Carlota M. Böhm, United States Bankruptcy Judge
The matter before the Court is Plaintiff's Motion to Remand ("Motion to Remand").
The State Court Action was commenced on August 15, 2006, in the Court of Common Pleas of Allegheny County ("State Court") when Jean H. Gedeon t/d/b/a Pittsburgh Youth Ballet (hereinafter "Ms. Gedeon") filed a complaint against Lindsay Piper, Steven Piper, and the Ballet Academy of Pittsburgh (collectively, "Piper Defendants"). In the State Court Action, Ms. Gedeon alleges fraud, defamation, and misappropriation of a trade secret. The case proceeded in State Court until the filing of Mr. Piper's Notice of Removal on October 23, 2015, asserting that the State Court Action is related to his bankruptcy case.
Also relevant to the background of this matter is Ms. Gedeon's bankruptcy case. On August 2, 2007, Kenneth J. Gedeon and Jean H. Gedeon d/b/a Pittsburgh Youth Ballet filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. See Case No. 07-24894 ("Gedeon Bankruptcy"). Although the case was closed in 2009, the case was reopened over two years later at the request of the Chapter 7 Trustee, Jeffrey J. Sikirica, Esq. ("Trustee Sikirica"), in order to employ special counsel to pursue the State Court Action. Thereafter, the case was once again closed, excepting the claims against the Piper Defendants from abandonment and providing for the reopening of the case in the event of a recovery or offer to settle the claims.
On November 19, 2014, the Gedeon Bankruptcy was reopened for the second time at the request of Trustee Sikirica. Following reopening, Trustee Sikirica was presented with an offer by the Gedeons to purchase the claims in the State Court Action as well as an offer of settlement on behalf of the Piper Defendants. Ultimately, on April 30, 2015, Trustee Sikirica sought approval of a stipulation with the Gedeons, which was subsequently approved. The stipulation provided for the bankruptcy estate's continued control and pursuit of the claims against the Piper Defendants; $25,000.00 to be paid by the Gedeons to Trustee Sikirica as property of the estate; and the potential for funds to flow into the estate should there be a recovery in the action. Thus, as of July of 2015, the State Court Action was to continue with a potential benefit to the Gedeons' bankruptcy estate.
Notably, however, the Piper Defendants indicated that a bankruptcy filing would likely occur if a settlement of the State Court Action was not achieved. Accordingly it was of no surprise that on October 15, 2015, Mr. Piper filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code halting the progress of the State Court Action. Approximately one week after filing the petition, Mr. Piper removed the State Court Action to this Court. The Motion to Remand followed.
Within the Motion to Remand, Ms. Gedeon seeks abstention pursuant to either 28 U.S.C. § 1334(c)(1) or (2), remand, and relief from the automatic stay for the purpose of liquidating the claims in state court. Alternatively, Ms. Gedeon requests that the claims against Mr. Piper be severed from the claims against Lindsay Piper and the Ballet Academy of Pittsburgh
While the Motion to Remand remained pending, Ms. Gedeon filed a Complaint to Determine Dischargeability of Debt ("Dischargeability Complaint") against Mr. Piper. See Adv. No. 16-2009. Therein, Ms. Gedeon, relying upon the claims asserted against Mr. Piper in the State Court Action, contends that the resulting debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(6). Mr. Piper filed a motion to dismiss the Dischargeability Complaint. Ms. Gedeon opposed the motion, and a hearing was held on March 10, 2016. The matter was taken under advisement at that time and will be addressed separately by the Court.
Also on March 10, 2016, oral argument was heard on the Motion to Remand. The parties previously filed briefs in support of their respective positions, and the matter is now ripe for decision.
The Notice of Removal was filed pursuant to 28 U.S.C. § 1452(a), which provides as follows:
Accordingly, removal requires an evaluation of jurisdiction as provided in § 1334:
See 28 U.S.C. § 1334(a), (b). District courts are authorized to refer said cases and proceedings to bankruptcy courts pursuant to 28 U.S.C. § 157(a).
Although a court may possess jurisdiction, whether a matter is core or non-core is relevant to the determination of abstention. Mandatory and permissive abstention are provided for in 28 U.S.C. § 1334(c):
If a court determines that it must or should abstain from hearing a case, it can then consider whether there is an equitable ground to remand pursuant to 28 U.S.C. § 1452(b). See Stoe, 436 F.3d at 215.
Beginning with abstention pursuant to 28 U.S.C. § 1334(c)(1), the Court notes that "permissive abstention applies to both core and non-core proceedings." See Bricker v. Martin, 348 B.R. 28, 34 (W.D.Pa.2006). Courts generally consider a number of factors in deciding whether permissive abstention is appropriate:
See id. The factors are flexibly applied, with no one factor being determinative. Id.
Without much need for elaboration, the Court notes that a number of the relevant factors support abstention. State law issues clearly predominate in the removed action, which involves non-debtor defendants. The proceeding was commenced in State Court well before the filing of this bankruptcy case, and the only jurisdictional basis for this proceeding to continue in this Court is 28 U.S.C. § 1334. In addition, a demand for a jury trial was made in the State Court Action. These considerations all support remand.
In addition, there is some indication of forum shopping. Despite Mr. Piper's contention in opposition to the Motion to Remand that a timely adjudication cannot occur in State Court, the assertion appears to be misleading based upon the circumstances. Although the State Court Action was commenced in 2006, Mr. Piper filed the Notice of Removal just days before trial was to commence. The Court further notes that Counsel for Mr. Piper indicated the potential to file bankruptcy petitions for the non-debtor defendants in the State
With respect to some of the remaining factors, a more in depth analysis is required. As the factors are intertwined, the Court considers a number of them together, including the effect on the administration of the estate, the degree of relatedness to the bankruptcy case, the substance rather than form of an asserted "core" proceeding, and the feasibility of severing the state law claims from core bankruptcy matters. Notably, as Ms. Gedeon did not file a proof of claim in this case, the claims set forth in the State Court Action will not be resolved through the claims allowance process. In fact, at the time of removal and the filing of the Motion to Remand, there was little support for Mr. Piper's argument that the claims set forth in the State Court Action are core matters. However, subsequent to the filing of the Motion to Remand, Ms. Gedeon filed the Dischargeability Complaint, which relies upon a determination of Mr. Piper's liability in the State Court Action. The Dischargeability Complaint is undeniably core and will be decided by this Court. The Court, however, is not convinced that the pendency of the Dischargeability Complaint tips the scale in favor of retaining the State Court Action in this forum. Other considerations also come into play.
While a decision to abstain and remand the State Court Action may impact the time to proceed with the Dischargeability Complaint, it is not entirely uncommon for relief from stay to be granted and a dischargeability proceeding to be delayed pending the outcome of a state court proceeding. Notably, depending upon the outcome of the State Court Action, the Dischargeability Complaint may be rendered moot. On the other hand, a decision in the State Court Action may result in issues of collateral estoppel with respect to dischargeability. The Court is confident that such matters could be easily resolved. While this Court makes no determinations at this time, the potential application of collateral estoppel may streamline the dischargeability proceeding. This Court is unconvinced that abstention and remand of the State Court Action would result in a denial of a determination by this Court on the issue of dischargeability as Mr. Piper suggests.
With respect to the administration of this case, while this Court's calendar may permit a trial to be held here prior to the time a trial could occur in State Court, there is no guarantee that this matter would be resolved sooner in this forum and the potential for an earlier trial would not be significant.
As the Court has determined that it should abstain and remand, it need not determine if it must abstain and remand. The decision to abstain and remand, however, is not a decision to grant relief from stay to proceed against Mr. Piper in the State Court Action. The procedure by which Ms. Gedeon sought relief from stay within the Motion to Remand was addressed by the parties at oral argument. As indicated at that time, Ms. Gedeon intends to file an appropriate motion seeking relief from stay should remand be granted. Accordingly, no decision is rendered on that matter at this time.
Therefore, based upon the foregoing, this Court finds that abstention and remand are appropriate. The State Court Action is remanded to the Court of Common Pleas of Allegheny County. Relief from stay to proceed against Mr. Piper, however, is not granted at this time. If an appropriate motion for relief from stay is filed, this Court will consider such a request on an expedited basis. An Order will be entered consistent with this Memorandum Opinion.