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Ventricelli v. Nicklin

United States District Court, N.D. New York

January 13, 2020

DANIEL J. VENTRICELLI, Plaintiff,
v.
WILLIAM F. NICKLIN; RIVERLIFE INVESTMENT HOLDINGS LLC; MULTI-PACK HOLDINGS, LLC; and LYNN E. GORGUZE, Defendants.

          BECKER GLYNN MUFFLY CHASSIN & HOSINSKI LLP ALEC P. OSTROW, ESQ. Counsel for Plaintiff

          BAKER & HOSTETLER LLP JORIAN ROSE, ESQ. MICHELLE N. TANNEY, ESQ. Counsel for Defendants Nicklin & Riverlife

          POLSINELLI PC JASON A. NAGI, ESQ. Counsel for Defendant Multi-Pack

          HUGHES, HUBBARD & REED LLP DANIEL H. WEINER, ESQ. Counsel for Defendant Gorguze

          DECISION AND ORDER

          HON. GLENN T. SUDDABY CHIEF U.S. DISTRICT JUDGE.

         Currently pending before the Court, in this action to set aside fraudulent conveyances filed by Daniel J. Ventricelli (“Plaintiff”) against William F. Nicklin (“Defendant Nicklin”), Riverlife Investment Holdings LLC (“Defendant Riverlife”), Multi-Pack Holdings LLC (“Defendant Multi-Pack”), and Lynn E. Gorguze (“Defendant Gorguze”), are Defendant Gorguze's motion to remand and Defendant Riverlife's motion to transfer venue to the Southern District of New York. (Dkt. No. 25; Dkt. No. 30.) For the reasons set forth below, Defendant Gorzue's motion to remand is denied and Defendant Riverlife's motion to transfer venue is granted.

         I. RELEVANT BACKGROUND

         A. Relevant Procedural Background

         On September 13, 2017, C.L. King & Associates, Inc. (“C.L. King”) filed a Complaint in the Supreme Court of New York, Albany County, against Defendants Nicklin, Riverlife, Multi-Pack, and Gorguze (both in her individual capacity and as Trustee of the Lynn. E. Gorguze Separate Property Trust and the Vincent & Gloria Gorguze Trust). (Dkt. No. 1-1.) C.L. King also filed seven separate lawsuits against various members of Defendant Nicklin's family. (Nos. 1:19-cv-0229, 1:19-cv-0234, 1:19-cv-0243, 1:19-cv-0244, 1:19-cv-0245, 1:19-cv-0248, 1:19-cv-0250.) In October 2018, Defendants Gorguze and Multi-Pack each filed a motion to dismiss for lack of personal jurisdiction in the New York State Supreme Court, Albany County.[1] (Dkt. No. 1-9; Dkt. No. 40, at 6.)

         On January 18, 2019, Defendant Nicklin filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the Southern District of New York, Bankruptcy Petition No. 19-35092. (Dkt. No. 41, at ¶ 7 [Weiner Affidavit].) On February 21, 2019, Daniel J. Ventricelli (“Plaintiff”) was elected to serve as Trustee of the Estate at Defendant Nicklin's Section 341 creditor meeting. (Dkt. No. 46, at 2.)

         On February 19, 2019, Defendant Riverlife filed a notice of removal pursuant to 28 U.S.C. §§ 1334, 1446, and 1452. (Dkt. No. 1.) In its Notice of Removal, Defendant Riverlife indicated that it would move to transfer venue to the Southern District of New York, the location of Defendant Nicklin's Chapter 7 bankruptcy proceeding. (Dkt. No. 1, at ¶ 13.)

         On March 21, 2019, Defendant Gorguze filed a motion to remand this action back to the Supreme Court of New York, Albany County. (Dkt. No. 25.) On June 7, 2019, Defendant Riverlife filed a motion to transfer venue to the Southern District of New York, pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 30.) On September 13, 2019, Plaintiff submitted a reply to both motions, in which he consented to Defendant Riverlife's motion to transfer venue to the Southern District of New York, and opposed Defendant Gorguze's motion to remand this action to the New York Supreme Court, Albany County. (Dkt. No. 39.)

         A. Defendant Gorguze's Motion to Remand

         1. Summary of Defendant Gorguze's Arguments

         Generally, in her motion to remand, Defendant Gorguze asserts two arguments. (Dkt. No. 25-2.) First, Defendant Gorguze argues that remand is both required and appropriate under the doctrine of mandatory abstention because all of the requisite factors are met. (Dkt. No. 25-2, at 4-6.) In the alternative, Defendant Gorguze argues that the Court should remand this action under the doctrines of permissive abstention and equitable remand. (Dkt. No. 25-2, at 6-10.)

         2. Summary of Defendant Riverlife's Response

         Generally, in response to Defendant Gorguze's motion, Defendant Riverlife asserts two arguments. (Dkt. No. 35.) First, Defendant Rivelife argues that Defendant Gorguze fails to meet the elements for mandatory abstention because Defendant Gorguze cannot establish that this matter would be “timely adjudicated” in state court. (Dkt. No. 35, at 10-14.) Second, Defendant Riverlife argues that Defendant Gorguze's permissive abstention and equitable remand arguments are meritless because Defendant Gorguze offers no compelling reason for permissive abstention. (Dkt. No. 35, at 14-17.) Defendant Riverlife offers a similar explanation regarding the doctrine of equitable remand. (Dkt. No. 35, at 14-17.)

         3. Summary of Defendant Gorguze's Reply

         Generally, in reply to Defendant Riverlife's opposition, Defendant Gorguze asserts that the first five factors for mandatory abstention are undisputed, and that the New York State Supreme Court can timely adjudicate the immediate action. (Dkt. No. 43, at 5-11.) In the alternative, Defendant Gorguze reiterates her argument that the Court should apply the doctrines of permissive abstention and equitable remand in the interest of justice. (Dkt. No. 43, at 11-15.)

         B. Defendant Riverlife's Motion to Transfer Venue

         1. Summary of Defendant Riverlife's Arguments[2]

         Generally, in its motion to transfer venue, Defendant Riverlife argues that this action could have been originally filed in the Southern District of New York because all Defendants reside in New York State and the interests of justice, as well as the convenience of the parties and witnesses, weigh in favor of transferring venue to the Southern District of New York. (Dkt. No. 30-1, at 5-9.)

         2. Summary of Defendant Gorguze's Arguments

         Generally, in its opposition to Defendant Riverlife's motion to transfer venue, Defendant Gorguze argues that this action could not have originally been filed in the Southern District of New York because not all Defendants in fact reside in New York State, and that the interests of justice weigh against transferring venue. (Dkt. No. 40, at 8-13.) Defendant Gorguze emphasizes the fact that multiple Defendants are domiciled outside of New York State and argues that the conveyances pursuant to a settlement agreement to non-family members are not related to the alleged fraudulent conveyances at issue in this action. (Dkt. No. 40, at 13.)

         3. Summary of Defendant Riverlife's Reply

         Generally, in its reply memorandum of law, Defendant Riverlife reiterates its argument that the interest of justice favors transferring venue to the Southern District of New York. (Dkt. No. 42, at 7-10.) Additionally, Defendant Riverlife argues that the Court has original jurisdiction over this matter. (Dkt. No. 42, at 5-6.)

         II. GOVERNING LEGAL STANDARDS

         A. Legal Standard Governing Motions to Remand

         “A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under 1446(a).” 28 U.S.C. § 1447(c).

Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.[3]

28 U.S.C. § 1334(c)(2) (emphasis added).

         B. Legal Standard Governing Motions to Transfer Venue

         An action can only be brought in “(1) a judicial district where any defendant resides, if all defendants reside in the same State, [or] (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated . . . .” 28 U.S.C. § 1391. When a plaintiff's choice of venue is improper, a district court may sua sponte transfer the case in the interest of justice and for the convenience of the parties and witnesses. See 28 U.S.C. § 1406(a) (“The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.”); Concession Consultants, Inc. v. Mirisch, 355 F.2d 369, 371 n.3 (2d Cir. 1966) (noting that § 1406(a) allows the district judge to dismiss the case or transfer venue sua sponte, even when venue is improper); Lead Indus. Assoc. v. Occupational Safety & Health Admin., 610 F.2d 70, 79 n.17 (2d Cir. 1979) (“The broad language of 28 U.S.C. § 1404(a) would seem to permit a court to order transfer [s]ua sponte . . . .”); Flaherty v. All Hampton Limousine. Inc., 01-CV-9939, 2002 WL 1891212, at *3 (S.D.N.Y. Aug. 16, 2002). “The purpose of [transferring venue] ‘is to prevent the ‘waste of time, energy and money' and ‘to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'” Flaherty, 2002 U.S. Dist. LEXIS 15171, at *3.

         III. ANALYSIS

         The Court will decide Defendant Gorguze's motion to remand before turning to Defendant Riverlife's motion to transfer venue, because, setting aside its aversion to transferring undecided motions to other district courts, the Court finds it improper to decide a motion to transfer a case over which it should abstain from exercising jurisdiction.

         A. Whether Defendant Gorguze's Motion to Remand Should Be Granted Because Abstention Is Appropriate

         After carefully considering the matter, the Court answers this question in the negative for the reasons stated below.

         Under 28 U.S.C. § 1452(a), any party to a state court civil action may remove a claim or cause of action to the local district court provided that the claim or cause of action meets the jurisdictional requirements of 28 U.S.C. § 1334. 28 U.S.C. § 1452(a). Federal district courts have “original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). Litigation is “related to” “a pending bankruptcy proceeding [if] its outcome might have any ‘conceivable effect' on the bankrupt estate.” In re Cuyahoga Equip. Corp., 980 F.2d 110, 114 (2d Cir. 1992). In general, the ...


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