Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00747/USCOURTS-caed-2_05-cv-00747-1/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 28:0157 Motion for Withdrawal of Reference

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

In re:

PETER C. ANDREOTTI, BK. NO. 05-21400-B-13

Debtor.

 /

MELANIE ANDREOTTI, a minor, by

E. JOAN BELL, her Guardian ad

Litem,

NO. CIV. S-05-747 LKK

Plaintiff,

v. O R D E R

PETER C. ANDREOTTI and 

DEBRA ANDREOTTI,

Defendants.

 /

On July 22, 2002, Melanie Andreotti (“plaintiff”) filed a 

complaint in Sacramento County Superior Court alleging sexual

abuse, intentional infliction of emotional distress, and two counts

of negligent infliction of emotional distress against her

stepfather, Peter Andreotti (“defendant”). On February 24, 2005,

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26 1 Background facts are derived from the parties’ papers. 

2

defendant removed this case to the Eastern District of California

pursuant to 28 U.S.C. § 1452(b), on the basis of “related to

bankruptcy” jurisdiction. 

I.

BACKGROUND1

In state court, defendant moved to reopen discovery on

February 8, 2005, although trial was set for February 14, 2005.

That motion was denied. On February 11, 2005, defendant filed for

bankruptcy relief in the Eastern District of California. 

Consequently, all matters relating to this action were immediately

stayed. On February 24, 2005, defendant removed the case to the

United States Bankruptcy Court for the Eastern District of

California.

During the bankruptcy proceedings, plaintiff objected to

defendant’s proposed Chapter 13 plan, which designated a minimum

of $40,000 (plaintiff sought damages totaling $ 2,000,000 in this

action). On March 30, 2005, defendant filed a motion to withdraw

reference, i.e., to transfer the proceedings from bankruptcy court

to this court. Plaintiff filed a statement of non-opposition to

the motion to withdraw reference and a counter-motion to remand.

All bankruptcy-related matters have been continued until August 18,

2005, when the bankruptcy court will hear plaintiff’s objections

to defendant’s proposed Chapter 13 plan. Pending before the court

is plaintiff’s motion to remand this case to the Sacramento County

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2 Because plaintiff does not oppose defendant’s motion to

withdraw reference, this court assumes jurisdiction to consider

plaintiff’s motion to remand. 

3 The Ninth Circuit has adopted a test set forth by the Third

Circuit in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (1984), where

the Circuit Court explained that:

 

The usual articulation of the test for determining

whether a civil proceeding is related to bankruptcy is

whether the outcome of that proceeding could conceivably

have any effect on the estate being administered in

bankruptcy...Thus the proceeding need not necessarily be

against the debtor or against the debtor’s property. An

action is related to bankruptcy if the outcome could

alter the debtor’s rights, liabilities, options, or

freedom of action (either positively or negatively) and

which in any way impacts upon the handling and

administration of the bankrupt estate. See Fietz v.

Great Western Savings, 852 F.2d 455, 457 (9th Cir.

1988). 

3

Superior Court.2 

II.

ANALYSIS

Plaintiff contends that her motion should be granted because

equity favors remanding the matter to state court. Plaintiff’s

arguments are persuasive. 

 As a threshold matter, the court notes that plaintiff’s suit

was properly removed to bankruptcy court because it is “related to”

the bankruptcy filing.3 The Supreme Court has held that “related

to” jurisdiction under Section 1334(b) should be interpreted

broadly. Celotex Corporation v. Edwards, 514 U.S. 300, 307–08

(1995). Because plaintiff’s lawsuit against defendant involves a

potentially large claim, it conceivably has an effect on the estate

being administered in bankruptcy. Thus, the action is related to

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4

the bankruptcy proceedings and was properly removed.

Turning to the motion to remand, a district court has

original, but not exclusive, jurisdiction over a civil action whose

outcome could conceivably have any effect on the administration of

a bankruptcy estate. In re Fietz, 852 F.2d 455, 457 (9th Cir.

1988) (adopting rule from Pacor Inc., v. Higgins, 743 F.2d 984, 994

(3rd Cir. 1984)). District courts are not required to adjudicate

such removed actions. 28 U.S.C. § 1452(b) expressly provides that,

“The court may . . . remand (such actions) on any equitable

ground.” Therefore, a court has discretion to remand a case

arising under or relating to Title 11 based on notions of "general

fairness." Schwarzer, Federal Civil Procedure Before Trial § 2:846

(The Rutter Group 2003). 

 There is no controlling authority on the meaning of “equitable

ground” because § 1452(b) also provides that: “An order entered

under this subsection remanding a claim or cause of action, or a

decision not to remand, is not reviewable by appeal or otherwise

by the court of appeals . . . or by the Supreme Court of the United

States . . . .” In reaching its remand decision, a court may

consider such factors as respect for state-court decision-making

and the predominance of state court issues. Schwarzer, Federal

Civil Procedure Before Trial § 2:846.19. (The Rutter Group 2003).

No consistent test emerges from the courts. Rather, courts have

considered various factors and devised different tests depending

on the unique circumstance of each case in applying the “equitable

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4 The Second Circuit has held that § 1452(b)’s reference to

“equitable ground” simply means one that is fair and reasonable.

Cathedral of the Incarnation in the Diocese of Long Island v.

Garden City Co., Inc., 99 F.3d 66, 69 (2d Cir. 1996). A Ninth

Circuit bankruptcy appellate panel has explained that this

“equitable ground” standard is an “unusually broad grant of

authority” which “subsumes and reaches beyond all of the reasons

for remand under the nonbankruptcy removal statutes.” In re

McCarthy, 230 B.R. 414, 417 (9th Cir. BAP 1999). The Southern

District of California has held that consideration of the following

factors may be appropriate in determining whether to remand: (1)

the effect of the action on the administration of the bankruptcy

estate; (2) the extent to which issues of state law predominate;

(3) the difficulty of applicable state law; (4) comity; (5) the

relatedness or remoteness of the action to the bankruptcy case; (6)

the existence of a right to a jury trial; and (7) prejudice to the

party involuntarily removed from state court. Williams v. Shell

Oil, 169 B.R. 684, 692-93 (S.D. Cal. 1994). Finally, defendants

point to Western Helicopters, Inc. v. Hiller Aviation, Inc., 97

B.R. 1, *2 (E.D. Cal. 1988) where Judge Schwartz remanded a civil

case based on considerations of “judicial economy; comity and

respect for state court decision-making capabilities; the effect

of remand upon the related title 11 estate; the effect of

bifurcating the claims and parties to an action and the

possibilities of inconsistent results; the predominance of state

law issues and non-debtor parties; and the prejudice to other

parties to the action.” 

5

ground” language.4 Having carefully considered the instant matter

and various “fairness factors,” the court finds that fairness

requires the action be remanded so it can finally be concluded. 

The parties were litigating for three years in the state court

before defendant filed for bankruptcy and removed the matter to

bankruptcy court. Three days before trial was to commence on

February 14, 2005, defendant filed for bankruptcy, and ten days

later, defendant removed the matter to bankruptcy court. Because

the case proceeded through pretrial, the California court is

intimately familiar with the issues and the state law that governs

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5 Significantly, all claims are based upon state law causes

of action. Although the law involved in this case is not

difficult, per se, the California court certainly has a greater

degree of expertise than does this court. 

6 During oral argument, defendant maintained that a trial in

state court could not begin earlier than March or April 2006. As

I explained to defendant during the hearing, it is unlikely that

the trial could begin any sooner in this court. 

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the case.5 Defendant admits that plaintiff’s lawsuit is the reason

he sought bankruptcy protection in the first instance. Opp’n at

1. It is clear to the court that through the filing of the

bankruptcy proceedings and the motion to reopen discovery in state

court, defendant was merely seeking to delay trial. Notably,

plaintiff explains that the state court would set trial within

sixty to ninety days and that if this matter were remanded to the

state court, trial would likely begin in October or November of

this year.6 Plaintiff contends that if the case remains with this

court, it is likely to further delay trial. Pl.’s Repl. at 3.

Plaintiff’s argument is well-taken. In sum, consideration of

judicial economy and comity supports remand to the state court,

especially considering the time invested by that court in the case.

Defendant contends that he will be prejudiced by remand

because of the resources he has already expended in trying the

matter at the federal level. Defendant points out that plaintiff

could have moved for remand in February when this case was removed,

but did not. This argument is unpersuasive. Both parties have

incurred expenses at the federal level. Rather, it appears that

plaintiff would be prejudiced if this court were not to remand the

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instant case. Plaintiff contends that she was prejudiced when

defendant removed this action three days prior to trial because she

was prepared to proceed with trial which was actually set to begin.

The removal statute was not intended as a litigation strategy to

be used for the purpose of delay.

For the reasons set forth above, the court ORDERS as follows:

1. The motion to withdraw reference is GRANTED;

2. The motion to remand the suit removed from the Superior

is GRANTED; and

3. The matter is REFERRED to the Bankruptcy Court for such

further proceedings as it deems appropriate.

IT IS SO ORDERED.

DATED: August 3, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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