Billing v. Ravin Greenberg & Zackin, P.A. (In Re Billing)

150 B.R. 563, 1993 U.S. Dist. LEXIS 829, 1993 WL 30845
CourtDistrict Court, D. New Jersey
DecidedJanuary 25, 1993
DocketCiv. A. 92-4278 (MTB)
StatusPublished
Cited by13 cases

This text of 150 B.R. 563 (Billing v. Ravin Greenberg & Zackin, P.A. (In Re Billing)) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Billing v. Ravin Greenberg & Zackin, P.A. (In Re Billing), 150 B.R. 563, 1993 U.S. Dist. LEXIS 829, 1993 WL 30845 (D.N.J. 1993).

Opinion

OPINION

BARRY, District Judge.

I. Introduction

Plaintiffs Anders S. Billing and Diann E. Billing have brought this action against the law firm of Ravin Greenberg & Zackin, P.A.; its successor firm, Ravin, Greenberg & Marks, P.A.;' and a member of the firms, *564 Howard Greenberg. Plaintiffs’ causes of action of malpractice, misrepresentation, breach of fiduciary duty, breach of contract, and breach of professional obligations arise from what they assert was defendants’ substandard representation in the course of plaintiffs’ Chapter 11 bankruptcy proceedings. Defendants now move, alternatively, for dismissal of this action, abstention, referral to the bankruptcy court, or for a stay of this action until a fee dispute is resolved by the bankruptcy court.

II. Background

Plaintiffs filed several petitions under Chapter 11 of the Bankruptcy Code in June, 1989. Defendants were thereafter retained by plaintiffs pursuant to an order of the bankruptcy court. On August 10, 1992, a Joint Modified Plan of Reorganization was confirmed by the bankruptcy court. See Debtors’ Objection to the Final Application for Compensation and Reimbursement of Expenses of Ravin, Green-berg & Marks, Def. Moving Br., Exh. B (hereinafter “Fee Objection”) 114.

Plaintiffs claim that they have paid defendants fees totalling $310,000. Fee Objection U 6. Currently pending in the bankruptcy court is a dispute over defendants’ final fee application for an additional $199,-043.50 for services rendered in representing plaintiffs. Id. 11115, 7-12. Plaintiffs have filed objections to the application relating to excessive time spent in meetings, reviewing pleadings, reviewing the file and, “most importantly,” defendants’ alleged malpractice as reflected by the complaint filed in this action. Fee Objection 11117-11.

The instant action is brought in this court under 28 U.S.C. § 1334 in that plaintiffs’ bankruptcy petitions, now consolidated, are pending in the District of New Jersey and this action arises under title 11 of the United States Code. Complaint 112. Plaintiffs base their claims in this action on allegations that defendants (1) failed to formulate a confirmable reorganization plan, (2) failed to meet certain bankruptcy court-imposed deadlines, (3) acted disloyally towards plaintiffs by counselling them to agree to the unreasonable demands of secured creditors, (4) failed to seek a “Wedgewood Order” which allowed Citizens First National Bank to obtain relief from an automatic stay, (5) failed to oppose a motion by First Fidelity Bank to convert the Chapter 11 proceedings to Chapter 7 proceedings until two days before the return date of the motion, (6) failed to comply with the requirements of the Bankruptcy Code with respect to the assumption of a ground lease for a commercial building in Morristown, New Jersey, (7) mishandled the sale of plaintiffs’ residence and the purchase of a new residence, (8) allowed Amerifirst Bank to obtain relief from the automatic stay and sell certain property for less than had previously offered for the property, and (9) denigrated plaintiffs’ lender liability claims against Citizens First National Bank. Complaint ITU 6-13.

III. Discussion

Plaintiffs contend that the claims raised in this action must remain before this court because they are legal in nature and therefore implicate their Seventh Amendment right to a jury trial. The extension from this argument is twofold. First, they argue that the malpractice claims do not constitute a core proceeding and that, because the Third Circuit squarely held in Beard v. Braunstein, 914 F.2d 434, 443 (3d Cir.1990), that a bankruptcy court cannot conduct a jury trial in a non-core proceeding, only this court can adjudicate this dispute. Alternatively, they argue that even if the malpractice action is deemed a core proceeding, the bankruptcy court is not empowered to conduct a jury trial. Both parties recognize that the latter question, i.e. whether a bankruptcy court may conduct a jury trial in a core proceeding, remains unanswered by the Third Circuit and is the subject of a split among other circuits. See Metro Transportation Co. v. North Star Reinsurance Co., 912 F.2d 672, 675 n. 1 (3d Cir.1990); see also In re Ben Cooper, Inc., 896 F.2d 1394 (2d Cir.), cert. granted, 497 U.S. 1023, 110 S.Ct. 3269, 111 L.Ed.2d 779 vacated and remanded, 498 U.S. 964, 111 S.Ct. 425, 112 L.Ed.2d 408 (1990), reinstated, 924 F.2d 36 (2d Cir.), cert. denied, — U.S. —, 111 S.Ct. 2041, 114 L.Ed.2d 126 *565 (1991); In re Grabill Corp., 967 F.2d 1152 (7th Cir.1992); In re Baker & Getty Financial Services, Inc., 954 F.2d 1169 (6th Cir.1992); In re Kaiser Steel Corp., 911 F.2d 380 (10th Cir.1990); In re United Missouri Bank, N.A., 901 F.2d 1449 (8th Cir.1990). Thus, key to a determination of whether the instant action proceeds in this court or in the bankruptcy court is whether the proceeding is deemed to he core or non-core.

A. Core or Non-core Proceeding

The starting point in determining whether this action is a core or a non-core proceeding is the Supreme Court’s decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). The Court in Marathon found unconstitutional that portion of the Bankruptcy Act of 1978 which gave bankruptcy courts “jurisdiction over all ‘civil proceedings arising under or related to cases under title 11.’ 28 U.S.C. § 1471(b) (1976 ed., Supp. IV) (emphasis added).” Id. at 54, 102 S.Ct. at 2862. Recognizing that Congress can grant bankruptcy courts the power to issue final orders in proceedings “at the core of the federal bankruptcy power,” the Court held that Congress cannot give bankruptcy courts power to adjudicate “state-created private rights” which are the province of Article III courts. Id. at 71, 102 S.Ct. at 2871.

In response to Marathon, Congress passed the Bankruptcy Amendments and Federal Judgeship Act of 1984 (“1984 Act”), which provided that “Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11... and may enter appropriate orders and judgments, subject to review under section 158 of this title.” Thus, in an attempt to stay within the constitutional bounds delineated by Marathon,

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150 B.R. 563, 1993 U.S. Dist. LEXIS 829, 1993 WL 30845, Counsel Stack Legal Research, https://law.counselstack.com/opinion/billing-v-ravin-greenberg-zackin-pa-in-re-billing-njd-1993.