Summary:
In December 2005, the Eichorns were seeking to purchase a home and entered hired Preferred Carolinas Realty (“PCR”) and James Allen to represent them in the process. The Eichorns wer shown property located in Wake Forest, North Carolina (''the property") and were told by PCR that it was owned by Toth Building Company, when it was, in fact, owned by Rodgers. Following negotiations through PCR, the Eichorns signed as sales contract with Toth, although Rodgers, the true owner of the property, had no knowledge of it. Unbeknownst to the Eichorns, PCR had modified the contract by "whiting out" the name of the seller, Toth Building Company, and substituting Rodgers' name.
Following the inevitable flurry of lawsuits, cross claims and counter claims, the Eichorns agreed to purchase the property from Rodgers for $425,000.00 and PCR and related co-defendants were required to pay Rodgers $50,000.00. Rodgers subsequently contended that he signed this settlement under gross duress and undue influence, refusing to honor its terms. The Wake County Superior Court ordered Rodgers to comply with the settlement, and after his appeal of that matter was dismissed, entered a second order finding that Rodgers "willfully and without justification" refused to comply with the settlement agreement and again ordered Rodgers' compliance.
Rodgers then filed Chapter 13 bankruptcy and commenced an Adversary Proceeding alleging claims of gross negligence, fraud, constructive fraud, unfair and deceptive trade practices, and willful and wanton conduct, which claims arose out of the same transactions at issue in the state court proceedings and settlement agreement. He also raised claims against the attorney for the Eichorns, Sidney Aldridge, claiming abuse of process, persistence in nonjusticiable claims, infliction of emotional distress, and fraudulent practices.
The Bankruptcy Court had previously granted a Motion for Judgment on the Pleadings for PCR and Allen based on the res judicata affect of the settlement agreement, but in an earlier decision, the District Court reverse. The Bankruptcy Court later subsequently granted a Motion for Judgment on the Pleadings to Aldridge. This order was, however, entered only days before the ruling by Supreme Court in Stern v. Marshall...
As a consequence, the District Court held that the claims against Aldridge did not “stem from the bankruptcy itself, nor would they necessarily be resolved in the claims allowance process. Instead, the instant claims involve possible tort liability of [Aldridge] arising out of state law based on a real estate dispute.” While the District Court noted that “§ 157(c) provides that if all parties consent to the referral and entry of a final order in a non-core matter, a bankruptcy court may enter a final order under § 157(c)(2)”, it was not clear whether the parties consented to such a determination. Accordingly, the matter was remanded to the bankruptcy court for a determination of the nature of the claims and, whether the bankruptcy court could either enter final judgment on those claims or submit proposed findings of fact and recommendation under 28 U.S.C. § 157(c)
The further wrinkle raise by the District Court is that is was not readily apparent from the record currently before it that the District Court itself would ultimately have independent subject matter jurisdiction, as there was neither any federal question raised nor diversity between the parties in the adversary proceeding.
For a copy of the opinion, please see:
Rodgers v PCR-Stern v Marshall.pdf
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