Doe v. Archdiocese of New Orleans Indem., Inc.
| Decision Date | 11 August 2020 |
| Docket Number | CIVIL ACTION NO: 20-1338 SECTION: "J"(3) |
| Parties | JAMES DOE v. ARCHDIOCESE OF NEW ORLEANS INDEMNITY, INC., et al. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court are a Motion to Remand Action to State Court filed by Plaintiff James Doe (Rec. Doc. 9) and a Motion to Refer Matter to Bankruptcy Court (Rec. Doc. 13) filed by Defendant, Roman Catholic Church of the Archdiocese of New Orleans ("Archdiocese"). Both motions are opposed.1 The Court heard oral argument via video conference on July 29, 2020. (Rec. Doc. 31).2 Having considered the motions, the parties' arguments, the record, and the applicable law, the Court finds that both motions should be DENIED.
This action is one of thirty-five similar cases filed by plaintiffs who allege they were sexually abused as children by clergy members working for the Archdiocese. The alleged abuse took place over a span of several decades, from the late 1960's into the 1990's. In 2018, the Archdiocese released a list of clergy members that had beencredibly accused of engaging in sexual abuse of minors. The release of the list precipitated dozens of lawsuits against individual clergymen and the Archdiocese, as well as the Archdiocese's insurers. All of the lawsuits were filed in state court. The above-captioned suit was brought in Orleans Parish Civil District Court in February of 2019.
The state court litigation became mired in discovery disputes regarding the confidentiality of various documents produced by the Archdiocese. On May 1, 2020, before the discovery disputes could be resolved, the Archdiocese filed for Chapter 11 Bankruptcy. Upon the filing of bankruptcy, the Archdiocese removed the sex abuse cases to federal court on the grounds that they are "related to the bankruptcy." (Rec. Doc. 1).
When the Archdiocese filed for bankruptcy, no scheduling order had been entered and no trial date had been set by the state court in this case. Proceeding parallel to this case is the Archdiocese's Chapter 11 Bankruptcy, overseen by the Bankruptcy Judge. On July 3, 2020, the Official Committee of Unsecured Creditors filed a motion to dismiss the Chapter 11 case, essentially arguing that the bankruptcy is fraudulent, and the Archdiocese is merely attempting to forum shop and delay litigation. That motion to dismiss is currently set for submission before the Bankruptcy Court on August 20, 2020.
On July 7, 2020, roughly two months after removal, Plaintiff filed the instant Motion to Remand. The Archdiocese then filed its Motion to Refer.
As explained below, the bedrock issue in this matter concerns weighing the factors that bear on permissive abstention and/or equitable remand. However, several antecedent issues must be addressed first. In the interest of brevity, the Court will do this in a somewhat abbreviated fashion. Accordingly, the Court largely assumes the reader's familiarity with the parties' arguments.
The Archdiocese's Motion to Refer is premised on Local Rule 83.4.1, which states:
All cases under Title 11 and all proceedings arising under Title 11 or arising in or related to a case under Title 11 are transferred by the district court to the bankruptcy judges of this district. As set forth in 28 U.S.C. 157(b)(5), personal injury tort and wrongful death claims must be tried in the district court.
Plaintiff responds by arguing the Court can and should withdraw the reference to the Bankruptcy Court.
A preliminary question exists as to whether the Court must first refer this matter to the Bankruptcy Court before it may decide whether to withdraw that reference. The Court concludes it is not required to do so. Fifth Circuit precedent indicates that a district court may "effectively withdraw" a case by simply acting in the case before it is referred. See Carlton v. Baww, Inc.,751 F.2d 781, 788 (5th Cir. 1985); see also Anderson v. Fed. Deposit Ins. Corp., 918 F.2d 1139, 1142 (4th Cir. 1990).3
The next question is whether the Court should "effectively withdraw" the reference. There are two types of withdrawal: mandatory and permissive. See 28 U.S.C. § 157(d). Plaintiff does not argue mandatory withdrawal applies; only permissive withdrawal is at issue. There must be "cause" to exercise permissive withdrawal. Id. Factors to consider include whether the matter is a core or non-core proceeding; whether the proceedings involve a jury demand; and whether withdrawal would further the goals of promoting uniformity in bankruptcy administration, reducing forum shopping and confusion, fostering the economical use of the debtors' and creditors' resources, and expediting the bankruptcy process. See Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992, 999 (5th Cir. 1985). The Court finds that the balance of factors favors withdrawing the reference.4 Consequently, the Court denies the Archdiocese's Motion to Refer.
The next issue is whether the Court has the power to decide a motion to remand while the bankruptcy automatic stay is in effect. The weight of authority holds that it does. See Verges v. Verges, No. 03-3533, 2004 WL 1375304, at *3 (E.D. La. June 17, 2004); Turbine Powered Tech. LLC v. Crowe, No. 19-cv-00475, 2019 WL4054093, at *6 (W.D. La. Aug. 12, 2019) (Mag. Rep. & Rec.); Sanders v. Farina 67 F. Supp. 3d 727, 730 (E.D. Va. 2014) (). But see Liljeberg Enter. Int'l., LLC v. Vista Hosp. of Baton Rouge, Inc., No. 04-2780, 2004 WL 2725965 (E.D. La. Nov. 24, 2004).
Moving to the question of whether the Court should remand Plaintiff's case, Plaintiff urges remand under mandatory abstention, see 28 U.S.C. § 1334(c)(2), or, alternatively, permissive abstention/equitable remand, see id. §§ 1334(c)(1), 1452(b). Mandatory abstention is only applicable when all of the following five elements are met: "(1) there was a for abstention; (2) the claim has no independent basis for federal jurisdiction, other than § 1334(b); (3) the claim is a non-core proceeding; (4) an action has been commenced in state court; and (5) the action could be adjudicated timely in state court." Cadle Co. v. Moore (In re Moore), 739 F.3d 724, 728-29 (5th Cir. 2014). The Court finds elements (2) and (5) are lacking.5
This leaves Plaintiff's arguments regarding permissive abstention and/or equitable remand.6 As other courts have noted, the factors governing permissive abstention and equitable remand are nearly identical. See, e.g., Dubose v. Merchs. & Farmers Bank, 318 F. Supp. 2d 419, 428 (S.D. Miss. 2003). Because the analysis is so similar, courts that grant remand often employ equitable remand found in 28 U.S.C. § 1452(b), which allows a court to remand "on any equitable ground" claims removed under § 1452(a). Lea v. Johnson & Johnson, No. 19-9716, 2019 WL 3335143, at *2 (E.D. La. July 24, 2019). This is a broad grant of authority. Id. A court may consider the following factors when deciding a motion for equitable remand:
(1) [t]he convenience of the forum;
(2) the presence of non-debtor parties;
(3) whether the case should be tried as a whole in state court;
(4) the duplicative and uneconomic effect of judicial resources in two forums;
(5) the lessened possibility of inconsistent results;
(6) whether the state court would be better able to handle issues of State law;
(7) the expertise of the Bankruptcy Court;
(8) the degree of relatedness or remoteness to the main bankruptcy case;
(9) prejudice to involuntarily removed parties;
(10) whether the case involves forum shopping; (11) the burden on the Bankruptcy Court's docket; and
(12) considerations of comity.
Not surprisingly, the parties vigorously dispute how the Court should weigh these factors. Plaintiff argues that the Bankruptcy Court's inability to adjudicate personal injury jury trials, the predominance of Louisiana state law issues, the presence of multiple non-debtors, the unrelatedness of Plaintiff's claims to the Archdiocese's Chapter 11 Bankruptcy, and the Archdiocese's alleged forum shopping all favor remand. The Archdiocese, on the other hand, contends that the Bankruptcy Court is willing and able to adjudicate the state law claims present in this case, the non-debtors will be prejudiced if the case is remanded to state court, this case is related to the main bankruptcy because the presence of the numerous sex abuse lawsuits was a primary driver in filing Chapter 11 Bankruptcy, and finally they were not forum shopping, but rather utilizing Chapter 11 Bankruptcy in the way Congress intended; i.e. to create a single forum to adjudicate and pay out claims against the estate.
The Court finds that both Plaintiff and the Archdiocese have equitable factors that favor their respective positions. Ultimately, though, the Court concludes that remand is inappropriate at this time, largely because the automatic stay has not been lifted. With the automatic stay still in effect, many of the equitable considerations Plaintiff cites in support of remand are less weighty than they would otherwise be. No discovery may proceed, no prescription hearings may be set, no state jury trialmay occur, and generally no comity concerns exist because the substantive claims against the Archdiocese are stayed, regardless of the forum.7 Conversely, the Archdiocese's concerns about maintaining the numerous suits against it in one forum are equally valid whether the stay is in effect or not.8 Accordingly, the Court denies Plaintiff's Motion to Remand.
For the above reasons,
IT IS ORDERED that the Archdiocese's Motion to Refer Matter to Bankruptcy Court (Rec. Doc. 13) is hereby DENIED.
IT IS FURTHER ORDERED that Plaintiff's Motion to Remand (Rec. Doc. 9) is hereby DENIED.
New Orleans, Louisiana, this 11th day of August, 2020.
/s/_________
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