In re Spookyworld, Inc., Bankruptcy No. 98-47660. Adversary No. 98-4257.

• Decision Date: 02 August 2001
• Docket Number: Bankruptcy No. 98-47660. Adversary No. 98-4257.
• Citation: 266 BR 1
• Parties: In re SPOOKYWORLD, INC., Debtor. Spookyworld, Inc., Plaintiff, v. Town of Berlin, et al., Defendants.
• Court: U.S. Bankruptcy Court — District of Massachusetts

266 B.R. 1 (2001)

In re SPOOKYWORLD, INC., Debtor Spookyworld, Inc., Plaintiff, v. Town of Berlin, et al., Defendants.

Bankruptcy No. 98-47660. Adversary No. 98-4257.

United States Bankruptcy Court, D. Massachusetts.

August 2, 2001.

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Carl D. Aframe, Aframe & Barnhill, P.A., Worcester, MA, Stephen J. Gordon, Stephen Gordon & Assoc., Worcester, MA, for Debtor.

Gary S. Brackett, Brackett & Lucas, Worcester, MA, Gerald Fabiaro, Boston, MA, for Defendants.

Richard King, Worcester, MA, United States Trustee.

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

The Defendants, the Town of Berlin (the "Town") and various of its representatives and agents (collectively the "Individual Defendants"), request this Court to grant summary judgment with respect to each claim raised by Spookyworld, Inc. (the "Debtor", or "Plaintiff") in the above titled Adversary Proceeding. The Debtor has asserted claims alleging violation of its civil rights under federal law (42 U.S.C. §§ 1983 and 1985) and Massachusetts law (M.G.L.A. c. 12 §§ 11H and 11I); violation of the automatic stay under 11 U.S.C. § 362; defamation; and interference with its contractual or business relationships.

I. Summary Judgment as Affected by Core and Non-core Jurisdiction

Before this Court can address the issues implicated in the Defendants' summary judgment motion, it must come to terms with the extent of its own jurisdiction. The Debtor has raised seven (7) separate causes of action against the Defendants and sought a jury trial as to each. In response, the Defendants filed a motion asking the District Court to withdraw the jurisdictional reference of the adversary proceeding from this Court. The Defendants reasoned that this Court had no jurisdiction to hear the matters because a jury trial was requested and the Defendants do not consent to the jury trial before the bankruptcy court.¹ The District Court (Gorton, J.) agreed to withdraw the reference, but ordered that "all pretrial matters be resolved in the Bankruptcy Court pursuant to MLBR 9015-1(c)." (Order dated April 14, 1999, hereinafter referred to as the "District Court Order").

Pursuant to the District Court Order, the parties have completed discovery under the aegis of this Court. However, disposition of a motion for summary judgment requires that a court first examine its jurisdiction to ensure that it can make the determination requested. Bankruptcy Courts are courts of limited jurisdiction. Northern Pipeline Construction Co. v. Marathon Pipe Line Co. 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). As to matters delineated as "core," a bankruptcy court may make final determinations of fact and conclusions of law. Fact determinations are reviewed employing a "clearly erroneous" standard, while conclusions of law are reviewed de novo. Fed. R. Bankr.P. 8013; see Brandt v. Repco Printers & Lithographics, Inc. (In re Healthco International, Inc.), 132 F.3d 104, 107 (1st Cir.1997); Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir.1997); see U.S. v. Clifford (In re Clifford), 255 B.R. 258, 263 (D.Mass.2000). But as to noncore matters, bankruptcy courts are precluded from making final determinations absent consent of the parties. 28 U.S.C. § 157(c)(2). The court may make proposed findings of fact and law, but those findings are afforded no special deference by the District Court. See Monarch Life Ins. Co. v. Ropes & Gray (In re Monarch Capital Corp.), 173 B.R. 31, 35 (D.Mass.1994), aff'd, 65 F.3d 973, 980 (1st Cir.1995)(without the parties consent, a bankruptcy court may only issue proposed findings of fact and conclusions of law with regard to noncore matters). Both findings of fact and conclusions of law are reviewed by the District Court de novo. 28 U.S.C. § 157(c)(1); see Arnold Print Works v. Apkin, (In re Arnold Print Works), 815 F.2d 165, 166 (1st Cir.1987).

The standard for allowance of a motion for summary judgment is well settled. In order for the moving party to prevail, it must demonstrate to the Court that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c) as made applicable by Fed. R. Bankr.P. 7056. The court must view the movant's arguments "scrutinizing the record in the light most flattering to the nonmovant and indulging all reasonable inferences in that party's favor." Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994)(citing Brennan v. Hendrigan, 888 F.2d 189, 191 (1st Cir. 1989)). The movant has the preliminary burden to demonstrate that no triable issue of fact exists. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)(stating that the movant bears the initial burden of "identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact."). But if met, the burden then shifts to the nonmoving party to introduce evidence of a genuine issue of material fact. FDIC v. Municipality of Ponce, 904 F.2d 740, 742 (1st Cir.1990); see also J. Geils Band Employee Benefit Plan v. Smith Barney Shearson, Inc., 76 F.3d 1245, 1251 (1st Cir.1996); Staffier v. Sandoz Pharmaceuticals Corp., 888 F.Supp. 287, 293 (D.Mass. 1995) aff'd, 78 F.3d 577 (1st Cir.1996). If the non-moving party is unable to do so, summary judgment for the movant is appropriate. See FDIC v. Municipality of Ponce at 742 (citing Celotex). In defense of a motion for summary judgment, it is not sufficient for the opposing party to simply rely on evidence of "some combination of `conclusory allegations, improbable inferences, and unsupported speculation.'" Maldonado at 581 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990)).

Here, the Defendants contend that the Debtor has offered no genuine issue of material fact. The absence of such an issue ordinarily empowers a court to grant judgment notwithstanding a request by the nonmoving party for a jury trial. However, the authority to grant summary judgment presupposes that the Court had the power to decide the matter in the absence of a request for a jury determination. Accordingly, whether this Court has the authority to grant summary judgment, or is limited to submitting to the District Court proposed findings of fact and conclusions of law, is wholly dependent on whether the underlying dispute would implicate a bankruptcy court's core or noncore jurisdiction in the absence of a request for jury trial.

In 28 U.S.C. § 157(b)(2), Congress set forth the following non-exhaustive list of disputes over which a bankruptcy court has jurisdiction to render final determinations, labeling them core matters:

(A) matters concerning the administration of the estate;

(B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11;

(C) counterclaims by the estate against persons filing claims against the estate;

(D) orders in respect to obtaining credit;

(E) orders to turn over property of the estate;

(F) proceedings to determine, avoid, or recover preferences (G) motions to terminate, annul, or modify the automatic stay;

(H) proceedings to determine, avoid, or recover fraudulent conveyances;

(I) determinations as to the dischargeability of particular debts;

(J) objections to discharges;

(K) determinations of the validity, extent, or priority of liens;

(L) confirmations of plans;

(M) orders approving the use or lease of property, including the use of cash collateral;

(N) orders approving the sale of property other than property resulting from claims brought by the estate against persons who have not filed claims against the estate; and

(O) other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims.

28 U.S.C. § 157(b).

Unfortunately, reliance on this list does not provide all of the answers. First, not only is the list non-exclusive, but some of the categories provided are painfully vague. See, e.g., § 157(b)(A) and (O); N. Parent Inc. v. Cotter & Co. (In re N. Parent Inc.), 221 B.R. 609, 624 (Bankr. D.Mass.1998); Noonan v. Cellu Tissue Corp. CST (In re Palmer Trucking), 201 B.R. 9 (Bankr.D.Mass.1996). In Ralls v. Docktor Pet Centers Inc., Judge Tauro provides additional guidance in his description of non-core issues as "state or federal claims that arise between parties within a bankruptcy proceeding . . . which could survive outside bankruptcy, and in the absence of bankruptcy, would have been initiated in a state or district court'". 177 B.R. 420, 424-5 (D.Mass.1995) (citations omitted). This Court agrees. Second, while it is clear that matters otherwise noncore should be viewed as core if arising post-petition, it is less clear how to categorize a dispute based on events which commenced pre-petition but continued post-petition. See In re Arnold Print Works, 815 F.2d 165 (1st Cir.1987)(a majority of courts addressing the issue have held causes of action arising post-petition to be core). The better view is that claims arising pre-petition and continuing post-petition should be deemed noncore. See generally Ralls v. Docktor Pet Centers, Inc., 177 B.R. 420 (D.Mass.1995); N. Parent at 625 (such matters are best categorized as noncore). Third, serious questions of judicial economy and the risk of inconsistent determinations arise where a single fact pattern commingles both core and noncore disputes. N. Parent at 629 (stating "to have the have the parties try the same facts in...