Great Western Capital LLC v. Copelin et al

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES DIVISION
In re
AVIS RICHELLE COPELIN,
Debtor.
GREAT WESTERN CAPITAL, LLC,
Plaintiff(s).
vs.
AVIS RICHELLE COPELIN, NICKLAUS
SEWARD, et al, DOES 1 TO 10,
INCLUSIVE,
Defendants.
Case No. 2:13-bk-32580-RK
Chapter 11
Adv. No. 2:14-ap-01175-RK
MEMORANDUM DECISION ON MOTION
TO REMAND REMOVED UNLAWFUL
DETAINER CASE TO SUPERIOR
COURT OF CALIFORNIA PURSUANT TO
28 U.S.C. §§ 1447(c) AND 1452(b)
Pending before the court is the motion of plaintiff Great Western Capital, LLC, to
remand this removed unlawful detainer action to the Superior Court of California for the
County of Los Angeles. Defendant Avis Copelin, the debtor in the underlying bankruptcy
case, filed a notice of removal, removing this action from state court to this court, on
March 21, 2014. Plaintiff filed its motion to remand the case pursuant to 28 U.S.C. §§
1447(c) and 1452(b) on April 7, 2014. The motion came on for hearing before the
undersigned United States Bankruptcy Judge on April 29, 2014 and May 6, 2014.
Appearances were made as noted on the record at the hearings. After the hearings, the
FILED & ENTERED
JUN 20 2014
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	bakchell
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parties filed supplemental briefing. Plaintiff filed a supplemental reply to defendant’s
response to the motion on May 9, 2014, and defendant filed a reply to this pleading on
May 13, 2014.
Having carefully considered the moving and opposing papers and the arguments
of the parties, the court now issues this decision and grants the motion to remand.
Plaintiff argues that the action should be remanded pursuant to 28 U.S.C. §
1447(c) on grounds that the court lacks subject matter jurisdiction. The court had
previously granted the motion of plaintiff for relief from the automatic stay in this
bankruptcy case to allow plaintiff to proceed with this unlawful detainer case. Plaintiff
was the purchaser of the subject property at a trustee’s sale and brought the action in
state court for unlawful detainer to assert its rights to possession as the purchaser.
Defendant removed the action from state court after the bankruptcy case was converted
to Chapter 11, asserting that she still has rights in the property and that the property is
needed for effective reorganization. Plaintiff asserts that defendant has no such rights
and that this court lacks subject matter jurisdiction over the unlawful detainer action.
Defendant asserts that she has such rights and that the court thus has subject matter
jurisdiction. The court notes that whether defendant has continuing rights to the property
after the trustee’s sale and whether subject matter jurisdiction exists is a factual and legal
dispute, but that while this dispute may raise evidentiary issues that may require an
evidentiary hearing, the court need not resolve this dispute for purposes of the remand
motion because the motion can be resolved without deciding this dispute. Because the
court grants the remand motion under 28 U.S.C. § 1452(b), the court need not reach the
alternative basis for the motion under 28 U.S.C. § 1447(c).
Under 28 U.S.C. § 1452(b), the court can remand a removed bankruptcy matter
for any equitable reason. The courts in this judicial district have looked to up to fourteen
factors in deciding whether to remand a case to state court pursuant to 28 U.S.C. §
1452(b). In re Enron Corp., 296 B.R. 505, 508 (Bankr. C.D. Cal. 2003); Maya, LLC v.
Cytodyn of New Mexico, Inc. (In re Cytodyn of New Mexico, Inc.,), 374 B.R. 733, 738
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(Bankr. C.D. Cal. 2007). The fourteen factors are: (1) the effect or lack thereof on the
efficient administration of the estate if the court recommends remand; (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 non-bankruptcy court; (5) the jurisdictional basis 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 bankruptcy court’s docket; (10) the likelihood that the commencement
of the proceeding in bankruptcy court involves forum shopping by one of the parties; (11)
the existence of a right to a jury trial; (12) the presence in the proceeding of nondebtor
parties; (13) comity; and (14) the possibility of prejudice to other parties in the action. Id.
The first factor (efficient administration) weighs in favor of remand because the
unlawful detainer action was already litigated to judgment in the state court, defendant
had challenged that judgment and sought rehearing in that court regarding the right to
possession, and the rights of the parties to possession can be determined by the state
court after remand (e.g., on a renewed motion to vacate default).
The second factor (predominance of state law issues) weighs in favor of remand
because the unlawful detainer action raises only issues of California state law regarding
real property rights; specifically, the right to possession under the unlawful detainer
remedy of California law after a nonjudicial foreclosure of a deed of trust. Citing Logan v.
U.S. Bank National Association, 722 F.3d 1163 (9th Cir. 2013), defendant argued that
having to litigate an unlawful detainer action in state court while her adversary proceeding
for wrongful foreclosure in this court would place her at a disadvantage. Logan is not
applicable to this case because the issue was whether there was a private federal cause
of action under the Protecting Tenants at Foreclosure Act (PTFA), which the Ninth
Circuit held there was not, but that the tenant could raise PTFA as an affirmative defense
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in the state court unlawful detainer proceedings. The court is of the view that arguing that
litigating the unlawful detainer case is besides the point here because this does not affect
the characterization of the case as presenting predominately state law issues, but more
importantly, defendant is really seeking some stay of the unlawful detainer action,
whether in this court or in the state court, and whether she is entitled to such relief
depends on whether she can establish entitlement to preliminary injunctive relief in the
adversary proceeding for wrongful foreclosure in this court, which she has not yet shown.
The third factor (difficult/unsettled nature of the applicable law) weighs against
remand because the unlawful detainer action does not involve difficult or unsettled areas
of law.
The fourth factor (presence of a related proceeding commenced in state court)
weighs in favor of remand because the unlawful detainer was commenced and already
litigated to judgment in the state court. The court agrees with the court in Cytodyn that
this factor is met under these circumstances, though the Ninth Circuit in Security Farms
v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers, 124
F.3d 999, 1010 (9th Cir. 1997) had held that the doctrine of abstention does not apply to
removed proceedings. The prior pendency of the unlawful detainer action in state court
indicates that this factor is met. Id.
The fifth factor (other jurisdictional basis) weighs in favor of remand because the
basis of this court’s jurisdiction over the unlawful detainer action is “related to” jurisdiction
of 28 U.S.C. § 1334 rather than “arising in” or “arising under” jurisdiction of 28 U.S.C. §
1334. Plaintiff’s unlawful detainer action is a state law claim not “arising in” or “arising
under” this court’s bankruptcy jurisdiction, though such claim may be “related to” the
bankruptcy case in some way if defendant has rights in the subject property, which may
make such property part of the bankruptcy estate under 11 U.S.C. § 541.
The sixth factor (relatedness to the main bankruptcy case) weighs in favor of
remand because the unlawful detainer action asserts nonbankruptcy state law claims,
which are not “core” proceedings within the meaning of 28 U.S.C. § 157(b)(1) and (2).
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The seventh factor (the substance of an asserted “core” proceeding) weighs in
favor of remand because as just stated, the unlawful detainer action asserts
nonbankruptcy state law claims, which are not “core” proceedings within the meaning of
28 U.S.C. § 157(b)(1) and (2).
The eighth factor (feasibility of severing state law claims) weighs in favor of
remand because it appears that it would be feasible to sever any state law claims from
any core bankruptcy matters to allow judgments to be entered in state court with
enforcement left to the bankruptcy court.
The ninth factor (the burden on the bankruptcy court’s docket) weighs in favor of
remand because the task before the court, hearing the unlawful detainer case, is whether
the judgment of the state court for possession applies to defendant and the state court is
in a better position to interpret its judgment as to whether it applies to defendant than this
court which did not render the previous judgment.
The tenth factor (forum shopping) weighs in favor of remand because the court
had already granted relief from the automatic stay to allow the plaintiff to litigate the
unlawful detainer action in state court and after plaintiff prevailed in that action in state
court and obtained a judgment for possession, defendant had this action removed to this
court.
The eleventh factor (right to jury trial) is a neutral factor since neither party
requested a jury trial in this court or in the state court.
The twelfth factor (presence of nondebtor parties) weighs in favor of remand
because there were other parties to the unlawful detainer action other than plaintiff and
defendant.
The thirteenth factor (comity) weighs in favor of remand because as stated
previously, the task before the court, hearing the unlawful detainer case, is whether the
judgment of the state court for possession applies to defendant and the state court is in a
better position to interpret its judgment as to whether it applies to defendant than this
court which did not render the previous judgment. Defendant argues that the judgment
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against her was a default judgment and entitled to set aside the judgment for lack of
service. Defective service is an issue defendant can raise in state court on remand in a
renewed motion to vacate default.
The fourteenth factor (possibility of prejudice) is a neutral factor in the court’s view.
Plaintiff argues that it would be financially prejudiced due to further delay if this court
does not remand this action to the state court. However, this factor relates to prejudice
to other parties rather than the parties to this litigation and is not a factor here.
The court determines that most of the relevant factors for equitable remand under
28 U.S.C. § 1452(b) favor remand, and the first, second, fourth, eleventh and thirteenth
factors are the ones I give most emphasis here and these factors favor remand.
For the foregoing reasons, the court will grant the motion for remand, and this
action is to be remanded to the Superior Court of California for the County of Los
Angeles. A separate order for remand is being filed and entered concurrently.
IT IS SO ORDERED.
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Date: June 20, 2014
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