Walnut Associates v. Saidel

164 B.R. 487, 30 Collier Bankr. Cas. 2d 1659, 1994 U.S. Dist. LEXIS 1799, 25 Bankr. Ct. Dec. (CRR) 450, 1994 WL 69606
CourtDistrict Court, E.D. Pennsylvania
DecidedFebruary 23, 1994
DocketCiv. A. 93-CV-2795
StatusPublished
Cited by43 cases

This text of 164 B.R. 487 (Walnut Associates v. Saidel) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walnut Associates v. Saidel, 164 B.R. 487, 30 Collier Bankr. Cas. 2d 1659, 1994 U.S. Dist. LEXIS 1799, 25 Bankr. Ct. Dec. (CRR) 450, 1994 WL 69606 (E.D. Pa. 1994).

Opinion

MEMORANDUM and ORDER

BECHTLE, District Judge.

Presently before the court are defendants Daniel H. Saidel, Jonathan A. Saidel, Richard M. Sand, individually and t/a Saidel, Sand, & Saidel, and James J. Smith’s motion to dismiss the complaint, pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction or 12(b)(6) for failure to state a claim, or in the alternative, for abstention, plaintiff Walnut Associates’ responses, and defendants’ replies thereto. For the following the reasons, the court will grant defendants’ motion to dismiss.

I. Background

The plaintiff in this case is Walnut Associates (hereinafter “plaintiff’), a reorganized bankrupt limited partnership whose single largest asset was, at all relevant times, its ownership interest in the MetroBank building located at 1528 Walnut Street, Philadelphia, Pennsylvania. Plaintiff filed its complaint alleging eight state law claims against defendants Daniel H. Saidel, Jonathan A. Saidel, Richard M. Sand, individually and Va Saidel, Sand, & Saidel, a Law Partnership, and James J. Smith (hereinafter “defendants”). 1 Plaintiffs complaint has asserted no federal claims against defendants nor is there any diversity jurisdiction.

Plaintiff, a limited partnership, immediately preceding its bankruptcy, owned and operated the MetroBank building. During its ownership of the building, plaintiff experienced cash flow problems and encountered difficulties in paying the expenses which arose in connection with the maintenance and operation of the building. Consequently, plaintiff was unable to supply its tenants with heat and provide building maintenance. Thereafter, many of the tenants vacated the MetroBank building or withheld rental payments and plaintiff soon became enmeshed in legal disputes concerning the building. See In re Walnut Assocs., 145 B.R. 489, 492 (Bankr.E.D.Pa.1992).

Plaintiff filed its voluntary petition in bankruptcy under chapter 11 on September 31, 1991. The United States Bankruptcy Court for the Eastern District of Pennsylvania, by Order dated February 19, 1992, confirmed plaintiffs amended plan of reorganization. The amended plan envisioned primarily the sale of the MetroBank building, the debtor’s single largest asset. See Defendants' Memorandum Of Law In Support Of Their Motion To Dismiss, Exhibit A, ¶ 5.1.2. In addition, the amended plan provided for continued jurisdiction of the estate only until the plan’s full consummation. 2 Shortly after the confirmation, in March 1992, a General *490 Electric Capital Corporation entity, 1528 Newco Associates, purchased the MetroBank building from Walnut Associates. In re Walnut Associates, 145 B.R. 489, 493 (1992).

In addition to the above, the bankruptcy court, by Order dated June 10, 1992, authorized the debtor Walnut Associates, the plaintiff in the above captioned action, to employ Mitchell Kramer, Esquire, “as special counsel to represent [the debtor] with claims and matters and causes of action related to its ownership” of the MetroBank building. See Defendants’ Memorandum Of Law In Support Of Their Motion To Dismiss, Exhibit C. Mitchell Kramer, allegedly acting in his role as special counsel to the debtor, is plaintiffs counsel and filed the instant suit on plaintiff/debtor’s behalf.

The bankruptcy court entered its final decree in debtor’s bankruptcy case pursuant to Bankruptcy Rule 3022 on April 15, 1993, after providing due notice and after all parties in interest were in attendance at the bankruptcy court’s hearing on April 14, 1993. 3 Plaintiff filed its complaint in the instant matter on May 26, 1993, nearly a month and a half after the bankruptcy case was closed. At no point before entry of the final decree on April 15, 1993, did plaintiff or plaintiffs counsel seek to have either the bankruptcy court or the district court retain jurisdiction with respect to the claims in plaintiffs complaint.

II. Standard For Motion To Dismiss Pursuant To Fed.R.Civ.P. 12(b)(1)

A district court can grant a dismissal pursuant to Fed.R.Civ.P. 12(b)(1) based on the legal insufficiency of a claim. Dismissal is proper only when the claim clearly appears to be immaterial and solely for the purpose of obtaining jurisdiction, or is wholly insubstantial and frivolous. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1408-09 (3d Cir.), cert. denied, — U.S. -, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991). See also Lunderstadt v. Colafella, 885 F.2d 66, 70 (3d Cir.1989) (court may dismiss for lack of jurisdiction only if claims are “insubstantial on their face”) (citations omitted).

A federal court, in deciding a motion to dismiss for lack of subject matter jurisdiction, presumptively lacks jurisdiction over a proceeding unless plaintiff affirmatively demonstrates that jurisdiction exists. Lucas v. Gulf & W. Indus., Inc., 666 F.2d 800, 805 (3d Cir.1981). Thus, when subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff bears the burden of persuasion. Id. See also Kehr Packages, 926 F.2d at 1409 (citing Mortensen v. First Fed. Sav. and Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977)). In a complaint filed in bankruptcy court, the fact that the debtor is a party to the proceeding does not automatically confer subject matter jurisdiction. See In re M. Paolella & Sons, Inc., 85 B.R. 965, 970 (Bankr.E.D.Pa.1988). Finally, when considering a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(1), the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits, documents or testimony, to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988) (citations omitted), cert. denied, 489 U.S. 1052, 109 S.Ct. 1312, 103 L.Ed.2d 581 (1989); 2A J. MOORE, FEDERAL PRACTICE, ¶ 12.07[2.-1], at 12-47 to 12-49.

III. Discussion

Defendants argue in their motion to dismiss that because the bankruptcy estate has been fully administered, and because the bankruptcy case has been officially closed, the court lacks subject matter jurisdiction to hear plaintiffs adversary complaint. In its response, plaintiff argues that the bankruptcy court’s authorization of the debtor to em *491 ploy special counsel to bring these type of “non-core” claims is sufficient to confer federal jurisdiction.

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Bluebook (online)
164 B.R. 487, 30 Collier Bankr. Cas. 2d 1659, 1994 U.S. Dist. LEXIS 1799, 25 Bankr. Ct. Dec. (CRR) 450, 1994 WL 69606, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walnut-associates-v-saidel-paed-1994.