Moore v. Hatfield

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
RICHARD L. HATFIELD,
Debtor.
JENNIFER M. MOORE,
Plaintiff,
vs.
RICHARD L. HATFIELD, SAND HILL ROAD
VENTURE GROUP, SAND HILL ROAD
VENTURE ONE, I.P. ENTERPRISES, I.P.
ENTERPRISES PENSION FUND, MELVIN R.
SLAGER, DAVID J. MILLER, ARTHUR D.
SMITH, ALLIANCE FINANCIAL CAPITAL,
INC., a California corporation,
ALLIANCE FINANCIAL CAPITAL HOLDINGS,
INC., a California corporation, and
ALLIANCE BUSINESS CAPITAL, INC., a
Nevada corporation,
Defendants.
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Case No. 08-30154 TEC
Chapter 7
Adv. Proc. No. 08-3140 TC
MEMORANDUM RE PLAINTIFF’S MOTION FOR RECONSIDERATION OF ORDER
ENTERED MARCH 2, 2009
On November 7, 2008, Plaintiff initiated the above-captioned
adversary proceeding by filing a complaint. 	The complaint asserts
state-law claims against non-debtor defendants. 	The complaint
Signed and Filed: July 17, 2009
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
July 20, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 1 of 6

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28 	1 The Slager Defendants are Marvin R. Persky, Sand Hill Road
Venture Group, Sand Hill Road Venture One, IP Enterprise, and IP
Enterprises Pension Fund.
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asserts state-law claims and a federal nondischargeability claim
against Debtor.
On March 2, 2009, the court entered an order (Order) granting,
without prejudice, the motions to dismiss filed by Defendant Arthur
D. Smith and the Slager Defendants. 1 	The Order provides that all
claims against the non-debtor parties are dismissed in abstention.
28 U.S.C. § 1334(c)(1).
On June 19, 2009, Plaintiff filed a motion (Motion) for
reconsideration of the Order. 	For the following reasons, the
Motion should be denied.
(1) The court properly dismissed the claims in abstention sua
sponte. 	In re Tucson Estates, Inc., 912 F.2d 1162, 1166 (9th Cir.
1990). 	Under Tucson Estates, the factors relevant to deciding
whether to abstain are as follows.
The effect or lack thereof on the efficient administration of
the estate if the court recommends abstention. 	This factor weighs
in favor of abstention. 	Abstention regarding the claims against
the non-debtor parties will have no effect on the efficient
administration of the estate, because the outcome of those claims
will have no effect on the estate.
The extent to which state law issues predominate over
bankruptcy issues. 	This factor weighs in favor of abstention. 	All
of the claims against the non-debtor parties arise under state law.
The degree of relatedness or remoteness of the proceeding to
the main bankruptcy case. 	This factor favors abstention. 	The
claims against the non-debtor parties are not “related to” the
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 2 of 6

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bankruptcy case within the meaning of section 1334(b), because they
will not affect assets of or claims against the bankruptcy estate.
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. 	This factor favors
abstention. 	The claims against Debtor, including the federal
nondischargeability claim, can be tried separately from the claims
against the non-debtor defendants.
The existence of a right to jury trial. 	This factor favors
abstention regarding the claims against the non-debtor defendants.
Those claims seek money damages. 	Accordingly, the non-debtor
defendants have a right to trial by jury.
The presence in the proceeding of nondebtor parties. 	This
factor favors abstention. 	Seven of the defendants (all defendants
other than Debtor and the Alliance entities) are not debtors.
The substance rather than the form of an asserted core
proceeding. 	This factor favors abstention. 	The claims against the
non-debtor parties are clearly non-core.
The difficulty or unsettled nature of the applicable law.
This factor is neutral. 	The state-law claims are for abuse of
process and conversion. 	The court does not believe these areas of
the law present unusual difficulties, or are unsettled.
The jurisdictional basis, if any, other than 28 U.S.C. § 1334.
This factor is neutral. 	There may be supplemental jurisdiction
over the claims under 28 U.S.C. § 1367, but the state-law claims
against non-debtor parties may predominate over the federal claim
against Debtor. 	It is unlikely that there is diversity
jurisdiction because Plaintiff is a California citizen, and four of
the Defendants (Debtor and the Alliance entities) are also
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 3 of 6

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California citizens. 	Although Debtor may file an action solely
against the non-California defendants, those defendants could move
to join the California defendants as necessary and indispensable
parties.
The likelihood that the commencement of the proceeding in
bankruptcy court involves forum shopping by one of the parties.
This factor is neutral. 	There is no evidence of forum shopping.
The presence of a related proceeding commenced in state court
or other nonbankruptcy court. 	This factor cuts against abstention.
There is no pending state-law action.
The factors favoring abstention outnumber and outweigh the
factors against abstention. 	Of particular importance is the
inefficiency and cumbersome procedure involved in trying non-core
claims, even if no jury trial is necessary. 	The cumbersomeness of
that process increases the burden on the court, which is of
significant importance because the court’s docket has become very
crowded in 2009 as a result of the economic downturn. 	The burden
of resolving the non-core matters at issue is not justified by any
advancement of the administration of the bankruptcy case.
(2) Abstention is not barred merely because there is no
pending state-court proceeding. 	The present case is
distinguishable from Lazar v. State of California, 237 F.3d 967,
981-82 (9th Cir. 2001) and Security Farms v. International
Brotherhood of Teamsters, 124 F.3d 999, 1009-10 (9th Cir. 1997).
Those cases held only that where a state-court proceeding had been
removed to the bankruptcy court, the bankruptcy court’s decision
whether to keep that proceeding is governed by the statutes and
rules governing remand of removed proceedings, rather than by the
more general provisions governing abstention. 	The Ninth Circuit
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 4 of 6

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expressly stated in Tucson Estates that the pendency of another
proceeding is only a factor in determining whether to remand. 	In
Eastport Estates v. City of Los Angeles, 935 F.2d 1071 (9th Cir.
1991), in which no state-court action was pending, the Ninth
Circuit treated that fact merely as a consideration weighing
against abstention, and not as a bar against abstention. 	Id. at
1078.
(3) Nor is abstention rendered inappropriate by Sigma Micro
Corp. v. Healthcentral.com, 504 F.3d 775 (9th Cir. 2007). 	That
case held only that the bankruptcy court should oversee all pre-
trial motions before certifying a proceeding to the district court
for jury trial. 	Healthcentral did not determine that such a
procedure is the most efficient way to try a case, and therefore
did not strike from the factors listed in Tucson Estates the
existence of the right to jury trial as a consideration weighing in
favor of abstention.
**END OF MEMORANDUM**
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 5 of 6

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Court Service List
James H. Seymour, Esq.
Law Offices of James H. Seymour
706 Cowper Street
Palo Alto, CA 94301
Joel K. Belway, Esq.
Law Offices of Joel K. Belway
235 Montgomery Street, Suite 668
San Francisco, CA 94104
Case: 08-03140 Doc# 33 Filed: 07/17/09 Entered: 07/20/09 13:00:57 Page 6 of 6