Opinion
In Bankruptcy Case No. 01-18495, Adversary No. 01-7125.
September 27, 2001
OPINION
This proceeding is before the Court on Advanta Leasing Services' Motion for Stay Pending Appeal.
On May 8, 2001, the Plaintiff, Illinois Licensed Beverage Association, Inc. ("ILBA") filed a complaint against the Defendants in the Circuit Court of the Seventh Judicial Circuit of Sangamon County, Illinois. The Complaint seeks declaratory, injunctive, and monetary relief against Advanta Leasing, the other leasing companies, and the Debtor, JRA 222 d/b/a Credit Card Center, for actions arising out of leasing contracts between ILBA's members, the leasing companies, and Credit Card Center involving automatic teller machines.
Credit Card Center filed a petition pursuant to Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Eastern District of Pennsylvania. An Order of Relief was entered on June 6, 2001.
On July 17, 2001, Advanta removed the pending civil action from the Sangamon County Circuit Court to the United States Bankruptcy Court for the Central District of Illinois. On July 18, 2001, the Sangamon County Circuit Court found the removal to be invalid and entered a preliminary injunction against the Defendants. On July 19, 2001, Advanta filed a Motion to Vacate the Injunction, to Transfer Venue to the Bankruptcy Court for the Eastern District of Pennsylvania, and for Expedited Consideration.
On July 31, 2001, this Court found that removal of the case had been effected upon filing of the Notice of Removal in the Sangamon County Circuit Court on July 17, 2001. The Court further found that the preliminary injunction entered by the Sangamon County Circuit Court on July 18, 2001, after the case was removed to the Bankruptcy Court, was void and a nullity. The Court granted the parties an opportunity to file their views on removal by August 13, 2001. ILBA filed its Response to Advanta's Notice of Removal, Motion to Vacate, and Motion for Abstention or Remand on July 31, 2001.
The Plaintiff settled its dispute with two of the Defendants — Carlton Financial Corporation and Information Leasing Corporation — and Orders of Dismissal were entered on August 23, 2001.
On August 24, 2001, ILBA filed a Motion to Dismiss Without Prejudice Credit Card Center from the civil action. The Court allowed the Motion, and Credit Card Center was dismissed from the action on September 4, 2001. Because the Debtor was no longer a party to the action, the Court granted ILBA's Motion for Remand on September 5, 2001.
Advanta filed a Notice of Appeal on September 14, 2001. Advanta now seeks a stay pending appeal.
Under Bankruptcy Rule 8005, a stay pending appeal must first be presented to the Bankruptcy Court whose decision is then reviewable by the District Court. In determining whether to allow the application for stay, the Court looks at the following:
1. Whether the stay applicant has made a strong showing that he is likely to succeed on the merits;
2. Whether the applicant will be irreparably injured absent a stay;
3. Whether the issuance of the stay will substantially injure the other parties in the case; and
4. Where the public interest lies.
In re Lightle, No. 88-70353 (Bankr.C.D.Ill. Oct. 5, 1992); Hilton v. Braunskill, 107 S.Ct. 2113, 2119 (1987); Adams v. Walker, 488 F.2d 1064 (7th Cir. 1973).
Advanta has failed to show any likelihood of success on the merits. This is clearly not a core proceeding. The civil action does not invoke a substantive right provided by Title 11; it is not a proceeding that could arise only in the context of a bankruptcy case. This case does not involve diversity of citizenship or a federal question. The claims are brought exclusively under Illinois law. This case is clearly capable of surviving without the Bankruptcy Code. Indeed, it was commenced in state court prior to the filing of the Debtor's bankruptcy petition.
Moreover, the Court does not have "related to" jurisdiction over this action pursuant to 11 U.S.C. § 1334(b). The Seventh Circuit has advised that a dispute is "related to" a bankruptcy if "it affects the amount of property available for distribution or the allocation of property among creditors." In re Xonics, Inc., 813 F.2d 127, 130 (7th Cir. 1987). The Supreme Court has recently held that "bankruptcy courts have no jurisdiction over proceedings that have no effect on the debtor."Celotex Corp. v. Edwards, 514 U.S. 300, 307 n. 6 (1995).
The Debtor is no longer a party to the civil action. The remaining counts are directed solely at Advanta and the other leasing companies. The Debtor is not a party to the equipment leases that ILBA wants to cancel. The remedies sought against the remaining Defendants will have no apparent impact on the Debtor's assets or impose any liabilities on the Debtor. The resolution of the remaining counts against the leasing companies will have only speculative, indirect, or incidental effects on the Debtor's bankruptcy estate. Therefore, the Court does not have jurisdiction.
See In re Concha, 212 B.R. 987, 991 (Bankr. M.D. Ala. 1997); McCratic v. Bristol-Meyers Squibb and Co., 183 B.R. 113, 115 (N.D.Tex. 1995).
Even if the Court had jurisdiction over this action, the Court may remand the removed case back to state court under 11 U.S.C. § 1452(b) "on any equitable ground," including (i) forum non conveniens, (ii) a state court's heightened ability to deal with questions of state law; (iii) the expertise of a particular court; (iv) the duplication or uneconomical effect of judicial resources in two forums; (v) prejudice to the involuntarily removed party; (vi) comity considerations; and (vii) a lessened possibility of an inconsistent result. In re Concha, supra, 212 B.R. at 992.
The claims asserted in the Complaint are based entirely on state law and are of the kind typically tried in state courts.
This case could not have been removed to federal court had it not been for the Debtor's bankruptcy. The Debtor is no longer a party to these proceedings. See Angus Group 1700, Inc. v. Steinman, 206 B.R. 757, 766 (E.D.Pa. 1997). This case involves multiple non-debtor defendants who are not ordinarily under the jurisdiction of this Court and whose claims may be readily liquidated in a state court forum. In fact, two Defendants have already settled, and ILBA has represented that a third settlement Defendant has entered into a contingent settlement. This case commenced shortly before it was removed. There is no harm or prejudice to the remaining parties in returning the case to the state court, and there is no evidence that the state court cannot timely adjudicate this case upon its remand. Under these circumstances, there is little chance that this Court's remand order will be overturned on appeal.
Advanta argues that the Court erred in dismissing the Debtor from this proceeding without allowing the other parties an opportunity to respond. Bankruptcy Rule 7041 incorporates by reference Federal Rule of Civil Procedure 41, which provides in pertinent part as follows: "An action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or a motion for summary judgment . . . ." Because the Debtor filed neither an answer nor a motion for summary judgment, the Plaintiff had an absolute right to dismiss the Debtor from this proceeding. Safeguard Business Systems, Inc. v. Hoeffel, 907 F.2d 861 (8th Cir. 1990). The filing of the notice of voluntary dismissal automatically terminated the lawsuit against the Debtor; no action by the Court was necessary to effectuate a dismissal. Thorp v. Scarne, 599 F.2d 1169 (2nd Cir. 1979). The Court had no power or discretion to deny the Plaintiff's right to dismiss, to attach any condition or burden to that right, or to assess attorneys fees against the Plaintiff. Williams v. Ezell, 531 F.2d 1261 (5th Cir. 1976). This is true even in a case with multiple defendants. The filing of answers or motions for summary judgment by some defendants does not divest the Plaintiff of the right to voluntarily dismiss without court order any other defendants who have not filed answers or motions for summary judgment. Sheldon v. Amperex Electronic Corp., 52 F.R.D. 1 (E.D.N.Y. 1971), aff'd, 449 F.2d 146 (2d Cir. 1971); Aggregates (Carolina), Inc. v. Kruse, 134 F.R.D. 23 (D.P.R. 1991).
For the foregoing reasons, the Motion of Defendant Advanta Leasing Services for Stay Pending Appeal is denied.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.
See written Order.
ORDER
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that the Motion of Defendant Advanta Leasing Services for Stay Pending Appeal be and is hereby denied.