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Anthony R. Calascibetta, As Liquidating Trustee of U.S. Mortgage v. J.H. Cohn Llp and John Does 1-10

June 6, 2011

ANTHONY R. CALASCIBETTA, AS LIQUIDATING TRUSTEE OF U.S. MORTGAGE CORPORATION AND C.U. NATIONAL MORTGAGE : LLC,
PLAINTIFF,
v.
J.H. COHN LLP AND JOHN DOES 1-10, DEFENDANTS.



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

NOT FOR PUBLICATION

OPINION

This matter comes before the Court upon the motion to remand [docket entry 6] filed by Plaintiff Anthony R. Calascibetta, as Liquidating Trustee of U.S. Mortgage Corporation and C.U. National Mortgage, LLC ("Plaintiff"). Defendant J.H. Cohn LLP ("Defendant") has opposed the motion. This Court has opted to rule based on the papers submitted and without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons expressed below, the Court will grant Plaintiff's motion and this action will be remanded to the Superior Court of New Jersey, law division, Middlesex County.

I.BACKGROUND

U.S. Mortgage Corporation ("USM") and its wholly owned subsidiary, C.U. National Mortgage, LLC ("CUNM"), filed voluntary Chapter 11 petitions under the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., on February 23, 2009 and April 1, 2009 respectively.

The Third Amended Joint Plan of Liquidation ("Liquidation Plan") was confirmed by the United States Bankruptcy Court for the District of New Jersey on October 26, 2009 ("Bankruptcy Proceeding"). Pursuant to the Liquidation Plan, a U.S. Creditors Liquidating Trust was created for the benefit USM's and CUNM's creditors and Plaintiff Anthony R. Calascibetta was appointed as the Liquidated Trustee.

Prior to filing for bankruptcy, USM and CUNM had retained Defendant, an accounting firm, to audit their books and records and provide them with various risk management services. Plaintiff, in its Complaint filed in state court, alleges that Defendant's negligence allowed Defendant's president, Michael J. McGrath, to misappropriate and divert company assets.

Subsequently, on or about March 28, 2011,Defendant removed this action pursuant to 28 U.S.C. § 1334(b), on the grounds that the present case is "related to" the Bankruptcy Proceeding. Plaintiff now moves this Court to remand the case to the Superior Court of New Jersey, law division, Middlesex County.

II. LEGAL ANALYSIS

A. Standard of Review

Upon a motion to remand, the removing party bears the burden of demonstrating that removal was proper. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990). The removing party thus bears the burden of proving that jurisdiction is proper in federal court. Id. Further, removal statutes are strictly construed, with all doubts to be resolved in favor of remand. Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992).

B. Discussion

In its motion to remand, Plaintiff contends that this Court must abstain from hearing this case on the basis of mandatory abstention pursuant to 28 U.S.C. § 1334(c)(2).*fn1 The mandatory abstention statute provides, in relevant part:

Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction. "In synopsis, [Section 1334(c)(2)] mandates that (1) where a timely motion is made, (2) the proceeding is based on state law, (3) the proceeding is "related to" a Title 11 case, (4) but not "arising under title 11 or arising in a case under title 11," (5) the action could not have been commenced in federal court absent the bankruptcy jurisdiction, and (6) an action is already commenced and timely adjudication is ...


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