UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
July 29, 2011
21 BROAD STREET DBT, LLC,
SML REALTY OF NJ, LLC, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Mary L. Cooper United States District Judge
NOT FOR PUBLICATION
THIS ACTION to foreclose upon certain property ("Property") was brought in state court against, among others, the defendant SML Realty of NJ, LLC ("SML"), and removed to this Court. (Dkt. entry no. 1, Rmv. Not.; id., Ex. B, Am. Compl.) The plaintiff alleges that (1) in order to facilitate the underlying loan to SML, the defendants Agostino Antiques, Ltd., Salvatore Trupiano, Louis Trupiano, and Marie Carlino guaranteed payment of the loan, and (2) the defendant C and A Capital, LLC, is a purchaser of the Property. (Am. Compl. at 5, 8.) SML has now petitioned for relief ("Bankruptcy Case") in the United States Bankruptcy Court for the Eastern District of New York ("New York Bankruptcy Court"), and lists the plaintiff, Salvatore Trupiano, Louis Trupiano, and Marie Carlino as creditors. See Petition, In re SML Realty of NJ, LLC, No. 11-44160 (Bankr. E.D.N.Y. May 16, 2011).
AN ACTION is "related to" bankruptcy if "the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy". Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984) (emphasis omitted); see In re Combustion Eng'g, 391 F.3d 190, 226 (3d Cir. 2004).*fn1 To be "related to" bankruptcy, the entire action need not be against the debtor or the debtor's property only. Pacor, 743 F.2d at 994. An "action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate". Id.; see also In re Combustion Eng'g, 391 F.3d at 226.
PURSUANT TO 28 U.S.C. § ("Section") 1412, a district court "may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties". 28 U.S.C. § 1412; see 28 U.S.C. § 1409(a) (stating "proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending"); Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1212 (3d Cir. 1991) (instructing that proper method for transferring related action to bankruptcy court already hearing bankruptcy case is to change venue from non-bankruptcy forum to bankruptcy forum under Section 1412, and then refer related action to bankruptcy court); Abrams v. Gen. Nutrition Cos., No. 06-1820, 2006 WL 2739642, at *8 (D.N.J. Sept. 25, 2006) (finding Section 1412 applies to transfer of action "related to" bankruptcy case). In general, the forum where the bankruptcy case is pending is the proper venue for all actions "related to" that bankruptcy case. Abrams, 2006 WL 2739642, at *9; see Hohl v. Bastian, 279 B.R. 165, 177 (W.D. Pa. 2002); Krystal Cadillac-Oldsmobile-GMC Truck, v. Gen. Motors Corp., 232 B.R. 622, 627 (E.D. Pa. 1999).
THIS ACTION is related to the Bankruptcy Case because an outcome here will affect the estate being administered. See
Pacor, 743 F.2d at 994. Also, the Bankruptcy Case is being actively litigated. See Docket, In re SML Realty of NJ, LLC, No. 11-44160 (Bankr. E.D.N.Y.). Thus, the interests of justice and the convenience of the parties favor a transfer of venue, as the New York Bankruptcy Court will be better positioned to determine how and to what extent the plaintiff's claims will affect (1) the bankruptcy estate, (2) the estate's efficient administration, and (3) asset distribution. See 28 U.S.C. § 1412; Abrams, 2006 WL 2739642, at *9; Hohl, 279 B.R. at 178.
THE COURT intends to transfer this action to the Eastern District of
New York immediately, as time is of the essence in
view of the active Bankruptcy Case. For good cause appearing, the
Court will issue an appropriate order.*fn2
Mary L. Cooper