453 B.R. 346
8th Cir. BAP2011Background
- Klein Bank filed two replevin actions in Wright County District Court against Debtors and related entities in February 2011.
- Debtors filed voluntary Chapter 11 petitions in February 2011; none of the corporate defendants filed for bankruptcy relief.
- The Wright County District Court scheduled hearings on the replevin actions for March 10, 2011.
- Removal notices were filed in March 2011; the F.H. Schmidt Replevin Action was removed prior to the March 10 hearing, Schmidt Electric Action was not.
- Bankruptcy Court denied remand requests, treating the replevin actions as core proceedings separate from state court process.
- On appeal, the panel held that core proceedings are those arising under or arising in a bankruptcy case, and Stern v. Marshall clarified limits on core status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Replevin Actions core proceedings under §157? | Klein Bank asserted core status under §157(b)(2). | Debtors argued actions do not arise under or in bankruptcy. | Not core proceedings. |
| Does Stern v. Marshall control the core/non-core classification here? | Stern supports broad core categorization for bankruptcy-related actions. | Stern limits core to actions arising under or in the bankruptcy, narrowing core. | Stern governs; actions not core. |
| If not core, may mandatory abstention apply under §1334(c)(2)? | Abstention is required if timely adjudicated in state court. | Abstention not clearly required until core status is settled. | Remand for abstention merits determined on timeliness in state court. |
| Should the court remand under discretionary abstention or §1452(b)? | Discretionary abstention or equitable remand may be warranted. | Court should not rely on discretionary remand if mandatory abstention applies. | Not decisive at this stage; remand for abstention timing findings. |
Key Cases Cited
- In re Farmland Indus., Inc., 567 F.3d 1010 (8th Cir. 2009) (distinguishes core vs. non-core proceedings)
- In re Refco, Inc., 354 B.R. 515 (8th Cir. BAP 2006) (abstention framework and core/non-core discussion)
- In re Williams, 256 B.R. 885 (8th Cir. BAP 2001) (non-core related-to proceedings and abstention guidance)
- Personette v. Kennedy (In re Midgard Corp.), 204 B.R. 764 (10th Cir. BAP 1997) (considerations on effect of bankruptcy on estate administration)
- In re United Container LLC, 284 B.R. 162 (Bankr.S.D.Fla.2002) (bankruptcy court abstention context)