court Business Cases involve, among other things, heavily contested disputes over the parties' respective ownership interests and rights to manage and control the Bartenfelder Entities and Forge Hill, as well as the propriety of the parties' conduct in the management and alleged mismanagement of the Bartenfelder Entities. At the time of the filing of the SAC, the State Court Cases were still pending in state court.[6] Second Am. Compl. ¶¶ 91, 108 [ECF No. 11].
In the SAC, Ms. Bartenfelder sets out nine causes of action:
APPLICABLE LAW
This Court's jurisdiction "is conferred by statute." In re Jacobs, 401 B.R. 202, 205 (Bankr. D. Md. 2008). Federal district courts are granted "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11" (28 U.S.C. § 1334(b)) and "may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district" (28 U.S.C. § 157(a)). Under its Local Rule 402, the United States District Court for the District of Maryland has generally referred bankruptcy cases and related adversary proceedings to this Court. Certain claims in this litigation are core proceedings under 28 U.S.C. § 157(b)(2), while other claims are non-core.[7]
I. Dismissal
"A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction challenges a court's authority to hear the matter brought by a complaint." Akers v. Maryland State Educ. Ass'n, 376 F.Supp.3d 563, 569 (D. Md. 2019), aff'd, 990 F.3d 375 (4th Cir. 2021). Such a motion "places the [] court in the role of a fact finder for the limited purpose of assessing disputes over allegations critical to establishing subject matter jurisdiction." James G. Davis Const. Corp. v. Erie Ins. Exch., 953 F.Supp.2d 607, 609 (D. Md. 2013). The court must find that an actual case or controversy exists and that the plaintiff has met her burden of "of proving, by a preponderance of the evidence, the existence of subject matter jurisdiction." Akers, 376 F.Supp.3d at 569.
II. Abstention
Notwithstanding its statutory grant of jurisdiction, a bankruptcy court may exercise its discretion to permissively abstain from considering a matter or hearing a proceeding when the interests of justice or comity would be best served by doing so.
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.
28 U.S.C. § 1334(c)(1). "The court is permitted to abstain from hearing a case that arises under or arises in or [is] related to a case under title 11 'in the interest of justice, or in the interest of comity with State courts or respect for State law.'" Power Plant Ent. Casino Resort Indiana, LLC v. Mangano, 484 B.R. 290, 299 (Bankr. D. Md. 2012) (quoting § 1334(c)(1)). Courts typically assess twelve factors to determine whether permissive abstention is warranted:
(1) efficiency in the administration of the debtor's estate; (2) the extent to which state law issues predominate over bankruptcy issues; (3) whether the issues involve difficult or unsettled questions of state law that would be better addressed by a state court; (4) the presence of a related proceeding commenced in state court; (5) the existence of a jurisdictional basis other than § 1334; (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; (7) the substance rather than form of an asserted "core" proceeding; (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court; (9) the burden of the federal court's docket; (10) the likelihood that the commencement of the proceeding in federal court involves forum shopping by one of the parties; (11) the existence of a right to a jury trial; and (12) whether non-debtor parties are involved in the proceeding.
MacLeod v. Dalkon Shield Claimants Tr., 967 F.Supp. 856, 858 (D. Md. 1997); Power Plant, 484 B.R. at 299; In re Porter-Hayden Co., 304 B.R. 725, 735 (Bankr. D. Md. 2004).
III. Jurisdiction of Adversary Proceeding After Dismissal of Bankruptcy Case
When a bankruptcy case is dismissed, "the general rule [is] that related proceedings ordinarily should be dismissed because a bankruptcy court's jurisdiction over such related proceedings depends on the proceedings' nexus to the underlying bankruptcy case." Okoro v. Wells Fargo Bank, N.A., 567 B.R. 267, 274 (D. Md. 2017) (cleaned up). Nevertheless, "nothing in the statute governing jurisdiction granted to the bankruptcy courts prohibits the continuance of federal jurisdiction over an adversary proceeding which arose in or was related to a bankruptcy case following dismissal of the underlying bankruptcy case." In re Morris, 950 F.2d 1531, 1534 (11th Cir. 1992) (collecting cases). Retaining jurisdiction over an adversary proceeding after dismissal of the bankruptcy case is within the bankruptcy court's discretion. In re Lindsey, 854 Fed.Appx. 301, 307 (11th Cir. 2021); In re Morris, 950 F.2d at 1534. Courts typically consider three factors in determining whether to exercise discretionary jurisdiction: "(1) judicial economy; (2) fairness and convenience to the litigants; and (3) the degree of difficulty of the related legal issues involved." In re Morris, 950 F.2d at 1535; In re Smith, 866 F.2d 576, 580 (3d Cir. 1989); In re Castillo, No. TDC-14-0924, 2015 WL 789095, at *5 (D. Md. Feb. 23, 2015).
The procedural posture of this adversary proceeding in the context of the underlying bankruptcy case has overtaken much of Mr. Bartenfelder's argument. The SAC was filed on September 3, 2021; the summons and SAC were served on November 23, 2021; and the bankruptcy case was dismissed on November 29, 2021 on Ms. Bartenfelder's motion. At the Hearing, under questioning by the Court, Ms Bartenfelder's counsel conceded that the dismissal of Ms. Bartenfelder's bankruptcy...
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