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McCorkle v. Herold

United States District Court, W.D. Virginia, Charlottesville Division

May 31, 2018

Austin Joseph McCorkle, Petitioner,
v.
Peter John Herold, Sr., Respondent.

          MEMORANDUM OPINION

          NORMAN K. MOON SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Petitioner Austin McCorkle's (“McCorkle”) motion to withdraw reference and Respondent Peter Herold's (“Herold”) subsequent motion to dismiss. (Dkts. 1, 3). Herold and his wife previously filed for Chapter 13 Bankruptcy in the United States Bankruptcy Court for the Western District of Virginia. (Dkt. 2 at ECF 1); In re Peter John Herold, Sr. and Amy Bond Herold, No. 17-62475, (Bankr. W.D. Va. Dec. 27, 2017). Before Herold filed for bankruptcy, McCorkle sued him in Virginia state court for injuries sustained in a car accident. The accident was allegedly caused by Herold's intoxication. Upon Herold's filing for bankruptcy, McCorkle's state action was stayed. McCorkle now seeks to have his claim against Herold excepted from the ongoing bankruptcy proceedings, pursuant to 11 U.S.C. § 523(a)(9), and litigated in this Court. See 28 U.S.C. §§ 157(b)(5), (d). Herold has appeared and moved to dismiss the instant action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Although I will grant McCorkle's motion to withdraw reference, I find permissive abstention is appropriate and will dismiss the instant case.

         I. Motion to Withdraw Reference

         “Under the Bankruptcy Code, a district court, and not the bankruptcy judge, must try personal injury tort and wrongful death claims.”[1] In re Beard, 811 F.2d 818, 832 (4th Cir. 1987).

The 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). Thus, withdrawing the reference of personal injury actions is mandatory under the language of § 157(b)(5). Desimone Hosp. Servs., LLC v. W. Virginia-Am. Water Co., No. AP 2:14-2008, 2014 WL 1577051, at *3 n.3 (S.D. W.Va. Apr. 16, 2014) (noting personal injury tort claims “are the subject of mandatory withdrawal of reference pursuant to 28 U.S.C. § 157(b)(5).”); In re 610 W. 142 Owners Corp., No. 94 B 44488 (JGH), 1999 WL 294995, at *2 (S.D.N.Y. May 11, 1999) (same).

         Here, neither party contests that McCorkle's claim is anything other than a personal injury tort claim. Indeed, his claim is for common law negligence, arising out of a car accident, seeking damages for personal injuries. In re Cramer, No. ADV. 10-1291 MBK, 2011 WL 2112518, at *2 (D.N.J. May 26, 2011) (granting plaintiff's motion to withdraw reference under § 157(b)(5) for a claim involving a car accident). Accordingly, the Court will grant McCorkle's motion to withdraw reference under the mandate in § 157(b)(5).

         II. Permissive Abstention

         Although granting McCorkle's motion to withdraw reference is mandatory under § 157(b)(5), subsection (b)(5) “has consistently been construed to recognize discretion in district courts to leave personal injury cases where they are pending. In other words, the Bankruptcy Code ‘ ‘allows abstention for personal injury cases' and only ‘where abstention does not occur' will the requirement for adjudication in a district court take effect.'” In re Pan Am. Corp., 950 F.2d 839, 844 (2d Cir. 1991) (quoting In re White Motor Credit, 761 F.2d 270, 273 (6th Cir. 1985)). A district court is not precluded, “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 title 11 or arising in or related to a case under title 11.” 28 U.S.C. § 1334(c)(1). Such “abstaining” is called permissive abstention.[2]

         A. Permissive Abstention Factors

         The Court considers a dozen factors when determining whether permissive abstention is appropriate:

(1) the effect or lack thereof on the efficient administration of the estate if a Court recommends abstention, (2) the extent to which state law issues predominate over bankruptcy issues, (3) the difficulty or unsettled nature of the applicable law, (4) the presence of a related proceeding commenced in state court or other nonbankruptcy 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 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 [federal] court involves forum shopping by one of the parties, (11) the existence of a right to a jury trial, and (12) the presence in the proceeding of nondebtor parties.

In re Eastport Assocs., 935 F.2d 1071, 1075 (9th Cir. 1991); see also In re Lee, 461 Fed.Appx. 227, 238 (4th Cir. 2012) (discussing the second, fourth, and tenth factors). “[O]ne or more (not necessarily all)” of these factors need be considered. In re Cody, Inc., 281 B.R. 182, 190 (S.D.N.Y. 2002) (emphasis in original), aff'd in part, appeal dismissed in part, 338 F.3d 89 (2d Cir. 2003). “Courts should apply these factors flexibly, for their relevance and importance will vary with the particular circumstances of each case, and no one factor is necessarily determinative.” Matter of Chicago, Milwaukee, St. Paul & Pac. R. Co., 6 F.3d 1184, 1189 (7th Cir. 1993). On the whole, the factors weigh in favor of abstention in this case.

         B. ...


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