474 F.Supp.3d 586
W.D.N.Y.2020Background
- Plaintiff CityView (a New York limited partnership) leased retail space in a Fort Worth, Texas shopping center to defendant Aissa Medical Resources, L.P.; Dr. Ramin Samadi guaranteed the 2008 lease.
- Two leases are at issue: a 2008 lease (surrender/fixture obligations) and a 2002 lease (obligation to reimburse broker commissions); both contain forum-selection clauses (the 2002 clause states exclusive venue in Monroe County Supreme Court).
- Plaintiff sued in New York State Supreme Court (Monroe County) for breach of both leases and attorneys’ fees; after substantial state-court proceedings (bench trial scheduled), Aissa removed on Jan. 2, 2020, invoking bankruptcy-related removal (28 U.S.C. §§ 1452, 1334) after filing a Chapter 11 petition in the N.D. Tex. bankruptcy court.
- Plaintiff moved to remand, abstain, and recover costs; Aissa also moved to transfer venue to the N.D. Tex.; Aissa’s bankruptcy was later dismissed.
- The district court held the case was non-core, the 2002 lease’s forum-selection clause was mandatory (waiving removal), mandatory abstention under § 1334(c)(2) and permissive abstention/equitable remand supported remand, and remanded the case to Monroe County Supreme Court.
- The court awarded plaintiff reasonable attorneys’ fees and costs under 28 U.S.C. § 1447(c); Aissa’s transfer motion was denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal based on bankruptcy jurisdiction was proper and whether dismissal of the bankruptcy divests jurisdiction | Removal was improper because the state-court action was covered by the leases’ forum-selection clauses and the bankruptcy dismissal requires remand | Removal was proper under §§ 1452/1334 as the state claims "related to" Aissa’s bankruptcy; dismissal of the bankruptcy would then lead to remand | Dismissal of the bankruptcy does not automatically divest jurisdiction, but remand was appropriate here for other reasons (forum clause, abstention) |
| Whether the leases’ forum-selection clauses waive the right to remove and require adjudication in Monroe County Supreme Court | The 2002 lease’s clause is mandatory and exclusive to Monroe County Supreme Court, which waives defendants’ removal right | Argued efficient centralization with bankruptcy court and that related bankruptcy proceedings can overcome forum clauses | The 2002 clause is mandatory and enforceable; it effectively waived removal and supports remand to state court |
| Whether mandatory abstention under 28 U.S.C. § 1334(c)(2) requires remand | The action is state-law, non-core, related to the bankruptcy, timely moved, and can be timely adjudicated in state court, so mandatory abstention applies | Removal under § 1334 was proper because the action is related to the bankruptcy | The factors for § 1334(c)(2) are met: timely motion, state-law non-core claims, sole basis § 1334, pending state action, and timely adjudication—mandatory abstention requires remand |
| Whether plaintiff is entitled to attorneys’ fees and costs under 28 U.S.C. § 1447(c) | Fees/costs are recoverable because removal lacked a colorable basis (forum clause plainly barred removal) | Removal was made in good faith and was defensible based on bankruptcy removal principles; but offered settlement covering fees | The court found removal lacked a colorable basis and awarded reasonable attorneys’ fees and costs; plaintiff to submit affidavit of fees and costs |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (forum-selection clauses are prima facie valid and enforceable)
- Atlantic Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49 (valid forum-selection clauses should be enforced in all but exceptional cases)
- Freeport-McMoRan, Inc. v. KN Energy, Inc., 498 U.S. 426 (jurisdiction existing at commencement is not divested by subsequent events)
- In re Porges, 44 F.3d 159 (2d Cir.) (dismissal of bankruptcy does not automatically strip jurisdiction over related adversary proceedings)
- Certain Underwriters at Lloyd’s, London v. ABB Lummus Global, Inc., 337 B.R. 22 (S.D.N.Y.) (related-to jurisdiction is assessed at time of removal; district court has discretion whether to retain jurisdiction)
- Stern v. Marshall, 564 U.S. 462 (distinguishing core from non-core bankruptcy proceedings)