CARLOTA M. BÖHM Bankruptcy Judge.
The matter before the Court is Movant's, OptimumBank's, Motion to Enforce Stipulation ("Motion") wherein Movant requests that this Court enforce a previously entered confirmation order and stipulation to compel Debtor-Respondent, Buena Vista Oceanside, LLC, to dismiss counterclaims filed against Movant in separate litigation. Debtor counters, in part, that the within Court lacks jurisdiction to decide the Motion
On or about November 30, 2005, Movant loaned Debtor $4,368,000.00, evidenced by a promissory note. As security for the promissory note, Debtor executed a Mortgage Deed and Security Agreement, also dated November 30, 2005, granting Movant a first in priority mortgage lien against certain realty owned by Debtor. After Debtor defaulted on the mortgage payments, on April 19, 2011, Movant instituted an action in mortgage foreclosure against Debtor and Frank Zokaites, as Guarantor, in the Circuit Court of the 17
Debtor commenced the within bankruptcy case by filing a Voluntary Petition under Chapter 7 of the Bankruptcy Code on July 20, 2011. Shortly thereafter, on August 8, 2011, Debtor filed a motion to convert the case to one under Chapter 11 of the Code, which was granted by the Honorable Bernard Markovitz on August 9, 2011. Due to the conversion, the case was reassigned to the Honorable Judith K. Fitzgerald on August 9, 2011.
Movant filed a Proof of Claim in the instant case on September 1, 2011, in the amount of $4,977,984.70. Debtor objected to said Proof of Claim on October 18, 2011. Following a valuation trial held April 9-10, 2012, Judge Fitzgerald held that Movant had an allowed secured claim of $2,238,182.63 and an allowed unsecured claim of $2,739,802.07.
Debtor filed an adversary proceeding against Movant, docketed as Adv. No. 11-02514-JKF, on October 17, 2011, asserting breach of fiduciary duty, fraud and misrepresentation, promissory estoppel, and violation of RESPA. Following the hearing held before Judge Fitzgerald on January 3, 2012, the complaint in the adversary proceeding was withdrawn with prejudice.
On November 5, 2012, the Florida Court granted Debtor's motion to stay the Florida Litigation pending the conclusion of the bankruptcy case before Judge Fitzgerald.
The Confirmation Order held, in part, that:
The Stipulation stated, in part, that Frank R. Zokaites, as Guarantor,
Further, the parties to the Stipulation agreed that the Stipulation ". . . shall be made a part of the order confirming the Plan and shall supersede any conflicting terms in the Plan." Additionally, it was provided under paragraph 36 of the Stipulation that the United States Bankruptcy Court for the Western District of Pennsylvania would retain jurisdiction over the Stipulation.
On March 28, 2014, the Florida Court entered an order lifting the stay on the Florida Litigation. On May 28, 2014, Debtor filed its answer, affirmative defenses, and counterclaims in the Florida Litigation.
On September 22, 2014, Debtor filed a motion to re-impose the stay in the Florida Litigation. In rendering its decision
At the hearing on the Lender's Motion to Dismiss Counterclaim of Buena Vista Oceanside, held together with Movant's motion to dismiss Zokaites' counterclaims on February 10, 2015, counsel for Movant asserted on the record:
Moreover, at the February 10, 2015 hearing, counsel for Movant stated that Movant would have no objection to granting leave to amend the defendants', Debtor's and Zokaites', respective counterclaims.
Although the outcome of the Lender's Motion to Dismiss Counterclaim of Buena Vista Oceanside is not a matter of record with this Court, Debtor averred in its response to the Motion, that the Florida Court denied Movant's res judicata claims and rejected the argument that Debtor's claims had been fully dismissed by the Bankruptcy Court.
On May 27, 2015, Debtor and Frank Zokaites filed amended counterclaims against Movant in the Florida litigation.
Pursuant to the Motion, Movant avers that Debtor's pursuit of the amended counterclaims amounts to an attempt to "circumvent the obligations to which it became consensually bound[,]" under the Stipulation. Movant rejects Debtor's argument that Debtor's right to assert counterclaims was preserved by the Confirmation Order since the counterclaims were already dismissed with prejudice by the Court via the dismissal of the adversary proceeding. Moreover, Movant argues that the Stipulation fully resolved all of the claims of the parties thereto, including Debtor. Therefore, Movant requests that the Court enter an order enforcing the Stipulation and Confirmation Order and directing Debtor to voluntarily dismiss the counterclaims asserted in the Florida Litigation. Movant asserts that this Court retains jurisdiction to enforce the terms of the Stipulation.
In opposition to the relief requested, Debtor avers in its Response that Movant is engaging in forum shopping, that the Motion is barred by res judicata and judicial estoppel, that Movant seeks an outcome which would violate the Full Faith and Credit Clause, that the underlying claims are non-core state law claims and therefore the Bankruptcy Court lacks jurisdiction, and that it is unambiguous that Debtor preserved its claims. Accordingly, Debtor seeks denial of the Motion and further requests sanctions due to Movant's filing of the within Motion.
At the hearing held on the Motion on August 25, 2015, this Court requested that the parties address the issue of whether this Court has jurisdiction to decide the Motion and provided an opportunity for the parties to submit briefs on or before September 15, 2015. On September 15, 2015, Movant filed its Supplemental Brief Regarding this Court's Jurisdiction to Interpret and Enforce Stipulation and Confirmation Order. Debtor filed a Brief in Support of Debtor's Response in Opposition to OptimumBank's Motion to Enforce Stipulation and Request for Sanctions.
Before examining the merits of the Motion, this Court will first address whether this Court has jurisdiction to decide the within Motion.
As this Court previously set forth in its Memorandum Order dated August 25, 2014, addressing this Court's jurisdiction to hear Debtor's adversary proceeding docketed as 14-02078-CMB,
Buena Vista Oceanside, LLC v. Holistix 24, Inc. et al, (In re Buena Vista Oceanside, LLC), No. ADV 14-02078-CMB, 2014 WL 4230891, at *1-2 (Bankr. W.D. Pa. Aug. 25, 2014).
Moreover, the mere entry of an order does not automatically preserve jurisdiction over all potential issues related thereto. See General Motors Corp. v. Krystal Cadillac-Oldsmobile-GMC Truck, Inc. (In re Krystal Cadillac-Oldsmobile-GMC Truck, Inc.), 371 B.R. 49, 54 (Bankr. M.D. Pa. 2006). Whether a bankruptcy court has jurisdiction to adjudicate a particular matter is controlled by 28 U.S.C. §1334 and 28 U.S.C. §157. Id. The same applies for retention of jurisdiction clauses. See In re Resorts Int'l, Inc., 372 F.3d at 161 ("If there is no jurisdiction under 28 U.S.C. § 1334 or 28 U.S.C. § 157, retention of jurisdiction provisions in a plan of reorganization or trust agreement are fundamentally irrelevant.").
Movant argues that the within Court possesses jurisdiction over the Motion based on a bankruptcy court's inherent retention of subject matter jurisdiction to resolve post-confirmation matters, the retention of jurisdiction clause included in paragraph 36 of the Stipulation, and/or a bankruptcy court's authority to enforce prior orders of court. However, as set forth above, retention of jurisdiction pursuant to any of these theories is not clear-cut.
Under Resorts, in order for the Movant to succeed on its argument that the within Court possesses subject matter jurisdiction based on its inherent ability to resolve post-confirmation matters, the Movant must demonstrate that the Motion has a "close nexus to the bankruptcy plan or proceeding," by showing that the instant matter "affects the interpretation, implementation, consummation, execution, or administration of a confirmed plan. . . ." On its face, the within Motion, filed as a motion to enforce the Stipulation, appears to fall squarely within the Court's post-confirmation jurisdiction as its title purports to affect the interpretation of the Stipulation, an integrated part of the Confirmation Order. However, upon closer review, it is clear that the relief sought by the Movant in the Motion amounts to more than a simple request for enforcement or interpretation of the Confirmation Order and Stipulation. Movant is not simply asking the Court to explain the meaning behind a phrase or terminology employed by the Court in rendering an order, or for enforcement of a deadline set therein. Instead, the substance of the Motion asks this Court to assess which claims and/or rights the Debtor preserved for future prosecution pursuant to the language included in the Confirmation Order and Stipulation by determining the effect of prior orders of court, specifically the January 3, 2012 order withdrawing Debtor's adversary proceeding with prejudice.
Similarly, due to the necessity to analyze the res judicata and/or collateral estoppel effects of the January 3, 2012 order to decide the Motion, the Court lacks jurisdiction under the remaining two theories set forth by the Movant as adjudication of the Motion goes beyond enforcement of prior orders of court and is not limited to the Stipulation.
Further, to the extent that an interpretation of the Confirmation Order and Stipulation is necessary to resolve the within matter as is averred by Movant, the Court notes that as both the Confirmation Order and Stipulation were drafted by the parties themselves, appear plain on their faces, and were entered by a preceding Judge, this Court has no advantage over the Florida Court in interpreting either order. This Court has no greater insight into the intentions of the Movant and Debtor in drafting, or the prior Court in adopting, the Confirmation Order and/or Stipulation. Moreover, this Court agrees with the Florida Court's assessment that there is nothing that prevents the Florida Court from adjudicating the claims as set forth in the Florida Litigation.
Based on the foregoing, this Court finds that it lacks jurisdiction to adjudicate the within Motion and further, that the Florida Court, as a court of competent jurisdiction, is the appropriate court to resolve this matter.
In the alternative, even if it were determined that this Court does have jurisdiction to resolve the within Motion, the Court notes that it would discretionarily abstain from rendering such a decision in accordance with 28 U.S.C. §1334(c)(1).
The Court has "considerable latitude in deciding whether to abstain." Winnecour v. Taylor (In re Taylor), 444 B.R. 534, 536 (Bankr.W.D.Pa. 2011). In making this decision, courts within this jurisdiction have, in the past, looked at twelve factors to determine whether discretionary abstention is appropriate:
In re Taylor, 444 B.R. at 536-37(citation omitted). No one factor of the enumerated twelve is necessarily determinative. Taylor, at 537.
In the within matter, this Court's position that abstention is appropriate is largely influenced by the presence of the ongoing litigation in the Florida Court and the cessation of the bankruptcy estate. As detailed above, following entry of the Confirmation Order and Stipulation, as well as the subsequent lifting of the stay by the Florida Court, the parties have engaged in substantial and continuing activity in the Florida Litigation. In contrast to this activity, and as observed by the Movant itself in its pleadings filed with the Florida Court, the bankruptcy case before this Court has been substantially concluded and, until the within Motion was filed, no issues remained between the Movant and Debtor pursuant thereto. Thus, the fourth factor weighs heavily in favor of abstention. Moreover, since the bankruptcy estate ceased to exist in this case as of the time of entry of the Confirmation Order, abstention by this Court in relation to the within Motion will have no discernable effect on the "efficient administration of the estate" causing the first factor to also weigh in favor of abstention.
With respect to fifth factor, in the event that this Court does possess jurisdiction to decide the Motion, the Court finds that any jurisdictional basis to adjudicate the Motion is insufficient to tip this Court's findings away from abstention.
In conjunction with the finding that this Court lacks jurisdiction to decide the Motion, discussed above, this Court also observes that the Motion does not possess a minimal degree of relatedness to the main case since the Motion bears no effect on the interpretation of the confirmed plan, but instead, in substance, seeks a determination of the res judicata and/or collateral estoppel effects of the January 3, 2012 order. These effects are controlled by state law and are easily severed from core bankruptcy matters. Thus, the second, sixth, seventh, and eighth factors weigh in favor of abstention.
Further, it is the opinion of this Court that the filing of the Motion in this Court may have been motivated, at least in part, by forum shopping. Since the filing of the Debtor's original counterclaims, Movant consistently asserted that the Florida Court was the appropriate court to adjudicate the matters arising thereto and purposely availed itself to the Florida Court for relief. In fact, Movant actively contested Debtor's averments that the within Court was the appropriate Court to decide Movant's motion to dismiss. It was not until the Movant suffered an adverse ruling with respect to its motion to dismiss Debtor's counterclaims that Movant sought relief from this Court. Accordingly, the tenth factor supports this Court's determination that abstention is appropriate.
Based on the foregoing, this Court alternatively finds that abstention is appropriate in the event that this Court possesses jurisdiction to decide the within Motion.
For the foregoing reasons, the Court refrains from resolving the Motion to Enforce Stipulation ("Motion"). The analysis required to adjudicate the within Motion falls outside the bounds of this Court's post-confirmation jurisdiction. However, in the event that it is determined that such jurisdiction to decide the Motion is held by this Court, this Court abstains pursuant to 28 U.S.C. §1334(c)(1). Therefore, the Motion is dismissed.
