NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

 :

IN RE GREGORY CRAMER, : Bankruptcy No. 10-12220 (MBK)

 : Adv. Proc. No. 10-1291 (MBK)

Debtor. :

 :

 :

THOMAS L. DEFEO, : CIVIL ACTION NO. 11-1211 (MLC)

 : 

Plaintiff, :

 : MEMORANDUM OPINION

v. :

 :

GREGORY CRAMER, :

 :

Defendant. :

 :

COOPER, District Judge

Plaintiff, Thomas L. DeFeo (“DeFeo”), commenced an action in

New Jersey Superior Court (“State Action”) against Defendant,

Gregory Cramer (“Cramer”), to recover damages for personal

injuries sustained when Cramer allegedly struck DeFeo with an

automobile. (Dkt. entry no. 1, Pl. Certif., Ex. 3, Compl. at 3-

4.) Eight months later, Cramer petitioned for bankruptcy relief

in the United States Bankruptcy Court for the District of New

Jersey, and subsequently disclosed the State Action, and DeFeo as

a creditor. See In re Cramer, Bankr. D.N.J. No. 10-12220, dkt.

entry no. 1, Pet.; id., dkt. entry no. 8, Am. Scheds. DeFeo then

brought an adversarial proceeding in the Bankruptcy Court

(“Adversary Action”), seeking judgment on his claims and a

declaration of nondischargeability. DeFeo v. Cramer, Bankr.

D.N.J. Adv. Proc. No. 10-1291, dkt. entry no. 1. 

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After issuing and vacating an Order To Show Cause why the

Adversary Action should not be dismissed for DeFeo’s failure to

prosecute on February 9, 2011, the Bankruptcy Judge granted DeFeo

30 days to move to withdraw the reference. Id., dkt. entry no.

19, Order To Show Cause; id., dkt. entry no. 22, 2-9-11 Minutes. 

DeFeo now moves to withdraw the reference of the Adversary Action

and seeks a jury trial in the District Court, apparently on both

the issues of liability and dischargeability. (See dkt. entry

no. 1, Not. of Mot. at 1; Pl. Certif. at 3.) The Court

determines the motion on the briefs without oral argument. See

Fed.R.Civ.P. 78(b). The Court will grant the motion in part and

deny the motion in part, for the reasons stated herein. 

DISCUSSION

I. Applicable Legal Standards

A. Withdrawal

Bankruptcy judges may preside over, and enter appropriate

orders and judgments pertaining to, all cases under chapter 11 of

the Bankruptcy Code and all “core proceedings” arising

thereunder. 28 U.S.C. § 157(b)(1). Bankruptcy judges may also

hear “non-core proceedings” that are “related to” pending

proceedings. 28 U.S.C. § 157(c)(1). In certain circumstances, 

when a case has been referred to a bankruptcy court, the District

Court may withdraw that reference, in whole or in part, from the

bankruptcy court’s jurisdiction. See 28 U.S.C. § 157(d); In re

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Pruitt, 910 F.2d 1160, 1168 (3d Cir. 1990); In re Glunk, No.

05–31656, 2006 WL 6659552, at *4 (Bankr. E.D. Pa. Aug. 18, 2006). 

Under Federal Rule of Bankruptcy Procedure 5011(c), a district

judge shall hear a motion for withdrawal of a case or proceeding

and the relief that the district judge grants pursuant to a filed

motion for withdrawal shall be on such terms and conditions as

the judge deems proper. See Fed.R.Bankr.P. 5011(c). 

“[B]ankruptcy courts have no power to make factual

determinations regarding personal-injury tort claims.” In re

Martinez, No. 10-0454, 2010 WL 3075282, at *2 (D.N.M. July 15,

2010). The Bankruptcy Court’s core jurisdiction does not extend

to “the liquidation or estimation of contingent or unliquidated

personal injury tort or wrongful death claims against the estate

for purposes of distribution in a case.” Id.; see also 28 U.S.C.

§ 157(b)(2)(B); 28 U.S.C. § 157(b)(2)(O) (stating that core

jurisdiction extends to “other proceedings affecting the

liquidation of the assets of the estate or the adjustment of the

debtor-creditor or the equity security holder relationship,

except personal injury tort or wrongful death claims”). Rather,

“[t]he district court shall order that personal injury tort and

wrongful death claims shall be tried in the district court in

which the bankruptcy case is pending, or in the district court in

the district in which the claim arose, as determined by the

district court in which the bankruptcy case is pending.” 28

U.S.C. § 157(b)(5). 

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The Bankruptcy Court lacks subject-matter jurisdiction to

adjudicate personal injury tort claims, but it has jurisdiction

to adjudicate dischargeability once the claims have been

liquidated. see In re Erickson, 330 B.R. 346, 349 (Bankr. D.

Conn. 2005); see also Martinez, 2010 WL 3075282, at *3 (noting 11

U.S.C. § 523(a)(6) “excepts from discharge any debt incurred for

willful and malicious injury by the debtor to another,” and that

“[t]his determination is a core bankruptcy matter”).

B. Abstention

Although 28 U.S.C. § (“Section”) 157(b)(5)’s use of the word

“shall” appears to require the district judge with jurisdiction

over the bankruptcy petition to order personal injury cases tried

in a district court, a second statutory provision states:

Nothing in this section prevents a district court in the

interest of justice, or in the interest of comity with State

courts or respect for State law, from abstaining from

hearing a particular proceeding arising under [the

bankruptcy code] or arising in or related to a case under

[the bankruptcy code].

28 U.S.C. § 1334(c)(1). “Federal courts have uniformly held that

this provision permits district court judges to abstain from

exercising the authority granted by [Section] 157(b)(5), where

such abstention would be in the interest of justice.” Marks v.

Outboard Marine Corp., 974 F.Supp. 406, 410 (D.N.J. 1997).

“Mandatory abstention pursuant to Section 1334(c)(2) does

not apply to the liquidation of personal injury tort or wrongful

death cases . . . However, in its discretion, the Court may

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abstain from hearing a case over which it has jurisdiction

pursuant to the discretionary abstention principles set forth in

Section 1331(c)(1).” Hopkins v. Plant Insulation Co., 342 B.R.

703, 710 (D. Del. 2006) (citations omitted).

In assessing whether to exercise discretionary abstention,

the Court considers the following factors: 

(1) the effect on the efficient administration of the

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

over bankruptcy issues; (3) the difficulty or unsettled

nature of applicable state law; (4) the presence of a

related proceeding commenced in state court or other

non-bankruptcy court; (5) the jurisdictional basis, if any,

other than 28 U.S.C. § 1334; (6) the degree of relatedness

or remoteness of the proceeding to the main bankruptcy case;

(7) the substance rather than the form of an asserted ‘core’

proceeding; (8) the feasibility of severing state law claims

from core bankruptcy matters to allow judgments to be

entered in state court with enforcement left to the

bankruptcy court; (9) the burden on the court’s docket; (10)

the likelihood that the commencement of the proceeding in

bankruptcy court involves forum shopping by one of the

parties; (11) the existence of a right to a jury trial; and

(12) the presence of non-debtor parties.

Allen v. J.K. Harris & Co., LLC, 331 B.R. 634, 645 (E.D. Pa.

2005).

II. Legal Standards Applied Here

A. The Court Will Withdraw the Reference in Part

Because the Adversary Action asserts unliquidated claims for

personal injury, the Court finds it appropriate to withdraw the

reference of the Adversary Action to the Bankruptcy Court, to the

extent that it seeks liquidation of the personal injury claims. 

See Martinez, 2010 WL 3075282, at *3 (withdrawing reference of

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personal injury claims from bankruptcy court); Beechgrove Redev.

Phase II, L.L.C. v. Wilson, No. 09-4347, 2009 WL 2922260, at *1-2

& n.11 (E.D. La. Sept. 10, 2009) (granting motions to withdraw

and abstain for liquidation of personal injury suit in state

court, noting creditor intended “to use the state forum for

liquidation” and once determined would “present the judgment to

the Bankruptcy Court for payment”). 

As discussed below, however, the Court will abstain from

hearing the personal injury claims, in favor of permitting the

pending State Action to resolve liability. The Bankruptcy Court

retains jurisdiction for making the determination of

dischargeability, once the state court in the State Action has

liquidated the personal injury claims. See Erickson, 330 B.R. at

349 (stating although bankruptcy court lacks subject-matter

jurisdiction to adjudicate personal-injury tort claim, it has

exclusive jurisdiction to adjudicate dischargeability once the

claim has been liquidated); Martinez, 2010 WL 3075282, at *3

(granting motion to withdraw, although staying proceedings for

state court action to continue). 

Unlike the personal injury claims, the Court does not find,

nor has DeFeo demonstrated, that the issue of dischargeability

merits withdrawal under Section 157(d). To the extent DeFeo

seeks to withdraw the issue of dischargeability through invoking

the right to a jury trial on the issue (see Not. of Mot. at 1.),

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he provides no authority for this position, and in any case,

DeFeo may have waived this right by failing to follow Local

Bankruptcy Rule 9015-1. 

B. The Court Abstains From Hearing the Personal Injury

Claims

The parties do not address whether DeFeo’s claims should be

heard in this Court or in the state court where the State Action

was originally brought. DeFeo asks for the claims to be “heard

by a Judge in the District Court,” but provides no authority for

this request. (Pl. Certif. at 3.) “[T]he Court must next

consider whether abstention is appropriate under Section

1334(c).” Hopkins, 342 B.R. at 710. Mandatory abstention does

not apply to the unliquidated personal injury claims here. See

id. However, the Court considers the factors for permissive

abstention below.

1. Efficient Administration of the Estate

Where the outcome of a case may affect the entire bankruptcy

case, permissive abstention is not proper. Allen, 331 B.R. at

645. Here, DeFeo’s claim against Cramer may have some impact on

the administration of the bankruptcy estate, if successful, in

that it would be brought against the estate along with those of

the other creditors. But the Bankruptcy Court must await a

finding of liability from either court before making a

determination on dischargeability. Further, it appears a

judgment would be non-dischargeable only if Cramer’s alleged

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conduct is found to be willful or malicious. See 11 U.S.C. §

1328; 11 U.S.C. § 523(a)(6). There does not appear to be any

other issue within the State Action that would negatively affect

the administration of the estate. Thus, this factor does not

preclude permissive abstention. See id. at 645-46. 

2. Domination of State Law Issues

The assertion of only state law claims in a complaint

suggests that permissive abstention would be appropriate. See,

e.g., Lomas & Nettleton Co. v. Warren (In re Warren), 125 B.R.

128, 130, 132 (E.D. Pa. 1991) (finding permissive abstention

appropriate where matter was solely based on state law). All of

DeFeo’s claims are state law claims (see Compl. at 2-3), thus,

weighing in favor of permissive abstention.

3. Difficult or Unsettled Nature of State Law

The State Action includes claims for negligence and

intentional personal injury. None of these claims appear to

present unique or unusual issues of law that are difficult or

unsettled in New Jersey. This factor is therefore somewhat

neutral to the issue of permissive abstention. See Allen, 331

B.R. at 646. 

4. Related Proceeding Already Commenced in State Court

The State Action was filed before Cramer’s bankruptcy

petition. Because the State Action had not only been commenced,

but had proceeded for nearly eight months prior to the initiation

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of the Adversary Action, this factor weighs in favor of

permissive abstention. See id. 

5. Jurisdictional Basis other than 28 U.S.C. § 1334

According to the Complaint, DeFeo and Cramer both reside in

New Jersey. (Compl. at 1.) There is, therefore, no basis for

jurisdiction pursuant to Section 1332. Because there are no

federal claims involved in the case, there is also no basis for

federal question jurisdiction. Thus, there is no jurisdictional

basis other than under Section 1334, and this factor weighs in

favor of permissive abstention. See id.

6. Relatedness or Remoteness to Main Bankruptcy Case

The claims in the Adversary Action are based on the alleged

personal injuries caused by Cramer. Until liability is found and

the claims liquidated, it is substantively remote from the main

bankruptcy case. While the amount potentially owed to DeFeo may

be of some importance to other creditors, the Court concludes

that its relatedness to the bankruptcy case does not preclude

permissive abstention. See id.

7. Substance, Rather than Form, of Core Proceeding

As discussed above, the substantive personal injury claims

underlying this proceeding do not “arise from” the bankruptcy

case, but rather are merely related to it. Thus, this factor

weighs in favor of permissive abstention. See id.

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8. Feasibility of Severing State Law Claims

The Adversary Action contains only state law claims and the

process of litigating those claims has already begun in the State

Action in state court. Thus, there are no state law claims which

could be severed—all of the claims could proceed in the state

court. See id.

9. Burden on the Court’s Docket

It appears from the ACMS Public Access (“ACMS”) Case

Document List that the State Action was proceeding, and it does

not appear that the state court would be unduly burdened by

resuming that action. ACMS, Dkt. No. OCN-L-2047-09, available at

http://njcourts.judiciary.state. nj.us/web1/ACMSPA/. The Court

does not believe that hearing the Adversary Action would burden

its docket any more than it would a state court docket. Thus,

this is a neutral factor in the permissive abstention analysis.

10. Forum Shopping

The Court notes that DeFeo originally brought the State

Action in state court. Rather than petitioning the Bankruptcy

Court to lift the automatic stay to permit the State Action to

continue, DeFeo moves for the Adversary Action to be heard in the

District Court. In addition, although it does not appear that

Cramer ever removed the State Action, DeFeo brought the Complaint

to Determine Non-Dischargeability in the Bankruptcy Court, which

included the request for a finding of liability and compensatory

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and punitive damages, even before the state court was notified of

Cramer’s bankruptcy action. (See Pl. Certif., Ex. 5, Compl. To

Determine Non-Dischargeability at 2.) See ACMS, Dkt. No. OCN-L2047-09, 4-26-10 entry, “NOTC BANKRUPCY”. The Court concludes

this conduct weighs slightly in favor of permissive abstention.

11. Right to a Jury Trial

DeFeo demanded a jury trial in the State Action and does so

here. However, because the Court is withdrawing the reference to

the Bankruptcy Court on the personal injury claims, DeFeo could

be afforded a jury trial in either state or federal court. Thus,

this is a neutral factor with respect to permissive abstention. 

Allen, 331 B.R. at 647.1

12. Presence of Non-debtor Parties

The only parties in the Adversary Action are the debtor,

Cramer, and a potential creditor, DeFeo. However, it appears

that another individual, Anna DeFeo, is a named party in the

State Action. See ACMS, Dkt. No. OCN-L-2047-09. The presence of

any other non-debtor parties weighs in favor of permissive

abstention. In re Pac. Gas & Elec. Co., 279 B.R. 561, 571

(Bankr. N.D. Cal. 2002).

 Because the Court is withdrawing and abstaining, it does 1

not decide whether DeFeo waived his federal jury trial right

through failure to follow the requirements of Local Bankruptcy

Rule 9015-1. 

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After considering each of the above dozen factors, the Court

concludes that the absence of any other basis for exercise of

federal jurisdiction over the claims, the dominance of state law

issues in the State Action, and the existence of a pending

proceeding in state court sufficiently outweigh other concerns

such that permissive abstention is appropriate here. See Matter

of Poole Funeral Chapel, Inc., 79 B.R. 37, 39 (Bankr. N.D. Ala.

1987) (recommending withdrawing the reference and abstaining from

a personal injury action, to “allow the cases to be liquidated in

the State court”). 

2

The parties have not provided any state court orders

indicating the current status of the State Action under Docket

No. OCN-L-2047-09 or why is was dismissed. However, the Court

has examined the ACMS docket and notes the April 26, 2010,

notation “ORDR DISM BANKR.” Because it appears that the State

Action was dismissed pursuant to Cramer’s bankruptcy petition,

and because the Court is withdrawing the reference of the

personal injury claims from the Bankruptcy Court, it appears

appropriate for the State Action to resume in state court. See

Lopez v. Colombo, 379 N.J.Super. 96, 99 (N.J. App. Div. 2005)

 The Court notes that the State Action was not removed to 2

this Court, so remand per se is not an issue. However, by

granting the motion to withdraw in part and abstaining, “the

effect will be the same.” Pac. Gas & Elec. Co., 279 B.R. at 576

n.7 (noting related actions, “possibly with some exceptions, will

proceed in state court”).

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(reinstating state court action pursuant to Bankruptcy Court’s

order lifting stay, noting “a dismissal occurring as a result of

a bankruptcy stay would necessarily be without prejudice as it is

not dispositional but instead interlocutory based upon lack of

jurisdiction pending further order of the Bankruptcy Court”).3

For these reasons, the Court will, in the interests of

justice, withdraw the reference in part and abstain from hearing

the personal injury claims, to permit DeFeo to resume the State

Action in New Jersey Superior Court, Ocean County. The

Bankruptcy Court will retain jurisdiction over the issue of

dischargeability once DeFeo’s claims have been liquidated.

CONCLUSION

The Court, for the reasons stated supra, will grant in part

and the deny in part the motion. Relief from the automatic stay

is granted to the extent necessary to allow litigation of the

personal injury claims in the State Action. The Court will issue

an appropriate order. 

 s/ Mary L. Cooper 

MARY L. COOPER

United States District Judge

Dated: May 26, 2011

 Under this reasoning, it appears that the next step is for 3

DeFeo to petition the state court to administratively restore the

State Action, advising the state court of this Court’s order

withdrawing the reference in part from the Bankruptcy Court. Id.

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