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remanding and noting that the issue of whether the automatic stay applies should be addressed by the state court
Summary of this case from J.R. v. Allegheny Highlands Council, Inc.Opinion
01 Civ. 7458 (SAS)
December 13, 2001
For Petitioner: Diana E. Goell, Esq., Assistant Corporation Counsel, Brooklyn, NY.
For Respondent (pro se): Ariel Borobio, New York, NY.
OPINION AND ORDER
Petitioner Jason Turner, Commissioner of Social Services of New York (the "Commissioner") has moved to remand the instant case to the Supreme Court for the State of New York, New York County. For the reasons stated below, the Commissioner's motion is granted.
I. BACKGROUND
On June 30, 2001, the Commissioner commenced a proceeding in the Supreme Court, New York County, for the appointment of a guardian of the personal needs and property management of Respondent Ariel Borobio ("Borobio"), pursuant to Aticle 81.06(a) of the Mental Hygiene Law of the State of New York (the "Article 81 Proceeding"). On August 10, 2001, Borobio removed the Article 81 Proceeding to this Court pursuant to 28 U.S.C. § 1334(b), claiming that the Proceeding is "related to" his pending chapter 13 bankruptcy proceeding, In re Ariel Borobio, Index No. 01-41626 (CB) (the "Bankruptcy Proceeding").See Notice of Removal ¶¶ 2-3. On October 9, 2001, during a conference before this Court, the Commissioner made an oral motion to remand the Article 81 Proceeding to state court. See 11/8/01 Transcript at 7. Borobio served his opposition to this motion on October 16, 2000, see Opposition to Oral Motion to Remand ("Resp. Opp."), and the Commissioner served his reply on October 16, 2001, see Petitioner's Reply Memorandum of Law in Support of His Motion to Remand ("Pet. Repl.").
II. DISCUSSION
Borobio argues that the Article 81 Proceeding is properly before this Court because (1) it is "related to" the Bankruptcy Proceeding pursuant to 28 U.S.C. § 1334(b); (2) it is a "core" proceeding over which the Bankruptcy Court has jurisdiction; and (3) it is subject to the automatic stay provision of 28 U.S.C. § 362 and may not proceed absent a Bankruptcy Court order lifting that stay. See Notice of Removal ¶¶ 1-2, 4, 6-9; Resp. Opp. ¶¶ 6-7, 24, 25, 27-28. The Commissioner argues that the Article 81 Proceeding should be remanded because (1) this Court lacks "related to" subject matter jurisdiction over the Proceeding, and (2) if subject matter jurisdiction does exist, equitable remand pursuant to 28 U.S.C. § 1452(b) is appropriate.
A. "Related To" Jurisdiction
1. Legal Standard
Removal is governed by 28 U.S.C. § 1452(a) which provides, in pertinent part:
A party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.28 U.S.C. § 1452(a). Section 1334(a) provides federal district courts with jurisdiction in cases "arising under" title 11 of the Bankruptcy Code, "arising in" a case under title 11, or "related to" a case under title 11. 28 U.S.C. § 1334(b). Thus, a proceeding must, as a threshold matter, at least be "related to" a bankruptcy proceeding for the removal to be proper pursuant to 28 U.S.C. § 1334(b).
Borobio argues that the Article 81 Proceeding is not "a civil action by a government unit's police or regulatory power" which would not be removable pursuant to 28 U.S.C. § 1452(a).See Notice of Removal at 2 n. 1. Because the Commissioner has not claimed that the Article 81 Proceeding is such an action, and because the Court finds that removal was nevertheless improper, it is not necessary to address this issue.
The test for determining whether a civil proceeding is "related to" a bankruptcy proceeding is "whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy." In re New York Int'l Hostel, Inc., 157 B.R. 748, 751 (S.D.N.Y. 1994) (quoting In re Wolverine Radio, Co., 930 F.2d 1132, 1138 (6th Cir. 1991)); see also Nemsa Establishment, S.A. v. Viral Testing Sys. Corp., No. 95 Civ. 0277, 1995 WL 489711, at *2 (S.D.N.Y. Aug. 15, 1995) (quotingDrexel Burham Lambert v. Vigilant Ins. Co., 130 B.R. 405, 407 (S.D.N.Y. 1991)). While "the proceeding need not necessarily be against the debtor or against the debtor's property," the party alleging that the proceeding is "related to" must show that "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." Pacor, Inc. v. Higggins, 743 F.2d 984 (3d Cir. 1984). The Second Circuit has "cautioned that 'related to' jurisdiction is not limitless." See Nemsa, 1995 WL 48711, at *3 (citing Turner v. Erminger, 724 F.2d 338, 341 (2d Cir. 1983);Publicker Indus. v. United States (In re Cuyahoga), 980 F.2d 110, 114 (2d Cir. 1992)). "Although the optimist may argue that anything is 'conceivable', any practical definition of this term of art must be tempered by a measure of reasonableness." World Travel Vacation Brokers, Inc. v. The Bowery Sav. Bank, 81 B.R. 243, 247 (Bankr. S.D.N.Y 1987).
2. Analysis
Borobio argues that the Article 81 Proceeding is "related to" his Bankruptcy Proceeding because the outcome of the Bankruptcy Proceeding is "totally depend[e]nt" on the outcome of the Article 81 Proceeding. Resp. Opp. ¶ 11. He argues that, if the Article 81 Proceeding results in the appointment of a guardian, he will "lose the power to decide where to live and the power to hold property or manage [his] own affairs." Id. ¶ 13. Therefore, he contends, the Article 81 proceedings would "deprive [him] of all of [his] powers as a Chapter 13 Debtor," including the power to challenge the validity of the foreclosure on his cooperative apartment. Id. ¶ 14.
Borobio's argument is unpersuasive. The Article 78 Proceeding is intended solely to determine whether Borobio is competent to manage his personal needs and his property. If he is deemed incompetent, a guardian ad litem will be appointed to assist with such management. "The spirit of Article 81 is to ensure that an incapacitated person is afforded 'the greatest amount of independence and self-determination and participation in all the decisions affecting such person's life' and essentially treated on the same basis as a competent person." Supplementary Practice Commentary to N.Y. Mental Hyg. Law § 81.01 (2001) (quoting N.Y. Mental Hyg. Law § 81.01). Thus, the court presiding over the Article 81 Proceeding will tailor the guardianship to meet Borobio's needs, and will "limi[t] fiduciary encroachment into [his] daily life and decision-making capabilities to the least restrictive form of intervention." In the Matter of Jayne Johnson, 172 Misc.2d 684, 689 (Sup.Ct., Suffolk Cty. 1997). Once appointed, the guardian will be required to "exercise the utmost care and diligence when acting on" Borobio's behalf and will be expected to "exhibit the utmost degree of trust, loyalty and fidelity in relation to" Borobio. N Y Mental Hyg. Law §§ 81.20(a)(2) (and (3). Indeed, the guardian "is a fiduciary" and will owe Borobio "no less a duty of loyalty, diligence and prudence than an attorney owes to his client." von Bulow by Ausberg v. von Bulow, 634 F. Supp. 1284, 1295 (S.D.N.Y. 1996); see also Comments to N.Y. Mental Hyg. Law §§ 81.20. Thus, the guardian will be obliged to preserve and protect Borobio's property and deliver it to him if and when he becomes competent. See In re Webber's Will, 187 Misc. 674 (N Y Sur. Ct. 1946) (discussing obligation of committee, predecessor to guardian under Article 81).
If a guardian is appointed for Borobio, that guardian will stand in Borobio's shoes to protect his personal and property interests. In accordance with his or her statutory duty, the guardian will help to optimize, protect and preserve Borobio's estate until he becomes competent. Thus, although the appointment of a guardian will impose some limitations on Barobio's freedom to act on his own, it will not limit his "rights, liabilities, options or freedom of action" with respect to the Bankrutptcy Proceeding. Pacor, 743 F.2d at 984. Accordingly, the Article 78 Proceeding is not "related to" Borobio's Bankruptcy Proceeding and there is no federal jurisdiction under section 1334(b).
B. "Core" Jurisdiction
Borobio's claim that the Article 78 Proceeding is a "core" proceeding is untenable because the Proceeding is not even "related to" the Bankruptcy Proceeding. The "related to" test is a threshold test for jurisdiction. In re Bill Cullen Elec. Contracting Co., 160 B.R. 581, 584 (Bankr. N.D. Ill. 1993) (citing In re Xonics, Inc., 813 F.2d 127, 131 (7th Cir. 1987)) Thus, courts that have found no "related to" jurisdiction over a dispute have also found an absence of "core" jurisdiction. See id.
C. The Automatic Stay
Borobio's final argument is that the automatic stay provision of 28 U.S.C. § 362 prevents the Commissioner from continuing the Article 81 Proceeding. Having already concluded that this Court lacks jurisdiction over this matter, the question of whether the automatic stay applies is an issue to be addressed, in the first instance, by the state court judge.
III. CONCLUSION
For the forgoing reasons, this Court lacks jurisdiction over the Article 78 Proceeding. Therefore, that action was improperly removed and the Commissioner's motion to remand is granted. The Clerk of the Court is directed to close this case.
SO ORDERED.