Wen Jing Huang v. Juan Juan Chen (In re Wen Jing Huang)

509 B.R. 742, 2014 WL 56053, 2014 Bankr. LEXIS 48, 58 Bankr. Ct. Dec. (CRR) 264
CourtUnited States Bankruptcy Court, D. Massachusetts
DecidedJanuary 7, 2014
DocketBankruptcy No. 11-10416-HJB; Adversary No. 12-01265-HJB
StatusPublished
Cited by11 cases

This text of 509 B.R. 742 (Wen Jing Huang v. Juan Juan Chen (In re Wen Jing Huang)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wen Jing Huang v. Juan Juan Chen (In re Wen Jing Huang), 509 B.R. 742, 2014 WL 56053, 2014 Bankr. LEXIS 48, 58 Bankr. Ct. Dec. (CRR) 264 (Mass. 2014).

Opinion

MEMORANDUM OF DECISION

HENRY J. BOROFF, Bankruptcy Judge.

Before the Court is a “Motion for Partial Summary Judgment Confirming the Court’s Ability to Enter Judgment Under the Massachusetts Wage Act or, in the Alternative, for Abstention on the Issue of Liability and Amount Due to Plaintiffs” (the “Summary Judgment Motion”) filed by the plaintiffs in this dischargeability action (the “Plaintiffs”) against the debtor, Wen Jing Huang (the “Debtor”).1 The [745]*745Plaintiffs have also filed a “Motion to Consolidate Adversary Proceeding and Objection to Proofs of Claim” (the “Consolidation Motion”). While the resolution of the Consolidation Motion is relatively straightforward, the disposition of the Summary Judgment Motion requires the Court to traverse rocky jurisprudential terrain. The question is whether the Court has the subject matter jurisdiction to determine the existence and scope of the Debtor’s liability on the Plaintiffs’ asserted state-law claims. Said otherwise, if the Court determines that the Debtor is liable to the Plaintiffs incident to this dischargeability action, can (or should) the Court enter a judgment in favor of the Plaintiffs that liquidates the underlying debt?

1. FACTS AND TRAVEL OF THE CASE

The Debtor filed a voluntary petition under Chapter 13 of the United States Bankruptcy Code (the “Bankruptcy Code” or the “Code”)2 on January 19, 2011. On the schedules filed with the petition, the Debtor disclosed her ownership of “Millennium Day Care Center” (“Millennium”) located in Boston, Massachusetts, noting that Millennium was also a debtor in a pending Chapter 11 case.3 The Debtor never achieved confirmation of a Chapter 13 plan and on May 12, 2011, the case was converted to one under Chapter 7 at the Debtor’s request. On May 26, 2011, the Debtor filed a statement indicating that there were no postpetition creditors.

On May 27, however, Millennium filed an Amended Schedule E in its case (which

had also been converted to one under Chapter 7) disclosing debts owed to various employees (the “Creditor Employees”) on account of asserted wage claims. Those Creditor Employees ultimately filed a motion in the Millennium case seeking allowance and payment of $52,573.40 in administrative wage claims (the “Administrative Claims Motion”), which they maintain accrued while Millennium operated in Chapter 11. The Chapter 7 trustee (the “Millennium Trustee”) opposed, primarily on the grounds that the Millennium estate had inadequate funds to pay the claims immediately and that Chapter 7 administrative expenses were likely to exhaust the projected available funds. The Millennium Trustee eventually reached a settlement with the Creditor Employees, agreeing that the administrative claims would be deemed allowed in the amounts claimed, but paid only if sufficient funds remained in the estate to make a distribution to the holders of Chapter 11 administrative expense claims. To date, no distribution in the Millennium case has been made.

The Creditor Employees, however, also maintain that the Debtor is individually liable for the unpaid wages under Massachusetts General Laws (“MGL”) ch. 149, §§ 148 and 150 (the “Massachusetts Wage Act”). In the Debtor’s individual Chapter 7 case, 12 of the 16 Creditor Employees filed proofs of claim for those unpaid wages (the “Claimants”). And on October 5, 2012, the Creditor Employees (here, the Plaintiffs) filed the instant complaint (the “Complaint”; the “Adversary Proceeding”) [746]*746against the Debtor, objecting to the dis-chargeability of their wage claims under § 528(a) on grounds that the Debtor fraudulently induced them to work for Millennium postpetition, and then failed to pay their wages despite having the financial means to do so.4 The Debtor filed an answer (the “Answer”) to the Complaint, denying personal liability under the Massachusetts Wage Act for any unpaid wages. She further disputed the amounts of the alleged debts, maintaining that all or part of the wages had been paid.

On April 9, 2013, the Debtor filed an objection to the Creditor Employees’ proofs of claim (the “Claims Objection”). In the Claims Objection, the Debtor again argued that she is not personally liable for any unpaid wages under the Massachusetts Wage Act and again disputed the scope of any unpaid wages, maintaining that all or part of each claim was satisfied by Millennium. The Claimants have responded in opposition to the Claims Objection, and the matter remains pending.

Presently before the Court are two motions filed by the Plaintiffs. In the Consolidation Motion, the Plaintiffs have asked that the pending Claims Objection be consolidated with the Adversary Proceeding. And in the Summary Judgment Motion, the Plaintiffs seek a determination as to the scope of this Court’s subject matter jurisdiction with regard to the liquidation of their claims under the Massachusetts Wage Act. The Debtor objected to both motions, and the Court took the matters under advisement.

II. POSITIONS OF THE PARTIES

A. Consolidation

The Plaintiffs first request consolidation of the Claims Objection and the Adversary Proceeding pursuant to Federal Rule of Civil Procedure (the “Federal Rules”) 42, made applicable to these proceedings by Federal Rule of Bankruptcy Procedure (the “Bankruptcy Rules”) 7042. Noting that the Claims Objection ' challenges proofs of claim filed by 12 of the 16 Plaintiffs, which proofs of claim represent the same debts alleged to be nondischargeable in this Adversary Proceeding, the Plaintiffs maintain that the factual and legal questions at issue in the two matters overlap — i.e., both require a determination of the Debtor’s liability under the Massachusetts Wage Act and the extent to which any debt has been satisfied.

The Plaintiffs argue that the benefits of consolidation outweigh any potential costs, as consolidation will avoid re-litigation of the Debtor’s liability and the amount of outstanding unpaid wages, and will allow discovery to proceed more efficiently by avoiding separate discovery processes and schedules. Furthermore, the Plaintiffs maintain that, because both the Claims Objection and the Adversary Proceeding are in their preliminary stages, there will be no delay occasioned by consolidation and no prejudice to the Debtor.

The Debtor, however, attempts to distinguish the issues raised in the Claims Objection from those raised in the Adversary Proceeding, maintaining that consolidation is not appropriate because the matters involve separate legal and factual issues. According to the Debtor, while the existence and amount of liability are at issue in the Claims Objection proceeding, the dis-chargeability questions in the Adversary Proceeding involve different factual and legal determinations regarding the Debt- [747]*747or’s conduct. In addition, the Debtor says, consolidating the proceedings would cause unnecessary expense and delay.

B. Jurisdiction

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Bluebook (online)
509 B.R. 742, 2014 WL 56053, 2014 Bankr. LEXIS 48, 58 Bankr. Ct. Dec. (CRR) 264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wen-jing-huang-v-juan-juan-chen-in-re-wen-jing-huang-mab-2014.