Farmers Bank & Capital Trust Co. v. Travel Professionals International of Scott County, Inc. (In re Travel Professionals International of Scott County, Inc.)

213 B.R. 669, 1997 Bankr. LEXIS 1673, 31 Bankr. Ct. Dec. (CRR) 767
CourtUnited States Bankruptcy Court, E.D. Kentucky
DecidedOctober 16, 1997
DocketBankruptcy No. 97-30188; Adversary No. 97-3009
StatusPublished
Cited by1 cases

This text of 213 B.R. 669 (Farmers Bank & Capital Trust Co. v. Travel Professionals International of Scott County, Inc. (In re Travel Professionals International of Scott County, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmers Bank & Capital Trust Co. v. Travel Professionals International of Scott County, Inc. (In re Travel Professionals International of Scott County, Inc.), 213 B.R. 669, 1997 Bankr. LEXIS 1673, 31 Bankr. Ct. Dec. (CRR) 767 (Ky. 1997).

Opinion

OPINION AND ORDER

WILLIAM S. HOWARD, Bankruptcy Judge.

Before the Court is a Motion for Abstention filed by defendants and counterclaim-ants, Charles O. Bush, Sr., Charles O. Bush, Jr., Sandra Bush, David Wilhelm and Karen Wilhelm (“Movants”). Movants have, by their Motion for Abstention, oral arguments and subsequent brief, challenged the jurisdiction of this Court to conduct a jury trial, which has been demanded in the within action, and move for mandatory and permissive abstention in this proceeding.

The corporate defendants in this proceeding are before this Court in involuntary Chapter 7 proceedings in which they failed to respond and orders for relief were entered. No schedules or statements of affairs have been filed by either debtor despite this [671]*671Court’s orders to do so. One of the defendants in this adversary proceeding, Bush, Jr., is resisting motions filed by the plaintiff in both bankruptcy cases that he be designated as the debtors’ representative for purposes of complying with the Court’s orders to file various required schedules and lists and appear on behalf of the debtor for purposes of the bankruptcy cases. In the absence of schedules and statements of affairs for the corporate debtors in their bankruptcy eases, the Court will assume that such schedules when filed will disclose assets to be administered.

The adversary proceeding before the Court was removed to this Court from Frankfort Circuit Court, Kentucky, where it began as an action by the plaintiff, Farmers Bank and Capital Trust Company, (“Farmers Bank”), to collect on obligations allegedly owing by the defendants Travel Professionals International of Scott County, Inc., and Travel Professionals International of Frankfort, Inc. (collectively “Debtors”) and guaranteed by other defendants in this action. The Debtors filed a counterclaim and the individual defendants have joined in that counterclaim except for Bush, Sr. who has set out a separate counterclaim based on alleged fraud by the plaintiff. It is several of the individual defendants who have raised the questions addressed herein.

Initially, the jurisdiction of this Court in an adversary proceeding must be found in 28 U.S.C. § 1334(b) wherein Congress has given the district courts original, but not exclusive, jurisdiction in all civil proceedings arising under, arising in or related to cases under title 11. The District Court of the Eastern District of Kentucky has adopted a uniform order of reference referring such proceedings to the bankruptcy judges of the district. This Court is a unit of the district court. 28 U.S.C. § 151. As such, its jurisdiction is that of the district court and the questions raised by the movants must be addressed pursuant to the terms of 28 U.S.C. § 1334(b). Questions concerning which judicial officials of the district court may conduct various proceedings, e.g. jury trials and entry of final judgments, is a question separate from that of jurisdiction.

The pleadings reveal that the plaintiff asserts claims against the debtors, the debtors assert counterclaims against the plaintiff and the Movants assert counterclaims, based upon debtors’ claims and the separate counterclaim of Bush, Sr., against the plaintiff.

The Sixth Circuit Court of Appeals has recently visited the question of “related to” jurisdiction set forth in § 1334(b). In re Dow Corning Corporation, 86 F.3d 482 (6th Cir.1996). Before the Court in that case, among other questions, was the question of whether the lawsuits by tort claimants against third party breast implant manufacturers were related to the bankruptcy proceeding of Dow Corning. The Court found “related to” jurisdiction on two bases: a) contribution and indemnity claims, and b) joint insurance. In reversing the district court and finding related to jurisdiction, the Court said:

Based on the principles outlined above, we believe the district court has “related to” subject matter jurisdiction over the breast implant claims pending against the non-debtor defendants in this ease. Thousands of suits asserted against Dow Corning include claims against the nondebtors, and the nature of the claims asserted establishes that Dow Corning and the various nondebtor defendants are closely related with regard to the pending breast implant litigation. Dow Chemical and Corning Incorporated have already asserted cross-claims against each other and Dow Corning in the underlying litigation, and the other nondebtor defendants have asserted repeatedly throughout their briefs, motions, and oral arguments that they intend to file claims for contribution and indemnification against Dow Corning, and we have no reason to doubt the veracity of those assertions at this time. (At page 493).

In the present action, if the plaintiff succeeds in obtaining judgment against mov-ants and debtors, movants would have causes of action against the debtors for contribution or indemnification to the extent that they satisfy the claims of the plaintiff. Additionally, in the present proceeding, all of these movants’ assertions against the plaintiff, Farmers Bank, except those of Bush, Sr. [672]*672appear to be identical to those of the debtor since movants have adopted the debtor’s counterclaim in this matter. Clearly then, this Court, as a unit of the district court, has jurisdiction under the broad net of the Dow Coming case over all of the claims and counterclaims in this action.

Movants raise the question of “jurisdiction” in the context of this Court’s ability to conduct a jury trial. As all parties are aware, the provisions of 28 U.S.C. § 157(e) provide that the bankruptcy court may conduct a jury trial with consent of all parties and upon being specially designated to exercise such jurisdiction by the district court. At the present time, both of the qualifications to conduct a jury trial, consent and special designation, are absent in this proceeding and, clearly, this Court cannot presently conduct a jury trial if movants are entitled to one. However, that does not affect the jurisdiction of this Court to proceed with this case to determine entitlement to a jury trial and, upon such determination, recommend that the district court withdraw the reference and conduct such a trial, as it, as an Article III court, may unquestionably do. In re Standard Insulations, Inc., 138 B.R. 947 (Bkrtey.W.D.Mo.1992).

Movants next contend that this Court should permissively abstain from hearing this proceeding pursuant to the terms of 28 U.S.C. § 1334(e)(1) which provides for permissive abstention in the interest of justice or of comity with the state courts or respect for state law. Based upon the complaint filed in this action, the claims asserted by Farmers Bank in this matter are secured claims (although no claims have yet been filed in the bankruptcy cases) claiming hens on the accounts receivable, general intangibles and other assets of the Chapter 7 estates.

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Bluebook (online)
213 B.R. 669, 1997 Bankr. LEXIS 1673, 31 Bankr. Ct. Dec. (CRR) 767, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmers-bank-capital-trust-co-v-travel-professionals-international-of-kyeb-1997.