Sullivan v. Pressman (In re Sullivan's Jewelry, Inc.)

160 B.R. 124, 1993 Bankr. LEXIS 1587
CourtDistrict Court, E.D. Missouri
DecidedOctober 22, 1993
DocketBankruptcy No. 90-44799-172; Adv. No. 93-4194-172
StatusPublished
Cited by1 cases

This text of 160 B.R. 124 (Sullivan v. Pressman (In re Sullivan's Jewelry, Inc.)) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sullivan v. Pressman (In re Sullivan's Jewelry, Inc.), 160 B.R. 124, 1993 Bankr. LEXIS 1587 (E.D. Mo. 1993).

Opinion

ORDER

JAMES J. BARTA, Bankruptcy Judge.

At Saint Louis, in this District, this 22nd day of October, 1993.

The matter before the Court is one of three related Adversary Proceedings that have been removed from a nonbankruptcy court to the Bankruptcy Court.1 Specifically, this Order addresses several pretrial requests, including the Defendant’s Motion For Judgment on the Pleadings. Prior to a consideration of the substantive legal issues presented by the pleadings, the Bankruptcy Court must determine the extent of its jurisdiction to enter final orders on the disputed issues. See 28 U.S.C. § 157(b)(3). Except for certain factual differences, the Order is essentially the same in each of the three Adversary Proceedings.

The initial question concerns the extent of the Bankruptcy Court jurisdiction in a lawsuit that has been removed from the Circuit Court of the City of St. Louis. This Order is the final order of the Bankruptcy Court concerning its jurisdiction in this matter.

The Debtor in this Chapter 7 bankruptcy case is Sullivan’s Jewelry, Inc., a corporate entity. The case was commenced on October 2, 1990 by the filing of an Involuntary Petition by certain creditors of the Debtor. On February 19, 1991, an Order For Relief under Chapter 11 was entered by the Court after the Debtor announced its intention to attempt to formulate a plan of reorganization. On May 2, 1991, on the motion of the duly appointed Chapter 11 Operating Trustee, the case was converted to a liquidating case under Chapter 7. The Chapter 7 Trustee was authorized to retain an attorney to assist with legal matters associated with the investigation, administration and liquidation of the Chapter 7 estate.

In late March, 1993, William Sullivan (“Plaintiff’), a former officer of the corporate Debtor filed a lawsuit against the Chapter 7 Trustee’s attorney (“Defendant”) in the Circuit Court of the City of St. Louis, Missouri. The Petition For Slander alleged that on March 27,1991, in the presence of others, the Defendant stated, “I know all about Bill Sullivan he is a thief.” The Plaintiff alleged further that the Defendant’s statement was slanderous; that Plaintiff was damaged as a result of the statement; and that Plaintiff was entitled to a money judgment.

On April 28, 1993, the Defendant filed a Notice of Removal of the slander action to the United States Bankruptcy Court for the Eastern District of Missouri, Eastern Division, pursuant to 28 U.S.C. § 1452 and Rule 9027 of the Federal Rules of Bankruptcy Procedure (“FRBP”). In.the Notice of Removal, the Defendant alleged that the slander action constituted a core proceeding as described at 28 U.S.C. § 157(c)(1) and, that therefore, the Bankruptcy Court had jurisdiction over the matter pursuant to both 28 U.S.C. § 157 and 28 U.S.C. § 1334. The removed matter was referred to the Bankruptcy Court pursuant to Rule 29 of the Rules of United States District Court for the Eastern District of Missouri.2

[126]*126The Defendant filed a copy of the Notice of Removal with the Clerk of the Circuit Court on April 28,1993. The Plaintiff did not file a statement admitting or denying the allegation that the removed action was a core proceeding within the time set out at Rule 9027(e)(3). On May 11, 1993, the Plaintiff demanded a jury trial after the Defendant had reported that this matter would have been triable as a Jury trial in the court from which it had been removed. After filing an answer and affirmative defenses, the Defendant filed a Motion for Judgment on the Pleadings on July 6, 1993. This Order is entered after a consideration of the record as a whole, including the oral arguments and legal memoranda presented by the Parties’ Counsel.

In the Notice of Removal and in the pretrial requests, the Defendant has contended that this Adversary Proceeding is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (0). He argues that the lawsuit will affect the administration of the Bankruptcy Estate, the liquidation of the estate assets, or the adjustment of the debtor-creditor or equity security holder relationship.

As support for his position, the Defendant has referred to the decision of the Ninth Circuit Bankruptcy Appellate Panel in the case of In re DeLorean Motor Co., 155 B.R. 521 (9th Cir. BAP 1993). The Defendant has argued that the DeLorean opinion stands for the proposition that state law claims against a Trustee’s attorney are considered core proceedings. As further support for his argument the Defendant has cited In re SPI Communications & Marketing, Inc., 112 B.R. 507 (Bankr.N.D.N.Y.1990) for the proposition that state law claims based on actions that arose post-petition are directly linked to matters concerning liquidation of the estate and the adjustment of the debtor-creditor relationship, and are therefore core proceedings.

The Plaintiff has objected to the Motion for Judgment on the Pleadings on the grounds that the Bankruptcy Court has no jurisdiction over the cause of action for slander. Essentially, Plaintiff has argued that the cause of action is not a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). He has requested that this Court immediately refer the Adversary Proceeding to the District Court for a jury trial without otherwise suggesting a basis for Federal Court jurisdiction.

Pursuant to 28 U.S.C. § 157(b)(2)(A), “[cjore proceedings include ... matters concerning the administration of the estate.” Subsection 157(b)(2)(0) of Title 28 provides that “proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship ...” are also core proceedings.

In the DeLorean decision, the Bankruptcy Appellate Panel (“BAP”) reasoned that the mere fact that a proceeding may fall within the literal language of Section 157 is not dispositive of the core jurisdiction question, because a court’s interpretation of the statute must include a consideration of the concerns raised by the Supreme Court’s decision in Northern Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). The BAP decision held that a proceeding will not be considered a core matter, despite falling within the literal meaning of Section 157, “if it is a state law claim that could exist outside of bankruptcy and is not inextricably bound to the claims allowance process or a right created by the Bankruptcy Code.” In re DeLorean,

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Cite This Page — Counsel Stack

Bluebook (online)
160 B.R. 124, 1993 Bankr. LEXIS 1587, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sullivan-v-pressman-in-re-sullivans-jewelry-inc-moed-1993.