United States Fidelity and Guaranty Company v. Malden Young Men's Christian Association, The

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Case 07-01340 Doc27 Filed 11/26/07 Entered 11/26/07 14:20:30 Desc Main
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS

In re
PAYTON CONSTRUCTION Chapter 11
CORPORATION, Case No. 07-11522-RS

Debtor

UNITED STATES FIDELITY AND

GUARANTY COMPANY,
Plaintiff
v. Adversary Proceeding
No. 07-1340
THE MALDEN YOUNG MEN’S

CHRISTIAN ASSOCIATION,

Defendant

MEMORANDUM OF DECISION ON ABSTENTION

On October 30, 2007, this Court issued an order to show cause why it should not abstain
from adjudicating this adversary proceeding. The Plaintiff opposes abstention, but the
Defendant, who does not consent to this Court’s adjudicating any matter herein that is not a core
proceeding, favors abstention. For the following reasons, the Court will abstain.

First, while the complaint is related to the present bankruptcy case, it is not a core
proceeding. The fact that the defendant has filed a proof of claim in the case does not convert the
plaintiffs claims in this proceeding into core proceedings.' Because the claims are not core and
the defendant does not consent to this Court’s entering final judgment in the matter, the Court

could, at most, enter only proposed findings and conclusions that would be subject to review de

' Non-core claims by the estate against a creditor do become core claims when the creditor files a proof of
claim in the case. See 28 U.S.C. § 157(b)(2)(C) (core proceedings include “counterclaims by the estate against
persons filing claims against the estate” (emphasis added)). The same is not true of non-core claims by parties who
are not, and do not represent, the estate.

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

Case 07-01340 Doc27 Filed 11/26/07 Entered 11/26/07 14:20:30 Desc Main
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novo in the District Court. See 28 U.S.C. § 157(c)(1). Judicial economy favors trying the matter
once, to a final judgment, in a court having jurisdiction to enter a final judgment.

Second, the matter is not of urgency to a reorganization in prospect. The Debtor at best
hopes here to file a liquidating plan, its hopes of reorganization having faded, and (from the
statements made at the hearing concerning abstention) the estate may not have sufficient funds
even to justify that effort. Nor is it clear that this matter could be resolved here sooner than in
state court, especially where the Court’s determinations would be subject to review de novo in
the District Court. Third, the matters in issue are entirely matters of state law, not matters
requiring bankruptcy expertise; absent a special bankruptcy purpose, comity would counsel in
favor of their going to state court. Fourth, the adjudication of nonbankruptcy issues in the
bankruptcy court reduces the time and resources available to the Bankruptcy Court to handle
those matters within its core jurisdiction, a not inconsiderable factor in a case such as this one,
where complex litigation appears to be part of the debtor’s ordinary course of business.

For all these reasons and pursuant to 28 U.S.C. § 1334(c)(1) , the Court will enter a

separate order of abstention and dismissal.

Date: November 26, 2007 Goan PSemy ae

Robert Somma
United States Bankruptcy Judge

ce: Scott Spearing, Esq., for USF&G
Douglas Rosner, Esq., for Malden YMCA
Charles A. Roberts, Esq., for Limbach Company LLC