Milford Group, Inc. v. Northeastern Bank of Pennsylvania (In re Milford Group, Inc.)

164 B.R. 892, 1993 Bankr. LEXIS 2085
CourtDistrict Court, M.D. Pennsylvania
DecidedJuly 15, 1993
DocketBankruptcy No. 5-91-00024; Adv. Nos. 5-91-0037, 5-92-0041
StatusPublished
Cited by7 cases

This text of 164 B.R. 892 (Milford Group, Inc. v. Northeastern Bank of Pennsylvania (In re Milford Group, Inc.)) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Milford Group, Inc. v. Northeastern Bank of Pennsylvania (In re Milford Group, Inc.), 164 B.R. 892, 1993 Bankr. LEXIS 2085 (M.D. Pa. 1993).

Opinion

OPINION AND ORDER

JOHN J. THOMAS, Bankruptcy Judge.

Before the Court are various Motions filed by the above-captioned parties, namely, a Motion to Dismiss for Lack of Jurisdiction and for Failure to State the Claim upon which Relief can be Granted and, in the alternative, a Motion for a More Specific Pleading and Plaintiffs’ Motion to Dismiss Complaint under Rule 41 of the Federal Rules of Civil Procedure. This matter was commenced by Complaint of the Debtor, Milford Group, Inc., (hereinafter “Debtor”), and the other-named Plaintiffs, Gerald E. Swend-sen, Melvin C. Swendsen, Dorsan, Inc. and Three Lanes Utility, Inc.,, all of which are non-debtors in this bankruptcy. The basis of the Complaint is a breach of contract action against various Defendants with additional requests to avoid personal guarantees of the individual Plaintiffs to the Northeastern Bank of Pennsylvania (hereinafter “Bank”) and to equitably subordinate claims. The Bank filed an answer and cross-claim. The other Defendants responded by filing a Motion to Dismiss for Lack of Jurisdiction and for Failure to State a Claim upon which Relief can be Granted and, in the alternative, a Motion for a More Specific Pleading.

Before proceeding to resolution of Defendants’ Motion to Dismiss, the Court will address a subsequent Motion to Dismiss filed by the Plaintiffs under Federal Rule of Civil Procedure 41(a)(1) and (2). This Motion was objected to by all of the Defendants. Plaintiffs assert that they filed their Notice of Dismissal before service by the adverse parties of an answer or Motion for Summary Judgment. As regards Northeastern Bank, [895]*895however, the Plaintiffs argue that because the Bank had earlier indicated a willingness to enter into a Stipulation of Dismissal under Rule 41(a)(l)(ii) that the Court should utilize the discretion granted. to it under Rule 41(a)(2) and dismiss the case without prejudice. Rule 41(a)(1) provides as follows:

Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.

We also look to Rule 12(b)(6) which, in pertinent part, provides that:

... If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

Such is the case as presented in the instant pleadings. Matters outside the original pleadings were requested by the Defendants to be considered by this Court in support of their Motion thus converting the Rule 12(b)(6) Motion into one for Summary Judgment. Plaintiffs also filed their own Motion for Partial Judgment on Count VI of the Amended Complaint and in furtherance of the opposition to Defendants’ Motion to Dismiss, also requested this Court to consider matters outside the pleadings. (See Affidavit and Exhibits attached thereto filed on October 21, 1992 in support of the Motion for Partial Judgment and in opposition to Motions to Dismiss.) The Court finds the requirements of Rule 41(a)(1) have not been met. No compelling reason was advanced to support a dismissal under Rule 41(a)(2). Consequently, Plaintiffs’ Motion to Dismiss is hereby DENIED.

Defendants’ Motion to Dismiss alleges, inter alia: that the Plaintiffs, Gerald and Melvin Swendsen, are not Debtors in this bankruptcy case and that their allegations and averments do not implicate either the Debtor or the Debtor’s estate; the allegations are not core proceedings and this Court lacks jurisdiction as to those claims raised by the individual Plaintiffs; that Defendants, Lester Lieberman, Ralph Miller, Richard Miller and ILM Corporation, do not consent to entry of final orders or judgment by this Bankruptcy Court; that the Complaint fails to state a claim upon which relief can be granted and that the individual Plaintiffs lack standing to bring the adversarial proceeding as a result of a certain assignment of their rights under an executory contract; that this Court must mandatorily and/or permissively abstain from hearing this matter; and that the Plaintiffs’ request for jury trial must also be stricken as improper.

The argument raised by the Defendants’ concerning this Court’s jurisdiction over the subject matter, request this Court to visit the issue of core versus non-core matters and contend that the controversy in question is related to the bankruptcy only tangentially and has little or no impact on the administration of the case. Furthermore, Defendants argue that the claims of the non-debtor parties, in particular, the Swendsens, are not related in any way to this bankruptcy case. Therefore, under the Third Circuit case of Pacor, Inc. v. Higgins, 743 F.2d 984 (3rd Cir.1984), this Court does not have jurisdiction of the causes of action as contemplated by 28 U.S.C. § 1334.

The Plaintiffs’ response to these arguments presents a somewhat limited and narrow view of the factual and legal arguments raised by the Complaint. In other words, the Plaintiffs seem to pick and choose those portions of the Complaint which appear on their face to create core jurisdiction in this [896]*896Court. In particular, Plaintiffs emphasize the causes of actions against Defendant, Sa-mall Associates, Inc., and the equitable subordination claim under 11 U.S.C. § 510(c), to establish core jurisdiction. Additionally, Plaintiffs indicate that in the alternative to the equitable subordination of Samall’s claim, its mortgage should be avoided in its entirety. This argument does not address, however, the other approximately seven (7) claims of the Complaint. Furthermore, the Plaintiffs’ brief supplies the Court with many quotes and citations to case law concerning whether a Bankruptcy Court can exercise core jurisdiction in actions involving non-debtors. Other than indicating that one of the Plaintiffs is the Debtor’s largest unsecured creditor and that the Swendsens are shareholders of the Debtor, no other support or .compelling argument to make a finding of core jurisdiction over these parties is submitted by the Plaintiffs.

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Cite This Page — Counsel Stack

Bluebook (online)
164 B.R. 892, 1993 Bankr. LEXIS 2085, Counsel Stack Legal Research, https://law.counselstack.com/opinion/milford-group-inc-v-northeastern-bank-of-pennsylvania-in-re-milford-pamd-1993.