Bankr. E.D.N.C.: New Bern Riverfront Development v. Weaver Cooke Construction et al.- Mandatory and Permissive Abstention

Summary:

New Bern Riverfront Development filed suit in state court against nine defendants, but, after New Bern Riverfront Development filed Chapter 11, the state court action was remanded to the bankruptcy court. One of the nine defendants, Davis Architects, filed a third party complaint against McKim, who (after its motions to dismiss were denied) sought to have the bankruptcy court abstain or remand the proceeding to state court.

Pursuant to 28 U.S.C. § 1334(c)(2)l, abstention is mandatory when all of following the elements are present:
(1) a timely motion to abstain is filed,
(2) the removed proceeding is based on a state law claim or state law cause of action,
(3) the removed proceeding is “related to” a bankruptcy case, but does not “arise under” Title 11 or “arise in” a case under Title 11,
(4) the action could not have been commenced in a United States court absent jurisdiction under 28
U.S.C. § 1334,
(5) the action was pending when the bankruptcy was filed, and
(6) the action can be timely adjudicated in the state forum of appropriate jurisdiction.

Here the bankruptcy court found that as McKim participated in the case for more than a year, its motion failed the first element.
McKim alternatively sought permissive abstention, under which a court has discretionary authority to abstain from hearing a proceeding related to a case under title 11 “in the interest of justice, or in the interest of comity with State courts or respect for State law.” 28 U.S.C. § 1334(c)(1). Based on the procedural history of this case and the number of parties involved, the bankruptcy court found that it would not be in the interest of justice for the court to abstain.

For a copy of the opinion, please see:

New Bern Riverfront Development v. Weaver Cooke Construction et al.- Mandatory and Permissive Abstention.pdf

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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