Powder Mill Village v. MillerPowder Mill Village v. Miller
In May and July 2024, Powder Mill Village, c/o Southern Management Companies LLC (Powder Mill Village), filed two eviction complaints against Zenzi Iyana Miller (the Debtor) in the District Court of Maryland for Prince George‘s County (the State Court). The Debtor removed both proceedings to the United States District Court for the District of Maryland (the District Court), and the District Court then referred the proceedings to this Court because they potentially relate to the Debtor‘s Chapter 7 bankruptcy case. The District Court‘s referrals resulted in the above-captioned adversary proceedings (together, the Adversary Proceedings) between Powder Mill Village and the Debtor.
The procedural background of the Adversary Proceedings is somewhat convoluted. In short, before the Court are (i) Powder Mill Village‘s motions requesting that the Court abstain from exercising jurisdiction over the parties’ disputes addressed in the Adversary Proceedings and remand the proceedings to the State Court; (ii) the Debtor‘s motion for summary judgment on
On October 11, 2024, the Court held a hearing to consider Powder Mill Village‘s motions to remand and/or abstain and the Debtor‘s objections thereto. The Court has also considered the motion for summary judgment, which the Debtor filed two days before the hearing, and the motion to dismiss, which Powder Mill Village filed two weeks after the hearing. This Court finds that a further hearing is unnecessary to address these additional motions. See
For the reasons set forth below, the Court will enter summary judgment in favor of Powder Mill Village and against the Debtor on all counts of the Debtor‘s counterclaim, grant Powder Mill Village‘s motion to dismiss the counterclaim, grant Powder Mill Village‘s motions to abstain from exercising jurisdiction over the eviction complaints, and direct the Clerk of the Court to immediately remand both Adversary Proceedings to the State Court.
I. PROCEDURAL BACKGROUND
A. The Debtor‘s Bankruptcy Case
On December 18, 2023, the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code.1 Prior to the petition date, Powder Mill Village and the Debtor entered into a residential lease agreement for the property known as 11340 Evans Trail #203, Beltsville, Maryland (the Leased Premises). At the time of the bankruptcy filing and at all times relevant to the matters pending before the Court, the Debtor resided at the Leased Premises.
The Debtor included Powder Mill Village on the creditor matrix [Case No. 23-19179, Dkt, No. 1] that she filed with her petition. On January 2, 2024, the Debtor filed bankruptcy schedules [Case No. 23-19179, Dkt. No. 18] in which she identified Powder Mill Village in Part 2 of Schedule D as a party to be Notified for a Debt That You Already Listed but did not otherwise list Powder Mill Village as having a claim against her. More concisely, the Debtor included Powder Mill Village as a party to receive notice of the proceedings but did not schedule Powder Mill Village as a creditor having a claim against her.
On April 11, 2024, the Court entered an Order of Discharge [Case No. 23-19179, Dkt. No. 30] and closed the Debtor‘s bankruptcy case. Upon entry of the discharge order, the automatic stay terminated.
B. Powder Mill Village‘s First Eviction Complaint
On May 29, 2024, approximately six weeks after the Debtor received her bankruptcy discharge, Powder Mill Village filed a Failure to Pay Rent Landlord‘s Complaint for Repossession of Rented Property (Real Property § 8-401) (the First Eviction Complaint) against the Debtor in the State Court, Case No. D-05-LT-24-20587-008. The First Eviction Complaint asserts that the Debtor failed to pay rent for the months of July 2023 through May 2024 and states that the total amount of unpaid rent for those 11 months is
On July 15, 2024, the Debtor removed the First Eviction Complaint to the District Court, Case No. 24-2039-TDC. Seven days later, the District Court entered an order directing the Debtor to show cause why removal was proper because it appeared to the District Court that there was no federal question or diversity jurisdiction. The Debtor filed a response alleging that Powder Mill Village terminated the lease, that the lease termination constituted a transfer, and that such transfer triggered a generation skipping transfer tax liability under the Internal Revenue Code (a federal statute). The District Court disagreed, found that the claims asserted were purely state law claims, and entered an order dismissing the case and remanding it to the State Court for lack of subject matter jurisdiction on August 20, 2024.
Undeterred, the Debtor again removed the First Eviction Complaint to the District Court, Case No. 24-2485-DLB, on August 27, 2024. This time, in her notice of removal, the Debtor included a three-count counterclaim (the Counterclaim) against Powder Mill Village seeking actual and punitive damages. Count I of the Counterclaim alleges that Powder Mill Village attempted to collect from the Debtor a debt that was discharged in her bankruptcy case in violation of
The next day, Powder Mill Village filed a Motion to Remand and/or Abstain [Adv. No. 24-00246, Dkt. No. 2] (the First Eviction Motion to Remand) asking this Court to abstain from exercising jurisdiction over the First Eviction Complaint and the Counterclaim and to remand the matter to the State Court. On September 23, 2024, the Debtor filed an opposition to the First
C. Powder Mill Village‘s Second Eviction Complaint
On July 26, 2024, Powder Mill Village filed a second Failure to Pay Rent – Landlord‘s Complaint for Repossession of Rented Property (Real Property § 8-401) (the Second Eviction Complaint) against the Debtor in the State Court, Case No. D-05-LT-24-26993-016. The Second Eviction Complaint asserts that the Debtor failed to pay rent for the months of June and July 2024 and states that the total amount of unpaid rent for those two months is $4,357.50. As with the First Eviction Complaint, the Second Eviction Complaint does not request a money judgment against the Debtor. The Court refers to the First Eviction Complaint and the Second Eviction Complaint collectively herein as the Eviction Complaints.
On August 9, 2024, the Debtor removed the Second Eviction Complaint to the District Court, Case No. 24-2308-DKC, alleging that Powder Mill Village has disregarded the bankruptcy court‘s discharge order and continues to attempt to collect the discharged debt, cites to the removal statute, alleges federal question jurisdiction, states a federal court has authority to enforce its own orders, argues removal is necessary to avoid inconsistent outcomes, and argues that removal is in the interest of justice because it provides a forum that can more effectively address the asserted discharge violation. Notice of Removal [Adv. No. 24-00222, Dkt. No. 1-1]. Four days later, the District Court entered an order referring the case to this Court and attached the Second Eviction Complaint to the referral order. This Court assigned Adv. No. 24-00222 to the removed case.
On August 29, 2024, Powder Mill Village filed a Motion to Remand and/or Abstain [Adv. No. 24-00222, Dkt. No. 3] (the Second Eviction Motion to Remand) asking this Court to abstain from exercising jurisdiction over the Second Eviction Complaint and to remand it to the State Court. On September 11, 2024, the Debtor filed an opposition to the Second Eviction Motion to Remand [Adv. No. 24-00222, Dkt. No. 5]. On October 8, 2024, Powder Mill Village filed a reply in support of its Second Eviction Motion to Remand [Adv. No. 24-00222, Dkt. No. 11] that appears to be identical to the reply it filed in support of the First Eviction Motion to Remand. The Court refers to the First Eviction Motion to Remand and the Second Eviction Motion to Remand collectively herein as the Motions to Remand.
D. The September 18, 2024 Status Conference and the Order Setting Deadlines
On September 18, 2024, the Court held a combined status conference in the Adversary
Powder Mill Village confirmed at the status conference that it is seeking to obtain possession of the rented premises from the Debtor and is not seeking to collect a debt from the Debtor. The Eviction Complaints confirm this; in both Eviction Complaints, Powder Mill Village did not check the box that states Landlord requests a money judgment. Adv. No. 24-00222, Dkt. No. 1-1; Adv. No. 24-00246, Dkt. No. 1-1.
E. The October 11, 2024 Hearing
On October 11, 2024, the Court held the hearing at which it considered the Motions to Remand and the Debtor‘s oppositions thereto. The Debtor and counsel for Powder Mill Village were present at the hearing. Counsel for Powder Mill Village confirmed that all substantive pleadings from the State Court proceedings have been filed in the Adversary Proceedings and, once again, confirmed that Powder Mill Village is seeking possession of the leased premises but not a money judgment against the Debtor for unpaid rent.
At the hearing, the Debtor demonstrated that she does not understand the difference between in personam liability and in rem relief and informed the Court that she relied on a friend who is in law school to draft the legal arguments set forth in her pleadings. The Debtor further stated that she believes she is not required to pay rent from the date of her discharge through the end of the lease term (which ended sometime in June 2024), that she believes she is not required to pay rent after the end of the lease term (regardless of whether she remains in possession of the premises), that she still resided at the leased premises at the time of the hearing, and that she has not paid rent since the entry of her discharge. In effect, the Debtor believes that she is not obligated to pay rent from July 2023 (when she first stopped paying rent) until such time as she no longer resides at the property. It is no wonder that the Debtor has fought to remain in possession of the property and that Powder Mill Village has fought to retake possession of the property.
II. THE PARTIES’ ARGUMENTS
A. Powder Mill Villages’ First Eviction Motion to Remand
Powder Mill Village makes five arguments in support of its First Eviction Motion to Remand.
First, Powder Mill Village argues that the removal to the District Court was untimely and, therefore, the First Eviction Complaint should be remanded to the State Court. Powder Mill Village relies on
Second, Powder Mill Village contends that federal jurisdiction does not exist and that the Counterclaim is an improper and ineffective attempt by the Debtor to create federal jurisdiction.8 Powder Mill Village asserts that a counterclaim cannot create federal jurisdiction where jurisdiction is lacking in the complaint, relying on The Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826, 830-32 (2002) (we decline to transform the longstanding well-pleaded-complaint rule into the well-pleaded-complaint-or-counterclaim rule urged by respondent) and Shakil v. Boeteng, 2023 WL 7194765, at *2 (D. Md. Nov. 1, 2023) (citing to The Holmes Group to remand a wrongful detainer action and reject an argument that a counterclaim is sufficient to support removal based on federal question jurisdiction).
Third, Powder Mill Village argues that, in the event that the Court determines that federal jurisdiction does exist, abstention is mandatory under
Fourth, while Powder Mill Village concedes that it may not seek a money judgment (i.e., an in personam judgment) against the Debtor for unpaid pre-petition rent that was discharged in her bankruptcy case, it argues that it may nonetheless base its claim for an eviction judgment on pre-petition discharged rent because the discharge relieves the Debtor‘s personal obligation to pay the rent but does not extinguish the underlying debt or Powder Mill Village‘s right to retake possession of the Leased Premises. In support, Powder Mill Village relies on In re Dabrowski, 257 B.R. 394 (Bankr. S.D.N.Y. 2001) (holding that a landlord could proceed in rem against a debtor‘s leasehold so long as the landlord did not obtain a personal judgment for the pre-petition rent discharged in the debtor‘s Chapter 7 bankruptcy case) and In re Richardson, No. 16-13482-BFK (Bankr. E.D. Va. May 30, 2017) (same), aff‘d sub nom. Richardson v. Priderock Capital Partners, LLC, 2017 WL 11476091 (E.D. Va. Dec. 21, 2017), aff‘d sub nom. In re Richardson, 724 Fed. Appx. 238 (4th Cir. 2018)(unpublished).9
Finally, Powder Mill Village contends that equitable grounds exist to remand the First Eviction Complaint under
Powder Mill Village also requests an award of costs and attorneys’ fees pursuant to
[P]re-petition debts are discharged and cannot be sued for or even demanded, but if you don‘t pay pre-petition rent, which includes the utilities, the landlord can move for a judgment for possession of the property in state Court ...
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[The debtor is] not at risk for a money judgment [for pre-petition amounts owed] because the amount‘s been discharged, but he remains at risk for an eviction for [pre-petition] amounts that aren‘t paid[.]
Adv. No. 24-00246, Dkt. No. 12-1 (transcript of May 30, 2017 hearing before bankruptcy court) at 66:25-67:8, 68:3-68:7 and 70:4-70:6. As argued by the Debtor, Richardson involved a post-petition debt, but the bankruptcy court‘s discussion regarding the impact of the discharge injunction on pre-petition rent obligations is directly on point.
The Debtor, who is proceeding pro se in the Adversary Proceedings, opposes the First Eviction Motion to Remand because she maintains that Powder Mill Village is attempting to pursue a debt that was discharged in her bankruptcy case, that Powder Mill Village‘s actions violate the discharge injunction set forth in
The Debtor also contends that an eviction predicated on pre-petition rent coerces a debtor into satisfying a discharged obligation, thereby violating the discharge injunction. The Debtor relies on In re Cherry, 247 B.R. 176, 182 (Bankr. E.D. Va. 2000), where the court noted that actions that amount to indirect attempts to collect discharged debts are still impermissible under
The Debtor also argues that equitable remand is not appropriate because it fails to consider the federal interest in upholding bankruptcy protections, including the discharge injunction, and she denies that Powder Mill Village has been prejudiced by the removal to the District Court. To the contrary, the Debtor argues that any alleged delay is the result of Powder Mill Village‘s unlawful attempt to collect on a discharged debt in violation of the discharge injunction and any prejudice is therefore self-inflicted.
B. The Debtor‘s Motion for Summary Judgment on the Counterclaim
In her Motion for Summary Judgment, the Debtor makes the same arguments as presented in the Counterclaim and the Debtor‘s opposition to the First Eviction Motion to Remand, i.e., that Powder Mill Village received notice of her bankruptcy case and related discharge but continued to pursue collection of the Debtor‘s discharged rent liability. The Debtor argues that Powder Mill Village failed to adjust its account ledger to reflect the discharged portion of the Debtor‘s debt.
The Debtor further argues that Powder Mill Village‘s continued efforts to collect the discharged debt triggered a generation skipping transfer tax under the Internal Revenue Code and asks the Court to formally recognize Powder Mill Village‘s failure to pay the asserted tax obligations. The Motion for Summary Judgment requests damages in the amount of $25,000 for emotional distress, damages in the amount of $15,000 for financial harm for
In opposition, Powder Mill Village reiterates the arguments it made in support of the First Eviction Motion to Remand.
C. Powder Mill Village‘s Motion to Dismiss the Debtor‘s Counterclaim
In its Motion to Dismiss the Debtor‘s Counterclaim, Powder Mill Village makes the same arguments it made in support of the First Eviction Motion to Remand.
The Debtor did not file an opposition to the Motion to Dismiss the Counterclaim.
D. Powder Mill Village‘s Second Eviction Motion to Remand
In support of its Second Eviction Motion to Remand, Powder Mill Village makes arguments identical to those set forth in the First Eviction Motion to Remand and adds that the doctrine of mandatory abstention applies because the claims asserted in the Second Eviction Complaint arose after the Debtor‘s bankruptcy case was closed. Alternatively, Powder Mill Village asserts that permissive abstention is appropriate because the Debtor‘s bankruptcy case has been fully administered, state law issues predominate, the State Court is intimately familiar with landlord/tenant cases, and it appears that the Debtor is forum shopping in an attempt to delay her eviction from the Leased Premises. Lastly, as with the First Eviction Motion to Remand, Powder Mill Village contends that the Second Eviction Complaint should be remanded to State Court because the removal has resulted in a delay of its ability to proceed with its eviction efforts. The Second Eviction Motion to Remand does not include a request for costs and attorneys’ fees pursuant to
The Debtor‘s arguments against remanding the Second Eviction Complaint are identical to the arguments presented in her opposition to the First Eviction Motion to Remand.
III. ANALYSIS
A. Summary Judgment
The standard for summary judgment is well-settled.
The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.
The movant must establish that there are no material facts at issue and that she is entitled to judgment as a matter of law. McLean, Koehler, Sparks & Hammond v. Hildebrand (In re Hildebrand), 230 B.R. 72, 74 (Bankr. D. Md. 1999). A material fact is one that might affect the outcome of the suit under governing law. Spriggs v. Diamond Auto Glass, 242 F.3d 179, 183 (4th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A disputed fact presents a genuine issue if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Spriggs, 242 F.3d at 183 (quoting Anderson, 477 U.S. at 248).
The party seeking summary judgment has the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving
The Court may grant summary judgment for a nonmovant and may grant a motion for summary judgment on grounds not raised by a party.
The Motion for Summary Judgment hinges on a single legal issue – whether the Debtor has established that Powder Mill Village violated the discharge injunction set forth in
A bankruptcy discharge operates as an injunction against the commencement or continuation of an action, the employment of process, or an act to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived.
As explained recently by the United States Bankruptcy Court for the Eastern District of Virginia, there is a distinction to be made between asserting the discharge as an affirmative defense, over which the State court and this Court have concurrent jurisdiction, and seeking contempt sanctions for violations of the discharge injunction, over which this Court has exclusive jurisdiction. DLJ Mortgage Capital, Inc. v. Arnolds (In re Arnolds), No. 15-14215-BFK, 2023 WL 138858, at *7 (Bankr. E.D. Va. Jan. 9, 2023). The Bankruptcy Court for the Eastern District of New York has also addressed this issue:
[W]hile state courts have concurrent jurisdiction to enforce a discharge injunction as an affirmative defense in collection suits,
only the bankruptcy court that issued the discharge order may offer a contempt remedy for an alleged violation of a court order and injunction. Belton, 961 F.3d at 616. This is [b]ecause our Court has
never identified a private right of action under [Bankruptcy Code] section 524 so debtors must pursue their remedy through contempt proceedings. Id.
Golden v. Discover Bank (In re Golden), No. 16-40809-ESS, 2021 WL 1535784, at *10 (Bankr. E.D.N.Y. Jan. 25, 2021). Here, the Debtor is seeking damages for an alleged discharge violation. Accordingly, this Court is the proper forum to address the Counterclaim.
The law is clear that a bankruptcy discharge only discharges a debtor‘s personal liability while a creditor‘s in rem rights survive the discharge. In Johnson v. Home State Bank, 501 U.S. 78 (1991), the United States Supreme Court addressed the impact of a bankruptcy discharge and stated:
[W]e have no trouble concluding that a mortgage interest that survives the discharge of a debtor‘s personal liability is a claim within the terms of § 101(5). Even after the debtor‘s personal obligations have been extinguished, the mortgage holder still retains a right to payment in the form of its right to the proceeds from the sale of the debtor‘s property. Alternatively, the creditor‘s surviving right to foreclose on the mortgage can be viewed as a right to an equitable remedy for the debtor‘s default on the underlying obligation. Either way, there can be no doubt that the surviving mortgage interest corresponds to an enforceable obligation of the debtor.
The Court of Appeals thus erred in concluding that the discharge of petitioner‘s personal liability on his promissory notes constituted the complete termination of the Bank‘s claim against petitioner. Rather, a bankruptcy discharge extinguishes only one mode of enforcing a claim—namely, an action against the debtor in personam-while leaving intact another namely, an action against the debtor in rem.
Id. at 84. Although Johnson addressed a mortgage claim, its reasoning applies equally to any creditor having an in rem claim against a debtor. This legal tenet was discussed in In re Dabrowski, 257 B.R. 294 (Bankr. S.D.N.Y. 2001), a case cited by both parties. The Dabrowski court stated:
So long as no money is sought, this Court regards proceeding in rem against the Debtor‘s leasehold as no more inconsistent with a discharge than would be a mortgagee‘s proceeding against the Debtor‘s fee interest. Though the Landlord cannot, consistent with the discharge, get a personal judgment against the Debtor for the Retroactive Rent, she can, consistent with the discharge, seek to evict the Debtor for its nonpayment.
This Court has addressed the parameters for a creditor to pursue its in rem rights against property without running afoul of the discharge injunction. In Mejia v. Partners for Payment Relief LLC (In re Mejia), No. 12-12090-TJC, 2018 WL 3015141 (Bankr. D. Md. June 14, 2018), this Court explained:
Typically a creditor may exercise its in rem rights against property without implicating the protections of the discharge injunction. 4 Collier on Bankruptcy ¶ 524.02 (16th ed. 2018); Johnson v. Home State Bank, 501 U.S. 78, 84 (1991). Notwithstanding the facial permissibility of a lawsuit or some other action taken by a creditor vis à vis a discharged debtor, a violation of § 524(a)(2) may still be found if the debtor proves the creditor acted in such a way as to coerce or harass the debtor improperly, i.e., so as to obtain payment of the discharged debt. In re Paul, 534 F.3d at 1308
(citation and internal quotation marks omitted); see also Pratt v. GMAC (In re Pratt), 462 F.3d 14, 19 (1st Cir. 2006) (even legitimate state-law rights exercised in a coercive manner might impinge upon the important federal interest served by the discharge injunction, which is to ensure that debtors receive a fresh start and are not unfairly coerced into repaying discharged prepetition debts.). An action is coercive where it is tantamount to a threat, or places the debtor between a rock and hard place in which he would lose either way. Lumb v. Cimenian (In re Lumb), 401 B.R. 1, 6–7 (B.A.P. 1st 2009) (quoting Jamo v. Katahdin Fed. Credit Union, 283 F.3d 392, 402 (1st Cir. 2002)). Therefore, [e]ven if a creditor threatens only to enforce its surviving lien, that threat will violate the discharge injunction if the evidence shows that the threat is really an effort to coerce payment of the underlying discharged debt. 4 Collier on Bankruptcy ¶ 524.02(2)(a). In such a circumstance, [t]he absence of any other reason for a creditor‘s act other than coercion is circumstantial evidence of the creditor‘s motives. Id.
The Court finds that the Debtor has failed to establish that Powder Mill Village violated the discharge injunction. There is not a scintilla of evidence that Powder Mill Village is attempting to do anything other than exercise its in rem rights as to the Leased Premises. The Eviction Complaints confirm that Powder Mill Village is not seeking a money judgment against the Debtor, and Powder Mill Village‘s counsel confirmed this fact at the hearings held on September 18, 2024 and October 11, 2024. Powder Mill Village wants to retake possession of the Leased Premises because the Debtor has defaulted on her monthly rental obligations. It is of no import whether she defaulted pre-petition, pre-discharge, or post-discharge. The law is clear that Powder Mill Village can pursue its in rem rights notwithstanding the discharge of the Debtor‘s personal liability for the unpaid pre-petition rent.
The Debtor‘s allegation that the filing of the Eviction Complaints is an attempt to coerce her into paying a discharged obligation is unsubstantiated and belied by the Eviction Complaints themselves. Powder Mill Village is being prejudiced by the Debtor‘s continued occupancy of the Leased Premises because she has not been meeting her rental obligations while depriving Powder Mill Village of possession of its property. The Debtor herself admitted that she has not paid rent since the entry of her discharge and, as evidenced by the First Eviction Complaint, did not pay rent during the 11 months preceding entry of her discharge. The Debtor‘s belief that her bankruptcy discharge relieved her of the ongoing obligation to pay rent to Powder Mill Village or somehow insulated her from the consequences of her nonpayment at the continued financial risk to Powder Mill Village is, for lack of a better word, preposterous. The Debtor‘s discharge applied only to her in personam liability for the pre-petition rent owed to Powder Mill Village; it did not give her a free place to live indefinitely. The discharge merely terminated one aspect of Powder Mill Village‘s state law and contractual enforcement rights while leaving its right to pursue collection of post-petition rent and possession of the Leased Premises in place. See Johnson, 501 U.S. at 84 ([A] bankruptcy discharge extinguishes only one mode of enforcing a claim—namely, an action against the debtor in personam—
Moreover, approximately one-half of the First Eviction Complaint and all of the Second Eviction Complaint are based on the Debtor‘s failure to pay post-petition rent and therefore are not subject to the discharge injunction. The Debtor filed her bankruptcy case on December 18, 2023, and her discharge applies only to any debts existing as of that date. See
For these reasons, the Court finds that Powder Mill Village is entitled to judgment on all counts of the Counterclaim because they are all predicated on a finding that Powder Mill Village violated the discharge injunction. Having found no such violation, the Court concludes that there can be no violation of the Fair Debtor Collection Practices Act as alleged in Count II and no triggering of any kind of generation skipping transfer tax liability as asserted in Count III. Frankly, with respect to Count III, this Court is bewildered by the Debtor‘s assertion that Powder Mill Village somehow incurred a tax liability applicable to the transfer of assets or property to individuals that are more than one generation below the transferor. See
In sum, the Court finds that there are no disputes over any material facts and that Powder Mill Village is entitled to judgment as a matter of law on all counts of the Counterclaim. Consequently, the Court will dismiss the Counterclaim in its entirety.
B. Mandatory Abstention
Having disposed of the Debtor‘s Counterclaim, the Court is left with Powder Mill Village‘s Eviction Complaints. Powder Mill Village argues that the Court is required to abstain from considering the Eviction Complaints under
Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall
abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.
Abstention is mandatory when: (1) the proceeding is based on a state law cause of action; (2) the proceeding relates to a Title 11 case but is not a core proceeding; (3) the proceeding could not have been commenced in federal court absent jurisdiction provided by Section 1334 of Title 28; and (4) the proceeding is commenced, and can be timely adjudicated, in a state forum of appropriate jurisdiction.
The Court finds that Powder Mill Village has met its burden of proof with respect to mandatory abstention. It is not remotely a close call. All of the Railworks factors apply to the Eviction Complaints. In fact, the Eviction Complaints are not even related to the Debtor‘s bankruptcy case in light of the impending dismissal of the Debtor‘s Counterclaim. The Eviction Complaints are entirely based on state law, are not core proceedings, could not have been filed in the District Court or this Court without the accompanying Counterclaim, and can be timely adjudicated by the State Court, which routinely presides over landlord/tenant matters. No further analysis is required.
As for Powder Mill Village‘s request for costs and attorneys’ fees pursuant to
affirmative defense, over which the State court and this Court have concurrent jurisdiction, and seeking contempt sanctions for violations of the discharge injunction, over which this Court has exclusive jurisdiction). The Debtor‘s Counterclaim requested damages for an alleged discharge violation. Therefore, this Court is the proper forum for adjudication of the Counterclaim notwithstanding any lack of jurisdiction over the Eviction Complaints.
C. Permissive Abstention
While the Court finds that mandatory abstention exists, even if it did not apply, the Court finds that grounds exist to abstain from hearing the matter under
[N]othing in this section prevents a district court 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.
Courts have identified numerous factors for a court to consider in determining whether to exercise discretion to abstain, including: (1) the efficiency in the administration of the debtor‘s estate; (2) the extent to which state issues predominate over bankruptcy issues; (3) whether
are involved in the proceeding. Railworks, 345 B.R. at 540 n.6. Courts should apply these factors on a case-by-case basis with no one factor necessarily determinative of the outcome. Barge v. Western Southern Life Ins. Co., 307 B.R. 541, 547 (S.D.W. Va. 2004). Although abstention is the exception rather than the rule, the decision to abstain is within the sound discretion of the court. Id.
Again, after considering the Railworks factors, this is not a close call. The Court administratively closed the Debtor‘s bankruptcy case after full administration and reopened the case only to address Powder Mill Village‘s Eviction Complaints and the Debtor‘s Counterclaim after the District Court referred them to this Court. The issues presented in the Eviction Complaints are entirely based on state law and would be better addressed by the State Court, which routinely presides over landlord/tenant matters. The Eviction Complaints were initially filed in the State Court, and other than the filing of the Counterclaim, there is no jurisdictional basis for this Court to preside over the Eviction Complaints because, by themselves, they do not relate to the Debtor‘s bankruptcy case. The Eviction Complaints are not a core proceeding and there are no core bankruptcy matters to be severed therefrom. The burden on this Court‘s docket is not a factor here; this Court will always hear and determine a matter appropriately brought before it. Powder Mill Village argues that the Debtor removed the Eviction Complaints to the District Court for purposes of forum shopping and delay. As previously stated, this Court is the proper forum to address the Counterclaim because it requested damages for the alleged violation of the discharge injunction. Although the Debtor‘s assertions were ultimately rejected, the Court understands why the matters were referred to this Court. Absent the Counterclaim, however, there is no basis for this Court to exercise jurisdiction over the Eviction Complaints. Moreover, courts have repeatedly said that a plaintiff‘s choice of forum should be honored when possible, that a plaintiff is
prejudiced by the loss of its chosen forum, and that legitimate doubts as to the existence of federal jurisdiction must be resolved against removal and in favor of remand. Davis & Dingle Dentistry v. E-Z Pay Services, Inc. (E-Z Pay Services, Inc.), 2006 WL 3230602 (Bankr. D.S.C. 2006). The issue of the right to a jury trial is not a factor here. Lastly, Powder Mill Village is not a debtor in bankruptcy and the Debtor‘s bankruptcy case was closed and only reopened to address the Adversary Proceedings. The Debtor‘s bankruptcy case will be closed after entry of this Memorandum and a related order. The Railworks factors overwhelmingly weigh in favor of permissive abstention.
D. Remand
The Court will next turn to Powder Mill Village‘s request to remand the Adversary Proceedings to the State
(a) A party may remove any claim or cause of action in a civil action ... to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.
(b) The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground.
Courts consider several factors when deciding whether to remand an action under
extent to which issues of state law predominate; (3) the difficulty or unsettled nature of applicable state law; (4) comity; (5) the degree of relatedness or remoteness to the proceeding in the main bankruptcy case; (6) the existence of the right to a jury trial; and (7) prejudice to the involuntarily removed parties. Merry-Go-Round Enterprises, 222 B.R. at 257. Additional factors courts may consider include the efficient use of judicial resources, the possibility of inconsistent results, and the expertise of the court where the action originated. Id.
For the reasons discussed above in connection with abstention, all of these factors weigh in favor of remanding the Eviction Complaints to the State Court.10 Remand is appropriate – both independently and in light of the Court‘s determination that mandatory abstention applies. There is simply no basis for this Court to exercise jurisdiction over the Eviction Complaints.
IV. CONCLUSION
For the foregoing reasons, the Court will enter judgment in favor of Powder
Motion to Dismiss, dismiss the Debtor‘s Counterclaim, grant Powder Mill Village‘s Motions to Remand, abstain from exercising jurisdiction over the Eviction Complaints pursuant to
cc: All Parties; All Counsel
END OF MEMORANDUM
Notes
[T]he landlord is entitled to be paid and could sue for possession of the property even for prepetition debt. Now, the landlord can‘t sue for an in personam judgment, in other words a judgment against you for money for the pre-petition debt, but if you‘re in default on your pre-petition rent, the landlord can sue for possession of the property because you continue to be in breach of that lease on a post-petition basis.
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[V]irtually the same (if not the identical) factors have emerged for judging the propriety of permissive abstention under § 1334(c)(1) as have been articulated for deciding the propriety of a remand under § 1452(b). This does not mean, however, that the doctrines of abstention and remand have merged in the bankruptcy context. Certainly, if a bankruptcy court concludes that it should exercise its discretion under § 1334(c)(1) to abstain from deciding a claim that has been removed from state court, it would be appropriate to remand the case to state court. In such an instance, a remand mirrors the decision to abstain and provides the mechanism for implementing the abstention. It does not follow, however, that every remand decision must be justifiable under abstention law. Section 1452 itself provides the criterion for orders of remand, and it broadly states that a claim may be remanded on any equitable ground, i.e., as interpreted by some courts, any “appropriate ground.”
Id. at 256-57 (citing Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 133 (1995)).