I am including our response to the filing to prevent removal of the case back to State Court. I believe it is worth reviewing our strategy. When considering adversarial bankruptcy defense -- specifically remand or relief from stay, the key is to remember three critical points:
- The litigation in state court must be well advanced (usually, through mid-discovery or later). Also known as the "amount of time" the state case has been ongoing.
- The matter must be substantially regarding state law and NOT a federal or bankruptcy question (the resulting decision is always a bankruptcy question, obviously. Rather, the matter itself, about which the state litigation is concerning, cannot be a federal or bankruptcy issue.)
- It should involve a jury matter. Though not strictly required, the fact there can be no jury trial on state matters in bankruptcy court is a strong motivator for the Bankruptcy Court to send the matter back to state.
The controlling cases are: Barge v. Western Southern Life Ins. Co., 307 B.R. 541, 547 (N.D. W. Va. 2004), and Linkway Inv. Co. v. Olsen (In Re Casamont Investors), 196 B.R. 517 (B.A.P. 9th Cir. Cal. 1996).
If you are the defendant attempting to prevent removal/remand, remember -- never argue that due process was violated in the state court (say, for example, due to pre-trial irregularities in preparing the case, discovery, etc.) when the parties have had ample time to prepare and litigate. There is nothing wrong with the approach per se, rather, the Bankruptcy Court is just going to point out that deficiencies in state court trial procedures are best handled at the state court level, not at Bankruptcy. A filing in Bankruptcy Court is not a second bite at the litigation apple.
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Do you have questions about bankruptcy or an adversarial process involving a debtor? Come talk to us! For the defense or the plaintiff, we are an experienced litigation firm, and we are accomplished at interweaving bankruptcy procedures with state court action.
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