In re Groggel, Bankruptcy No. 02-34080-MBM.

• Decision Date: 13 February 2004
• Docket Number: Bankruptcy No. 02-34080-MBM.,Adversary No. 03-3240-MBM.
• Citation: 305 B.R. 234
• Parties: In re Mark Donald GROGGEL, Debtor. Carlota M. Bohm, Trustee of the Bankruptcy Estate of Mark Donald Groggel, Plaintiff, v. The Horsley Company, a Utah corporation, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

305 B.R. 234

In re Mark Donald GROGGEL, Debtor Carlota M. Bohm, Trustee of the Bankruptcy Estate of Mark Donald Groggel, Plaintiff, v. The Horsley Company, a Utah corporation, Defendant.

Bankruptcy No. 02-34080-MBM.

Adversary No. 03-3240-MBM.

United States Bankruptcy Court, W.D. Pennsylvania.

February 13, 2004.

COPYRIGHT MATERIAL OMITTED

S. James Wallace, Griffith, McCague & Wallace, P.C., Pittsburgh, PA, for creditor.

Carlota M. Bohm, Esq., Pittsburgh, PA, pro se.

Dennis E. Shean, Esq., Lower Burrell, PA, Timothy P.Palmer, Buchanan Ingersoll PC, Pittsburgh, PA, for debtor.

MEMORANDUM AND ORDER OF COURT

M. BRUCE MCCULLOUGH, Bankruptcy Judge.

AND NOW, this 13th day of February, 2004, upon consideration of (a) the adversary complaint filed by Carlota Bohm, the Chapter 7 Trustee for the above-captioned debtor (hereafter "the Trustee"), wherein the Trustee pleads three separate causes of action, namely (i) one for breach of contract (Count 1), (ii) one for quantum meruit (Count 2), and (iii) one predicated upon the failure by the Horsley Company, the named defendant in the instant adversary proceeding (hereafter "Horsley"), to file a payment bond (Count 3), (b) the motion to dismiss such adversary complaint filed by Horsley, and (c) the parties' briefs regarding Horsley's motion to dismiss;

and after notice and a hearing held on February 5, 2004, regarding Horsley's motion to dismiss,

it is hereby ORDERED, ADJUDGED, AND DECREED that Horsley's motion to dismiss is

(a) DENIED WITH PREJUDICE to the extent that, pursuant to Fed.R.Civ.P. 12(b)(1), dismissal of the entirety of the Trustee's adversary complaint is sought thereby on the basis (i) of a lack of subject matter jurisdiction by this Court, or (ii) that this Court must mandatorily abstain from entertaining the instant adversary proceeding pursuant to 28 U.S.C. § 1334(c)(2);

(b) DENIED WITH PREJUDICE to the extent that, pursuant to Fed.R.Civ.P. 12(b)(6), dismissal of the Trustee's Count 2, that is her quantum meruit claim, is sought thereby on the basis that a claim upon which relief can be granted has not been stated therein; and

(c) GRANTED to the extent that, pursuant to Fed.R.Civ.P. 12(b)(6), dismissal of the Trustee's Count 3, that is her claim for Horsley's failure to post a payment bond, is sought thereby for failure to state a claim.

The Court notes that Horsley did not move, in particular, to dismiss the Trustee's Count 1, that is her breach of contract claim, pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. The rationale for the Court's decision is set forth below.

I.

Horsley, notwithstanding that it asserted in its dismissal motion that this Court lacks personal jurisdiction over Horsley, now concedes, in its reply brief, that such personal jurisdiction exists in this Court. Horsley, in such brief, now contends that the Court lacks subject matter jurisdiction over each of the three counts pled in the Trustee's adversary complaint, and asserts as well that the parties agree that such subject matter jurisdiction is lacking if the amounts in controversy for such three counts fail to total at least $75,000. The genesis for Horsley's contention that this Court lacks such subject matter jurisdiction is, no doubt, the Trustee's statement found on page 1 of her brief to the effect that Horsley had, by asserting the applicability of mandatory abstention to the Trustee's complaint as a ground for the Court's lack of personal jurisdiction over Horsley, instead inadvertently alleged a ground for why this Court lacks subject matter jurisdiction. Horsley, in its dismissal motion, contends that mandatory abstention is required because, argues Horsley, none of the Trustee's three counts could have been commenced in this Court absent subject matter jurisdiction under 28 U.S.C. § 1334(b); put differently, Horsley contends that an alternate basis for this Court's subject matter jurisdiction is lacking, which contention Horsley supports, in turn, by arguing that federal diversity jurisdiction is lacking given that, argues Horsley as well, the amounts put in controversy via the Trustee's three counts total less than $75,000.

As an initial matter, the Court corrects the Trustee by pointing out that the applicability of mandatory abstention does not bear upon the issue of the Court's subject matter jurisdiction over a matter — indeed, § 1334(c)(2), which provision provides the authority for mandatory abstention by a court over a matter, makes clear that mandatory abstention can occur in the first instance only if a court possesses noncore "related to" subject matter jurisdiction over such matter. Furthermore, the Court rules that it undoubtedly possesses subject matter jurisdiction over each of the three counts pled in the Trustee's complaint, albeit subject matter jurisdiction of the noncore "related to" variety. Noncore "related to" subject matter jurisdiction must be found to exist in this Court because the outcome of each of the Trustee's three counts could conceivably have an effect on the instant debtor's (hereafter "the Debtor") bankruptcy estate, which conclusion satisfies the test for the existence of such subject matter jurisdiction by a court pursuant to 28 U.S.C. § 1334(b). See Halper v. Halper, 164 F.3d 830, 837 (3rd Cir.1999); In re Allegheny Health, Education and Research Foundation, 265 B.R. 88, 96 (Bankr.W.D.Pa.2001) (citing Halper).

As for Horsley's mandatory abstention position, which position, the Court notes, should have been advanced by way of a separate motion for mandatory abstention rather than via a Rule 12 motion to dismiss, the Court must reject such position. The Court so holds because (a) "[o]ne of the requirements of [mandatory abstention under] 28 U.S.C. § 1334(c)(2) is that an action must have been commenced and must be pending in a state forum," In re Southwinds Associates Ltd., 115 B.R. 857, 861 (Bankr.W.D.Pa.1990) (emphasis added); see also In re Yobe, 75 B.R. 873, 876 (Bankr.W.D.Pa.1987) (same); In re Worldwide Collection Services of Nevada, Inc., 149 B.R. 219, 223-224 (Bankr.M.D.Fla.1992) (same); In re West Coast Video Enterprises, Inc., 145 B.R. 484, 486 (Bankr.E.D.Pa.1992) (same), (b) such requirement of course, cannot be met if an action previously commenced in a state forum is no longer pending by virtue of having since been dismissed or terminated, see Yobe, 75 B.R. at 876; Worldwide Collection Services, 149 B.R. at 224; West Coast Video, 145 B.R. at 486, and (c) Horsley, prior to the commencement of the instant bankruptcy case, succeeded in obtaining a dismissal on jurisdictional grounds of an action that had been brought by the Debtor in Pennsylvania state court, which action (i) pled each of the three causes of action now pled in the Trustee's adversary complaint, and (ii) constitutes the only such action which was ever brought by either the Debtor or the Trustee in a state forum. Since at least one of the requisite elements for mandatory abstention is lacking when such concept is applied to the instant adversary proceeding, namely that a parallel action has been commenced and is still pending in a state forum, it becomes entirely academic to a resolution of Horsley's mandatory abstention request, and thus moot as well, whether (a) the amounts put in controversy via the Trustee's three counts total less than $75,000, (b) federal diversity jurisdiction is thus lacking with respect to such counts, and (c) a basis for this Court's subject matter jurisdiction over such counts is thus lacking absent § 1334(b). Accordingly, the Court shall

(a) refrain from resolving the diversity jurisdictional issues that have been raised by Horsley,

(b) hold that mandatory abstention is inapplicable to any of the Trustee's three counts brought in the instant adversary proceeding, and

(c) deny with prejudice Horsley's dismissal motion to the extent that the same is predicated upon (i) an alleged lack by this Court of subject matter jurisdiction, and (ii) the applicability of mandatory abstention.

II.

Horsley moves for dismissal of the Trustee's Count 2, that is her quantum meruit claim, on the basis that such count fails to state a quantum meruit claim for which relief can be granted. Horsley so moves because, argues Horsley, the Trustee, by way of the Debtor, is limited to a breach...