In re Joshua Slocum, Ltd., Bankruptcy No. 88-14082S

• Decision Date: 21 December 1989
• Docket Number: Misc. No. 89-0097.,88-14083S,Bankruptcy No. 88-14082S
• Citation: 109 BR 101
• Parties: In re JOSHUA SLOCUM, LTD., A Delaware Corporation, Debtor. In re JOSHUA SLOCUM, LTD., A Pennsylvania Corporation, jointly administered, Debtor. Lester E. WOLSER, Plaintiff, v. JOSHUA SLOCUM, LIMITED and Joshua Slocum, Limited the Parent corporation of Joshua Slocum, Limited and Louise MacKenzie, individually and in her capacity as President and a Member of the Board of Directors for Joshua Slocum, Limited and Raymond L. Bank, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Trudy Sullivan, individually and in her capacity as a Member of the Board of Directors for Joshua Slocum Limited and F.C. Maynard, III, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and G. Clinton Merrick, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Frank Adams, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Charles A. Burton, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

109 B.R. 101 (1989)

In re JOSHUA SLOCUM, LTD., A Delaware Corporation, Debtor In re JOSHUA SLOCUM, LTD., A Pennsylvania Corporation, jointly administered, Debtor Lester E. WOLSER, Plaintiff, v. JOSHUA SLOCUM, LIMITED and Joshua Slocum, Limited the Parent corporation of Joshua Slocum, Limited and Louise MacKenzie, individually and in her capacity as President and a Member of the Board of Directors for Joshua Slocum, Limited and Raymond L. Bank, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Trudy Sullivan, individually and in her capacity as a Member of the Board of Directors for Joshua Slocum Limited and F.C. Maynard, III, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and G. Clinton Merrick, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Frank Adams, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited and Charles A. Burton, individually and in his capacity as a Member of the Board of Directors for Joshua Slocum, Limited, Defendants.

Bankruptcy Nos. 88-14082S, 88-14083S, Misc. No. 89-0097.

United States District Court, E.D. Pennsylvania.

December 21, 1989.

William F. Saldutti, III, Philadelphia, Pa., for plaintiff.

Carl H. Delacato, Jr., Philadelphia, Pa., Robert S. Burrick, New York City, for debtors.

Claudia Z. Springer, David E. Loder, Judith D. Reich, Philadelphia, Pa., for movants.

James W. Adelman, Philadelphia, Pa., for Creditors' Committee.

Melvin Lashner, Philadelphia, Pa., trustee.

MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

Presently before the court are the objections of the plaintiff in this adversary action, Lester E. Wolser (Wolser), to the Report and Recommendations of the Honorable David A. Scholl, United States Bankruptcy Judge for the Eastern District of Pennsylvania. Individual defendants¹ in this adversary action moved to remand this case to state court pursuant to 28 U.S.C. § 1452 as an exercise of mandatory abstention pursuant to 28 U.S.C. § 1334(c)(2), or discretionary abstention pursuant to 28 U.S.C. § 1334(c)(1). The Bankruptcy Court recommended that this court exercise its discretion to abstain from hearing this matter pursuant to 28 U.S.C. § 1334(c)(1). The trustee for the debtor has also filed a motion to dismiss Wolser's claim against debtor/defendant Joshua Slocum, Ltd. (Slocum).²

This court's standard of review of factual findings in the report and recommendations of the bankruptcy court requires that they be accepted unless clearly erroneous. Fed.R.Bankr. 8013. Issues of law are subject to de novo review. In re Harris, 94 B.R. 832 (D.N.J.1989).

There is no dispute concerning the relevant facts in this matter. Wolser was employed by Slocum as Executive Vice President and Chief Operating Officer. On September 2, 1988, a letter was sent to Wolser informing him that his employment was terminated by Slocum. On September 16, 1988, Wolser filed a complaint against Slocum and the individual defendants in the Court of Common Pleas, Philadelphia County. Wolser's complaint alleged breach of contract and defamation. The parties reached an agreement to settle this case for various terms, including a $75,000.00 payment to Wolser. Subsequent to this agreement, Slocum filed its Chapter 11 petition which prevented payment to Wolser pursuant to the automatic stay in bankruptcy, 11 U.S.C. § 362. Wolser then removed this case to the United States District Court and it was referred to the Bankruptcy Court.

Wolser now contends that there has been no settlement in this case as no writing memorialized the agreement and Slocum has not satisfied all of the terms of the settlement. In the adversary action, Wolser seeks to now litigate his breach of contract and defamation claims.

These contentions are without merit. The presence of a writing to memorialize the settlement of a case, while evidence of such settlement, is not an essential component of that settlement. All that is required is the mutual assent of the parties. Mainline Theatres v. Paramount Distributing Corp., 298 F.2d 801, 803 (3d Cir.) cert. denied, 370 U.S. 939, 82 S.Ct. 1585, 8 L.Ed.2d 807 (1962); Pugh v. Super Fresh Food Markets, 640 F.Supp. 1306 (E.D.Pa. 1986). While Slocum has not paid Wolser the required $75,000.00, this is a necessary result of Slocum's Chapter 11 filing and Wolser's subsequent creditor status. Wolser's claim against Slocum may be properly asserted through the procedures of the administration of the estate in bankruptcy. Accordingly, Wolser's complaint against Slocum is barred by res judicata and the court shall grant the trustee's motion to dismiss.

Because there is no independent subject matter jurisdiction for Wolser's complaint against the individual defendants, that part of Wolser's complaint shall be remanded to the Court of Common Pleas, Philadelphia County consistent with the report and recommendations of Judge Scholl.³

ORDER

AND NOW, this 21st day of December, 1989, upon consideration of the objections to the Report and Recommendation entered on February 21, 1989 in the United States Bankruptcy Court for the Eastern District of Pennsylvania by the Honorable David A. Scholl, of the plaintiff, Lester E. Wolser, the various responses thereto, the motion to dismiss of the trustee, Melvin Lashner, Esquire, the plaintiff's response thereto, and upon a thorough review of the record it is ORDERED that:

1. The motion to dismiss of the trustee, Melvin Lashner, Esquire, is GRANTED. The Complaint against defendants Joshua Slocum, Ltd., a Delaware Corporation and Joshua Slocum, Ltd., a Pennsylvania Corporation is DISMISSED.

2. The complaint against defendants Louise MacKenzie, Raymond L. Bank, Trudy Sullivan, F.C. Maynard, III, G. Clinton Merrick, Frank Adams and Charles A. Burton is REMANDED to the Court of Common Pleas, Philadelphia County.

REPORT AND RECOMMENDATION OF BANKRUPTCY JUDGE IN REFERENCE TO MOTION FOR REMAND PURSUANT TO 28 U.S.C. SECTION 1452(b) AND BANKRUPTCY RULE 9027(e) AND FOR ABSTENTION PURSUANT TO 28 U.S.C. SECTION 1334(c)

DAVID A. SCHOLL, Bankruptcy Judge.

Presently at issue is a motion filed by Defendants, Louis Mackenzie, Raymond L. Bank, Trudy Sullivan, F.C. Maynard, III, G. Clinton Merrick, Frank Adams, and Charles A. Burton, individually and in their capacity as members of the Board of Directors of Joshua Slocum Ltd. (hereinafter referred to as "the Movants"), seeking the following alternative relief in reference to this proceeding, which was removed to federal court by its Plaintiff:

(1) Remand, pursuant to 28 U.S.C. § 1452(b), upon the contention that this Court lacks jurisdiction over the matter or upon other "equitable principles;" and

(2) Abstention, pursuant to 28 U.S.C. § 1334(c)(2) or 28 U.S.C. § 1334(c)(1).

In light of Bankruptcy Rules 9027(e) and 5011(b), we are obliged to present a report and recommendations concerning the instant motion to the district court in order that the district court can make a disposition thereof.

The Plaintiff, Lester E. Wolser, commenced this action in the court of Common Pleas of Philadelphia County by filing a Complaint against the Debtors, Joshua Slocum, Ltd. (Delaware) and its parent corporation, Joshua Slocum Ltd. (Pennsylvania), and the Movants on September 16, 1988.

The Complaint contends that the Plaintiff's employment was terminated by the Debtors in breach of the employment agreement between him and the Debtors. The Plaintiff alleges that the Movants are jointly liable with the Debtors for the breach. In addition, the Plaintiff asserts a claim of defamation arising from the contents of a letter of September 2, 1988, sent to the Plaintiff which terminated the employment agreement.

Subsequent to the institution of this lawsuit, the parties entered into a settlement agreement. Allegedly, the Debtors' intervening filing of Chapter 11 bankruptcy petitions, on November 21, 1988, prevented the Debtors from fully complying with some of the terms of the settlement agreement, most significantly paying the Plaintiff an agreed of $75,000.00. The Debtors are presently in a liquidation motion having sold all of their inventory to a liquidator. On February 16, 1989, a Chapter 11 Trustee was appointed, and it is anticipated that, within the next two weeks, the case will be converted to a Chapter 7 case.

After the bankruptcy filings, the Plaintiff filed a Petition for Removal and accompanying papers in the state court and in the district court in order to remove this action to this federal district court. Apparently, the district court, without taking any action on the matter, referred the matter to this court where it was docketed on December 8, 1988.

On December 15, 1988, as soon as we became aware of the matter, we entered an Order directing any parties desiring to file any motion to remand or make any disposition other than have us hear it on the merits must so move by December 30, 1988, with a response due on January 15, 1989, and a status conference scheduled on January 18, 1989. On January 10, 1989, the non-debtor Movants, claiming not to have received the Order of December 15, 1988, filed a motion to enlarge the time for filing a motion to remand. Considering this motion at the January 18, 1989, conference, after a colloquy with counsel, we granted it and directed the Movants to file a motion for remand and a supporting brief on or before January 31, 1989; provided the Plaintiff until February 15, 1989, to answer; and scheduled a further status conference on February 22, 1989. This Report is submitted for distribution at that status conference.

The law applicable to the instant motion is 28 U.S.C. § 1452(b), which merely states that a court may remand a claim or cause of action which had previously been removed on "any equitable ground." Judge Fox of this court has expressly held that, if grounds for...