In re Passodelis

• Decision Date: 21 May 1999
• Docket Number: Adversary No. 99-2092-MBM.,Bankruptcy No. 97-24837-MBM
• Citation: 234 BR 52
• Parties: In re Christopher PASSODELIS, Sr., Debtor. Francis M. Woods, Louis Woods, and Rose Marie Woods, his wife, Rose Mary Woods and Rosella Stephen, Plaintiffs, v. Christopher Passodelis, and C.P. Financial Services, Inc., and C.P. Real Estate, Penn Mutual Insurance Company, John M. Mouganis, Richard Snebold and The Mouganis/Snebold Agency, William C. Passodelis and Christopher Passodelis, Jr. Defendants.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

234 B.R. 52 (1999)

In re Christopher PASSODELIS, Sr., Debtor.

Francis M. Woods, Louis Woods, and Rose Marie Woods, his wife, Rose Mary Woods and Rosella Stephen, Plaintiffs, v. Christopher Passodelis, and C.P. Financial Services, Inc., and C.P. Real Estate, Penn Mutual Insurance Company, John M. Mouganis, Richard Snebold and The Mouganis/Snebold Agency, William C. Passodelis and Christopher Passodelis, Jr. Defendants.

Bankruptcy No. 97-24837-MBM, Adversary No. 99-2092-MBM.

United States Bankruptcy Court, W.D. Pennsylvania, Pittsburgh Division.

May 21, 1999.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert Gerald Sable, Sable, Pusateri, Rosen, Gordon & Adams, Pittsburgh, PA, for Debtor.

James F. Israel, James A. McGovern, Michael Kaminski, Joseph Friedman, Office of the U.S. Trustee, James A. Ashton, James R. Cooney, Joseph E. Schmitt, William C. Passodelis, Pittsburgh, PA.

MEMORANDUM AND ORDER OF COURT

M. BRUCE McCULLOUGH, Bankruptcy Judge.

AND NOW, this 21st day of May, 1999, upon consideration of

(A) the motions, raised in the alternative, by Penn Mutual Insurance Company (Penn Mutual) for remand of, or mandatory abstention with respect to, the instant plaintiffs' causes of action against the instant debtor, said debtor's wife, and Penn Mutual, which actions (i) comprised plaintiffs' civil proceeding originally commenced in the Pennsylvania Court of Common Pleas for Allegheny County on April 7, 1997,¹ (ii) were subsequently removed by plaintiffs to this Court on March 16, 1999, pursuant to 28 U.S.C. § 1452, and (iii) now comprise the substance of the above-captioned adversary proceeding;

(B) Penn Mutual's response to plaintiffs' notice of removal pursuant to Fed. R.Bankr.P. 9027(e)(3), wherein Penn Mutual (i) contends that this Court lacks subject matter jurisdiction over plaintiffs' removed causes of action, or, alternatively, that said removed actions constitute noncore matters if this Court can exercise subject matter jurisdiction over them, and (ii) withholds its consent to entry of final orders or judgments by this Court regarding the removed actions in the event that said actions are determined to constitute noncore matters;

(C) plaintiffs' notice of removal of the civil proceeding commenced in the Common Pleas Court, wherein plaintiffs contend that the removed actions will constitute (i) core matters if they are ultimately consolidated with Penn Mutual's pending adversary proceeding in this Court, which pending adversary proceeding seeks a determination of nondischargeability by this Court with respect to Penn Mutual's claims for indemnification/contribution against the instant debtors, and (ii) noncore matters absent said consolidation, in which event, according to plaintiffs, all of the parties have consented to this Court's entering of a final judgment and/or order with respect to said actions, such consent allegedly having been given by Penn Mutual by virtue of its having commenced its aforementioned nondischargeability adversary proceeding in this Court and its having filed a proof of claim against the debtor's bankruptcy estate;

(D) plaintiffs' six-count state court complaint, wherein plaintiffs plead the removed causes of action for (i) fraud, conversion, and violation of state unfair trade practices law against the debtor, his wife, and Penn Mutual (Counts 1, 2, and 5), (ii) negligence and breach of contract against Penn Mutual only (Counts 3 and 4), and (iii) conspiracy against the debtor and his wife only (Count 6);²

(E) plaintiffs' response to Penn Mutual's motions for remand and mandatory abstention, as well as the case authorities submitted by plaintiffs as supposedly supporting plaintiffs' respective positions;

(F) Penn Mutual's reply to plaintiffs' aforementioned response, as well as Penn Mutual's letter dated May 11, 1999;

(G) Penn Mutual's complaint which commenced its aforementioned pending adversary proceeding in this Court (H) plaintiffs' stipulation with the debtor wherein the debtor consented to limited relief from stay so that plaintiffs could pursue to judgment the removed causes of action in the Common Pleas Court, which stipulation this Court approved by an order dated November 25, 1997; and

(I) plaintiffs' proofs of claim in the instant bankruptcy case, which proofs of claim (i) were each filed on January 30, 1998, in violation of the December 15, 1997 claims bar date established for the instant case, and (ii) indicated that said claims each arose merely as a result of the lending of money by plaintiffs;

and subsequent to notice and a hearing on Penn Mutual's motions held on May 6, 1999, it is hereby ORDERED, ADJUDGED, AND DECREED that Penn Mutual's motion for remand or, alternatively, mandatory abstention, is GRANTED and plaintiffs' removed state court causes of action shall all be REMANDED forthwith to the Pennsylvania Common Pleas Court from which they were removed. The Court identifies the following four separate grounds upon which it bases its decision to remand plaintiffs' removed causes of action:

(a) plaintiffs did not file their notice of removal with respect to their state court causes of action in this Court within the time constraints imposed by Fed.R.Bankr.P. 9027(a)(2), and plaintiffs have not demonstrated excusable neglect such that this Court can now permit the untimely removal of said actions;

(b) the Court lacks subject matter jurisdiction over the causes of action set forth in plaintiffs\' removed counts 3, 4 and 6, which means that those particular counts were not properly removed to this Court under 28 U.S.C. § 1452 in any event;

(c) the Court would have to grant Penn Mutual\'s motion for mandatory abstention under 28 U.S.C. § 1334(c)(2) with respect to each of plaintiffs\' state court causes of action;

(d) plaintiffs requested a jury trial with respect to all of their state court causes of action and Penn Mutual has neither consented to (i) a withdrawal of said jury trial demand, which means that each count of plaintiffs\' state court complaint in which Penn Mutual is named as a party defendant must be tried by a jury, nor (ii) a jury trial in this Court.

The Court shall, in the ensuing sections of this memorandum, set forth in greater detail the rationale behind its decision.

I.

Plaintiffs and Penn Mutual agree that Fed.R.Bankr.P. 9027(a)(2) controls with respect to the issue of whether plaintiffs timely filed in this Court their notice of removal. The Court concurs with the parties in this regard because plaintiffs commenced the state court proceeding the subject of which was plaintiffs' removed state court actions on April 7, 1997, which date precedes July 3, 1997, which is when the instant bankruptcy case was commenced. Plaintiffs and Penn Mutual also agree, and this Court concurs, that the time limits contained in Fed.R.Bankr.P. 9027(a)(2)(A) and (C) have indisputably passed with respect to plaintiffs' notice of removal since said notice was filed on March 16, 1999, which is more than (a) ninety days subsequent to the July 3, 1997 order for relief in the instant case in violation of Fed.R.Bankr.P. 9027(a)(2)(A), and (b) 180 days after said order for relief in violation of Fed.R.Bankr.P. 9027(a)(2)(C). However, the parties disagree as to whether the time limit contained in Fed. R.Bankr.P. 9027(a)(2)(B) is applicable to plaintiffs' notice of removal and, if it is applicable, whether plaintiffs have satisfied said time limit.

Fed.R.Bankr.P. 9027(a)(2)(B) effectively provides that, even if the time limits contained in Fed.R.Bankr.P. 9027(a)(2)(A) and (C) have not been met, a notice of removal is nevertheless timely filed if said notice is filed within "30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under § 362 of the Code." Fed. R.Bankr.P. 9027(a)(2)(B), 11 U.S.C.A. (West 1999). Penn Mutual contends that the latter time limit is inapplicable to plaintiffs' notice of removal, even though plaintiffs' actions, at least with respect to the instant debtor, are clearly stayed under 11 U.S.C. § 362(a),³ because (a) an order has never been entered terminating the stay in the instant case, and (b) if said time limit is held to apply to the instant matter, then plaintiffs could remove a state court action to this Court at any time provided that an order was not entered terminating the automatic stay. The Court, contrary to Penn Mutual's pleas, must conclude that the time limit contained in Fed.R.Bankr.P. 9027(a)(2)(B) applies (a) even in the instance where an order is never entered to terminate an automatic stay, see Fed.R.Bankr.P. 9027 advisory committee's note, 11 U.S.C.A. (West 1984) ("As long as the stay remains in effect there is no reason to impose a time limit for removal to the bankruptcy court and, therefore, clause (B) of subdivision (a)(2) provides that a removal application may be filed within 30 days of entry of an order terminating the stay;" see also the example provided which demonstrates that the 180-day time limit does not operate if the stay applies and an order has not been entered terminating it), and (b) to plaintiffs' notice of removal given that plaintiffs' actions against the debtor are stayed under § 362(a).

While the Court agrees with plaintiffs that the time limit contained in Fed. R.Bankr.P. 9027(a)(2)(B) applies to plaintiffs' notice of removal, the Court nevertheless must also conclude that plaintiffs have not satisfied said time limit given that (a) this Court entered an order on November 25, 1997, terminating the stay in the instant case to the extent that plaintiffs sought to pursue to judgment the removed causes of action in the Common Pleas Court, and (b) thirty days from November 25, 1997, has long since passed. Plaintiffs are quick to point out, and the Court agrees, that the November 25, 1997 order of this Court only approved, and thus granted, the stay relief to which plaintiffs and the...