United States District Court, E.D. Pennsylvania
March 24, 2004.
THOMAS W. DOYLE AND PATRICIA DOYLE, HUSBAND AND WIFE, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED Plaintiffs,
MELLON BANK, N.A., DAVIS & REILLY, P.C., REED J. DAVIS, DAVIS DAVIS ATTORNEYS, P.C. and JOHN DOES 1 THROUGH 50, Defendants
The opinion of the court was delivered by: LOUIS POLLAK, Senior District Judge
On March 29, 2002, this court dismissed plaintiffs' federal claims
with prejudice and dismissed plaintiffs' state law claims without
prejudice, stating that the defendants' Motion to Dismiss was granted for
reasons given in court on March 25, 2002. At the March 25, 2002 hearing,
this court granted defendants' Motion to Dismiss for lack of federal
question jurisdiction. Tr. of Mot. to Dismiss Hr'g at 18. The transcript
of the hearing on the Motion to Dismiss makes clear the insufficiency of
all the federal claims asserted by the plaintiffs. Tr. of Mot. to Dismiss
Hr'g at 18. This court stated that the dispute is "essentially a contract
dispute [Y]," which involves "the stuff of the law of contract and not of
the law of
fraud [Y]," and that "issues as to reasonableness are again to be
determined in the context of a civil action civil in the contract
sense [Y]." Tr. of Mot. to Dismiss Hr'g at 17, 18.
On April 17, 2002, plaintiffs filed a seven-count class action
complaint, Doyle II, in the Philadelphia Court of Common Pleas.
The case was removed to the District Court after defendants filed a Joint
Notice of Removal in the District Court based on Count I of the
Doyle II complaint, which re-alleged the FDCPA claim this court
had dismissed with prejudice. Subsequently, the parties filed a
Stipulation and Order for Extension of Time with the court, which
contained only one requirement that plaintiffs file an amended
complaint not alleging any federal claims. Under the stipulation, if
plaintiffs filed an amended complaint that did not allege any federal
claims, defendants would consent to a remand of the case to the Court of
Common Pleas of Philadelphia County.
On May 31, 2002, plaintiffs served a copy of their First Amended
Complaint. The First Amended Complaint raised state-law claims based on
breach of contract (Count I), breach of the obligation of good faith and
fair dealing (Count II), Pennsylvania's Loan & Interest Protection
Law (Count III), unfair trade practices (Count IV), misrepresentation
(Count V), fraudulent misrepresentation (Count VI), and seeking
injunctive relief (Count VII).
On June 17, 2002, defendants filed a Motion to Dismiss the plaintiffs'
First Amended Complaint as barred by res judicata and/or collateral
estoppel, arguing that the claims were based on or preempted by the
Bankruptcy Code or based on the FDCPA. On November 19, 2002, plaintiffs
filed a consolidated Motion [for leave] to File Second Amended Complaint
and Motion to Remand. On June 20, 2003, plaintiffs filed a Notice of
Removal from United States District Court to United States Bankruptcy
Court, purportedly pursuant to Federal Rule of Bankruptcy Procedure 9027.
Defendants responded by filing a Motion to Strike the Plaintiffs' Notice
of Removal from United States District
Court to United States Bankruptcy Court on July 24, 2003. All three
motions are presently before this court.
(a)Rules and Statutes
Plaintiffs' Notice of Removal is described as being "Pursuant to
B.R.C.P. 9027." But the Rule offers plaintiffs no support.
Rule 9027 speaks of removal "to a district court" and contemplates that
it may be followed by a district court referral of the case to a
bankruptcy court. B.R.C.P. 9027(e)(1) and (e)(2). Since Rule 9027 does
not support plaintiffs' Notice of Removal, the next question is whether
the Notice of Removal is supported by any relevant statutes.
Removal is governed by Chapter 89 of Title 28. All sections of Chapter
89, other than the last, deal with removal from a "state court" (defined
as including the Superior Court of the District of Columbia,
28 U.S.C. § 1451) to a federal district court. The last section of Chapter 89
Section 1452 deals with removal to a federal district
court from another federal court. Section 1452 is captioned "Removal of
claims related to bankruptcy cases." It reads as follows:
(a) A party may remove any claim or cause of
action in a civil action other than a proceeding
before the United States Tax Court or a civil
action by a governmental unit to enforce such
governmental unit's police or regulatory power, to
the district court for the district where such
civil action is pending, if such district court
has jurisdiction of such claim or cause of action
under section 1334 of this Title.
(b) The court to which such claim or cause of
action is removed may remand such claim or cause
of action on any equitable ground. An order
entered under this subsection remanding a claim or
cause of action, or a decision not to remand, is
not reviewable by appeal or otherwise by the court
of appeals under section 158(d), 1291, or 1292 of
this title or by the Supreme Court of the United
States under section
1254 of this title.
It is to be noted that § 1452 says nothing about removal
from a district court to any other court, including a
bankruptcy court. Indeed, neither section 1452 nor any other section of
Chapter 89 mentions bankruptcy courts. Accordingly, Chapter 89 offers no
statutory support for plaintiffs= attempt to remove this matter to the
Nor are plaintiffs aided by 28 U.S.C. § 157, which governs
bankruptcy court procedures. Section 157 makes it clear that bankruptcy
court authority derives from the district courts which are empowered, in
the exercise of their discretion, to refer bankruptcy cases to, and
withdraw them from, the bankruptcy courts.*fn1
(2) The caselaw
Given that no rule of court and no statute authorizes a litigant to
remove a case from a district court to a bankruptcy court, the remaining
question is whether there is a substantial body of caselaw
supporting the notion that there is a non-rule-or-statute-based,
judicially constructed, practice recognizing a district court litigant's
entitlement, in a case assertedly having a bankruptcy ingredient, to
remove that case from the district court to a bankruptcy court.
The only pertinent reported cases that have come to this court's
attention are decisions of bankruptcy courts, with the exception of one
district court. In two instances bankruptcy courts have sustained
removal. Philadelphia Gold Corp. v. Fauzio, 56 B.R. 87
(Bankr.E.D. Pa. 1985); MATV-Cable Satellite Inc. v. Phoenix Leasing
Inc., 159 B.R. 56 (Bankr.S.D. Fla. 1993). In Philadelphia
Gold the court held that the term "district court," in
28 U.S.C. § 1452(a) should be "deemed to denote the bankruptcy court." 56 B.R.
at 89. In MATV the court acquiesced in removal but was
imprecise as to the rationale.
Five bankruptcy courts and one district court have found no authority
to support removal from a district court to a bankruptcy court.
Centrust Savings Bank v. Love, 131 B.R. 64, 65 (S.D. Tex.
1991); Thomas Steel Corp. v. Bethlehem Rebar Industries, Inc.,
101 B.R. 16, 19 (Bankr.N.D. Ill. 1989); In re: Interpictures,
Inc., 86 B.R. 24, 28-29 (Bankr.E.D. New York 1988); In re:
Mitchell, 206 B.R. 204, 210-211 (Bankr.C.D. California 1997);
Sharp Electronics Corp. v. Deutsche Financial Services Corp.,
222 B.R. 259, 263 (Bankr.D. Md. 1998); In re: Cornell & Company,
Inc., 203 B.R. 585, 586 (Bankr.E.D. Pa. 1997). Both
Cornell and Thomas Steel rejected the contention that
"district court" in section 1452(a) could be read as embracing bankruptcy
courts. Cornell, 203 B.R. at 586; Thomas Steel, 101
B.R. at 19. The Cornell court observed that Philadelphia
Gold's reading of the statute would create a "gap" in the district
court's complete referral power over bankruptcy matters [. . .]."
Cornell, 203 B.R. at 586, and noted that, even if a bankruptcy
court had authority to accept removal of a case, that authority would be
undermined by 28 U.S.C. § 157(d), which gives district
courts the power to withdraw cases from bankruptcy courts.
Id. It is the view of this court that the rulings in
Cornell and Thomas Steel are wholly persuasive.
Accordingly, plaintiffs' Notice of Removal of the case at bar from this
court to the bankruptcy court is deemed to be without effect, and will be
II. Leave to Amend and Remand & Motion to Dismiss
Not every claim involving a question of federal law "aris[es] under"
federal law as articulated by section 1331 of Title 28. See,
e.g., Trent Realty Associates v. First Federal Savings and
Loan Association of Philadelphia, 657 F.2d 29, 32-33 (3d Cir. 1981)
(citing Gully v. First National Bank in Meridian, 299 U.S. 109,
115 (1936). The claim must depend upon the resolution of a substantial
question of federal law. Id. As noted above, the First Amended
Complaint raised purely state-law claims.
As this court made clear in its Order of March 29, 2002 and at the
hearing of March 25, 2002, the questions embodied in this dispute are
state law questions which should be decided in state court. The fact that
plaintiffs' pleadings may ornament the state law claims by reference to
standards said to be derived from federal law does not change the state
law claims into federal questions.
Accordingly, in an order accompanying this opinion, defendants' Motion
to Strike Plaintiffs' Notice of Removal from United States District Court
to United States Bankruptcy Court will be granted; plaintiffs' Motion
[for leave] to File Second Amended Complaint and Motion to Remand will be
granted; and defendants' Motion to Dismiss will be denied.