JEFF BOHM, Bankruptcy Judge.
On October 11, 2018, Danny Hanna, the debtor in the main Chapter 13 case (the "
The Court has reviewed the complaint and the Motion to Dismiss and has determined that this adversary proceeding should be dismissed pursuant to 28 U.S.C. § 1334(c)(1).
The Court has jurisdiction over this matter pursuant to § 1334. Section 1334(b) provides that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11 [of the Code], or arising in or related to cases under title 11."
A bankruptcy court has the power to abstain from hearing a dispute under § 1334. A court may permissively abstain from a matter pursuant to § 1334(c)(1), while § 1334(c)(2) mandates abstention in certain proceedings. Abstention under § 1334(c)(2) does not apply here because (1) no party has made a timely motion for the Court to abstain pursuant to § 1334(c)(2); and (2) the Court is not aware of any action in state court regarding this matter. Thus, only permissive abstention is relevant here.
Permissive abstention may be raised by the court sua sponte. Gober v. Terra + Corp. (In re Gober), 100 F.3d 1195, 1207 n.10 (1996); Genesis Producing Co., L.P. v. Smith Big Oil Corp., No. H-13-3342, 2014 WL 3897831, at *3 (S.D. Tex. Aug. 8, 2014). Further, the bankruptcy court "has broad power to abstain whenever appropriate." In re Wood, 825 F.2d at 93. Here, this Court chooses to sua sponte raise whether it should abstain from adjudicating the dispute at bar.
The factors a court may consider when deciding whether to abstain pursuant to § 1334(c)(1) are:
Genesis Producing Co., L.P.,, 2014 WL 3897831, at *3; McVey v. Johnson (In re SBMC Healthcare, LLC), 519 B.R. 172, 190 (Bankr. S.D. Tex. 2014). The Court now examines each of these factors with respect to the dispute at bar.
This factor supports abstention. This suit deals with noncore issues with a remote connection to the Debtor's main Chapter 13 case. See Houston Baseball Partners LLC v. Comcast Corp. (In re Houston Reg'l Sports Network, L.P.), 514 B.R. 211, 215 (Bankr. S.D. Tex. 2014). The Debtor has represented in his Schedule B that he has an ownership interest in Blackwolf, but he has also represented in his Schedule I that he draws no salary from this entity. [Main Case Doc. Nos. 24, 34]. Moreover, it is Blackwolf, not the Debtor himself, who has standing to bring claims against Compass Bank;
Factor 2 supports abstention because all claims in this suit are state law claims. There are absolutely no claims based upon the Bankruptcy Code that are asserted in this lawsuit. See id.; Lain v. Watt (In re Dune Energy, Inc.), 575 B.R. 716, 732 (Bankr. W.D. Tex. 2017).
The claims asserted in this adversary proceeding are "garden variety" state law causes of action (i.e., breach of contract and a violation of § 4.101 of the Texas Business and Commerce Code) that a state court can easily adjudicate—and should adjudicate. This factor therefore favors abstention. See In re SBMC Healthcare, LLC, 519 B.R. at 191.
This factor is neutral, as the Court is not aware of another related proceeding commenced in state court or some other nonbankruptcy forum.
Jurisdiction under § 1334 is the only basis for jurisdiction and, thus, this factor favors abstention. See id. at 191; Lone Star State Bank of W. Tex. v. Waggoner (In re Waggoner Cattle, LLC), No. 18-20126-R1J-11, 2018 WL 6060351, at *5 (Bankr. N.D. Tex. Nov. 19, 2018).
Factor 6 favors abstention because the claims asserted are not property of the Debtor's Chapter 13 estate. The only nexus between these claims and the Debtor is that the Debtor has an ownership interest in the party asserting the claims (i.e., Blackwolf)—and, as already noted, these claims are remote with respect to having an impact on the administration of the Debtor's Chapter 13 estate.
Factor 7 supports abstention because the dispute at bar is not a core proceeding. In re Houston Reg'l Sports Network, L.P., 514 B.R. at 216; In re Dune Energy, Inc., 575 B.R. at 732.
Factor 8 does not apply, as none of the claims are core proceedings.
It is a burden on this Court's docket to adjudicate solely state law claims between nondebtor parties, particularly when the outcome of that litigation will have such little effect (if at all) on the Debtor's Chapter 13 bankruptcy estate.
There does appear to improper forum shopping here. As already noted, the Debtor is a named plaintiff, and yet he has no standing to pursue claims that clearly belong to Blackwolf. The Debtor, by naming himself as a plaintiff, appears to be doing so in order to bolster his position that this Court, as opposed to a state court, should adjudicate this dispute. This is a dubious strategy that smacks of improper forum shopping. Accordingly, the Court finds that this factor favors abstention. See In re CHC Grp. Ltd., 2017 WL 1380514, at *22.
This factor weighs in favor of abstention because Compass Bank has the right to a jury trial in state court given the causes of action asserted in this adversary proceeding. See In re Dune Energy, Inc., 575 B.R. 716 at 733.
This factor favors abstention because Compass Bank and Blackwolf are both non-debtor parties. Moreover, as already noted above, the Debtor has no standing to be a plaintiff, which in turn means that this adversary proceeding involves only non-debtor parties. See IO AT Tech Ridge, LP v. Hartford Fire Ins. Co. (In re ID AT Tech Ridge LP), No. 17-11540-TMD, 2018 WL 2431640, at *6 (Bankr. W.D. Tex. May 3, 2018).
Factor 13 weighs in favor of abstention. The adversary proceeding involves "garden variety" state law issues and deference should be given to a state court to decide state law issues under these circumstances. See In re Dune Energy, Inc., 575 B.R. 716 at 733; In re Special Value Continuation Partners, L.P. v. Jones, No. 11-3304, 2011 WL 5593058, at *10 (Bankr. S.D. Tex. Nov. 10, 2011).
There is no evidence of prejudice to any party and, thus, this factor is not relevant to the Court's consideration.
In sum, 11 of the factors weigh in favor of abstention, none of the factors weigh against abstention, and 3 factors are neutral. Further, case law is clear that this Court has the discretion to give different weight to each of these factors. In re Houston Reg'l Sports Network, L.P.), 514 B.R. at 217 ("More important than the numerical count of factors weighing for and against abstention, the Court must determine which arguments are of greater importance and persuasion."). Here, this Court places substantial weight on factors 2, 7, 10, 11, 12, and 13, all of which (as noted above) weigh in favor of abstention. The Court will therefore abstain from adjudicating this adversary proceeding and, instead, will dismiss this lawsuit.
An order consistent with this Memorandum Opinion will be entered simultaneously on the docket.