Western and Southern Life Insurance Company et al v. Bank of America, N.A. et al
Filing
22
OPINION AND ORDER granting 7 Motion to Remand. The Court REMANDS this matter back to the Hamilton County Court of Common Pleas for further proceedings. Signed by Judge S Arthur Spiegel on 12/22/2011. (km1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
THE WESTERN AND SOUTHERN LIFE :
INSURANCE COMPANY, et al.,
:
:
Plaintiffs,
:
:
:
v.
:
:
BANK OF AMERICA, N.A. et al., :
:
Defendants.
:
NO. 1:11-CV-00667
OPINION AND ORDER
This matter is before the Court on Plaintiffs’ Motion to
Remand (doc. 7), Defendants’ Response in Opposition (doc. 18), and
Plaintiffs’ Reply (doc. 20). For the reasons indicated herein, the
Court GRANTS Plaintiffs’ motion and REMANDS this case to the
Hamilton County Court of Common Pleas.
This
case
involves
Plaintiffs’
allegations
that
Defendants sold them mortgage-backed securities after abandoning
disclosed underwriting guidelines (doc. 2).
the
loans
were
issued
based
on
In Plaintiffs’ view,
overstated
incomes,
inflated
appraisals, false verifications of employment, and other departures
from disclosed underwriting criteria (Id.).
several
state
claims
for
violations
of
Plaintiffs assert
securities
law,
for
recission, negligent misrepresentation, and for common-law fraud
(Id.).
At issue before the Court is whether this matter is
properly before this Court or should be remanded back to the state
court
where
Plaintiffs
Defendants removed it.
originally
filed
it,
and
from
which
Defendants contend this matter is properly
before this Court because there exists “related to” bankruptcy
jurisdiction,
in
that
some
of
the
underlying
securities are related to bankrupties (doc. 18).
mortgage-backed
Plaintiffs argue
that only a tiny fraction of the loans, some 0.13%, were originated
by the bankrupt originators, such that it is too attenuated to find
“related to” jurisidiction (doc. 20). Moreover, Plaintiffs rely on
Allstate Insurance Company v. Credit Suisse, 11-Civ. 2232, 2011
U.S. Dist. LEXIS 120734 (S.D.N.Y. October 19, 2011), in arguing
that Bank of America has not filed proofs of claim in the relevant
bankruptcy cases, and the bar dates for filing such proofs of claim
have passed.
In Allstate the court remanded the case to state
court after determining that bankruptcy “related to” jurisdiction
was inappropriate because the Defendants had not filed with the
bankruptcy court any proofs of claim for potential indemnification
and the bar date for filing such a claim had expired.
Id.
The
Court further found that even if it did have jurisdiction it should
abstain from hearing the case, as the matter involved only state
law claims, and the state court was equally capable of adjudicating
the matter.
Id.
Plaintiffs contend they too only assert state
law claims, and that under principles of mandatory abstention, the
Court should remand even if “related to” bankruptcy jurisdiction
exists (doc. 20).
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Having reviewed the parties’ briefing, the Court finds
this matter extremely similar to Western & Southern v. Morgan
Stanley, Case No. 1:11-CV-00576, which the Court remanded to the
Hamilton County Court of Common Pleas on December 20, 2011. In its
decision the Court cited the Allstate court favorably, in that it
rejected
defendants’
position
that
their
case
qualified
for
“related to” bankrupcty jurisdiction when defendants had not filed
proofs of claim and the time the bar date had long since expired.
The Court finds the same principle applicable here, and further
agrees with Plaintiffs that only a miniscule amount of the loans
underlying the offerings were originated by entities in bankruptcy.
Such connection appears extremely attenuated to this Court.
Even should the Court’s analysis be flawed, a remand is
nonetheless appropriate under principles of mandatory abstention.
Pursuant to 28 U.S.C. § 1334(c)(2), a district court must abstain
from exercising jurisdiction where 1) a complaint is “based on a
state law claim or cause of action;” 2) the only asserted basis for
federal jurisdiction is bankruptcy “related to” jurisdiction; 3)
the
action
was
“commenced
in
a
state
forum
of
appropriate
jurisdiction;” 4) the action can be timely adjudicated in state
court; and 5) the action is a non-core proceeding.
Corning Corp., 86 F.3d at 497 (6th Cir. 1996).
In re Dow
The only claims at
issue in this matter are based on Ohio law, the only basis for
federal jurisdiction is bankruptcy “related to” jurisdiction, this
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matter was appropriately commenced in the Hamilton County Court of
Common Pleas, and this action is a non-core proceeding.
Moreover
this Court sees no valid evidence that the state court is not
emminently capable of adjudicating this matter in a timely fashion,
especially as it is now handling related matters including that
which this Court only recently remanded, Western & Southern v.
Morgan Stanley, Case No. 1:11-CV-00576.
As such, for these reasons, the Court finds Plaintiffs’
motion
well-taken
arguments
to
the
in
all
respects,
contrary.
and
Accordingly,
rejects
the
Defendants’
Court
GRANTS
Plaintiffs’ Motion to Remand (doc. 7), and REMANDS this matter back
to
the
Hamilton
County
Court
of
Common
Pleas
for
further
proceedings.
SO ORDERED.
Dated: December 22, 2011
/s/ S. Arthur Spiegel
S. Arthur Spiegel
United States Senior District Judge
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