Dottore v. Scheibal et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
In re: 	: 	Case No. 24-55161
Mary Ann Scheibal 	: 	Chapter 13
and 	: 	Judge Mina Nami Khorrami
Heather F. Scheibal, 	:
:
Debtors. 	:
:
:
Mark E. Dottore, Receiver, 	: 	Adv. Pro No. 25-02012
:
Plaintiff, 	:
:
v. 	:
:
Mary Ann Scheibal, et al., 	:
:
Defendants. 	:
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR LEAVE TO AMEND (DOC. 40)
________________________________________________________________
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: August 10, 2026
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I. 	Introduction
Before the Court is the motion of Plaintiff Mark Dottore (the “Receiver”) for leave to file
his second amended complaint (the “Motion for Leave”).1 Defendants, Mary Ann Scheibal,
Heather F. Scheibal, and Scheibal Property Development LLC,2 oppose the Motion for Leave.3 In
the Motion for Leave, the Receiver requests leave to file a second amended complaint since the
Court dismissed Count V of the Amended Complaint (the “Amended Complaint”), Dkt. No. 22.
Mot. for Leave 1-2. 	The Court’s dismissal of Count V was without prejudice and allowed the
Receiver an opportunity to seek leave to file an amended complaint if the Receiver could show
that the 	Debtors, as net positive recipients of funds from a Ponzi scheme, acted with intent to
defraud under 11 U.S.C. § 523(a)(2)(A), or that the Debtors were in a partnership or agency
relationship with a third party whose intent to defraud could be imputed to them under the Supreme
Court case of Bartenwerfer v. Buckley, 598 U.S. 69, 143 S. Ct. 665, 214 L. Ed. 2d 434 (2023). As
to the other counts of the Amended Complaint, the Receiver requests in the Motion for Leave that
they be withdrawn without prejudice and that he be allowed to pursue those claims in the state
court. This matter is fully briefed and ripe for decision, and the Court finds this matter suitable for
resolution without oral argument. See LBR 9013-1(e).
For the reasons which follow, the Motion for Leave is denied in part and granted in part.
Specifically, regarding the § 523(a)(2)(A) claim, the Receiver has not shown how the proposed
amendments to the Amended Complaint will cure the deficiencies previously found by the Court.
Leave to amend the § 523(a)(2)(A) claim is therefore denied with prejudice. Regarding Counts I-
IV and VI of the Amended Complaint (the “Remaining Claims”), the Motion for Leave is granted
1 Motion Of The Receiver For Leave To File His Second Amended Complaint Pursuant To Rule 15(a)(2) (Doc. 40).
2 Mary Ann Scheibal and Heather Scheibal are referred to collectively where appropriate as the “Debtors.” Mary Ann
Scheibal, Heather Scheibal, and Scheibal Property Development LLC are collectively referred to as the “Defendants”.
3 Defs.’ Obj. (the “Objection”), Dkt. No. 42; Receiver’s Reply Mem. (the “Reply”), Dkt. No. 43.
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to the extent that it requests that the Remaining Claims be withdrawn without prejudice and the
adversary proceeding thus is dismissed. To the extent that the Motion for Leave requests that the
Receiver be permitted to pursue the Remaining Claims in the Court of Common Pleas of Summit
County, Ohio (the “State Court”), the Motion for Leave is denied. The Remaining Claims will be
heard and determined in this Court under the Debtors’ objection to the proof of claim filed by the
Receiver.4
II. 	Factual and Procedural Background5
This is largely a nondischargeability adversary proceeding under 11 U.S.C. § 523(a)(2)(A).
The Receiver was appointed in 2022 by the Summit County, Ohio Court of Common Pleas (the
“State Court”) as a receiver over numerous related entities (known as the “AEM Entities”) owned
and operated by Mark Dente (“Mr. Dente”). Am. Compl. 1 n.1, Dkt. No. 22. The order appointing
the Receiver granted him the authority to pursue property fraudulently transferred from the AEM
Entities. Id. ¶ 3. The Defendants were alleged to have invested in and received transfers from the
AEM Entities, collectively totaling $3,133,925.11. 	Id. ¶ 137. 	The Receiver alleged Mr. Dente
was operating the AEM Entities as a Ponzi scheme and therefore made each transfer with the actual
intent to hinder, delay, or defraud its creditors. Am. Compl. ¶ 111-12. The Receiver conceded
that he did not allege that the Debtors had any fraudulent intent or knowledge of Mr. Dente’s fraud.
4 On February 5, 2025, the Receiver filed a proof of claim (the “Proof of Claim”) in the Debtors’ chapter 13 case that
is based on the complaint filed in the State Court. Op. 7, Dkt. No. 38. The Debtors have objected (the “Claim
Objection”) to the Proof of Claim. Id. The Court has held the Claim Objection in abeyance pending the outcome of
this adversary proceeding. Id., n.12.
5 The factual and procedural background of this adversary proceeding is more fully described in pages 4-8 of the
Opinion And Order Granting In Part Defendants’ Motion To Dismiss The Amended Complaint (Doc. 24) As To Count
V Of The Amended Complaint (Doc. No. 22), . (the “Opinion”), Dkt. No. 38. The Opinion is reported at Dottore v.
Scheibal (In re Scheibal), Case No. 24-55161, Chapter 13, Adv. Pro No. 25-02012, 2026 Bankr. LEXIS 1203 (Bankr.
S.D. Ohio May 14, 2026) and the Court will use the LEXIS citation when referencing the Opinion. That background
will not be repeated here except where specifically relevant to the issues currently before the Court. Capitalized terms
not otherwise defined herein have the same meaning given to them in the Opinion.
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Scheibal, 2026 Bankr. LEXIS 1203, at *6-7. 	Nor did he allege that the Debtors had any
relationship with Mr. Dente and/or the AEM Entities beyond that of passive investor. Id.
The Amended Complaint asserts six counts, five of which (Counts I-IV and VI) plead
various theories under which the Defendants owe a debt to the Receiver. Counts I and II assert
claims for damages under the Ohio Uniform Fraudulent Transfer Act (“OUFTA”), Ohio Rev. Code
Chapter 1336. 	Count III asserts a claim for damages for unjust enrichment, Count IV asserts a
claim for constructive trust, and Count VI seeks declaratory relief. Am. Compl., Dkt. No. 22. The
sixth count (Count V) asserts that the debt owed is nondischargeable under § 523(a)(2)(A). The
Defendants had moved to dismiss all six counts of the Amended Complaint under Federal Rule of
Civil Procedure (“Civil Rule”) 12(b)(6), made applicable by Federal Rule of Bankruptcy
Procedure (“Bankruptcy Rule”) 7012.6
On May 14, 2026, the Court issued the Opinion, which dismissed Count V of the Amended
Complaint because it did not allege that the Debtors acted with intent to defraud, nor did it allege
that the Debtors were in a partnership or agency relationship with a third party whose intent to
defraud could be imputed to them. . Scheibal, 2026 Bankr. LEXIS 1203, at *30-33. Indeed, the
Receiver had conceded that he did not allege that the Debtors had the intent to defraud. Id. at *32-
33. The Receiver instead asserted that Bartenwerfer v. Buckley, 598 U.S. 69, 143 S. Ct. 665, 214
L. Ed. 2d 434 (2023), made it unnecessary for him to allege the Debtors’ intent to defraud. Id. at
*11-12. The Receiver argued that he was only required to allege that the Debtors obtained money
or property as the result of Mr. Dente’s fraud, even if the Debtors had no knowledge of Mr. Dente’s
fraud. Id.
6 Defs.’ Mot. to Dismiss (the “Motion to Dismiss”), Dkt. No. 24.
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The Court rejected the Receiver’s broad reading of Bartenwerfer. As the Court noted in
the Opinion, Bartenwerfer is not a fraudulent transfer case but addressed whether the fraud of one
partner could be imputed to an innocent partner who later filed for bankruptcy. 	Scheibal, 2026
Bankr. LEXIS 1203, at *21-22. Rather, the Supreme Court case most directly on point was Husky
Int'l Elecs., Inc. v. Ritz, 578 U.S. 355, 365, 136 S. Ct. 1581, 194 L. Ed. 2d 655 (2016). Husky held
that a debt for receiving a fraudulent transfer can be nondischargeable, but only where the debtor
received the transfer with fraudulent intent. Scheibal, 2026 Bankr. LEXIS 1203, at *15-16 (citing
Husky, 578 U.S. at 365). Since Bartenwerfer addressed the distinct question of whether the fraud
of an agent or partner can be imputed to a debtor under § 523(a)(2)(A), the Court concluded that
Bartenwerfer left Husky’s holding undisturbed. 	Scheibal, 2026 Bankr. LEXIS 1203, at *21-31.
Therefore, the Receiver was required to plausibly allege either that the Debtors received the
transfers with the intent to defraud, or that they were in a partnership or agency relationship with
Mr. Dente such that his intent to defraud could be imputed to them. 	Id. at *31-32. 	Since the
Amended Complaint contained no such allegations, the Court concluded that the Amended
Complaint did not plausibly allege a viable claim under § 523(a)(2)(A) and granted the Motion to
Dismiss Count V. Id.
Although the Motion to Dismiss was addressed to the Amended Complaint as a whole, the
Court deferred ruling on the Motion to Dismiss regarding the “Remaining Claims. Because the
Receiver had first submitted his proposed Second Amended Complaint (the “PSAC”) with his
post-hearing brief7 without a formal motion for leave to amend, the Court directed the Receiver to
file a motion for leave to amend so that he could explain how the PSAC remedied the deficiencies
7 At the hearing on the Motion to Dismiss, the Receiver had orally requested leave to amend if the Court ruled against
him. 	He later attached the PSAC to his post-hearing brief filed after oral argument on the Motion to Dismiss.
Receiver’s Suppl. Br. Ex. A, Dkt. No. 34. He did not file a formal motion for leave to amend until directed to do so
in the Opinion.
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identified by the Court in the Opinion. Scheibal, 2026 Bankr. LEXIS 1203, at *33-34. The Court
also directed the Receiver to clarify whether he still intended to pursue the Remaining Claims,
because the PSAC left it unclear whether he still intended to pursue them. Id. The Receiver filed
the Motion for Leave on May 23, 2026, bringing these unresolved issues back before the Court.
III. 	Jurisdiction and Venue
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334 and the Amended
General Order 05-02 entered by the United States District Court for the Southern District of Ohio,
referring all bankruptcy matters to this Court. 	Proceedings to determine the dischargeability of
particular debts are core proceedings under 28 U.S.C. § 157(b)(2)(B) and (I).8 Venue properly lies
in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
IV. 	Contentions of the Parties
The Receiver asserts that leave to file the PSAC is appropriate under Civil Rule 15(a)(2),
made applicable here by Bankruptcy Rule 7015, because “justice requires amendment not for the
Receiver to add new claims, but to remove duplicative ones that will narrow the issues in this case
and ‘ensure just, speedy, and inexpensive resolutions of civil disputes.’” Mot. for Leave 3, Dkt.
No. 40. He asserts that removing the Remaining Claims would “remedy the duplication of claims
that are pending” before both this Court and the State Court.). Id. 2-3. The Receiver also asserts
that granting the Motion for Leave will allow him to proceed with the Remaining Claims in the
State Court. Reply ¶ 9, Dkt. No. 43.
The Defendants assert that the Receiver has not addressed the issues that this Court directed
him to address – particularly that he has not addressed how the PSAC states a claim that could
8 To the extent that any claim asserted in this adversary proceeding could be construed as non-core, all parties have
consented to this Court’s entry of a final judgment. Pl.’s Pretrial Statement 2-3, Dkt. No. 19; Defs.’ Suppl. Mem. 1,
Dkt. No. 33.
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survive another motion to dismiss. 	Obj. ¶¶ 1-3, 16-20, Dkt. No. 42. 	They also assert that the
Receiver is attempting to forum shop by seeking to pursue the Remaining Claims in the State Court
now that the Court has ruled against him on the dischargeability issue. 	Obj. ¶¶ 25-32. 	The
Defendants therefore assert that if the Court allows dismissal of the Remaining Claims, it should
be with prejudice. Id. ¶ 3.
V. 	Analysis
A. The Proposed Second Amended Complaint
The Court begins by summarizing the amendments proposed in the PSAC which can be
separated into two categories. 	First, there are amendments to the § 523(a)(2)(A) claim which
appear to attempt to bolster the allegation of intent to defraud. Paragraphs 79-84 add allegations
that the Defendants had reason to know they had invested in a Ponzi scheme:
79. From the inception and at the time of each Transfer, the Debtors were aware of
facts that should have made them ask questions about the legitimacy of AEM’s
business operations.
80. The high interest rate of the Promissory Notes put the Debtors on inquiry notice
that AEM’s business was illegitimate.
81. The Debtors invested in AEM without conducting any due diligence on Dente
or AEM, or alternatively, such inquiries as the Debtors made were not the [sic]
commensurate with the inquiries of a reasonably prudent investor under the totality
of circumstances.
82. AEM did not make all payments as required by the Promissory Notes.
83. AEM did not make timely payments to the Debtors under the Promissory Notes.
84. The amounts and dates of payments from AEM to the Debtors did not coincide
with the terms of their Promissory Notes.
Mot. for Leave Ex. A ¶¶ 79-84, Dkt. No. 40. The second category of amendments in the PSAC is
that Counts I-IV and VI are eliminated, consistent with the Receiver’s determination that he does
not wish to pursue them in this adversary. Mot. for Leave 3.
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B. Standards Governing Leave to Amend After a Rule 12(b)(6) Motion is Granted
After a motion to dismiss a complaint is granted, courts will typically allow leave to amend
if there is reason to believe that the defects that led to dismissal can be corrected. 	Brown v.
Matauszak, 415 F. App'x 608, 614-16 (6th Cir. 2011). Even so, leave to amend may be denied for
reasons such as undue delay, bad faith or dilatory motive, failure to cure deficiencies, undue
prejudice to the defendant, and futility. Greer v. Strange Honey Farm, LLC, 114 F.4th 605, 617
(6th Cir. 2024) (citing Skatemore, Inc. v. Whitmer, 40 F.4th 727, 737 (6th Cir. 2022)). 	“An
amendment is futile when, after including the proposed changes, the complaint still could not
withstand a Rule 12(b)(6) motion to dismiss.” Greer, 114 F.4th at 617 (citation modified).
Where a proposed amendment seeks to remove claims, it is the functional equivalent of a
voluntary motion for dismissal of those claims under Civil Rule 41(a)(2) and should be judged by
Rule 41(a)(2)’s standards. 	Greene v. Ab Coaster Holdings, Inc., No. 2:10-cv-38, 2012 WL
2342927, at *7 (S.D. Ohio June 20, 2012). 	This is because Civil Rule 41(a)(2) only applies to
dismissal of “actions,” and dismissal of individual claims must therefore be accomplished by
amendment of the complaint under Civil Rule 15(a). Mgmt. Invs. v. United Mine Workers of Am.,
610 F.2d 384, 394 (6th Cir. 1979). For this reason, such a motion for leave to amend should be
evaluated under the standards governing Civil Rule 41(a)(2). Greene, 2012 WL 2342927, at *5.
Under Civil Rule 41(a)(2), a plaintiff should be permitted to voluntarily dismiss without
prejudice, unless a defendant will suffer “plain legal prejudice.” Id. (citing Grover by Grover v.
Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994)). This does not, however, include the mere fact
that the defendant might have to defend against the dismissed claim in a second proceeding.
Bridgeport Music, Inc. v. Universal-MCA Music Pub., Inc., 583 F.3d 948, 953 (6th Cir. 2009)
(citing Grover, 33 F.3d at 718). The fact that withdrawal of a claim may partially moot a motion
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to dismiss which the defendant has invested time and attorney fees preparing “is not the type of
prejudice deserving of much weight.” Greene, 2012 WL 2342927, at *5.
Given 	the 	legal 	standard, 	the 	Court 	will 	first 	consider 	the 	amendments 	to 	the
§ 523(a)(2)(A). It will then move to address the proposed removal of the Remaining Claims.
1. 	Amendment of the § 523(a)(2)(A) Claim
The Court expected that the Motion for Leave to file the PSAC would attempt to 	show
how the PSAC addresses the Debtors’ intent to defraud or show that the Debtors were in a
partnership or agency with Mr. Dente or AEM Entities. Contrary to the Court’s directive, however,
neither the Motion for Leave nor the Reply provides the Court with any analysis of the viability of
the PSAC. Indeed, the Receiver appears to concede that he is not attempting to justify his
amendments to his § 523(a)(2)(A) claim to add how he could prove scienter on the part of the
Debtors; rather he seems to propose judicial economy as justification for allowance of the filing
of the PSAC. Mot. for Leave 2 (“justice requires the amendment not for the Receiver to add new
claims, but to remove duplicative ones . . . .”); Reply ¶ 14, Dkt. No. 43 (“Applying the § 523
Opinion to the proposed second amended complaint and entering judgment on that issue alone will
foster judicial economy . . . .”).9
Regardless of whether the Receiver intended these statements to concede that he was no
longer advocating for the amendments to the § 523(a)(2)(A) claim, his inability to provide any
argument why those amendments are appropriate compels denial of leave to amend. “Issues are
forfeited when they are merely mentioned but not developed.” Cockrun v. Berrien Cnty, Mich.,
9 The Court specifically directed the Receiver to address futility of the PSAC in the Opinion. Dottore v. Scheibal (In
re Scheibal), Case No. 24-55161, Chapter 13, Adv. Pro No. 25-02012, 2026 Bankr. LEXIS 1203, at *33-34 (Bankr.
S.D. Ohio May 14, 2026). The Defendants also specifically pointed out in the Objection that the Receiver had not
addressed how the amendments to the § 523(a)(2)(A) claim remedy the deficiencies of the Amended Complaint. The
Defendants also provided argument as to why paragraphs 79-84 of the PSAC do not remedy the deficiencies identified
by the Court. 	Obj. ¶¶ 13-15. 	Yet the Reply only addresses the removal of the Remaining Claims and not the
deficiencies raised by the Court.
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101 F.4th 416, 419 (6th Cir. 2024). For the Court to evaluate whether a proposed amendment is
in the interests of justice, the proposing party must present the substance of the amendments and
the reasons for them. Beydoun v. Sessions, 871 F.3d 459, 469 (6th Cir. 2017) (affirming dismissal
with prejudice where the plaintiff “never informed the district court of what facts he would use to
supplement his claim, thus allowing him to withstand a motion to dismiss”).
The Court directed the Receiver to provide analysis and arguments as to why the proposed
amendments were not futile and were otherwise appropriate. 	Although the Receiver provided
additional allegations (Paragraphs 79-84) in the PSAC, he has not explained how his amendments
would survive a motion to dismiss. 	The absence of that explanation effectively concedes that
Paragraphs 79-84 do not remedy the deficiencies - knowledge and intent of the Debtors to defraud
- identified in the Opinion. 	See, e.g., Francisco v. Abengoa, S.A., 559 F. Supp. 3d 286, 317-18
(S.D.N.Y. 2021) (holding that a plaintiff’s failure to address how a proposed amendment cured
defects previously identified by the court conceded the defendant’s argument concerning futility).
A review of added Paragraphs 79-84 to the PSAC reflect conclusory statements including
that the Defendants were “aware of facts that should have made them ask questions about the
legitimacy of AEM’s business operations.” Mot. for Leave Ex. A ¶ 79. 	These statements and
others similar statements in Paragraphs 79-84 of the PSAC lack any precision regarding what facts
or information the Debtors knew, when they learned these facts or information, how those facts or
information showed their knowledge of the Ponzi Scheme, and why their knowledge should have
put them on notice. Mot. for Leave Ex. A ¶¶ 79-84, Dkt. No. 40.
As the Sixth Circuit has held, generalized allegations of a defendant’s knowledge are not
sufficient to plead fraudulent intent. United States ex rel. Angelo v. Allstate Ins. Co., 106 F.4th
441, 451 (6th Cir. 2024) (“[W]e cannot accept the bare use of the terms ‘knowingly’ or
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‘knowledge’ without evidence of what information Allstate knew, and when and how it knew it.”).
Furthermore, Paragraphs 79-84 are more closely related to negligence, which does not equate to
intent to defraud. Fuller v. Givens (In re Givens), 634 B.R. 755, 764-65 (Bankr. E.D. Tenn. 2021)
(citing Sims v. Roggasch (In re Roggasch), 494 B.R. 398, 407-408 (Bankr. E.D. Ark. 2013);
Indiana v. Jewell (In re Jewell), 554 B.R. 169, 171 (Bankr. N.D. Ind. 2016).
Accordingly, the Court denies the Motion for Leave as to the new and changed allegations
in support of the § 523(a)(2)(A) claim. Because the Receiver has not suggested that there is any
amendment that he might propose that would survive a motion to dismiss, the Court will therefore
enter judgment of dismissal on the § 523(a)(2)(A) claim (Count V of the Amended Complaint)
with prejudice and without leave to amend. Greer, 114 F.4th at 617-19 (affirming dismissal with
prejudice where the plaintiff had not proposed any amendment that would have survived a motion
to dismiss).
2. 	Withdrawal Without Prejudice of the Remaining Claims
The other amendment proposed in the PSAC is the withdrawal of the Remaining Claims
from the Amended Complaint. The Receiver has confirmed that he does not intend to pursue the
Remaining Claims in this adversary proceeding and asks that they be dismissed without prejudice.
Mot. for Leave 2. 	Given that clarification, the Court will grant leave to amend, which will
effectively dismiss the Remaining Claims in the adversary proceeding without prejudice. But the
Defendants object that they have expended resources to defeat the Remaining Claims, which
would be wasted if the Receiver is permitted to withdraw the Remaining Claims without prejudice
and to proceed in the State Court. They assert that any dismissal should be with prejudice. Defs.’
Obj. ¶¶ 25-32, Dkt. No. 42.
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The Defendants seem to argue that the concept of “plain legal prejudice” applies here. As
the Greene court noted, when assessing whether there is “plain legal prejudice,” the fact that a
party has incurred costs to move to dismiss which is then mooted because the plaintiff asks to
withdraw the claim “is not the type of prejudice deserving of much weight.” Greene v. Ab Coaster
Holdings, Inc., No. 2:10-cv-38, 2012 WL 2342927, at *5 (S.D. Ohio June 20, 2012). 	The
Remaining Claims have not been decided, and dismissal with prejudice is therefore not
appropriate. 	“Plain legal prejudice” results when a plaintiff seeks to dismiss claims without
prejudice after it is clear that the law does not permit recovery. Grover by Grover v. Eli Lilly &
Co., 33 F.3d 716, 719 (6th Cir. 1994). 	For example, in Grover, when a decision by the state
supreme court made clear that the claims were barred as a matter of law, it was error to permit
them to be dismissed without prejudice in the hope that the state supreme court might change its
mind. 	Id. 	In other words, since it was clear the claims were barred as a matter of law, the
defendants were entitled to a judgment on the merits.
Here, no decision on the merits of the Remaining Claims has been made. 	Moreover,
dismissal without prejudice of the Remaining Claims makes sense from the standpoint of judicial
economy. If the Receiver wishes to appeal the Opinion, he should have the opportunity to appeal
sooner rather than later. At the same time, the Remaining Claims should be heard and determined
without further delay. Dismissal of Count V with prejudice and the dismissal of the Remaining
Claims without prejudice will accomplish both those goals.
3. 	The Treatment of the Remaining Claims Under the Claims Objection
The Receiver and the Defendants disagree as to whether the dismissal of the Remaining
Claims should be with or without prejudice to the Receiver’s ability to proceed in State Court. The
Receiver argues that the Court should permit him to pursue the Remaining Claims in the State
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Court. Reply ¶ 9, Dkt. No. 43. The Defendants argue that the Court should not grant the requested
permission and the Remaining Claims should be dismissed with prejudice. Obj. ¶¶ 3, 25-29, Dkt.
No. 42. Dismissal of this adversary proceeding does not alter the fact that the Remaining Claims
are also pending before this Court under the Claim Objection. Nor does it alter the fact that the
proceedings on the Remaining Claims before the State Court are stayed by 11 U.S.C. § 362(a).
By filing the Proof of Claim and this adversary proceeding, the Receiver has submitted the
Remaining Claims to this Court’s jurisdiction. He did not raise any concern about duplication of
claims until May 2026, fifteen months after he filed the Proof of Claim and initiated this adversary
proceeding. Indeed, on August 6, 2025, the Receiver affirmatively stated that he would not file
motions for abstention, remand, or withdrawal of the reference, and he also expressly consented
to this Court’s entry of a final judgment. Pl.’s Pretrial Statement § II.E-G, Dkt. No. 19.
When he filed the Proof of Claim, the Receiver triggered the claims allowance process and
submitted the Remaining Claims to the jurisdiction of the bankruptcy court. In re SCS Logistics,
671 B.R. 224, 247 (Bankr. S.D. Ohio 2025) (“A creditor who offers proof of his claim, and
demands its allowance, subjects himself to the dominion of the court, and must abide the
consequences.”) (quoting Wiswall v. Campbell, 93 U.S. 347, 351, 23 L. Ed. 923 (1876)). And this
means that the Receiver also triggered this Court’s obligation to exercise that jurisdiction.
McDaniel v. ABN Amro Mortg. Grp., 364 B.R. 644, 649 (S.D. Ohio 2007); Murray v. Dinsmore
& Shohl, LLP (In re Murray Energy Holdings Co.), 662 B.R. 604, 633 (Bankr. S.D. Ohio 2024).
“Abstention from the exercise of federal jurisdiction is the exception, not the rule. The doctrine of
abstention is an extraordinary and narrow exception to the duty of a district court, and thus a
bankruptcy court, to adjudicate a controversy that is properly before it.” McDaniel, 364 B.R. at
649 (citation modified). A bankruptcy court should abstain “only in the exceptional circumstances
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where the order to the parties to repair to the State Court would clearly serve an important
countervailing interest.” Id. at 649 (quoting Brothers v. Tremaine (In re Tremaine), 188 B.R. 380,
384 (Bankr. S.D. Ohio 1995)).
28 U.S.C. § 1334(c) provides for two forms of bankruptcy abstention. 	First, in some
circumstances, § 1334(c)(2) makes abstention mandatory if a party timely requests it and it is a
non-core proceeding. Mandatory abstention thus does not apply in core proceedings. Lindsey v.
Dow Chem. Co. (In re Dow Corning Corp.), 113 F.3d 565, 570 (6th Cir. 1997) (citation omitted).
A claim objection is a core proceeding. SCS Logistics, 671 B.R. at 245; 28 U.S.C. § 157(b)(2)(B).
Mandatory abstention therefore does not apply here.
Where mandatory abstention does not apply, § 1334(c)(1) gives the Court discretion to
abstain out of respect for state law or in the interest of comity with state courts. 	28 U.S.C.
§ 1334(c)(1). The Sixth Circuit has stated that the primary consideration is whether the bankruptcy
court would be determining an unsettled question of state law, such that principles of federalism
and comity counsel in favor of allowing the state courts to decide the issue: “Given the genesis of
section 1334(c)(1), it is not surprising that the primary determinant for the exercise of discretionary
abstention is whether there exists unsettled questions of state law.” Dow Corning, 113 F.3d at 571
(citation modified); see also Junk v. CitiMortgage (In re Junk), 512 B.R. 584, 618 (Bankr. S.D.
Ohio 2014) (abstaining so that state courts could decide unsettled questions of state law). When
there is no suggestion that state law issues are unique, unsettled, or difficult, “principles of
federalism and comity would not be violated” if the bankruptcy court exercises its jurisdiction.
Dow Corning, 113 F.3d at 571. The Receiver has not made any suggestions which would convince
this Court to abstain here.
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The only argument the Receiver makes is that allowing him to proceed in the State Court
would “remedy the duplication of claims” between this Court and the State Court. Mot. for Leave
2-3, Dkt. No. 40; Reply ¶¶ 2, 3, 7, 8, 10, 14, Dkt. No. 43. In other words, he has merely pointed to
a parallel case in the State Court. But he has not shown any further consideration, such as respect
for state law or comity between the state and federal courts, that must be present for this Court to
abstain. 	Dow Corning, 113 F.3d at 571; McDaniel, 364 B.R. at 649 (stating that bankruptcy
abstention is appropriate only where it will serve an “important countervailing interest.”). Nor has
the Receiver shown any of the other factors that bankruptcy courts have considered in deciding
abstention under § 1334(c)(1).10 	The burden to establish discretionary abstention is always an
elevated standard requiring “exceptional circumstances,” McDaniel, 364 B.R. at 649, and the
“clearest of justifications.” In re Ionosphere Clubs, 108 B.R. 951, 956 (Bankr. S.D.N.Y. 1989).
This already high standard “is heightened where the proceeding involves the allowance or
disallowance of a claim.” SCS Logistics, 671 B.R. at 241 (citation modified). The Receiver had to
do more than point to the mere existence of a parallel proceeding in the State Court, but that is all
he did. SCS Logistics, 671 B.R. at 243 (“The existence of related state court proceedings, however,
is not weighted heavily by courts.”) (citation omitted); Junk, 512 B.R. at 624 (“the Court is
abstaining based on much more than the mere pendency of a state court proceeding.”).
10 Although Dow Corning says that the presence of unsettled state law issues or other matters implicating federalism
and comity is the “primary determinant” of discretionary abstention, it is not the only one. Courts typically consider
numerous factors: 1. the effect or lack of effect on the efficient administration of the estate if a court abstains; 2. the
extent to which state law issues predominate over bankruptcy issues; 3. the difficulty or unsettled nature of the
applicable state law; 4. the presence of a related proceeding commenced in state court or other non-bankruptcy court;
5. the jurisdictional basis, if any, 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 of this 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 non-debtor parties; and 13. any unusual or other
significant factors. SCS Logistics, 671 B.R. at 240-41 (collecting cases). These factors are not exclusive and are not
to be mechanically applied or given equal weight. Id. Indeed, they need not all be considered. Murray, 662 B.R. at
634.
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A final point cements the Court’s conclusion. 	The Receiver had not asserted any issue
with “duplication of claims” until he filed the Motion for Leave on May 23, 2026. He actively
litigated this case for over fifteen months, from February 2025 to May 2026, before mentioning
any concern about duplication of claims. 	And in August 2025, he filed a pretrial statement
affirmatively confirming his satisfaction with this Court exercising jurisdiction and disclaiming
any intent to seek abstention. Through his words and his conduct, the Receiver has conceded that
this Court is the appropriate forum to determine the Remaining Claims. He has therefore waived
any argument that this Court should allow the Remaining Claims to be decided in the State Court.
See, e.g., Schwebke v. United Wholesale Mortg. LLC, 96 F.4th 971, 974-76 (6th Cir. 2024) (holding
that a party waives a right to proceed in another forum where it takes affirmative actions that are
inconsistent with proceeding in that other forum).11
VI. 	Conclusion
For all these reasons, the Court grants the Motion for Leave in part and denies it in part.
Count V of the Amended Complaint will be dismissed with prejudice and without leave to amend.
As to the Remaining Claims, the Motion for Leave will be granted to the extent that the Remaining
Claims are withdrawn without prejudice to their resolution before this Court under the Claim
Objection. The Court will enter a final judgment of dismissal of this adversary proceeding that is
consistent with this Opinion and Order.12
11 The Receiver has also made these arguments which relate to relief from stay and abstention without filing a separate
motion. See LBR 4001-1(a)(9) (providing that relief from stay must be sought by separate motion). In addition, the
Receiver has not requested relief from stay to proceed in the State Court, which would be necessary in addition to
abstention. Junk, 512 B.R. at 616 (“Of course, it makes sense to grant relief from stay only if the Court also abstains
from deciding the issues that will be decided by the state court.”).
12 Since this adversary proceeding will be terminated without resolving the Remaining Claims, the Court will issue a
separate notice setting a further pretrial conference on the Claim Objection.
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IT IS SO ORDERED.
Copies to:
John C. Cannizzaro
Matthew L. Fornshell
Erica Lynn Arras
Michael A. Cox
James Ehrman
Rachel L Steinlage
Scott R. Belhorn
Whitmer & Ehrman LLC
2344 Canal Road, Suite 401
Cleveland, OH 44113-2535
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