United States District Court, D. Nebraska
In re KORLEY B. SEARS, Debtor.
RHETT R. SEARS; RHETT SEARS REVOCABLE TRUST; RONALD H. SEARS; RON H. SEARS TRUST; and DANE SEARS, Defendants/Appellants ROBERT A. SEARS; ROBERT A. SEARS, TESTAMENTARY TRUSTEE; AND KORLEY B. SEARS, Plaintiffs/Appellees.
Bankruptcy Case No. 10-40277. Adversary Proceeding No. 14-04061.
For Robert A. Sears, Robert A. Sears, Trustee, Korley B. Sears, Plaintiffs: Jerrold L. Strasheim, STRASHEIM LAW FIRM, Omaha, NE.
For Rhett R. Sears, Rhett R. Sears Revocable Trust, Ronald H. Sears, Ron H. Sears Trust, Dane R. Sears, Defendants: Brian J. Koenig, Donald L. Swanson, Kristin M.V. Krueger, KOLEY, JESSEN LAW FIRM, Omaha, NE.
For U.S. Bankruptcy Court, Interested Party: U.S. Bankruptcy Clerk - Lincoln, U.S. BANKRUPTCY COURT - LINCOLN, Lincoln, NE.
For U.S. Trustee, Trustee: Patricia M. Fahey, U.S. TRUSTEE - OMAHA, Omaha, NE.
MEMORANDUM AND ORDER
Richard G. Kopf, Senior United States District Judge.
This is an appeal from an order entered by the United States Bankruptcy Court for the District of Nebraska on December 9, 2014, remanding an adversary proceeding to the District Court of Madison County, Nebraska. For the reasons discussed below, the bankruptcy court's order will be reversed and the case will be remanded for further proceedings.
On October 20, 2014, Robert A. Sears, individually and as testamentary trustee under the will of Redmond Sears, deceased, and Korley B. Sears (" Appellees), filed a complaint in state court alleging that Rhett R. Sears, Rhett Sears Revocable Trust, Ronald H. Sears, Ron H. Sears Trust, and Dane Sears (" Appellants" ), breached an agreement for the sale of their shares of AFY, Inc. stock to Korley B. Sears and the corporation, and that Ronald H. Sears and Dane Sears breached their fiduciary duties as employees of the corporation. Appellees also sought restitution of distributions Appellants received from the bankruptcy estate of AFY, Inc. (Case No. 10-40875), and claimed that Appellants tortiously interfered with the Chapter 11 reorganization of AFY, Inc., and filed " bogus" claims as creditors.
On November 24, 2014, Appellants filed a notice of removal in the Chapter 11 bankruptcy of Korley B. Sears (Case No. 10-40277), thereby initiating Adversary Proceeding No. 14-04061. The bankruptcy court has subject matter jurisdiction over the adversary proceeding pursuant to 28 U.S.C. § 1334(b) (for claims " arising in or related to cases under" the Bankruptcy Code).
However, on December 11, 2014, the bankruptcy court ordered sua sponte that the adversary proceeding be remanded to the state court under the permissive abstention doctrine of 28 U.S.C. § 1334(c)(1) and the equitable remand doctrine of 28 U.S.C. § 1452(b). Appellants timely appealed
the order to this court on December 24, 2014. See Fed. R. Bankr. P. 8002(a)(1).
This court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(a). Although 28 U.S.C. § § 1334(d) and 1452(b) provide that decisions to, or not to, abstain or remand are not subject to review by appeal or otherwise by a " court of appeals" or by " the Supreme Court of the United States," appellate review by a district court (or bankruptcy appellate panel) is permitted. In re Schmidt, 453 B.R. 346, 349 (8th Cir. B.A.P. 2011); Cargill, Inc. v. Man Fin., Inc. (In re Refco, Inc.), 354 B.R. 515, 518 (8th Cir. B.A.P. 2006). In addition, 28 U.S.C. § 1447(d) only prohibits appellate review of cases in which remand was based on a timely raised defect in the removal procedure or on the lack of subject matter jurisdiction, neither of which is present here. See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995).
Permissive abstention decisions under § 1334(c)(1) and equitable remand decisions under § 1452(b) are reviewed for an abuse of discretion. In re Williams, 256 B.R. 885, 891 (8th Cir. B.A.P. 2001) (citing In re DeLorean Motor Co., 155 B.R. 521, 524 (9th Cir. B.A.P. 1993)). " A bankruptcy court abuses its discretion if it bases its decision on an ...