Shamban v. Rodman et al

In re
CRAIG A. RODMAN,
Debtor
STEPHEN E. SHAMBAN, Chapter 7
Trustee,
Plaintiff
v.
CRAIG A. RODMAN and
ELIZABETH RODMAN, Individually and
as Trustee,
Defendants/
Third-Party Plaintiffs
v.
ANTHONY T. VISCONTI,
Third-Party Defendant
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
EASTERN DIVISION
Chapter 7
Case No. 08-12712-FJB
Adversary Proceeding
No. 08-1391
MEMORANDUM OF DECISION ON
MOTION OF ANTHONY VISCONTI TO DISMISS THIRD-PARTY COMPLAINT
By his complaint in this adversary proceeding, the chapter 7 trustee, Stephen Shamban,
asserts objections to discharge against debtor Craig Rodman and a claim for recovery of certain
assets that he allegedly fraudulently conveyed to his wife, Elizabeth Rodman. The Rodmans in
turn contend that Craig’s bankruptcy filing and the alleged fraudulent conveyances were done
upon the bad advice of Craig’s attorney, Anthony Visconti, against whom they have filed a third-
party complaint for negligence (legal malpractice), negligent infliction of emotional distress, and
violation of the Massachusetts Consumer Protection Act, G. L. C. 93A. The third-party
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complaint is now before the court on a motion by Visconti to dismiss the third-party complaint on
various grounds, including (among others) that the court lacks subject-matter jurisdiction over
Elizabeth’s claims against him and that the court should, in its discretion, abstain from
exercising jurisdiction over Craig’s claims against him. The court agrees and accordingly will
dismiss the third-party complaint.
In order for a claim to fall within the bankruptcy court’s subject-matter jurisdiction, that
claim must at least be “related to a case under title 11.” 28 U.S.C. §§ 1334(b) and 157(a).
Under the well-established test of “related-to jurisdiction,” a claim is deemed to relate to a case
under title 11, the Bankruptcy Code, if “the outcome of that proceeding could conceivably have
any effect on the estate being administered in bankruptcy.” Pacor, Inc. v. Higgins, 743 F.2d 984
(3rd Cir. 1984). Elizabeth’s claims against Visconti can have no effect on Craig’s bankruptcy
case: she is not herself a debtor in this case; and whatever her rights of recovery against
Visconti, they are her own, not the bankruptcy estate’s. I therefore conclude that her third-party
claims fall outside the bankruptcy court’s subject-matter jurisdiction.
Moreover, there is good cause to abstain from exercising any jurisdiction this court may
have over the claims of both Craig and Elizabeth against Visconti. These claims are not core-
proceedings, and Visconti does not consent to the Bankruptcy Court’s entering final judgment
as to them. Without the consent of all parties to a non-core matter, the bankruptcy court may
not enter final judgment but may, at best, enter only proposed findings of fact and conclusions
of law, subject to review de novo in the U.S. District Court. 28 U.S.C. § 157(c)(1). This
procedure is in this instance, as in most, an inherently inefficient use of the courts’ and the
parties’ resources; the procedure is therefore disfavored where the claims at issue may be
litigated in another forum with jurisdiction to enter final judgment. In addition, the third-party
plaintiffs have demanded and are entitled to a jury trial on the third-party complaint, but Visconti
does not consent to the Bankruptcy Court’s conducting the jury trial. 	A bankruptcy judge may
conduct a jury trial only with the consent of all the parties. 28 U.S.C. § 157(e). In view of the
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1 In view of this result, I need not decide, and express no opinion, as to whether the
claims asserted herein by Craig Rodman belong to him, as opposed to his bankruptcy estate,
such that he has standing to prosecute them.
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inefficiency of proceeding in the bankruptcy court, the bankruptcy court’s inability to conduct the
jury trial to which the third-party plaintiffs are entitled, and the ability of the third-party plaintiffs to
take the same counts to a state court with jurisdiction and authority to finally decide the matter
before a jury in a single proceeding, it is in the interest of justice that the court abstain. 28
U.S.C. § 1334(c)(1) (permitting court, “in the interest of justice,” to abstain from exercising
bankruptcy jurisdiction).
For these reasons, the Court will enter a separate and final order of abstention and
dismissal as to the third-party complaint. 1
Date: May 15, 2009 	_______________________________
Frank J. Bailey
United States Bankruptcy Judge
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