In re Princess Louise Corp.
| Decision Date | 28 August 1987 |
| Docket Number | Adv. No. LA 87-01120-SB.,Bankruptcy No. LAX 87-10102-SB |
| Citation | 77 BR 766 |
| Parties | In re PRINCESS LOUISE CORPORATION, Debtor. PRINCESS LOUISE CORPORATION, et al., v. PACIFIC LIGHTING LEASING CO., et al., and Related Cross Actions. |
| Court | U.S. Bankruptcy Court — Central District of California |
Richard M. Moneymaker, Moneymaker & Kelley, Los Angeles, Cal., for debtor.
W. David Smith, Pacific Lighting Leasing Co., Los Angeles, Cal., Caroline Consolver, Pacific Lighting Leasing Co., Culver City, Cal., Ray Meline, Hollywood, Cal., for Pacific Lighting Leasing Co.
C. Randall Cook, Obispo, Cal., for Mervin Davis.
This adversary proceeding was removed to this Court from Los Angeles County Superior Court by the debtor Princess Louise Corporation ("Princess Louise"). The debtor has brought a motion for the determination of whether all of the proceedings in superior court have been removed to this Court, or only a portion thereof.
The Court holds that, pursuant to the specific language of the removal petition, the entire state court action including cross-complaints has been removed to this Court. In consequence, nothing remains in state court, and that court lacks jurisdiction to proceed until such time as this Court may remand some or all of the removed litigation.
Defendant Pacific Lighting Leasing Co. ("Pacific Lighting") previously brought a motion for remand before the Court, which the Court denied without prejudice on the grounds that it was premature. While it appears that certain portions of the superior court case should be remanded in due course to state court, in part on the grounds that this Court lacks jurisdiction over such claims, this issue is not yet ripe for adjudication.
The debtor previously owned The Princess Louise, a former cruise ship now anchored in the Los Angeles harbor in San Pedro and converted to a restaurant. The debtor sold the business prior to the filing of this bankruptcy case, and its principal assets are now apparently a liquor license and its rights in the litigation removed from state court.
The debtor filed its Chapter 11 bankruptcy case on May 19, 1987. Some five years earlier the debtor filed an action in the Los Angeles County Superior Court for the specific enforcement of a settlement agreement with Pacific Lighting. Pacific Lighting cross-complained against Princess Louise, Podesta-Moller & Associates and six individuals on several causes of action arising out of a related transaction. Mervin Davis, one of the individual cross-defendants, cross-complained against Princess Louise, Podesta-Moller & Associates and two of the remaining cross-defendants for breach of contract and other relief also rising out of the related transaction.
Trial in the Superior Court is set for September 1, 1987. The parties are anxious to commence trial because of the California five-year rule. California Code of Civil Procedure ("CCP") § 583.310 (West Supp.1987) provides:
An action shall be brought to trial within five years after the action is commenced against the defendant.
The sanction for violating this command is set forth in CCP § 583.360(a) (West Supp. 1987):
An action shall be dismissed by the court on its own motion or on the motion of the defendant . . . if the action is not brought to trial within the time prescribed in this article.
These statutory provisions require that trial commence, according to the parties, on or before October 1, 1987.
Defendant Pacific Lighting has asserted here and in state court that the removal extends only to the original complaint filed by the debtor in state court, and not to the cross-complaints filed by other parties in that case. In consequence, the debtors have brought this motion to determine the scope of the removal.
Removal to the bankruptcy court of a state court case relating to a bankruptcy case is governed by 28 U.S.C. § 1452(a) (Supp.1987), which provides:
A party may remove any claim or cause of action in a civil action . . . to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.
Section 1334 is the jurisdictional statute for bankruptcy cases and related proceedings. Subsection (b) provides:
The district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under the Bankruptcy Code, or arising in or related to cases under the Bankruptcy Code.
28 U.S.C. § 1334(b) (Supp.1987). The reference of such cases from district court to bankruptcy court is authorized by 28 U.S.C. § 157(a) (Supp.1987), which provides:
Each district court may provide that any or all cases under the Bankruptcy Code and any or all proceedings arising under the Bankruptcy Code or arising in or related to a case under the Bankruptcy Code shall be referred to the bankruptcy judges for the district.
All of the judicial districts in the United States, including the Central District of California, have adopted general orders referring to the bankruptcy courts all matters within the scope of section 157(a). Where such an order is in effect, removal is made directly to the bankruptcy court.1 Marketta Development, Ltd. v. North American Funding Corp. (In re North American Funding Corp.), 64 B.R. 795, 796 (Bankr.S.D.Tex.1986); 1 Collier on Bankruptcy § 3.015c (L. King ed. 1987).
The removal procedure is set forth in Bankruptcy Rule 9027, which is very similar to the procedure set forth in 28 U.S.C. § 1446 (1973 & Supp.1987) for the removal of a state court case to federal district court. Removal is accomplished by the filing in the bankruptcy court of a verified application containing a short and plain statement of the facts that entitle the applicant to remove. The application must be accompanied by a copy of all process and pleadings filed in the state court. Promptly after filing the application (and a bond if required), the applicant is required to serve a copy of the application on all parties to the removed claim or cause of action. The removal is effective upon the filing of a copy of the removal application (without the accompanying copy of all process and pleadings) in the court from which the action is removed. The parties are then enjoined from proceeding any further in that court unless and until a remand is ordered by the bankruptcy court.
The petition for removal in this case is not accompanied by a copy of all of the pleadings filed in the state court. It is accompanied only by the complaint and the cross-complaints. It is not accompanied by the answers on file, or any of the other papers filed in state court, which counsel represent to be very voluminous.
The Court finds that the petition is incomplete because of the failure to accompany it with all of the pleadings filed in Los Angeles County Superior Court. The reason for this requirement is that the physical file of the state court case remains in the state court. The filing of a copy of all process and pleadings is required so that the bankruptcy court will have a copy of the entire state court file, and can proceed to adjudicate the case. However, the failure to file copies of all of the required state court pleadings with the bankruptcy court does not invalidate the removal petition. 14 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure 575-76 (2d ed. 1985). Counsel for the debtor is directed to file copies of the remaining pleadings with the Court within fifteen days.
Pacific Lighting contends that the cross-complaints, or at least the causes of action therein as to which the debtor is not a party, fall outside the jurisdiction of the bankruptcy court, and that in consequence any attempt to remove them was ineffective. In consequence, Pacific Lighting contends that these claims remain pending in state court, and remain set for trial on September 1, 1987. The debtor, on the other hand, contends that removal was effective as to the entire state court action, and that the state court has no further jurisdiction until such time as this Court should remand all or a portion of the case to it.
The language of section 1452, the bankruptcy removal statute, is different from the language of 28 U.S.C. § 1441 (1973 & Supp.1987), which governs removal from a state court to a federal district court. Section 1441(a) provides:
Any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
The language of this statute relates to "any civil action": In contrast, removal to the bankruptcy court under section 1452(a) extends to "any claim or cause of action in a civil action". Pacific Lighting contends that the latter language is more restrictive, and prohibits the removal of an entire case unless the entire case qualifies for removal. In consequence, Pacific Lighting contends, part of the state court case remains pending in the Los Angeles County Superior Court.
The language of section 1452(a) is also rather different from that contained in 28 U.S.C. § 1441(c) (1973), which provides:
Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters not otherwise within its original jurisdiction.
While the language of section 1441(c) may be read to permit the removal of part of an action, case law interpreting section 1441 establishes that only the entire state court case may be...
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