Lembo v. Read (In re Lembo)

262 B.R. 21, 46 Collier Bankr. Cas. 2d 312, 2001 Bankr. LEXIS 446
CourtUnited States Bankruptcy Court, D. Rhode Island
DecidedApril 17, 2001
DocketBankruptcy No. 98-10875; Adversary No. 98-1050
StatusPublished

This text of 262 B.R. 21 (Lembo v. Read (In re Lembo)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lembo v. Read (In re Lembo), 262 B.R. 21, 46 Collier Bankr. Cas. 2d 312, 2001 Bankr. LEXIS 446 (R.I. 2001).

Opinion

DECISION AND ORDER

ARTHUR N. VOTOLATO, Bankruptcy Judge.

The United States District Court for the District of Rhode Island has remanded this matter with instructions to make findings of fact and conclusions of law regarding my January 3, 2000 Order granting the Defendants’ Motion to Abstain in the captioned adversary proceeding. The following comprises my response to the District Court’s July 10, 2000 remand order.

BACKGROUND

On March 5, 1998, Donald Lembo filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Pending in the Rhode Island Family Court for some five years prior to the bankruptcy, was Mr. Lembo’s divorce case against his former wife, Carolyn Lembo. The family court litigation has taken various turns and twists, and according to Mrs. Lembo there have been 27 appeals to the Rhode Island Supreme Court, 3 civil actions in the Rhode Island Superior Court, and an 11 week trial in the family court, resulting in judgments against the Debtor approaching $400,000. Included within this sum are attorney’s fees awarded to Mrs. Lembo’s attorney, Arthur M. Read II, Esq. On April 29, 1998, Donald Lembo filed an adversary proceeding in this Court seeking, inter alia, a determination that the debts owed to his ex-wife are dischargeable under both 11 U.S.C. §§ 523(a)(5) and (15). The Complaint, which lists Arthur M. Read II as the Defendant,1 also seeks damages for alleged violation of the automatic stay.

On June 16, 1998, Carolyn Lembo filed a motion for relief from stay in this court, for leave to proceed with the litigation pending in the family court. On August 20, 1998, we granted the motion stating:

In light of the protracted litigation that has already taken place in the Family Court, its familiarity with this case, its experience in such matters, and the fact that the resolution of these issues involves intent vis-a-vis the various Family Court orders, relief from stay is GRANTED. See In re Schweikart, 154 B.R. 616 (Bankr.D.R.I.1993). Once the Family Court determines the nature of these obligations, the parties shall report back to this Court for a determination of dischargeability of the challenged debts.

Order Granting Relief from Stay dated August 20, 1998, BK No. 98-10875, Docket No. 16. The Debtor appealed this order to the Bankruptcy Appellate Panel for the First Circuit (“BAP”) and on September 10, 1999, the BAP issued its decision and order remanding the matter to this Court, stating:

[Bankruptcy courts have concurrent jurisdiction with state courts to determine the dischargeability of debts under 11 U.S.C. § 523(a)(5). [In re Crawford, 183 B.R. 103 (Bankr.W.D.Va.1995)]; Siragusa v. Siragusa (In re Siragusa), 27 F.3d 406 (9th Cir.1994); Thaggard v. [24]*24Pate (In re Thaggard), 180 B.R. 659, 662 (M.D.Ala.1995); Bereziak v. Bereziak (In re Bereziak), 160 B.R. 533, 535 (E.D.Penn.1993); Rosenbaum v. Cummings (In re Rosenbaum), 150 B.R. 994, 996 (E.D.Tenn.1993) (“Although there has been some confusion on this issue, it is now clear that bankruptcy courts and state courts have concurrent jurisdiction to determine whether a debt is excepted from discharge under § 523(a)(5)”); Chaney v. Chaney (In re Chaney) 229 B.R. 266, 269 (Bankr.D.N.H.1999) ... Fed.R.Bankr.P. 4007, Advisory Committee Notes (1983) (“Jurisdiction over this issue on these debts is held concurrently by the bankruptcy court and any appropriate nonbankrupt-cy forum.”).

BAP Order dated September 10, 1999, BK No. 98-10875, Docket No. 30. The BAP pointed out that bankruptcy courts have exclusive jurisdiction over complaints to determine the dischargeability of debts under § 523(a)(15), but that since it was unable to determine whether the underlying Complaint was brought under both Sections 523(a)(5) and 523(a)(15), or what exactly we were asking the family court to determine, it remanded the matter to this Court for clarification.

On October 27, 1999, a hearing was held to consider the remand order, resulting in the parties agreeing to file papers which would clarify the matters concerning the Panel, i.e., on November 10, 1999, the parties filed a stipulation in the family court which provided, inter alia, that “[tjhis Court [the family court] elects to exercise its concurrent jurisdiction with the Bankruptcy Court to determine the discharge-ability of any debts owed by the Plaintiff to Defendant.” See Stipulation dated November 10, 1999, Plaintiff’s Ex. C. Both Mr. and Mrs. Lembo assented to the form and substance of the Stipulation. See id.

On November 12, 1999, Mrs. Lembo filed a motion to abstain in our adversary proceeding, and on January 3, 2000, I granted the motion, citing to the BAP order, and noting the family court’s concurrent jurisdiction with the bankruptcy court on issues arising under 11 U.S.C. § 523(a)(5). I also ruled that, because the Defendants had not requested a determination under Section 523(a)(15), and because the time for filing such complaints had expired, all issues raised under Section 523(a)(15) by the Debtor were moot.

On February 11, 2000, Donald Lembo filed a Notice of Appeal, this time to the District Court, where Judge Lagueux was troubled by the fact that I did not explain if I was relying on 11 U.S.C. § 305 in granting the motion to abstain. He also questioned whether the November 10, 1999 Family Court Stipulation (Exhibit C) played any role in my decision, and whether the underlying adversary proceeding is dismissed or merely stayed.

DISCUSSION

While Mrs. Lembo’s Motion to Abstain cites Section 305 of the Bankruptcy Code, that was not the basis for my decision to abstain. It is well settled that bankruptcy courts and state courts have concurrent jurisdiction to hear and decide matters arising under Section 523(a)(5). See BAP Order dated September 10, 1999, BK No. 98-10875, Docket No. 30.; Siragusa v. Siragusa (In re Siragusa), 27 F.3d 406, 408 (9th Cir.1994); Hopkins v. Hopkins, 487 A.2d 500, 503-04 (R.I.1985). The circumstances under which a bankruptcy court may abstain in favor of a state court to adjudicate the same issues are spelled out in 28 U.S.C. § 1334(c)(1). See Siragusa, 27 F.3d at 408. Section 1334 states in part:

(a) Except as provided in subsection (b) of this section, the district court shall have original and exclusive jurisdiction of all cases under title 11.
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Cite This Page — Counsel Stack

Bluebook (online)
262 B.R. 21, 46 Collier Bankr. Cas. 2d 312, 2001 Bankr. LEXIS 446, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lembo-v-read-in-re-lembo-rib-2001.