Benitez v. Jarrette Bay Investments Corp. (In re Nassau Development of Village West Corp.)

547 B.R. 857
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedMarch 7, 2016
DocketCase No. 15-27691-AJC; Adv. Case No. 2015-01764-AJC
StatusPublished
Cited by3 cases

This text of 547 B.R. 857 (Benitez v. Jarrette Bay Investments Corp. (In re Nassau Development of Village West Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Benitez v. Jarrette Bay Investments Corp. (In re Nassau Development of Village West Corp.), 547 B.R. 857 (Fla. 2016).

Opinion

ORDER GRANTING BENITEZ, JR.’S MOTION TO ABSTAIN THIS COURT FROM EXERCISING JURISDICTION AND TO REMAND

A. Jay Cristol, Judge

United States Bankruptcy Court

THIS MATTER came before the Court on February 26, 2016 at 10:00 a.m. upon Orlando Benitez Jr.’s Motion to Abstain this Court from Exercising Jurisdiction and to Remand (D.E.5). The removed commercial foreclosure case involves solely non-debtor parties and does not involve any asset or liability owned by the Chapter 11 Debtor Nassau Development of Village West Corporation (“Debtor”). The Court having considered argument of counsel and having reviewed the record in these proceedings has decided that Debtor’s arguments have no merit and the matter is to be remanded to state court.

THE UNDERLYING STATE COURT PROCEEDING

1. Debtor removed a commercial foreclosure case pending in Miami-Dade [860]*860Case No. 2011-034048-CA (“Commercial Foreclosure Action”). In 2011, Orlando Benitez, Jr. initiated the Commercial Foreclosure Action against Jarrette Bay Investments, Julio C. Marrero, and other defendants for failure to make payments and other claims. Debtor is not a party to the Commercial Foreclosure Action. Debtor does not own any assets or liabilities that are involved in the Commercial Foreclosure Action. The Commercial Foreclosure Action has resulted in numerous docket entries at the state court level. Prior to the removal, the trial court entered orders on November 20, 2015 and December 2, 2015. Parties appear to have engaged in extensive discovery, and all of the parties’ claims and defenses are state-based claims. None of the claims or defenses involved the Bankruptcy Code. And prior to the removal on December 31, 2015, the trial court had scheduled an Order to Show Cause pursuant to § 702.10(2), Florida Statutes for January 25, 2016.

JURISDICTION

2. Federal courts are courts of limited jurisdiction. And bankruptcy court jurisdiction potentially extends to four types of title 11 matters, pending referral from the district court: (1) cases under title 11, (2) proceedings arising under title 11, (3) proceedings arising in a case under title 11, and (4) proceedings related to a case under title 11. In re Florida Dev. Associates Ltd., 2009 WL 393870 (Bankr.S.D.Fla.2009). The Eleventh Circuit has expressly adopted the “related-to” jurisdictional test set forth in Pacor v. Higgins, 743 F.2d 984, 994 (3d Cir.1984), for determining whether a civil proceeding is “related to” bankruptcy.

3. As the Debtor concedes in its Notice of Removal (D.E.1), the Commercial Foreclosure Action is a non-core matter because the matter does not raise any substantive provisions of the Bankruptcy Code and the proceeding does not arise in the Debtor’s bankruptcy ease. As such, this Court does not have jurisdiction over this proceeding “under title 11” or “arising in” a case under title 11. 28 U.S.C. § 1334(b).

4. This Court is left to consider whether it has “related to” jurisdiction. A proceeding “related to” a case under title 11 is the kind of proceeding with the most tenuous federal jurisdictional basis. The Eleventh Circuit has adopted a test for whether the “related to” basis for jurisdiction applies to specific matters. See Ctmy. Bank of Homestead v. Boone, 52 F.3d 958, 960 (11th Cir.1995). The test for determining whether a civil proceeding is “related-to” bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. Id. An action is related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankruptcy estate. Id.

5. Even under this expansive test for “related to” jurisdiction, this Court does not have jurisdiction over the Commercial Foreclosure Action. The removed proceeding does not impact the Debtor’s assets or liabilities. Further, the Debtor is not a party in the removed proceeding, and this Court can efficiently handle and administer the Debtor’s estate.

6. The Debtor’s arguments in support of this Court’s jurisdiction do not hold water. Debtor claims that an adverse ruling or judgment in the Commercial Foreclosure Action would directly impact the Debtor. This is simply not possible. Debtor is not a party to the action. Debt- [861]*861or’s assets (four real properties) are not the subject of the Commercial Foreclosure Action. And the so-called partnership interest in the corporate entity that owns the properties in Commercial Foreclosure Action is not disclosed anywhere in the Debtor’s schedule.

7. The test for “related to” jurisdiction is indeed broad, but there are limits. Because nothing in the Commercial Foreclosure Action would impact the administration and handling of the Debtor’s estate, this Court holds that it does not have “related to” jurisdiction over the Commercial Foreclosure Action.

MANDATORY ABSTENTION

8. Even if this Court were to find jurisdiction over the Commercial Foreclosure Action, this Court would abstain and remand it to proceed in its original forum (the state court). Section 1334(c)(2), title 28, United States Code, provides that “[u]pon 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 ... 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.” Under this section, this Court must abstain from jurisdiction when (1) the action has no independent basis for federal jurisdiction, other than 28 U.S.C. § 1334(b); (2) the action is a non-core proceeding; (3) an action has been commenced in state court, and (4) the action could be timely adjudicated in state court. See In re SOL, LLC, 419 B.R. 498, 502 (Bankr.S.D.Fla.2009).

9. There is no independent basis for federal jurisdiction. The Commercial Foreclosure Action involves purely state law claims and the Debtor acknowledges that this is a non-core proceeding in his notice of removal. (D.E.l).

10. The Commercial Foreclosure Action was commenced in state court and proceeded to the verge of a hearing on an Order to Show Cause pursuant to § 702.10(2), Florida Statutes. The trial court had scheduled it for January 25, 2016. There is adequate evidence that the Eleventh Judicial Circuit has demonstrated that it can timely adjudicate the Commercial Foreclosure Action and that it desires to proceed expeditiously.

PERMISSIVE ABSTENTION

11. Even if this Court were not compelled to remand this matter, it would exercise its discretion arid abstain from hearing and adjudicating this Commercial Foreclosure Action. Sections 1134(c)(1) and 1452(b), title 28, United States Code, give this Court broad discretion to abstain from and remand state court proceedings in the interests of comity or on equitable grounds.

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547 B.R. 857, Counsel Stack Legal Research, https://law.counselstack.com/opinion/benitez-v-jarrette-bay-investments-corp-in-re-nassau-development-of-flsb-2016.