Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


July 8, 2005.

JACK BUECHNER, et al., Plaintiffs,

The opinion of the court was delivered by: P. KEVIN CASTEL, District Judge


This action was removed from state court under 28 U.S.C. § 1452. The plaintiffs include the Trustee in bankruptcy for The AdBrite Corporation ("AdBrite") which is in Chapter 7 proceedings and who brought the state court action with the approval of the Bankruptcy Court. Also named as plaintiffs are fifteen shareholders of AdBrite. The Trustee and the shareholders bring claims against Allan R. Avery, the former Chief Executive of AdBrite, and others.

In urging remand, plaintiffs argue that the action was improperly removed by Avery and that this Court lacks subject matter jurisdiction. Plaintiffs assert that if this Court were to conclude that the action was properly removed and that there is subject matter jurisdiction, then the action is subject to mandatory abstention or, alternatively, permissive abstention. They urge equitable remand to state court pursuant to 28 U.S.C. § 1452(b). For the reasons set forth below, I conclude that the action was properly removed, that the Court has subject matter jurisdiction and that the action includes "core" proceedings to recover assets of the bankrupt in the hands of third-parties, which are not subject to mandatory abstention. I further conclude that the relevant factors strongly support permissive abstention. Also, as to the non-core state law money damage claims, mandatory abstention is required.

  Pursuant to 28 U.S.C. § 1452(b), the action is remanded to Supreme Court of the State of New York, New York County.

  The Proceedings in Bankruptcy Court

  On October 15, 2002, AdBrite filed a voluntary Chapter 11 petition in this District, 02-30225-CGM. On March 6, 2003, the Chapter 11 proceeding was converted into a Chapter 7 proceeding.

  On February 17, 2004, the Trustee for the debtor applied to the Bankruptcy Court for an order approving the retention of special counsel to bring an action on behalf of the bankrupt estate and certain of its shareholders against four persons and two entities. As described in the submissions to the Bankruptcy Court, the action would allege fraud, breach of fiduciary duty and conspiracy to deprive AdBrite of certain intellectual property rights. The factual basis for the claims arises out of the alleged actions of Allan Avery, as President of AdBrite, commencing in January 2002. Avery and Norman Rothstein allegedly formed a separate entity, A.B. Media Corporation, for the purpose of taking over the assets of AdBrite. The proposed lawsuit would allege that Avery caused AdBrite to enter into a short-term loan agreement with Rothstein with AdBrite's intellectual property as collateral and that Avery knew that AdBrite could not repay the loan according to its terms.

  Bankruptcy Judge Cecelia G. Morris held a hearing on the application on April 13, 2004, at which prospective defendants Avery, McNulty, Rothstein, Willen and Fuel Cell Components were represented by counsel. The Bankruptcy Court approved the retention of special counsel to pursue the action in New York state court.

  The State Court Action

  The summons in the action is dated December 22, 2004, the same date it and the complaint were filed with the New York County Clerk. Buechner, et al. v. Avery, et al., Index No 04/604319, Supreme Court, New York County. In addition to money damages, the action sought, among other things, an order "declaring the Rothstein Loan transaction and the conveyance of Adbrite's intellectual property cancelled and deemed void" and the "imposition of a constructive trust over the assets of" AdBrite in the hands of defendants. (Complaint, p. 27, ¶¶ 2 and 3)

  On February 14, 2005, defendant Avery filed a "Notice of Removal" in this District. Defendant alleged that removal was proper because the Court has "related to" jurisdiction. 28 U.S.C. § 1334(b).

  The Timeliness of Removal

  Plaintiffs assert that the removal petition was untimely because one or more defendants (other than Avery) were served with process more than thirty days prior to removal and failed to remove within that time period. Plaintiffs also assert that defendant Avery was served more than thirty days prior to removal, a point he strongly contests.

  Section 1441 of title 28 of the United States Code authorizes removal of actions from state to federal court in certain circumstances. It provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court . . . where such action is pending." In the face of a motion to remand, the party removing the case bears the burden of establishing that removal was proper. See United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994). The removal statute is to be strictly construed. See Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 32 (2002) (citing Healy v. Ratta, 292 U.S. 263, 270 (1934) ("Due regard for the rightful independence of state governments . . . requires that [federal courts] scrupulously confine their own jurisdiction to the precise limits which the statute has defined.")); see also Pupo v. Chadwick's of Boston, Inc., 2004 WL 2480399 at *1 (S.D.N.Y. Nov. 4, 2004). In all cases seeking remand to state court, the defendant bears the burden ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.