Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_11-cv-08135/USCOURTS-azd-3_11-cv-08135-0/pdf.json

Nature of Suit Code: 350
Nature of Suit: Motor Vehicle Personal Injury
Cause of Action: 28:1441 Petition for Removal- Tort/Motor Vehicle (P.I.)

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Jin Ah Lee, decedent, by her estate 

representative, Jungil Lee, Sang Chul Lee, 

decedent's father, and Dukson Lee, 

decedent's mother, 

Plaintiffs, 

vs. 

ANC Car Rental Corp., General Motors 

Corp., and Hong-Jun Jeon, 

Defendants.

No. CV11-8135-PCT-DGC

ORDER 

 Defendant Jeon moves to sever Plaintiffs’ claims against him and remand to state 

court. Doc. 12. Defendants Motors Liquidation Company GUC Trust (“GUC Trust”), as 

successor to General Motors Corporation (“GM”), opposes Jeon’s motion to sever and 

remand. Doc. 15. Defendant Alamo Rent A Car, LLC (“ANC”) joins GUC Trust’s 

opposition. Doc. 16. 

 Plaintiffs oppose Jeon’s motion to sever and have filed a cross-motion to remand 

to state court without severance. Doc. 18. GUC Trust opposes the cross-motion to 

remand. Doc. 21. ANC joins GUC Trust’s opposition. Doc. 22. 

 Jeon’s motion to sever and remand has been fully briefed. Docs. 12, 15, 20. No 

reply has been filed to Plaintiffs’ cross-motion to remand without severance. Docs. 18, 

21, 26. Defendant Jeon’s request for oral argument (Doc. 14) is denied, as the issues 

have been sufficiently briefed and oral argument will not aid in the Court’s decision. For 

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the reasons that follow, the Court will grant in part Jeon’s motion, grant in part Plaintiff’s 

motion, and remand the case to state court. 

I. Background.

 In August 2003, Plaintiffs filed a personal injury and wrongful death action 

against GM and other defendants in the District of Arizona based on federal diversity 

jurisdiction. Doc. 1, at 2. On October 18, 2004, Judge Teilborg dismissed the case for 

lack of complete diversity. Id. at 2, n.4. In May 2005, Plaintiffs filed the instant action in 

the Arizona Superior Court based on the same underlying facts and claims asserted in the 

District Court action. Civil Cause No. CV2005-0307. 

 In 2009, GM filed for Chapter 11 reorganization in the United States Bankruptcy 

Court in the Southern District of New York. Case No. 09-50026 (REG). On 

February 22, 2010, Plaintiffs filed proof of claim number 70062 (the “Lee Bankruptcy 

Claim”) relating to this action. Doc. 1, at 3. Pursuant to the Stipulation and Agreed 

Order between GM and Plaintiffs (the “May 2010 Stipulation”), Plaintiffs agreed to cap 

the Lee Bankruptcy Claim at $20,000,000. Docs. 1, at 3, n.5, 15, at 4. On March 28, 

2011, the Bankruptcy Court confirmed GM’s Second Amended Joint Chapter 11 Plan 

and established GUC Trust. Doc. 15, at 4. The Lee Bankruptcy Claim was among the 

claims transferred to GUC Trust. Id. GUC Trust is the successor to GM in this action. 

 On August 2, 2011, after Plaintiffs and GUC Trust were unable to resolve the Lee 

Bankruptcy Claim through mandatory mediation, the Bankruptcy Court entered the 

Stipulation and Agreed Order between GUC Trust, Sang Chul Lee, and Dukson Lee 

Providing for Limited Modification of the Automatic Stay and Plan Injunction (the 

“Stipulation and Agreed Order”) to enable this case to proceed to final judgment or 

settlement, subject to GUC Trust’s right to seek removal or transfer of venue. Docs. 15-

1, at 4. On September 1, 2011, GUC Trust filed a Notice of Removal (Doc. 1) pursuant 

to 28 U.S.C. § 1452(a), asserting that this Court has jurisdiction under § 1334(b). 

II. Removal and Remand Principles. 

A civil case brought in state court over which a federal district court has original 

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jurisdiction may be removed to the federal court in the district where the action is 

pending, pursuant to 28 U.S.C. § 1441(a). The statute is to be strictly construed against 

removal jurisdiction. See Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 32 

(2002). The “strong presumption” against removal “means that the defendant always has 

the burden of establishing that removal is proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 

(9th Cir. 1992). Federal jurisdiction must be rejected, and the case remanded to state 

court, “if there is any doubt as to the right of removal in the first instance.” Id.; 

see 28 U.S.C. § 1447(c). The burden of showing jurisdiction falls on the party asserting 

jurisdiction. Indus. Techtonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990). 

III. “Related To” Bankruptcy Jurisdiction. 

 Federal courts have original jurisdiction over cases “related to” bankruptcy 

proceedings. 28 U.S.C. § 1334(b). The Ninth Circuit has adopted the Third Circuit’s test 

in Pacor for determining the scope of “related to” jurisdiction. In re Pegasus 

Gold Corp., 394 F.3d 1189, 1193 (9th Cir. 2005) (citing In re Fietz, 852 F.2d 455, 457 

(9th Cir. 1988)). Under the Pacor test, federal courts have “related to” jurisdiction over 

any proceeding where “the outcome could conceivably have any effect on the estate 

being administered in bankruptcy.” Id. (citing Pacor, Inc. v. Higgins, 743 F.2d 984, 994 

(3rd Cir. 1984)). 

 The Ninth Circuit has stated, however, that bankruptcy jurisdiction after a 

reorganization plan has been approved (i.e., post-confirmation jurisdiction) is necessarily 

more limited than pre-confirmation jurisdiction, and has adopted the Third Circuit’s 

“close nexus” test for determining whether post-confirmation “related to” jurisdiction 

exists. Pegasus, 394 F.3d at 1194. The Third Circuit concluded that “matters affecting 

the ‘interpretation, implementation, consummation, execution, or administration of the 

confirmed plan will typically have the requisite close nexus.’” Id. (quoting In re Resorts 

Int’l, Inc., 372 F.3d 154, 167 (3rd Cir. 2004)). 

 In its September 1, 2011 Notice of Removal, GUC Trust asserts that this Court has 

jurisdiction pursuant to 28 U.S.C. § 1334(b) because the action is “related to” GM’s 

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bankruptcy proceedings. Doc. 1, at 4. The Lee Bankruptcy Claim seeks unliquidated 

damages against GUC Trust for, inter alia, wrongful death, pain and suffering, and 

survival claims. Doc. 1, at 5. GUC Trust claims that the jurisdictional requirements of 

§ 1334(b) are satisfied because the outcome of the instant litigation will certainly have a 

“conceivable effect” on GM’s bankruptcy estates. Id. (citing Kaonohi Ohana, Ltd. V. 

Sutherland, 873 F.2d 1302, 1306 (9th Cir. 1989)). The “conceivable effect” standard that 

GUC Trust quotes, articulated in Pacor, applies in the pre-confirmation context. A 

bankruptcy plan has been confirmed here, rendering this a post-confirmation action. See

Doc. 15, at 4.1

 The Court will apply the “close nexus” test adopted by the Ninth Circuit 

to determine whether post-confirmation “related to” bankruptcy jurisdiction exists. 

 GUC Trust did not address the post-confirmation issue in its Notice of Removal 

(Doc. 1), but now quotes the standard in its opposition to Jeon’s motion to sever and 

remand, noting that “related to” jurisdiction extends to matters that affect “the 

interpretation, implementation, consummation, execution, or administration of the 

confirmed plan.” Doc. 15, at 5-6 (citation omitted). But GUC Trust makes no factual 

argument to demonstrate that the pending litigation meets this standard. Instead, it 

merely claims that the litigation “will determine the GUC Trust’s liability and the amount 

of damages, if any, owed to Plaintiffs” and concludes that “[u]ndoubtedly, the outcome of 

the instant litigation could have a significant impact on [GM’s] bankruptcy estate and the 

1

 GUC Trust acknowledges that the Bankruptcy Court has confirmed GM’s Second Amended Joint Chapter 11 Plan as of March 28, 2011. Doc. 15, at 4. It attempts to distinguish between lawsuits filed before confirmation from “lawsuits filed after 

confirmation (which is not the case here).” Doc. 15, at 5. Cf. In re Resorts Intern., Inc., 372 F.3d 154, 159 (3rd Cir. 2004) (“[A]lmost seven years after Reorganization Plan confirmation, the Trustee filed the underlying professional malpractice action . . . .”) (emphasis added). The Court concludes, however, that the concerns giving rise to the narrower “close nexus” test exist as long as confirmation has occurred and a reorganization plan is in place, regardless of when the lawsuit was filed. See In re 

Resorts Intern., Inc., 372 F.3d at 165 (“After confirmation of a reorganization plan, retention of bankruptcy jurisdiction may be problematic. This is so because, under traditional Pacor analysis, bankruptcy jurisdiction will not extend to a dispute between non-debtors unless the dispute creates ‘the logical possibility that the estate will be affected.’ At the most literal level, it is impossible for the bankrupt debtor’s estate to be affected by a post-confirmation dispute because the debtor’s estate ceases to exist once 

confirmation has occurred.”) (citations omitted). 

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administration, implementation, execution, and consummation of the Plan, thus satisfying 

the jurisdictional requirements of 28 U.S.C. § 1334(b).” Doc. 15, at 6. It is not enough 

for GUC Trust to base its jurisdictional claim on the notion that the pending litigation 

will affect the damages paid out of GM’s bankruptcy estate and that this could reduce 

distributions to other creditors. See, e.g., Doc. 15, at 4, n.1. The Ninth Circuit has 

rejected this line of reasoning as overbroad. Pegasus, 394 F.3d at 1194, n.1 (“[W]e are 

not persuaded by the Appellee’s argument that jurisdiction lies because the action could 

conceivably increase the recovery to the creditors. As the other circuits have noted, such 

a rationale could endlessly stretch a bankruptcy court’s jurisdiction.” (citation omitted)). 

 The Court also notes that the Bankrupty Court initially “enjoined all persons from 

commencing or continuing in any manner on account of or respecting any claim, debt, 

right, or cause of action for which [GM], the GUC Trust Administrator, or the Avoidance 

Action Trust Administrator retains sole and exclusive authority to pursue in accordance 

with the Plan.” Doc. 1, at 3-4. The Bankruptcy Court later modified GM’s 

reorganization plan “to the extent necessary to enable [the pending litigation] to proceed 

to final judgment or settlement . . . .” Doc. 1, at 4. This modification indicates that the 

Bankruptcy Court accounted for the pending litigation in connection with GM’s 

reorganization plan, making it unlikely that resolution of this action will affect “the 

interpretation, implementation, consummation, execution, or administration of the 

confirmed plan” to an extent that meets the “close nexus” standard. 

 In sum, GUC Trust’s assertions fall short of convincing the Court that the pending 

litigation has the requisite “close nexus” to the bankruptcy proceedings. GUC Trust has 

therefore not overcome the strong presumption against removal. In light of this ruling, 

the Court need not address whether the case should be remanded on mandatory 

abstention grounds under 28 U.S.C. § 1334(c)(2), permissive abstention grounds under 

28 U.S.C. § 1334(c)(1), or equitable grounds under 28 U.S.C. § 1452(b). Doc. 12. The 

Court will deny Jeon’s motion to sever without prejudice.

 

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IT IS ORDERED: 

1. The Clerk shall remand this action to Coconino County Superior Court. 

 2. Defendant Jeon’s motion to remand (Doc. 12) and Plaintiffs’ cross-motion 

to remand (Doc. 18) are granted. 

 3. Defendant Jeon’s motion to sever (Doc. 12) is denied without prejudice. 

 Dated this 17th day of November, 2011. 

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