State v. Briseno (In re Briseno)

Citation571 B.R. 214
Decision Date19 April 2017
Docket NumberADVERSARY NO. 17–7004,CASE NO: 17–70073
Parties IN RE: Adelina BRISENO; dba Briseno Construction, Debtor State of Texas, Office of the Attorney General, Plaintiff v. Adelina Briseno, et al., Defendants
CourtUnited States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

Joe D. Garcia, Law Office of Joe D. Garcia, McAllen, TX, Todd Brice Headden, Office of the Texas Attorney General, Austin, TX, for Plaintiff.

Antonio Martinez, Jr., Attorney at Law, McAllen, TX, for Defendants.


[Resolving ECF No. 4]

Eduardo V. Rodriguez, United States Bankruptcy Judge


Pending before the Court is a single motion, the State of Texas' Motion to Remand, which was filed on March 7, 2017. [ECF No. 2]; [ECF No. 4] (amending [ECF No. 2] ) (the "Motion "). The Motion states that Adelina Briseno and Alejandra Melendez (collectively, the "Defendants ") improperly removed the state court proceeding in violation of 28 U.S.C. § 1452(a)'s prohibition against removal of civil actions by governmental units that are enforcing police or regulatory powers. See generally [ECF No. 4]. The Court conducted an evidentiary hearing on March 24, 2017, at which time both parties presented their arguments and evidence. In consideration of the arguments presented in the hearings on these matters, all other evidence in the record, and relevant case law, for the reasons stated in this Memorandum Opinion, this Court determines that States of Texas' Motion should be granted.


This Court makes the following Findings of Fact and Conclusions of Law pursuant to Fed. R. Bankr. P. 7052, which incorporates Fed. R. Civ. P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.

On February 17, 2017, the State of Texas ("Plaintiff "), by and through the Consumer Protection Division of the Texas Attorney General's Office's, filed its complaint in state court, thereby initiating the instant case. [ECF No. 4 at ¶ 2]; see also [ECF Nos. 1–2, 1–3]. The complaint alleges that Defendants operated Briseno Construction, through which they entered into contracts with customers for the construction of homes on such customers' property and took deposits from customers before subsequently failing to meet deadlines in some of the contracts, in such a way as to have "engaged in false, misleading, and deceptive acts and practices declared unlawful." See generally [ECF No. 1–3] (the "Complaint "). Plaintiff seeks both monetary and non-monetary relief. Id. at 3, 11–13. On February 21, 2017, a temporary restraining order, as requested by Plaintiff, prohibited Defendants from engaging in certain acts for 14 days. See generally [ECF No. 1–4].

On February 27, 2017, Adelina Briseno ("Briseno ") filed her initial petition for bankruptcy under chapter 11, title 11 of the United States Code.1[Case No. 17–70073, ECF No. 1]. Contemporaneously, Alejandra Melendez ("Melendez ") likewise filed her initial petition for bankruptcy under chapter 11. [Case No. 17–70072, ECF No. 1]. In Melendez's and Briseno's cases, both filed their respective bankruptcy as being involved in "Briseno Construction" (the "Business "). Id. at 1; [Case No. 17–70073, ECF No. 1 at 1].

On March 1, 2017, Plaintiff filed its "Notice of Memorandum of Law Filed in State Court Proceeding" in both bankruptcy cases. [ECF No. 7]; [Case No. 17–70072, ECF No. 7] (collectively, the "Notice "). In its Notice, Plaintiff sought to apprise the Court of the ongoing litigation in state court that, according to its legal analysis, was not subject to the provisions of the automatic stay as an allegedly valid exercise of Texas' police and regulatory powers. Id. ; see also [ECF No. 7–1]; [Case No. 17–70073, ECF Nos. 7, 7–1].

On March 6, 2017, Defendants filed their Application of Removal wherein they state that the state court case has been removed pursuant to 28 U.S.C. §§ 1334, 1452(a). See generally [Case No. 17–7004, ECF No. 1] (the "Application ").

On March 7, 2017, Plaintiff filed its Motion to Remand that was subsequently amended. [ECF Nos. 2, 4]. Plaintiff argues that the state court proceeding was improperly removed when the Defendants filed their Application because the removal statute precludes the removal of actions "by a governmental unit to enforce such governmental unit's police or regulatory power..." [ECF No. 4 at 3]. According to Plaintiff, the present action is an exercise of its "police and regulatory power" and supports its argument by citing to Fifth Circuit authority. Id. at 4 (citing to In re Halo Wireless, Inc. , 684 F.3d 581, 589 (5th Cir. 2012) ). Moreover, Plaintiff states that, pursuant to 28 U.S.C. § 1447(c), when a case has been improperly removed the court "lacks proper subject matter jurisdiction to hear the case and the action must be remanded." Id. Due to the significance and importance of the arguments lodged by Plaintiff, the Court set a hearing on the Motion for March 31, 2017. [ECF No. 3].

On March 20, 2017, Briseno filed her response. See [ECF No. 11]. The following day, Melendez filed her response. [ECF No. 12]. Defendants' responses present the same argument: namely that Article III of the United States Constitution and 28 U.S.C. § 1251 deprives the state court of jurisdiction over the instant matter. See generally [ECF Nos. 11, 12] (collectively, the "Response "). Defendants' Response also cite to two cases to support the notion that § 1251 deprives the state court of jurisdiction. See Nebraska v. Colorado , ––– U.S. ––––, 136 S.Ct. 1034, 194 L.Ed.2d 545 (2016) (Thomas, J., dissenting); Ohio v. Wyandotte Chemicals Corp. , 401 U.S. 493, 500–05, 91 S.Ct. 1005, 28 L.Ed.2d 256 (1971).

On March 22, 2017, Briseno, as the removing defendant, filed her First Amended Application of Removal. [ECF No. 14] (the "Amended Application "). In Briseno's Amended Application, she states that the state court case has been moved to federal court "pursuant to 28 U.S.C §§ 1334, 1441, and 1452(a)..." Id. at 1. Briseno also reiterates the same jurisdictional argument made in the Response. Compare id. at 2 with [ECF No. 11] and [ECF No. 12].

Contemporaneous to Briseno's Amended Application being filed, Plaintiff filed its reply to Defendants' Response. [ECF No. 15] (the "Reply "). Plaintiff argues that Defendants' Response fails to address the main thrust of their Motion, i.e. the police and regulatory exception in § 1452(a), and focus on "spurious arguments ... to validate their unmoored Removal Pleading." Id. at 2. Plaintiff proceeds to analyze the argument for removal pursuant to § 1441 and preclusion of jurisdiction by Article III and § 1251. Id. at 3–6.

The Court conducted an evidentiary hearing on Plaintiff's Motion on March 24, 2017 (the "Hearing "). [ECF Nos. 3, 6]. Counsel for Plaintiff and the Defendants appeared and offered argument on the Motion. Both Plaintiff and Defendants offered exhibits for evidence, which were admitted by the Court.


For a motion to remand, or alternatively to abstain, there are four different bases from which it may be brought: 28 U.S.C. §§ 1447(c), 1452(b) and 28 U.S.C. § 1334(c)(1), (c)(2). In re Treyson Dev., Inc. , 2016 WL 1604347, at *1 (Bankr. S.D. Tex. Apr. 19, 2016). Section 1447 astricts courts to remand causes of action when the court determines that it lacks subject matter jurisdiction at any point prior to final judgment. § 1447(c) ; see also In re Allison , 2006 WL 2620480, at *7 (Bankr. S.D. Tex. Sep. 12, 2006) ("At a minimum, a bankruptcy court has jurisdiction to determine its own jurisdiction."). A motion to remand, pursuant to § 1452, or abstention, under § 1334(c)(1), are similar in nature, as both are rooted in equity and courts have discretion to rule. J.T. Thorpe Co. v. Am. Motorists , 2003 U.S. Dist. LEXIS 26016, at *21 (S.D. Tex. June 6, 2003). Remand under §§ 1452 and 1334(c)(1) also use similar factors for considering whether to remand the removed action. Browning v. Navarro , 743 F.2d 1069, 1076 n.21 (5th Cir. 1984) ; WRT Creditors Liquidation Trust v. C.I.B.C. Oppenheimer Corp. , 75 F.Supp.2d 596, 603 n.1 (S.D.Tex.1999) ; see also Ramirez v. Rodriguez , 413 B.R. 621, 631–33 (Bankr. S.D. Tex. 2009). A motion to abstain pursuant to § 1334(c)(2) is significantly different, and courts have no discretion if the party requesting relief meets the requirements for remand. J.T. Thorpe , 2003 U.S. Dist. LEXIS 26016, at *10; see Ramirez , 413 B.R. at 626–28 ; see also Schuster v. Mims (In re Rupp & Bowman Co. ), 109 F.3d 237, 239 (5th Cir. 1997). Irrespective of the type of motion made, 28 U.S.C. § 1447(c) limits the basis for remand to a lack of subject matter jurisdiction once 30 days has elapsed from removal. See also Things Remembered, Inc. v. Petrarca , 516 U.S. 124, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995) (noting that § 1452 is not exclusive and § 1447 applies to remand of any removed case); United States v. Rice , 327 U.S. 742, 752, 66 S.Ct. 835, 90 L.Ed. 982 (1946).

a. Jurisdiction

The requirements of removal, either pursuant to § 1452 or 28 U.S.C. § 1441, necessitate a determination of the existence of a court's relevant jurisdiction. Chicot Cty. Drainage Dist. v. Baxter St. Bank , 308 U.S. 371, 376, 60 S.Ct. 317, 84 L.Ed. 329 (1940) (noting that "[t]he lower federal courts are all courts of limited jurisdiction, ... [b]ut none the less they are courts with authority ... to determine whether or not they have jurisdiction to entertain the cause and for this purpose to construe and apply the statute under which they are asked to act"). In order to remove a case to federal court through § 1452(a), the court must have jurisdiction over the matter pursuant to § 1334. Section 1334(a) provides that "the district courts shall have original and exclusive jurisdiction of all cases under ...

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