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In Re Gregory Cramer v. Gregory Cramer

May 26, 2011

IN RE GREGORY CRAMER,
DEBTOR. THOMAS L. DEFEO,
PLAINTIFF,
v.
GREGORY CRAMER, DEFENDANT.



The opinion of the court was delivered by: Cooper, District Judge

NOT FOR PUBLICATION

MEMORANDUM OPINION

Plaintiff, Thomas L. DeFeo ("DeFeo"), commenced an action in New Jersey Superior Court ("State Action") against Defendant, Gregory Cramer ("Cramer"), to recover damages for personal injuries sustained when Cramer allegedly struck DeFeo with an automobile. (Dkt. entry no. 1, Pl. Certif., Ex. 3, Compl. at 3-4.) Eight months later, Cramer petitioned for bankruptcy relief in the United States Bankruptcy Court for the District of New Jersey, and subsequently disclosed the State Action, and DeFeo as a creditor. See In re Cramer, Bankr. D.N.J. No. 10-12220, dkt. entry no. 1, Pet.; id., dkt. entry no. 8, Am. Scheds. DeFeo then brought an adversarial proceeding in the Bankruptcy Court ("Adversary Action"), seeking judgment on his claims and a declaration of nondischargeability. DeFeo v. Cramer, Bankr. D.N.J. Adv. Proc. No. 10-1291, dkt. entry no. 1.

After issuing and vacating an Order To Show Cause why the Adversary Action should not be dismissed for DeFeo's failure to prosecute on February 9, 2011, the Bankruptcy Judge granted DeFeo 30 days to move to withdraw the reference. Id., dkt. entry no. 19, Order To Show Cause; id., dkt. entry no. 22, 2-9-11 Minutes. DeFeo now moves to withdraw the reference of the Adversary Action and seeks a jury trial in the District Court, apparently on both the issues of liability and dischargeability. (See dkt. entry no. 1, Not. of Mot. at 1; Pl. Certif. at 3.) The Court determines the motion on the briefs without oral argument. See Fed.R.Civ.P. 78(b). The Court will grant the motion in part and deny the motion in part, for the reasons stated herein.

DISCUSSION

I. Applicable Legal Standards

A. Withdrawal

Bankruptcy judges may preside over, and enter appropriate orders and judgments pertaining to, all cases under chapter 11 of the Bankruptcy Code and all "core proceedings" arising thereunder. 28 U.S.C. § 157(b)(1). Bankruptcy judges may also hear "non-core proceedings" that are "related to" pending proceedings. 28 U.S.C. § 157(c)(1). In certain circumstances, when a case has been referred to a bankruptcy court, the District Court may withdraw that reference, in whole or in part, from the bankruptcy court's jurisdiction. See 28 U.S.C. § 157(d); In re Pruitt, 910 F.2d 1160, 1168 (3d Cir. 1990); In re Glunk, No. 05--31656, 2006 WL 6659552, at *4 (Bankr. E.D. Pa. Aug. 18, 2006). Under Federal Rule of Bankruptcy Procedure 5011(c), a district judge shall hear a motion for withdrawal of a case or proceeding and the relief that the district judge grants pursuant to a filed motion for withdrawal shall be on such terms and conditions as the judge deems proper. See Fed.R.Bankr.P. 5011(c).

"[B]ankruptcy courts have no power to make factual determinations regarding personal-injury tort claims." In re Martinez, No. 10-0454, 2010 WL 3075282, at *2 (D.N.M. July 15, 2010). The Bankruptcy Court's core jurisdiction does not extend to "the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case." Id.; see also 28 U.S.C. § 157(b)(2)(B); 28 U.S.C. § 157(b)(2)(O) (stating that core jurisdiction extends to "other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims"). Rather, "[t]he district court shall order that personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim arose, as determined by the district court in which the bankruptcy case is pending." 28 U.S.C. § 157(b)(5).

The Bankruptcy Court lacks subject-matter jurisdiction to adjudicate personal injury tort claims, but it has jurisdiction to adjudicate dischargeability once the claims have been liquidated. see In re Erickson, 330 B.R. 346, 349 (Bankr. D. Conn. 2005); see also Martinez, 2010 WL 3075282, at *3 (noting 11 U.S.C. § 523(a)(6) "excepts from discharge any debt incurred for willful and malicious injury by the debtor to another," and that "[t]his determination is a core bankruptcy matter").

B. Abstention

Although 28 U.S.C. § ("Section") 157(b)(5)'s use of the word "shall" appears to require the district judge with jurisdiction over the bankruptcy petition to order personal injury cases tried in a district court, a second statutory provision states:

Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under [the bankruptcy code] or arising in or related to a case under [the bankruptcy code].

28 U.S.C. § 1334(c)(1). "Federal courts have uniformly held that this provision permits district court judges to abstain from exercising the authority granted by [Section] 157(b)(5), where such abstention would be in the interest of justice." Marks v. Outboard Marine Corp., 974 F.Supp. 406, 410 (D.N.J. 1997).

"Mandatory abstention pursuant to Section 1334(c)(2) does not apply to the liquidation of personal injury tort or wrongful death cases . . . However, in its discretion, the Court may abstain from hearing a case over which it has jurisdiction pursuant to the discretionary abstention principles set forth in Section 1331(c)(1)." ...


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