Drauschak v. VMP Holdings Ass'n, L.P. (In re Drauschak)

Decision Date01 November 2012
Docket NumberAdversary No. 12–0544.,Bankruptcy No. 12–17697.
Citation481 B.R. 330
PartiesIn re Thomas G. DRAUSCHAK, Jr., Debtor. Thomas G. Drauschak, Jr., Plaintiff v. VMP Holdings Association, L.P. et al., Defendants.
CourtU.S. Bankruptcy Court — Eastern District of Pennsylvania


David L. Braverman, John E. Kaskey, Peter J. Leyh, Braverman Kaskey P.C., Philadelphia, PA, for Plaintiff.

Stacey L. Schwartz, Schwartz & Blackman, Walter Weir, Jr., Weir and Partners LLP, Philadelphia, PA, Jeffrey S. Adler, Burns White LLC, West Conshohocken, PA, Lyle D. Washowich, Burns White LLC, Pittsburgh, PA, Jeffrey P. Bryman, Brutscher Foley Milliner & Land LLP, Kennett Square, PA, for Defendant.


BRUCE FOX, Bankruptcy Judge.

Before me is a motion filed by defendants Vincent Piazza Sr., Piazza Family L.P., Piazza Management Corporation, VMP Holdings Associates, L.P., and VMP Holdings, LLC (hereinafter the Piazza defendants) seeking to remand this proceeding back to state court pursuant to 28 U.S.C. § 1452(b) or, in the alternative, to abstain from determining this adversary proceeding under 28 U.S.C. § 1334(c). This motion was joined by defendants, Richard J. Meadows, W. Joseph Liberato, and Thomas F. Alloy, and also by defendant Sovereign Bank.

The plaintiff, Thomas G. Drauschak, Jr., opposes remand or abstention. He maintains that this adversary proceeding should be determined in this bankruptcy forum.

The parties submitted memoranda in support of their respective positions and presented oral argument. The following material undisputed facts are derived from their submissions, particularly the pleadings, state court orders, and state court docket entries.


On September 14, 2010, Mr. Drauschak, acting individually and as a shareholder, partner and member of more than 25 entities, filed a civil action against 12 named defendants in the Pennsylvania Court of Common Pleas located in Chester County. This civil action was assigned to the docket of the Honorable Jacqueline C. Cody.

In essence, Mr. Drauschak's second amended complaint (375 paragraphs and 68 pages long), filed in May 2011, alleged that he—acting individually and through existing or newly created limited partnerships or limited liability companies—and Vincent Piazza, Sr., acting through a Piazza-controlled entity, agreed to develop commercial and residential real estate projects in Montgomery and Chester County, Pennsylvania. Funding for these projects came primarily from Sovereign Bank and Susquehanna Bank. Messrs. Drauschak and Piazza provided personal guarantees for these loans.

Mr. Drauschak second amended complaint avers that the Piazza defendants and other defendants failed to tender promised compensation, and improperly attempted to eliminate his interests in those various developmental entities or to make his interests worthless, and in so doing breached contracts as well as their fiduciary duties, converted property, and tortiously interfered with existing and prospective contracts or improperly aided and abetted those who so acted.

Raising 14 separate causes of action under Pennsylvania law, Mr. Drauschak sought damages, injunctive and declaratory relief, an accounting, the appointment of a receiver, and the “imposition of a constructive trust.”

The defendants filed answers to this complaint denying Mr. Drauschak's entitlement to any relief. They contended that Mr. Drauschak mismanaged the construction projects resulting in loan defaults, and Mr. Piazza acted appropriately under his guarantee agreement and state law. Moreover the Piazza defendants also asserted 10 state law counterclaims seeking damages for alleged conversion, breach of contract, and breach of fiduciary duties, as well as the imposition of a constructive trust. In addition, certain of the Piazza defendants asserted contribution cross-claims against certain other defendants. The parties agree that the Piazza defendants have demanded trial by jury. Mr. Drauschak contends that they have no state law jury trial rights.

Since its commencement, Judge Cody has issued numerous orders in connection with this litigation including: staying certain execution sales, overruling a defendant's preliminary objections, denying plaintiff's request to consolidate this litigation with other state court litigation, and addressing numerous discovery disputes. In May 2012, she approved a stipulation dismissing defendants Vincent Piazza, Jr., Daniel Piazza, and Richard Orlow. In addition, in September 2011, the state court directed Mr. Drauschak to return approximately $330,000 he withdrew from an account with Malvern Savings Bank. In November 2011, Mr. Drauschak was held in civil contempt and placed on six months probation, and ordered to pay $2,000 per month beginning in December 2011. In December 2011, certain defendants were awarded almost $30,000 in counsel fees against Mr. Drauschak.

By order dated May 14, 2012, Judge Cody issued a revised scheduling order setting deadlines for completing discovery by July 15, 2012, directing the exchange of expert reports to occur in August 2012, requiring any dispositive motions to be filed by September 1, 2012, and notifying the parties that [t]his case shall be deemed trial ready as of October 15, 2012.”

On or about July 23, 2012, the state court scheduled a hearing for August 16, 2012 to determine the Piazza defendants' supplemental petition for contempt against Mr. Drauschak. On August 14, 2012, Mr. Drauschak filed a voluntary petition in bankruptcy under chapter 11. On August 16, 2012, the parties appeared in state court, and a transcript of that hearing has been submitted in connection with the instant motion.

From my review of the transcript, it appears that the state court correctly stated at the August 16th hearing that the bankruptcy stay under 11 U.S.C. § 362(a) only applied to the claims asserted against Mr. Drauschak, not the claims asserted by him. N.T. at 12; see Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1204–05 (3d Cir.1991). Thus, Judge Cody stated that she would hold the contempt motion in abeyance, N.T. at 14–15, but added:

I'm just telling you [plaintiff's counsel] right now it's a case that's been pending a long, long time, and its on the trial list for October. And that's what's going to happen to the case.... I'm just letting you know that the plaintiff is your client, and he sued all of these other folks, and filing bankruptcy doesn't stop his case.

N.T. at 13.

On August 20, 2012, Mr. Drauschak filed a notice of removal of the state court litigation with this court. See28 U.S.C. § 1452(a); Fed. R. Bankr.P. 9027; In re Seven Fields Development Corp., 505 F.3d 237, 247 n. 8 (3d Cir.2007). The removed matter was docketed by the court clerk as Adv. No. 12–12–0544. Thereafter, on September 4, 2012, the movants filed a joint motion for summary judgment, as did Sovereign Bank. Also on September 4, 2012, in accordance with Federal Rule of Bankruptcy Procedure 9027(e)(3), various defendants, including the defendants who are movants herein, filed statements asserting that all claims in this removed proceeding are non-core and that they do not consent to the entry of a final judgment in this bankruptcy court. See docket entries 9, 14–15, 17.1

On September 4, 2012, the Piazza defendants (and Sovereign Bank) filed motions for summary judgment. These motions, opposed by the debtor, are still pending. On September 6, 2012, the Piazza defendants filed the instant motion for remand/abstention. Other defendants almost immediately joined their request to return this proceeding to state court. And on September 7, 2012, the Piazza defendants filed a motion for the appointment of a chapter 11 trustee or, in the alternative, conversion of this case to chapter 7. The September 7th motion was voluntarily withdrawn on October 12, 2012, prior to any response having been filed by the debtor.


Section 1452(a) of title 28 of the United States Code provides for the removal of claims related to pending bankruptcy cases. [A] proceeding is ‘related to’ a Chapter 11 proceeding if the ‘outcome of [the] proceeding could conceivably have any effect on the estate being administered in bankruptcy.’ Nuveen Mun. Trust ex rel. Nuveen High Yield Mun. Bond Fund v. WithumSmith Brown, P.C., 692 F.3d 283, 293–94 (3d Cir.2012) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984)). The movants in this contested matter do not dispute that the instant state court lawsuit was properly removed to this bankruptcy court as related to Mr. Drauschak's pending chapter 11 case. The outcome of this litigation could affect the assets of the bankruptcy estate as well as the amount of the claims asserted against the debtor. See generally, e.g., In re Midgard Corp., 204 B.R. 764, 772 (10th Cir. BAP 1997) (removed state court litigation involving claims by the debtor and a counterclaim against the debtor was related to the pending bankruptcy case).

Although the plaintiff may have properly removed the state court litigation to this forum, section 1452(b) states that [t]he court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground.” This subsection grants “broad discretion” to the bankruptcy court to remand a removed proceeding back to the state court from which it has been removed, or to deny the remand request. See, e.g., In re Micro Design, Inc., 120 B.R. 363, 366 (E.D.Pa.1990); 1 Collier on Bankruptcy ¶ 3.07[6], at 3–82 (16th ed. 2012). The Piazza defendants, joined by other defendants, contend that remand is warranted. The debtor disagrees.

In general, among the factors to be considered by a court in determining whether equitable grounds to remand exist are:

1. the court's duty to decide matters properly before it;

2. plaintiff's choice of forum as between state and federal courts;

3. nature of the claim or claims, that is, whether purely state law matters which could be better addressed by the state court...

To continue reading

Request your trial
17 cases
  • In re Bernadin
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • October 28, 2019
  • Bernadin v. U.S. Bank Nat'l Ass'n (In re Bernadin)
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • October 24, 2019
  • Bernadin v. U.S. Bank N.A. (In re Bernadin), Bky. No. 18-12717 ELF
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • October 28, 2019
    ...to enter a final judgment as to each claim. In re Mullarkey,536 F.3d 215, 223 (3d Cir. 2008); Halper, 164 F.3d at 839); In re Drauschak, 481 B.R. 330, 339 (Bankr. E.D. Pa. 2012).Page 9 B. Analysis of the Debtor's Claims To analyze the extent of my authority to enter a final order in this pr......
  • Crawford v. Hertzberg (In re Hertzberg)
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Western District of Pennsylvania
    • November 4, 2014
    ... ... In re Drauschak, 481 B.R. at 346 (bankruptcy courts are empowered to sua ... VMP Holdings Ass'n, L.P., (In re Drauschak), 481 B.R. 330 ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT