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Bankruptcy | Case Law | Abstention
ABSTENTION--SECTIONS 305 AND 1334(C)
In re Macke Intern. Trade, Inc., 370 B.R. 236 (9th Cir. BAP 2007)
Bankruptcy court may award attorney fees to a debtor where case is dismissed pursuant to
§ 305(a), even if debtor meets all of the requirements for an involuntary under § 303. Case was
properly dismissed under § 305, where debtor had done an assignment for the benefit of creditors
six months before the involuntary was filed, and the petitioning creditor was the only creditor not
to consent to the assignment.
In re Franceschi, 268 B.R. 219 (9th Cir. B.A.P. 2001), aff’d, 43 Fed.Appx. 87 (9th Cir. 2002)
Action for declaratory and injunctive relief properly dismissed on sovereign immunity
grounds as to state bar, and on Younger abstention grounds as to the state bar's chief trial counsel.
In order to abstain under Younger, the court must find that state proceedings :
1. are ongoing;
2. implicate important state interests; and
3. provide the plaintiff an adequate opportunity to litigate federal claims.
Security Farms v. International Brotherhood of Teamsters, 124 F.3d 999, 1009-10 (9th Cir. 1997)
District court’s denial of abstention treated as a decision not to remand, since after the
removal of the proceeding to federal court, the state court action was extinguished. "Section
1334(c) abstention should be read in pari materia with section 1452(b) remand, so that the former
applies only in cases in which there is a related proceeding that either permits abstention in the
interests of comity, section 1334(c)(1), or that, by legislative mandate, requires it, section
1334(c)(2)."
In re Conejo Enterprises, Inc., 96 F.3d 346 (9th Cir. 1996)
Remand order based on abstention not appealable
In re Conejo Enterprises, Inc., 71 F.3d 1460 (9th Cir. 1995) (see also “automatic stay”)
Opinion Withdrawn by In re Conejo Enterprises, Inc., 78 F.3d 1456 (9th Cir. 1996), AND
Opinion Superseded by In re Conejo Enterprises, Inc., 96 F.3d 346 (9th Cir. 1996)
1) Court has jurisdiction to review mandatory abstention issue, notwithstanding pre-1994
statute to contrary.
2) Mandatory abstention not approved because after requesting mandatory abstention,
creditor filed a claim making action core.
1334(c)(2)In order for mandatory abstention to apply, a proceeding must:
(1) be based on a state law claim or cause of action;
(2) lack a federal jurisdictional basis absent bankruptcy;
(3) be commenced in a state forum of appropriate jurisdiction;
(4) be capable of timely adjudication; and
(5) be a non-core proceeding.
In re Conejo Enterprises, Inc., 71 F.3d 1460, 1464 (9th Cir. 1995); see also In re Kold Kist
Brands, Inc., 158 B.R. 175, 178 (C.D. Cal. 1993); In re World Solar Corporation., 81 B.R. 603,
606 (S.D. Cal. 1988); In re Baldwin Park Inn Assoc., 144 B.R. 475 (C.D. Cal. 1992).
In re Eastman, 188 B.R. 621 (9th Cir. B.A.P. 1995)
§ 305 abstention
Dismissing a chapter 7 case under the more restrictive provisions of 305 (and not 707)
requires a factual finding that both the debtor and creditors would be ‘better served’ by a
dismissal.
In re Davis, 177 B.R. 907 (9th Cir. B.A.P. 1995)
Court improperly abstained where it failed to consider economy, convenience, fairness
and comity
In re Eastport Associates, 935 F.2d 1071 (9th Cir. 1991)
Rehearing denied and opinion amended, July 31, 1991.
In re Tucson Estates, Inc., 912 F.2d 1162 (9th Cir. 1990)
Bankruptcy court abstention warranted for resolution of related state court case
(note: holding limited by In re Conejo)