Mickler v. Trujillo

485 B.R. 797
CourtDistrict Court, M.D. Florida
DecidedJanuary 22, 2013
DocketNos. 3:12-cv-645-J-12, 3:09-bk-04774-JAF; Adversary No. 3:12-ap-00034-KSJ
StatusPublished
Cited by2 cases

This text of 485 B.R. 797 (Mickler v. Trujillo) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mickler v. Trujillo, 485 B.R. 797 (M.D. Fla. 2013).

Opinion

OPINION AND ORDER

HOWELL W. MELTON, Senior District Judge.

This case presents an appeal pursuant to 28 U.S.C. § 158(a) and Fed.R.Bankr.P. 8001, from a final order of the United States Bankruptcy Court for the Middle District of Florida. On April 2, 2012, the Bankruptcy Court issued an oral ruling denying Appellants’ motion to dismiss an adversary proceeding, construing Appel-lee’s response to the motion to dismiss as a motion to abstain and to remand, and remanding the adversary proceeding to state court. Doc. 2-3. On April 9, 2012, the Bankruptcy Court entered its Order Denying Defendants’ [Appellants’] Motion to Dismiss and Treating Plaintiffs [Appel-lee’s] Response to Motion to Dismiss as Motion to Abstain and to Remand (Doc. 1-5), memorializing its oral ruling.1 For the reasons set forth below, the Court will adopt and affirm the Order of the Bankruptcy Court and direct that the adversary proceeding be remanded to state court.

FACTS AND PROCEDURAL HISTORY

This appeal arises in the factual context of the Chapter 11 bankruptcy case of Ap-pellee, Cheryl Lynn Trujillo, and her husband.2 Appellants are attorneys who were appointed by the Bankruptcy Court to represent the Trujillo bankruptcy estate.

After the reorganization plan was confirmed, Appellee sued Appellants in state court for negligence arising from an alleged promise made to assist her by “taking care of’ criminal worthless check charges she faced which were based upon a pre-petition insufficient funds check. See Complaint, Doc. 1-3 at 13-15. Appel-lee’s Complaint is essentially one for legal malpractice related to Appellants’ alleged agreement to represent her on the criminal worthless check charges. Appellants removed the state negligence/legal malpractice suit to this Court where it was referred to the Bankruptcy Court. See Notice of Removal, Doc. 2-1 at 7-18 and Order, Doc. 2-1 at 4-5.

Appellants sought dismissal of Appel-lee’s Complaint, considered as an adversary proceeding in the Bankruptcy [800]*800Court.3 The Bankruptcy Court found that Appellee’s Complaint was not due to be dismissed for failure to state a cause of action4 and that there was no basis for jurisdiction in the Bankruptcy Court. In finding no basis for jurisdiction, the Bankruptcy Court found that either discretionary or mandatory abstention from exercise of jurisdiction was appropriate under 28 U.S.C. §§ 157 and 1334(c)(1) or (2), because Appellee’s claim arose under state law, and although some defenses may have interconnection with bankruptcy proceedings, “it [the adversary proceeding] is not driven by bankruptcy law, it is driven by state court negligence claim of action [sic], stating a classical legal malpractice claim against the Debtor’s [Appellee’s] former bankruptcy lawyers.” Doc. 2-3 at 14-15. The Bankruptcy Court found that the claim stated in Appellee’s Complaint did not present a core proceeding, whether it was related or not to her bankruptcy reorganization, and that absent a tie to her Chapter 11 case there was no separate basis for jurisdiction under Stern v. Marshall. Id. at 15. The Bankruptcy Court also noted that it could not conduct a jury trial in the adversary proceeding. Id. Therefore, the Bankruptcy Court directed the adversary proceeding to be remanded to state court. Appellants then appealed that decision to this Court.

STANDARD OF REVIEW AND ANALYSIS

The United States District Court functions as an appellate court in reviewing decisions of the United States Bankruptcy Court. In re Colortex Industries, Inc., 19 F.3d 1371, 1374 (11th Cir.1994). This Court reviews de novo the legal conclusions of the Bankruptcy Court, In re JLJ, Inc., 988 F.2d 1112, 1113 (11th Cir.1993), and accepts the Bankruptcy Court’s findings of fact unless they are clearly erroneous, In re Goerg, 930 F.2d 1563, 1566 (11th Cir.1991); Fed.R.Bankr.P. 8013. The issues presented in this appeal concern the Bankruptcy Court’s application of law to undisputed facts.

The Court has carefully reviewed the submissions of the parties, as well as the applicable law, considered the argument of counsel presented at the oral argument held on November 28, 2012, and reviewed the record on appeal. For the reasons set forth below, as well as for those set forth by the Bankruptcy Court, the Court will adopt and affirm the Bankruptcy Court’s Order, and direct that Appellee’s Complaint be remanded to state court.

Appellants assert that the Bankruptcy Court erred in remanding the adversary proceeding when it found that lacked subject matter jurisdiction, because the adversary proceeding was a core proceeding, or because it was subject to the public rights exception discussed in Stern v. Marshall, — U.S. —, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), which would allow the exercise of the Bankruptcy Court’s jurisdiction.5 Appellee’s brief (Doc. 11 at 11-12) sug[801]*801gests that the issue of whether the Bankruptcy Court Order is a non-reviewable abstention is presented in this appeal, and at oral argument raised the issue of whether the Bankruptcy Court should have proposed findings of fact and conclusions of law to this Court, rather than enter a final order. The Court discusses each issue in turn.

Whether the Adversary Proceeding Was a Core Proceeding

Appellants maintain that the negli-genee/legal malpractice lawsuit presented by Appellee’s Complaint properly was removed from state court and referred to the Bankruptcy Court for disposition. They contend it constitutes a core proceeding over which the Bankruptcy Court should exercise jurisdiction because it concerns a matter arising as a direct consequence of her Chapter 11 reorganization, or is a matter arising in a case under Title 11 because the relationship between Appellee and Appellants was formed and governed pursuant to Title 11 and orders entered during the course of her bankruptcy case. Doc. 9 at 8. Their position is that Appellee’s claim arose out of her bankruptcy, was derived from and dependant on bankruptcy law, or otherwise was related to it so that any agreement with regard to legal representation between the parties was governed by bankruptcy law and subject to adjudication by the Bankruptcy Court. In support of their position that the Bankruptcy Court erred in not exercising jurisdiction over the adversary proceeding, Appellants point to such matters as: 1) Appellee was required to and did in fact on several occasions seek Bankruptcy Court approval in order to hire an attorney; 2) Appellee’s allegations arose in the course of her bankruptcy proceeding while Appellants were representing the bankruptcy estate, and as a result they would have been prohibited from representing her in a criminal matter; and 3) any proceeds from Appellee’s lawsuit would become property of the bankruptcy estate.

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Bluebook (online)
485 B.R. 797, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mickler-v-trujillo-flmd-2013.