Sunset Marine of Puerto Rico, Inc. v. Tracker Marine, LLC

495 B.R. 190, 2013 WL 3864686, 2013 Bankr. LEXIS 2999, 58 Bankr. Ct. Dec. (CRR) 59
CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedJuly 24, 2013
DocketBankruptcy No. 12-09083 (MCF); Adversary No. 12-00427
StatusPublished

This text of 495 B.R. 190 (Sunset Marine of Puerto Rico, Inc. v. Tracker Marine, LLC) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunset Marine of Puerto Rico, Inc. v. Tracker Marine, LLC, 495 B.R. 190, 2013 WL 3864686, 2013 Bankr. LEXIS 2999, 58 Bankr. Ct. Dec. (CRR) 59 (prb 2013).

Opinion

OPINION AND ORDER

MILDRED CABAN FLORES, Bankruptcy Judge.

Before the court are the motion to dismiss, abstain and/or remand filed by defendants Tracker Marine, LLC, Bass Pro Group and Mako Marine International, LLC, f/k/a Mako Marine International, Inc. (hereinafter collectively referred to as “Tracker”) and the opposition thereto filed by the plaintiff Sunset Marine of Puerto Rico, Inc. (hereinafter referred to as the “Debtor”). For the reasons stated below, the court remands this adversary action. Consequently, the automatic stay is modified to allow Tracker to proceed to a final, firm and unappealable judgment in the action before the United States District Court for the Western District of Missouri (“Missouri case”); however, Tracker is barred from executing any judgment in its favor against Debtor.

[192]*192I. BACKGROUND

Prior to the removal, Tracker filed a three count complaint against Debtor and its principals, Juan Carlos Nieto Rodriguez and Maria Teresa Perea Fernández (hereinafter collectively referred to as “Principal”), regarding a distribution agreement between the parties in the Missouri case. Debtor answered the complaint raising various affirmative defenses including a defense under Puerto Rico’s Law 75, 10 L.P.R.A. § 278-278(e). Debtor and Principal filed a counterclaim seeking a refund on warranty claims, damages for breach of contract, damages for implied warranty and unjust enrichment as well as an award of attorney’s fees and costs. Debtor also moved to have the Missouri case transferred to Puerto Rico but said request was denied.

A month later, Principal filed a complaint against Tracker Marine Group in the Commonwealth of Puerto Rico, Court of First Instance, San Juan Part. Debtor was not a party to the local court action. The local court granted a motion to stay the proceedings after determining that the claims were substantially similar to those at issue in the Missouri case.

In the Missouri case, the trial was initially set for October 20, 2012; however, counsel for the Debtor withdrew legal representation. The court then granted Debtor until November 11, 2012, to obtain new counsel and until November 18, 2012, to respond to a motion for contempt and sanctions and other pending motions. The trial was rescheduled for December 3, 2012.

On November 14, 2012, Debtor filed a voluntary petition under Chapter 11, thereby staying the Missouri case.1 On November 27, 2012, Debtor commenced an adversary action (Adv. No. 12-411) against Tracker, seeking damages for breach of contract under a distribution or representation agreement under Puerto Rico’s Law 75 or Law 21, respectively.

On December 18, 2012, Debtor removed the Missouri case to this court in the instant case (Adv. No. 12-427), pursuant to 28 U.S.C. § 1452(a) and Fed. R. Bankr.P. 9027. Tracker moved to dismiss the case or in the alternative to remand or abstain from the case (Docket Nos. 8 & 9). Debt- or replied and moved to strike Tracker’s memorandum of law in support of the motion to dismiss (Docket Nos. 10, 12 & 13).2

In the bankruptcy case, Tracker had moved for relief from the automatic stay to proceed with the Missouri case but their request was denied as premature until the court resolved the pending motion to dismiss or abstain in the adversary case.3

On June 18, 2013, the court conducted a hearing regarding the pending motion to dismiss and the matter was taken under advisement.

II. DISCUSSION

A. Parties’ Contentions

Tracker contends in its motion to dismiss and memorandum of law that: 1) Debtor’s adversary proceeding consists en[193]*193tirely of non-core common law claims regarding a pre-petition contract between the parties, which should be decided by a jury trial before an Article III court; 2) the Notice of Removal should be quashed and dismissed due to impressible cross-judicial district removal and failure to copy all of the pleadings from the Missouri District Court case; and 3) Debtor filed both the bankruptcy petition and this adversary case in bad faith as a forum-shopping exercise and in an effort to delay and avoid the looming motion for sanctions and trial date in the Missouri case.

Debtor opposes Tracker’s motion to dismiss claiming that Tracker has no other recourse but to have the dispute heard in Puerto Rico because the Missouri case was correctly removed to Puerto Rico. As a result of the removal, Debtor claims that the court is unable to abstain from this action because there is no longer a pending case in Missouri.

B. Jurisdiction

Section 1334 of title 28 establishes the district court’s jurisdiction to hear bankruptcy cases and proceedings. “Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for each district.” 28 U.S.C. § 157(a).

In our district, the Resolution dated July 19, 1984, refers all cases under title 11 and any or all proceedings “arising under” title 11 or “arising in” under title 11 or “related to” a case under title 11 to the bankruptcy court. This court also has the authority to enter final decisions in all cases under title 11 and all core proceedings which “arise under” title 11 or “arise in” under title 11, pursuant to 28 U.S.C. §§ 1334 and 157(a) & (b)(1). With respect to cases that are “related to” title 11, also known as “non-core” proceedings, the bankruptcy courts may hear those proceedings but cannot issue final findings of fact and conclusions of law unless all the parties to the proceeding consent to the bankruptcy judge rendering a final adjudication.4 28 U.S.C. § 157(c)(l)-(2).

Debtor alleges that this adversary action is primarily a core proceeding because it “arises in” the Chapter 11 bankruptcy case because the distribution agreement involves an asset of the bankruptcy estate and will likely affect the administration of the estate (Docket No. I).5 However, Tracker claims that this adversary action is a non-core proceeding and is not “related to” the bankruptcy case.6

The term “core proceeding” is undefined in the Bankruptcy Code. However, the Code does provide a descriptive list of core proceedings in 28 U.S.C. § 157(b)(2). A core proceeding that “arises in” a bankruptcy is not based on any right expressly created by title 11, but “acts as the residual category of civil proceedings and includes such things as administrative matters.” 1

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Bluebook (online)
495 B.R. 190, 2013 WL 3864686, 2013 Bankr. LEXIS 2999, 58 Bankr. Ct. Dec. (CRR) 59, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunset-marine-of-puerto-rico-inc-v-tracker-marine-llc-prb-2013.