PAONE v. PECK et al
Filing
26
OPINION filed. Signed by Judge Mary L. Cooper on 5/28/2013. (eaj)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JAMES A. PAONE, as court
appointed receiver of the
property of DEBORAH PECK,
Plaintiff,
v.
GEORGE C. PECK, et al.,
Defendants.
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CIVIL ACTION NO. 13-1059 (MLC)
O P I N I O N
THIS ACTION was removed from New Jersey state court pursuant
to 28 U.S.C. § (“Section”) 1332.
(See dkt. entry no. 1, Notice Of
Removal; see also id., Ex. A, Compl.)
This Court will transfer
this action to the United States District Court for the Southern
District of Florida.
BACKGROUND
Frederik Cornelis Komen secured a monetary judgment in New
Jersey Superior Court, Monmouth County (“Monmouth Superior”)
against Deborah Peck on July 11, 2011 (“July 2011 Judgment”).
(See Compl., Ex. A, 11-4-11 Am. J. at 1-2 (referring to July 2011
Judgment).)
The July 2011 Judgment “remains in effect, and
continues to be enforceable according to its terms”.
(Id. at 2.)
When Deborah Peck did not satisfy the July 2011 Judgment,
Monmouth Superior — upon Komen’s motion — named James A. Paone as
receiver of New Jersey property in which Deborah Peck has an
ownership interest to aid Komen “in executing [the July 2011]
[J]udgment”, by an order dated October 10, 2012 (“State
Appointment Order”).
(Compl., Ex. B, 10-10-12 Order at 1; see
dkt. entry no. 8, Fasano Certification, Ex. B, 6-13-12 Komen Br.
In Supp. Of Mot. For Post-J. Relief In Aid Of Execution.)
New
Jersey statutory law generally authorizes New Jersey state courts
to appoint and oversee a receiver to aid in the execution of
their outstanding judgments.
2A:17-67.
See N.J.S.A. §§ 2A:17-65, 2A:17-66,
Accordingly, in view of the State Appointment Order,
Paone (1) is under the authority and direction of Monmouth
Superior in pursuing the July 2011 Judgment, and (2) must “make
N.J.S.A. § 2A:17-68.1
report in writing to the court”.
Paone then brought this action against George C. Peck and
Deborah Peck, seeking sale of a parcel of their real estate
pursuant to N.J.S.A. § 2A:56-2, with Deborah Peck’s share of the
proceeds to go toward satisfaction of the July 2011 Judgment.
(See Compl. at 2-3.)
But George C. Peck challenges the validity
of the July 2011 Judgment, asserting that “[n]either [Paone] nor
. . . Komen hold a valid and enforceable judgment lien against the
interest of George C. Peck in one half of the subject Property,
and therefore may not sell George C. Peck’s interest to satisfy
the obligation of any co-tenant without the affirmative consent
1
See Colozzi v. Bevko, Inc., 17 N.J. 194, 199 (1955)
(describing statutory process by which New Jersey state courts
restrain party obligated by judgment from transferring or
assigning property, in order to assist judgment holder in
collecting on New Jersey state court judgment).
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of George C. Peck, which consent has been continuously withheld”.
(Notice Of Removal, Ex. B, Answer of George C. Peck at 2.)
BANKRUPTCY MATTERS
Deborah Peck is not seeking bankruptcy protection, but is
named in several proceedings in the United States Bankruptcy Court
for the Southern District of Florida (“Florida Bankruptcy Court”).
In In re CLSF III IV, Inc., she is named as an interested party,
as she is the incorporator, sole officer, and registered agent of
the debtor entity therein.
See Bankr. S.D. Fla. No. 12-30081,
dkt. entry no. 23, Notice; id., dkt. entry no. 144, Notice.
By
an order dated January 22, 2013, the Florida Bankruptcy Court
preliminarily enjoined her from selling or transferring assets
that might be subject to oversight in that bankruptcy proceeding.
Id., dkt. entry no. 145, 1-22-13 Order at 5.
In Menotte v. Behl Corp., which is an adversarial proceeding,
Deborah Peck is named as a defendant and is alleged to have
engaged in fraud concerning the debtor entity in In re CLSF III
IV, Inc.
Compl.
See Bankr. S.D. Fla. No. 12-1889, dkt. entry no. 1,
The Florida Bankruptcy Court preliminarily enjoined her
from selling or transferring assets that might be subject to
oversight by the Florida Bankruptcy Court by an order dated
September 25, 2012 (“September 2012 Bankruptcy Injunction
Order”).
Id., dkt. entry no. 40, 9-25-12 Order.
The Florida
Bankruptcy Court stated in the September 2012 Bankruptcy
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Injunction Order that “[a] person or entity who claims a right,
title, or interest in property subject to the injunctions imposed
by . . . this Order that asserts that such right, title, or
interest is improperly impaired by this Order may apply to this
[Bankruptcy] Court to lift the Injunction regarding such
identified property or property interests”.
Id. at 6.
The
Florida Bankruptcy Court thereafter permanently enjoined Deborah
Peck from selling or transferring assets that might be subject to
its oversight.
Id., dkt. entry no. 105, 3-13-13 Order at 4.
In Van Egmond v. Peck, which is an adversarial proceeding,
Deborah Peck is named as a defendant and is alleged to be an
interested party in yet another bankruptcy proceeding.
See
Bankr. S.D. Fla. No. 13-1123, dkt. entry no. 4, Am. Compl.
Deborah Peck and George C. Peck, as the removing defendants,
have violated the Local Civil Rules by failing to specifically
notify this Court about the bankruptcy proceedings.
See L.Civ.
R. 11.2 (stating party must certify whether matter in controversy
is subject of any other action pending in any court, and, if so,
party must identify each such action and all parties thereto).
But the record before this Court contains a letter brief filed by
Deborah Peck in Monmouth Superior, wherein she points out (1) the
bankruptcy proceedings, (2) the September 2012 Bankruptcy
Injunction Order, and (3) that the State Appointment Order would
improperly direct a receiver “to take control over the same
4
personal and business property that is effected by the Court
Order in the Bankruptcy Court in Florida”.
(Dkt. entry no. 14,
Grant Certification, Ex. B, 9-19-12 Letter Br. at 2.)
Also, the
State Appointment Order is annexed to the Notice Of Removal, and
it states that Monmouth Superior:
is aware of the [September 2012 Bankruptcy Injunction
Order]. This Order is not intended to conflict with or
supersede the [September 2012 Bankruptcy Injunction
Order]. The Receiver shall comply with the [September
2012 Bankruptcy Injunction Order] including but not
limited to [the portion] thereof, regarding assets that
were or may have been improperly impaired by the
[September 2012 Bankruptcy Injunction Order].
(10-10-2012 Order at 3.)
This Court is uncertain whether the
parties made Monmouth Superior aware of other orders issued by
the Florida Bankruptcy Court.
TRANSFER
The issues presented in this action are intertwined with the
aforementioned bankruptcy proceedings.
Also, whether the State
Appointment Order “conflict[s] with” the orders of the Florida
Bankruptcy Court must be determined by that court, not by
Monmouth Superior.
This Court will thus transfer the claims
asserted in this action to the United States District Court for
the Southern District of Florida, with the assumption that it
will then refer the claims to the Florida Bankruptcy Court.
See
28 U.S.C. § 157(a) (stating “district court may provide that any
or all cases under title 11 and any or all proceedings arising
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under title 11 or arising in or related to a case under title 11
shall be referred to the bankruptcy judges for the district”); 28
U.S.C. § 1409(a) (stating “proceeding arising under title 11 or
arising in or related to a case under title 11 may be commenced
in the district court in which such case is pending”); 28 U.S.C.
§ 1412 (authorizing transfer of bankruptcy-related action to
another district court); Maritime Elec. Co. v. United Jersey
Bank, 959 F.2d 1194, 1212 (3d Cir. 1991) (stating district court
should transfer claim to proper district court, and then proper
district court refers claim to the overseeing bankruptcy court);
see also Alderwoods Grp. v. Garcia, 682 F.3d 958, 973 (11th Cir.
2012) (directing transfer of action to proper district court, and
then “that court may refer it to the . . . Bankruptcy Court”).
The extent of the Florida Bankruptcy Court’s authority over
these claims depends on whether this action is a “core proceeding”
or a “non-core proceeding”.
28 U.S.C. § 157(b)(1)-(4); see 28
U.S.C. § 157(b)(1) (stating bankruptcy court may enter orders in
core proceeding); 28 U.S.C. § 157(c)(1) (stating bankruptcy court
makes proposed findings of fact and conclusions of law in non-core
proceedings, and final order is entered by district court after
considering same); see Mullarkey v. Tamboer (In re Mullarkey), 536
F.3d 215, 220-21 (3d Cir. 2008) (discussing bankruptcy court’s
authority).
Such a determination should be made by the Florida
Bankruptcy Court upon referral of this action.
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See 28 U.S.C. §
157(b)(3) (stating bankruptcy court determines whether matter is
core proceeding); Certain Underwriters At Lloyd’s Of London v.
Otlowski, No. 08-3998, 2009 WL 234957, at *2 (D.N.J. Jan. 29,
2009) (stating “Section 157(b)(3) calls for the bankruptcy judge
to make the initial decision on whether a case is a core
proceeding, and its language is not ambiguous”); E. W. Trade
Partners v. Sobel WP (In re E. W. Trade Partners), No. 06-1812,
2007 WL 1213393, at *3-4 (D.N.J. Apr. 23, 2007) (same); see also
Mickler v. Trujillo (In re Trujillo), 485 B.R. 797, 805 (M.D.
Fla. 2013) (same).
ABSTENTION
If the Florida Bankruptcy Court finds that it has no
jurisdiction over the claims in this action, and if this action
is transferred back here, then this Court intends to abstain from
exercising jurisdiction and to remand this action to Monmouth
Superior.
This Court is inclined to abstain because:
(1) the
action underlying the July 2011 Judgment is ongoing, as that
judgment (a) has not been satisfied, (b) “remains in effect, and
continues to be enforceable”, and (c) is subject to challenge by
George C. Peck; (2) the important interest that New Jersey and
its courts have in enforcing state court judgments — particularly
through separate proceedings that are creatures of New Jersey law
— is implicated; and (3) there is an adequate opportunity to
raise federal claims in state court.
7
See Middlesex Cnty. Ethics
Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 435 (1982);
Younger v. Harris, 401 U.S. 37, 43-54 (1971); see also Adams v.
Lynn, 472 Fed.Appx. 125, 128 (3d Cir. 2012) (abstaining in action
where plaintiff “plainly seeks enforcement of [an] order” issued
in an earlier action brought in state court); Anthony v. Council,
316 F.3d 412, 421-22 (3d Cir. 2003) (stating abstention is proper
when post-judgment proceedings are involved, given importance to
states of enforcing judgments entered by their courts).
In this
action removed under Section 1332, this Court should refrain from
intruding upon New Jersey’s “sovereign prerogative”.
Bath Unltd.
v. Ginarte, O’Dwyer, Winograd & Laracuente, No. 04-3919, 2005 WL
2406097, at *3 (D.N.J. Sept. 29, 2005) (discussing La. Power &
Light Co. v. City of Thibodaux, 360 U.S. 25 (1959)).
The New
Jersey state courts would recognize (1) the action underlying the
July 2011 Judgment as being pending until that judgment is
satisfied, and (2) their authority to appoint and oversee Paone
to enforce that judgment as an important state interest.
See
First Nat’l State Bank Of N.J. v. Kron, 190 N.J.Super. 510, 51216 (App.Div. 1983) (discussing same).
The Court, for good cause appearing, will issue an
appropriate order.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated:
May 28, 2013
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