Parker v. Nationwide Mut. Ins. Co. (In re Duran), Case No. 16–33704

• Decision Date: 16 February 2018
• Docket Number: Adv. Pro. No. 17–03114,Case No. 16–33704
• Citation: 586 B.R. 7
• Parties: IN RE: Katina Lynn DURAN, Debtor. Ericka Parker, Chapter 7 Trustee, Plaintiff, v. Nationwide Mutual Insurance Company, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

586 B.R. 7

IN RE: Katina Lynn DURAN, Debtor.Ericka Parker, Chapter 7 Trustee, Plaintiff,

v.Nationwide Mutual Insurance Company, Defendant.

Case No. 16–33704

Adv. Pro. No. 17–03114

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed February 16, 2018

Matthew Grimsley, Caryn Groedel & Associates, Caryn Markowitz Groedel, Cleveland, OH, for Plaintiff.

Ali Imran Haque, Lisa M. Kathumbi, Quintin F. Lindsmith, Bricker & Eckler, Columbus, OH, for Defendant.

MEMORANDUM OF DECISION AND ORDER RE: ABSTENTION AND REMAND

John P. Gustafson, United States Bankruptcy Judge

This Adversary Proceeding came before the court for hearing on February 14, 2018 on Plaintiff–Trustee Ericka Parker's ("Plaintiff–Trustee") Motion for Remand and Abstention [Doc. # 9]. Defendant Nationwide Mutual Insurance Company ("Defendant") filed a Memorandum in Opposition to Plaintiff's Motion [Doc. # 12] on February 1, 2018, and Plaintiff filed a Memorandum in Support [Doc. # 14] on February 8, 2018.

The court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1334, 157(a), and the general order of reference entered by the United States District Court for the Northern District of Ohio.¹

For the following reasons, the court will permissively abstain from further hearing on this matter under 28 U.S.C. § 1334(c)(1) and will remand the case back to the Lucas County Court of Common Pleas pursuant to 28 U.S.C. § 1452(b).²

FACTUAL BACKGROUND

Debtor Katina Lynn Duran filed for Chapter 7 bankruptcy on November 29, 2016. [Case No. 16–33704, Doc. # 1]. The Debtor listed her potential claims against Defendant in Schedule B, in response to the question at No. 33: "Claims against third parties, whether or not you have filed a lawsuit or made a demand for payment". [Id. , Doc. # 1, p. 14]. Debtor's response listed: "Claim: Nationwide Insurance For Fraud/ unliquidated", with the amount listed as "unknown". [Id. ].

An Order of Discharge was entered on March 23, 2017. [Id. , Doc. # 32]. Because Plaintiff–Trustee anticipated that the value of the estate would exceed her estimate of the cost of administration and the payment of all timely filed claims, with interest, Plaintiff–Trustee filed a Motion for Order Regarding Surplus Funds on June 23, 2017. [Id. , Doc. # 37]. The court granted the Motion the same day. [Id. , Doc. # 38]. Even after the extended bar date for the filing of claims against surplus funds, it appears all creditors who filed claims will be paid in full. Per Plaintiff–Trustee's Interim Report filed on October 4, 2017, Debtor's estate only needed $13,000.00 to fully pay all bankruptcy costs and filed claims. [Id. , Doc. # 40, pp. 1–2]. The required funds are likely to come from an inheritance from Debtor's mother, in the estimated amount of $30,000, that she became entitled to acquire within 180 days of the filing of her Chapter 7 case. See , 11 U.S.C. § 541(a)(5)(A). [Id. , Doc. # 40, pp. 1–2].

On November 16, 2017, Plaintiff–Trustee filed a civil Complaint ("Complaint") on behalf of Debtor's estate in the Lucas County Court of Common Pleas, Case No. G–4801–CI–0201704851–000.³ [Doc. # 2, pp. 2–20]. In the Complaint, Plaintiff alleges eight counts against Defendant: 1) Gender Discrimination, 2) Retaliation, 3) Violation of Public Policy, 4) Tortious Interference with Prospective Employment and/or Contractual Relations, 5) Fraudulent Inducement, 6) Intentional Misrepresentation, 7) Promissory Estoppel, and 8) Unjust Enrichment. [Id. , pp. 10–19]. The claims asserted in the Complaint are limited to causes of action under Ohio law. [Id. , p. 3]. The Complaint specifically states:

5. This action is brought under the common and statutory laws of the State of Ohio. The averments in this Complaint are intended to assert claims only under the laws of the State of Ohio. No federal claims are asserted herein. It is Plaintiff's specific intention to litigate the claims asserted herein in this Ohio State court. Therefore, should the averments in this Complaint, and/or any evidence adduced during discovery in this case, suggest or imply that Plaintiff is asserting any federal claims, Plaintiff specifically rejects such suggestion or implication, and hereby states that Plaintiff is not pursuing, and has not intended to pursue, any claim in the action under any federal law of the United States, thereby precluding the removal of this action to any federal court based upon federal question jurisdiction.

[Id. , pp. 2–3, ¶ 5].

After being served the Complaint on November 28, 2017 [Doc. # 2, p. 30], Defendant filed a timely Notice of Removal with this court on December 19, 2017. [Doc. # 1]. Defendant filed its Answer to the Complaint on January 8, 2018 [Doc. # 6] and Plaintiff–Trustee filed a Motion for Remand and Abstention on January 18, 2018. [Doc. # 9].

LAW AND ANALYSIS

Plaintiff–Trustee argues that this court should abstain from exercising federal jurisdiction over the removed state court action and remand the case back to the state court. [Doc. # 9]. Upon review of the parties' arguments to the court at the February 14 hearing, the briefs, and the relevant statutes and case law, the court will remand the case to the Lucas County Court of Common Pleas.

I. Permissive Abstention

Section 1334(c)(1) provides that "nothing in this section prevents a district court⁴ in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11." Otherwise known as permissive abstention, courts apply § 1334(c)(1) using "a multi-factor balancing test, not a rule in which every element must be satisfied...." DiGirolamo v. Applegate (In re Applegate ), 414 B.R. 209, 216 (Bankr. N.D. Ohio 2008). Factors federal courts look to include:

1) the effect or lack of effect on the efficient administration of the estate if a court abstains; 2) the extent to which state law issues predominate over bankruptcy issues; 3) the difficulty or unsettled nature of the applicable state law; 4) the presence of a related proceeding commenced in state court or other non-bankruptcy court; 5) the jurisdictional basis, if any, other than 28 U.S.C. § 1334 ; 6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; 7) the substance rather than form of an asserted "core" proceeding; 8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court; 9) the burden of this court's docket; 10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties; 11) the existence of a right to a jury trial; 12) the presence in the proceeding of nondebtor parties; and 13) any unusual or other significant factors.

Parrett v. Bank One, N.A. (In re Natl. Cent. Fin. Enters., Inc., Inv. Litig. ), 323 F.Supp.2d 861, 884–85 (S.D. Ohio 2004) (quoting Mann v. Waste Mgmt. of Ohio , 253 B.R. 211, 214 (N.D. Ohio 2000) ); see also , Applegate , 414 B.R. at 216 ; Bavelis v. Doukas (In re Bavelis ), 453 B.R. 832, 881–82 (Bankr. S.D. Ohio 2011) ; Meritage Homes Corp. v. JPMorgan Chase Bank, N.A. , 474 B.R. 526, 573 (Bankr. S.D. Ohio 2012). Although abstention is rarely exercised, "federal courts should not be hesitant to decline to exercise jurisdiction when ‘state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought.’ " Mann, 253 B.R. at 215 (quoting In re White Motor Credit , 761 F.2d 270, 274 (6th Cir. 1985) ); see also , McDaniel v. ABN Amro Mortg. Group , 364 B.R. 644, 650 (S.D. Ohio 2007).

The court finds that a number of the aforementioned factors weigh heavily in favor of permissive abstention, particularly factors (1), (2), (5), (6), and (11).⁵ In terms of the first and sixth factors, dealing with efficient administration and the degree of "relatedness" to the bankruptcy proceeding, Debtor's bankruptcy case is nearing its end, or as Plaintiff–Trustee puts it, "is in its 12th hour." [Doc. # 14, p. 5]. It appears likely that Debtor's estate will be fully funded soon, allowing the Plaintiff–Trustee to pay both administrative expenses and all creditor's claims without regard to the outcome of the removed state court action. [Doc. # 14, p. 5; Case No. 16–33704, Doc. # 40, pp. 1–2]. Thus, the court's decision to abstain will have very little, if any, impact "on the efficient administration of the estate" and the removed state court action is only remotely related to a main bankruptcy case that will probably be administratively closed before the lawsuit against the Defendant is concluded. See , Mann , 253 B.R. at 214.

Under the second factor of the § 1334(c)(1) balancing test, the parties do not dispute that the allegations contained in Plaintiff–Trustee's Complaint are based solely on Ohio law. [Doc. # 2, p. 30]. Accordingly, state law issues not only predominate over bankruptcy issues in this case, Ohio law is the only basis for Plaintiff's requested relief. Moreover, the removed state court action's relationship with bankruptcy law is limited to the fact that Debtor's cause of action against Defendant is property of the bankruptcy estate while Debtor's bankruptcy case is pending. Given the evidence presented that Debtor's bankruptcy case is nearing its conclusion [Doc. # 14, p. 5], the removed state court action's relationship to bankruptcy law may soon be non-existent. Consequently, this factor weighs heavily in favor of permissive abstention because "state issues substantially predominate." Mann , 253 B.R. at 215 (quotation omitted).

The fifth factor also supports permissive abstention. Both parties agree that the only basis for bankruptcy court jurisdiction is "related to" jurisdiction under 28 U.S.C. § 1334(b). The claims here are non-core, state law claims. See , Northern Pipeline...