ORDER ON CREDITOR FRANK VASSOUT'S MOTION TO LIFT AUTOMATIC STAY1

MIKE K. NAKAGAWA, Bankruptcy Judge.

On March 28, 2018, the court heard "Creditor Frank Vassout's Motion to Lift Automatic Stay" ("RAS Motion"). The appearances of counsel were noted on the record. After arguments were presented, the matter was taken under submission.

BACKGROUND

On August 10, 2017, a voluntary Chapter 13 "skeleton" petition was filed by Ovidiu Remus Ene ("Debtor"). (ECF No. 1). Attached to the bankruptcy petition is a Verification of Creditor Matrix submitted by the Debtor to which is attached the Debtor's list of creditors ("Creditor Matrix"). On the same date, a Notice of Chapter 13 Bankruptcy Case ("Bankruptcy Notice") was filed, setting forth: (1) a September 19, 2017, date for the meeting of creditors; (2) a deadline of November 20, 2017, for creditors to file complaints objecting to the dischargeability of certain debts ("November Deadline"); and (3) a deadline of December 18, 2017, for creditors to file proofs of claim ("Claims Bar Date"). (ECF No. 6). On August 13, 2017, the Bankruptcy Notice was served by first class mail on all parties appearing on the Creditor Matrix. (ECF No. 9). The case was assigned to a panel bankruptcy trustee, Kathleen Leavitt ("Chapter 13 Trustee").

On October 26, 2017, after extensions of time had been granted by the court, Debtor filed his schedules of assets and liabilities ("Schedules") along with his statement of financial affairs ("SOFA"). (ECF No. 32). On his creditor Schedule "E/F," Debtor listed Franck Vassout ("Vassout") as an unsecured creditor having a claim in an unknown amount based on an unspecified lawsuit. In his SOFA, Debtor listed a civil action entitled: Franck Vassout, et al vs. Kathleen Petitjean, et al, Case No. A-17-750836-C ("Civil Action"), pending in the Eighth Judicial District Court located in Clark County, Nevada ("State Court").2

On October 30, 2017, a certificate of service was filed by the Debtor stating that a copy of the Bankruptcy Notice was served by United States mail to various interested parties, including Vassout in care of his attorney in the Civil Action. (ECF No. 36).

On December 11, 2017, an order was entered denying confirmation of the Debtor's proposed Chapter 13 plan3 and dismissing the case. (ECF No. 47).4

On February 6, 2018, an order was entered vacating the dismissal of the Chapter 13 case. (ECF No. 58).

On February 20, 2018, a proof of claim in the amount of $115,690.00 was filed on behalf of Vassout. On February 27, 2018, an amended proof of claim ("Vassout POC")5 was filed for the sole purpose of correcting the name of the Debtor.6 The nature of the claim is described as money loaned to Debtor for investment in a restaurant. Part 9 of the Vassout POC asserts that the claim is secured by a lien on property and simply describes the property as the money that was loaned. Part 12 of the Vassout POC also asserts that up to $2,850 of the claim is entitled to priority as a deposit towards the purchase, sale or rental of property or services for personal, family, or household use under Section 507(a)(7).

On February 20, 2018, Vassout filed the instant RAS Motion. (ECF No. 60). Vassout seeks relief from stay under Section 362(d)(1). The RAS Motion was noticed to be heard on March 28, 2018. (ECF No. 61). The motion requests relief from the automatic stay to permit Vassout to proceed with the Civil Action in State Court and for this court to abstain from adjudicating his state law claims.

On March 13, 2018, an opposition to the RAS Motion was filed by the Debtor. (ECF No. 64). On March 20, 2018, a reply was filed by Vassout. (ECF No. 65).

DISCUSSION

A copy of a Second Amended Complaint ("Complaint") filed in the Civil Action is attached to the RAS Motion. The plaintiffs, including Vassout, consist of two individual citizens of France, doing business in Clark County, Nevada, along with a third plaintiff consisting of a Nevada limited liability company doing business in Clark County. The named defendants include the Debtor, along with five other individual residents of Clark County, plus two Nevada limited liability companies doing business in Clark County. The crux of the Civil Action is described as follows:

Complaint at ¶ 15. The Complaint is framed as eleven separate causes of action, the fifth through tenth of which are asserted against all defendants, including the Debtor. Those causes of action are asserted under theories of conspiracy to commit misrepresentation or breach of fiduciary duties, aiding and abetting the same, concert of action, breach of contract or unjust enrichment, breach of implied covenant of good faith and fair dealing, and tortious interference with contract or prospective economic advantage.

Upon the filing of the Chapter 13 petition on August 10, 2017, the automatic stay barred continuation of the Civil Action against the Debtor. If the Debtor is able to confirm a Chapter 13 plan and then complete payments under that plan, a discharge would be entered as soon as practicable pursuant to Section 1328(a). Payments would be made by the Chapter 13 Trustee on all allowed claims in accordance with the terms of the confirmed plan. Under Section 502(a), a claim set forth in a proof of claim is deemed allowed unless a party objects. As previously mentioned at 2-3, supra, the Vassout POC is a claim in the amount of $115,690 that allegedly is secured by the monies loaned to the Debtor. Additionally, a portion of the claim allegedly is entitled to priority under Section 507(a)(7).

Although Sections 2.10 through 2.15 of the Debtor's previous proposed Plan addressed the treatment of secured claims, none of those sections provided for treatment of the Vassout POC. Additionally, although Section 2.17 of the proposed Plan addressed the treatment of priority unsecured claims, that Section did not provide for treatment of the Vassout POC. Finally, while Sections 2.18 and 2.19 of the proposed Plan provided for the treatment of nonpriority unsecured claims, there was no specific treatment of the Vassout POC. Instead, Section 2.19 merely provided that nonpriority unsecured creditors would be paid the total amount of only $44.01. In other words, if Vassout's claim is allowed as a nonpriority unsecured claim, Debtor previously proposed that Vassout be paid less than a penny on the dollar, with the unpaid balance being discharged.

A Chapter 13 discharge under Section 1328(a), however, excludes a variety of debts, including: [a] debts incurred through false pretenses, false representations, or actual fraud, as set forth in Section 523(a)(2); [b] debts for fraud or defalcation while acting in a fiduciary capacity, or embezzlement, or larceny, as set forth in Section 523(a)(4); and [c] debts for willful injury or malicious injury, as set forth in Section 1328(a)(4). See 11 U.S.C. § 1328(a)(2) and (4). Under FRBP 4007(c), the deadline in a Chapter 13 proceeding to object to the discharge of such claims is no later than 60 days after the meeting of creditors. At least 30 days notice of that deadline must be given to creditors.

In the present case, Vassout was not included on the Creditor Matrix filed by the Debtor. As a consequence, Vassout was not served with the Bankruptcy Notice nor did Vassout receive the Bankruptcy Notice before the September 19, 2017, meeting of creditors. On October 30, 2017, the Debtor served a copy of the Bankruptcy Notice to Vassout's counsel in the Civil Action, but that was only 21 days before the November Deadline to object to dischargeability of debts encompassed by Section 1328(a). Obviously, that amount of notice is less than the amount required by FRBP 4007(c). At this point, Vassout has not commenced an adversary proceeding to determine dischargeability of his claims under Section 523(a)(2 and 4) or Section 1328(a)(4). Whether Vassout could even commence an adversary proceeding under FRBP 7001(6) on a timely basis is not presently before the court.7

What is before the court is Vassout's request for relief from stay under Section 362(d)(1) to pursue the Civil Action. In addition to relief from stay, Vassout requests that the court abstain under 28 U.S.C. section 1334(c)(2) from deciding issues encompassed by the Civil Action. Both parties acknowledge that the factual issues determined by the State Court in the Civil Action would have relevance to the dischargeability complaint that has yet to be commenced. Those issues also would have relevance to any objection to the allowance of the Vassout POC. Vassout argues that all or some of the factual issues can be fully litigated in the Civil Action and the State Court findings would have issue preclusive effect in the anticipated dischargeability proceeding in the bankruptcy court. Debtor maintains that he does not want to go through the expense of litigating the issues in State Court in lieu of defending a determination of the same factual issues in the bankruptcy court.

Neither Vassout nor the Debtor dispute, however, that the Civil Action seeks to determine the liability of non-debtor defendants over which this bankruptcy court does not have jurisdiction, and also seeks a jury trial for all of the state law claims alleged in the Complaint. As between the non-debtor plaintiffs and the non-debtor defendants, the bankruptcy court simply lacks authority to enter a final judgment on any of the causes of action, none of which arise under bankruptcy law. See Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 52, 71-72 & n.26, 87 (1982) (plurality opinion). See also Executive Benefit Ins. Agency v. Arkison, 134 S.Ct. 2165, 2171 (2014). As to a jury trial, it also is clear that the bankruptcy court lacks authority to conduct a jury trial without the affirmative consent of all parties. See Local Rule 9015(e). Additionally, the nature of the allegations of the fifth through tenth causes of action, i.e., conspiracy, aiding and abetting, concert of action, and the like, suggest that the testimony of multiple parties either through discovery or during trial, will be required. The legal expenses therefore will be significant irrespective of whether the State Court or this bankruptcy court resolves the relevant factual issues.

As a general rule, a federal court cannot abstain from adjudicating a matter where there is no parallel proceeding pending in state court that could adjudicate the same matter. See Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1009 (9th Cir. 1997). In this unusual case, however, the opposite situation currently exists: there is no adversary proceeding pending before this court that can be abated in favor of the pending Civil Action. Thus, abstention, even on a permissive basis under 28 U.S.C. § 1334(c)(1), is inappropriate. Compare Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1167-68 (9th Cir. 1990) (applying twelve-factor test to determine whether bankruptcy court should abstain with respect to issues raised in pending state court action). The question, then, is whether granting relief from stay to permit the Civil Action to proceed would serve any purpose in the context of the Debtor's bankruptcy case. See id. at 1166 ("Where a bankruptcy court may abstain from deciding issues in favor of an imminent state court trial involving the same issues, cause may exist for lifting the [automatic] stay as to the state court trial.").

In the instant case, the Civil Action clearly is an action against the Debtor to recover a claim that arose before the instant Chapter 13 proceeding was commenced. Section 362(a)(1) therefore applies. Prosecution of the Civil Action also is an act to collect, assess or recover a claim against the Debtor that arose before the Chapter 13 was filed. Section 362(a)(6) therefore applies. It is also clear, however, that the stay of an action or act to recover a claim against a debtor does not shield the debtor from involvement as a witness or a source of discovery. See Bartech Systems Int'l, Inc. v. Mobile Simple Solutions, Inc., 2018 WL 679905, at *2 (D. Nev. Jan. 4, 2018); United Nat'l Funding, LLC v. JetDirect Aviation, Inc., 2012 WL 2514929, at *3 (D. Nev. June 28, 2012); Baker v. Miller (In re Miller), 262 B.R. 499, 505 (B.A.P. 9th Cir. 2001). Thus, as it currently stands, nothing prevents Vassout from seeking discovery from the Debtor to pursue the state law causes of action against the non-debtor defendants in the Civil Action, including the civil conspiracy and similar theories.

Under Section 362(d)(1), "cause" may be established to permit litigation to go forward in another forum. As in the case of permissive abstention, courts typically apply a multi-factor test in determining whether cause exists. See Sonnax Indus., Inc. v. Tri Component Prods. Corp. (In re Sonnax Indus., Inc.), 907 F.2d 1280 (2nd Cir. 1990). "These are: (1) whether relief would result in a partial or complete resolution of the issues; (2) lack of any connection with or interference with the bankruptcy case; (3) whether the other proceeding involves the debtor as a fiduciary; (4) whether a specialized tribunal with the necessary expertise has been established to hear the cause of action; (5) whether the debtor's insurer has assumed full responsibility for defending it; (6) whether the action primarily involves third parties; (7) whether litigation in another forum would prejudice the interests of other creditors; (8) whether the judgment claim arising from the other action is subject to equitable subordination; (9) whether movant's success in the other proceeding would result in a judicial lien avoidable by the debtor; (10) the interests of judicial economy and the expeditious and economical resolution of litigation; (11) whether the parties are ready for trial in the other proceeding; and (12) impact of the stay on the parties and the balance of harms." 907 F.2d at 1286, citing In re Curtis, 40 B.R. 795, 799-800 (Bankr. D. Utah 1984) ("Sonnax/Curtis Factors").

For the reasons already discussed, the court concludes that items (1), (6), (7), and (10) of the Sonnax/Curtis Factors favor relief from stay under certain conditions. Additionally, item (2) is neutral because the Civil Action is relevant to the bankruptcy case, but prosecution under the circumstances will not interfere with the case. Item (3) also is neutral insofar as any determination of the Debtor's fiduciary status may or may not be consistent with the definition of a fiduciary under Section 523(a)(4).8 Items (4), (5), (8) and (9) are inapplicable. Item (11) on its face does not favor relief from stay because trial of the Civil Action is not imminent. Item (12) favors relief from stay inasmuch as the Debtor already is subject to compelled testimony and discovery in connection with the causes of action against the non-debtor defendants. Any harm to the Debtor can be avoided by reserving any dischargeability determination to the bankruptcy court and barring the enforcement of any judgment in the Civil Action against property of the Debtor or the bankruptcy estate.

On balance, the court concludes that relief from stay for cause pursuant to Section 362(d)(1) is warranted under the Sonnax/Curtis Factors. As permitted by Section 362(d), termination of the automatic stay will be subject to the conditions set forth below.

IT IS THEREFORE ORDERED that Creditor Frank Vassout's Motion to Lift Automatic Stay, Docket No. 60, be, and the same hereby is, GRANTED AS PROVIDED HEREIN.

IT IS FURTHER ORDERED that the movant may proceed with respect to the above-captioned debtor in the civil action styled as Franck Vassout, et al vs. Kathleen Petitjean, et al, Case No. A-17-750836-C, pending in the Eighth Judicial District Court, Clark County, Nevada, subject to the following conditions:

IT IS FURTHER ORDERED that notice of entry of the instant Order must be filed by the moving party in the aforementioned civil action.