In re: Malcolm Curtis and Judith Curtis ( 2017 )

FILED
AUG 18 2017
1
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
2 OF THE NINTH CIRCUIT
ORDERED PUBLISHED
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
4
5 In re: ) BAP No. CC-16-1288-LTaKu
)
6 MALCOLM CURTIS and JUDITH ) Bk. No. 6:16-bk-15373-SY
CURTIS, )
7 ) Adv. No. 6:16–ap-01159-SY
Debtors. )
8 ______________________________)
)
9 MALCOLM CURTIS; JUDITH CURTIS,)
)
10 Appellants, )
)
11 v. ) O P I N I O N
)
12 NATASHA SHPAK, )
)
13 Appellee. )
______________________________)
14
15 Argued and Submitted on June 22, 2017
at Pasadena, California
16
Filed - August 18, 2017
17
Appeal from the United States Bankruptcy Court
18 for the Central District of California
19 Honorable Scott Ho Yun, Bankruptcy Judge, Presiding
20 _________________________
21 Appearance: Rebekah L. Parker of the Law Office of Rebekah L.
Parker argued for Appellants Malcolm Curtis and
22 Judith Curtis.
23 _________________________
24 Before: LAFFERTY, TAYLOR, and KURTZ, Bankruptcy Judges.
25
26
27
28
1 LAFFERTY, Bankruptcy Judge:
2
3 In this case, the bankruptcy court granted Appellee’s
4 motion to strike a notice of removal attempting to transfer a
5 lawsuit pending in the U.S. District Court for the Eastern
6 District of New York to the Bankruptcy Court for the Central
7 District of California.
8 This appeal presents the question whether 28 U.S.C. § 1452
9 authorizes removal of a case from a federal district court to a
10 bankruptcy court. We conclude it does not, based on the plain
11 language of the statute. More fundamentally, we conclude that
12 to interpret the statute otherwise would unconstitutionally
13 undermine the district courts’ referral power under 28 U.S.C.
14 § 157(a), which was enacted by Congress in 1984 in response to
15 the Supreme Court’s holding in Northern Pipeline Construction
16 Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982). Accordingly,
17 we AFFIRM.
18 FACTS
19 Pre-petition, Malcolm and Judith Curtis and related
20 entities were defendants in a lawsuit filed in 2010 in the U.S.
21 District Court for the Eastern District of New York by Appellee
22 Natasha Shpak and her parents (the “EDNY Lawsuit”). In the EDNY
23 Lawsuit, plaintiffs sought damages of $500,000 for (1) violation
24 of “civil rights law section 80(b)”; (2) breach of contract;
25 (3) fraud - conspiracy; (4) breach of fiduciary duty; (5) unjust
26 enrichment; (6) conversion/replevin; (7) conversion; (8) aiding
27 and abetting breach of fiduciary duty; (9) actual fraudulent
28 conveyance; and (10) constructive fraudulent conveyance, all
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1 based on the Curtises’ and their son’s alleged fraudulent scheme
2 to deprive plaintiffs of valuable restaurant equipment. A jury
3 trial was scheduled in the EDNY Lawsuit for June 20, 2016, but,
4 after defendants’ counsel passed away, the court struck the
5 trial date to give defendants time to obtain new counsel.
6 On June 15, 2016, before a new trial date could be set, the
7 Curtises filed a chapter 111 petition in the Bankruptcy Court
8 for the Central District of California. A few days later, they
9 filed a notice of removal of the EDNY Lawsuit to the bankruptcy
10 court where their chapter 11 was pending.
11 Ms. Shpak subsequently filed a motion to strike the notice
12 of removal and/or to remand the EDNY Lawsuit, arguing that there
13 was no basis under the removal statutes, 28 U.S.C. § 1441-1452,
14 to remove a lawsuit from federal district court to bankruptcy
15 court. In the alternative, Ms. Shpak argued that the bankruptcy
16 court should abstain from hearing the matter.
17 In their opposition, Debtors informed the bankruptcy court
18 that they had filed a “2nd Amended Notice of Removal” removing
19 the EDNY Litigation to the U.S. District Court for the Central
20 District of California (“CACD”). Debtors thus argued that the
21 motion to remand was moot and agreed to dismiss the adversary
22 proceeding and permit CACD to dispose of the matter.
23 The CACD, however, dismissed without prejudice the EDNY
24 Lawsuit on grounds that the cited authorities (28 U.S.C.
25
26 1
Unless specified otherwise, all chapter and section
27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
all “Rule” references are to the Federal Rules of Bankruptcy
28 Procedure.
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1 §§ 1332, 1334, 1446, and 1452) did not authorize removal from
2 one federal district court to another and thus the purported
3 “removal” constituted a “meaningless act.” Debtors timely
4 appealed the dismissal to the Ninth Circuit Court of Appeals,
5 where the matter remains pending (Case No. 16-56323).
6 At the hearing on the motion to strike/remand held in
7 August 2016, Debtors’ counsel acknowledged CACD’s dismissal of
8 the lawsuit and stated that she intended to advise her clients
9 to appeal that dismissal. She then requested that the
10 bankruptcy court dismiss the adversary proceeding, after which
11 she would request that the matter be certified for a direct
12 appeal to the Ninth Circuit Court of Appeals. After hearing
13 argument, the bankruptcy court concluded:
14 You can’t remove a district court lawsuit to
another district court or to a bankruptcy court. The
15 way [28 U.S.C. §] 1452 works, you remove a civil
action to the district court where the civil action is
16 pending. Here the civil action is pending in the
United States District Court for the Eastern District
17 of New York.
18 So, if you technically want to comply with 1452,
you have to remove that lawsuit from the United States
19 District Court in the Eastern District of New York to
the United States District Court in Eastern District
20 of New York, because that’s where the civil action is
pending. That’s the district. That’s a nullity
21 . . . . You can’t remove a district court lawsuit to
the district court where the civil action is pending,
22 because you can’t remove a lawsuit from [and] to . . .
the same Court. So this doesn’t work.
23
24 Based on this reasoning, the bankruptcy court granted the
25 motion to strike the notice of removal, and Debtors timely
26 appealed.
27
28
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1 Debtors thereafter requested certification of a direct
2 appeal to the Ninth Circuit Court of Appeals, which was denied
3 by both the bankruptcy court and this Panel.
4 JURISDICTION
5 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
6 §§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C.
7 § 158.
8 ISSUE
9 Does 28 U.S.C. § 1452 authorize removal of cases from
10 federal district court to bankruptcy court?
11 STANDARD OF REVIEW
12 We review de novo the bankruptcy court’s interpretation of
13 a federal statute. Etalco, Inc. v. AMK Indus., Inc. (In re
14 Etalco, Inc.), 273 B.R. 211, 218 (9th Cir. BAP 2001) (federal
15 venue statute). “De novo means review is independent, with no
16 deference given to the trial court’s conclusion.” Deitz v. Ford
17 (In re Deitz), 469 B.R. 11, 16 (9th Cir. BAP 2012), aff’d, 760
18 F.3d 1038 (9th Cir. 2014) (citing Barclay v. Mackenzie (In re
19 AFI Holding, Inc.), 525 F.3d 700, 702 (9th Cir. 2008)).
20 DISCUSSION
21 28 U.S.C. § 1452 is one of several statutes comprising
22 Chapter 89 of the U.S. Code, which is entitled “District Courts;
23 Removal of Cases from State Courts.”2 28 U.S.C. § 1452, the
24
2
25 Although the bankruptcy removal statute is part of the
chapter of the United States Code dealing with removal of state
26 court actions, courts have interpreted 28 U.S.C. § 1452 as
authorizing removal to district courts from other federal courts,
27 such as the Court of Federal Claims, the local courts of the
District of Columbia, or the territorial courts of Guam. Quality
28
(continued...)
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1 “bankruptcy removal statute,” is entitled “Removal of claims
2 related to bankruptcy cases” and provides:
3 (a) A party may remove any claim or cause of action in
a civil action other than a proceeding before the
4 United States Tax Court or a civil action by a
governmental unit to enforce such governmental unit’s
5 police or regulatory power, to the district court for
the district where such civil action is pending, if
6 such district court has jurisdiction of such claim or
cause of action under section 1334 of this title.
7
(b) The court to which such claim or cause of action
8 is removed may remand such claim or cause of action on
any equitable ground. An order entered under this
9 subsection remanding a claim or cause of action, or a
decision to not remand, is not reviewable by appeal or
10 otherwise by the court of appeals under section
158(d), 1291, or 1292 of this title or by the Supreme
11 Court of the United States under section 1254 of this
title.
12
13 Debtors assert – correctly – that 28 U.S.C. § 1452(a) is
14 designed to further Congress’s purpose of centralizing
15 bankruptcy litigation in a federal forum. California Pub.
16 Employees’ Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 103 (2d
17 Cir. 2004). Citing that policy, Debtors contend that the
18 statute authorizes removal of an action pending in a federal
19 district court to the federal district court or the bankruptcy
20 court in the district where the bankruptcy case is pending. We
21 agree with the bankruptcy court’s conclusion that it does not.
22 Although we have found no Ninth Circuit or other appellate
23 decision on point, numerous trial courts have concluded that 28
24 U.S.C. § 1452 does not permit removal of cases from federal
25
26
2
(...continued)
27 Tooling, Inc. v. United States, 47 F.3d 1569, 1572 (Fed. Cir.
1995); Centrust Sav. Bank v. Love, 131 B.R. 64, 66-67 (S.D. Tex.
28
1991).
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1 district court to bankruptcy court. See LMRT Assoc., LC v. MB
2 Airmont Farms, LLC, 447 B.R. 470, 472-73 (E.D. Va. 2011);
3 Wellness Int’l Network v. J.P. Morgan Chase Bank, N.A. (In re
4 Sharif), 407 B.R. 316 (Bankr. N.D. Ill. 2009); Doyle v. Mellon
5 Bank, N.A., 307 B.R. 462, 464 (E.D. Pa. 2004); Cornell & Co.,
6 Inc. v. Se. Pa. Transp. Auth. (In re Cornell & Co., Inc.), 203
7 B.R. 585, 586 (Bankr. E.D. Pa. 1997); Mitchell v. Fukuoka Daiei
8 Hawks Baseball Club (In re Mitchell), 206 B.R. 204, 209 (Bankr.
9 C.D. Cal. 1997); Centrust Sav. Bank, 131 B.R. at 67; Thomas
10 Steel Corp. v. Bethlehem Rebar Indus., Inc., 101 B.R. 16, 19
11 (Bankr. N.D. Ill. 1989). There are virtually no published
12 decisions to the contrary, with the arguable exceptions of
13 Philadelphia Gold Corp. v. Fauzio (In re Philadephia Gold
14 Corp.), 56 B.R. 87 (Bankr. E.D. Pa. 1985) and MATV-Cable
15 Satellite, Inc. v. Phoenix Leasing, Inc., 159 B.R. 56 (Bankr.
16 S.D. Fla. 1993), discussed below.
17 Courts concluding that 28 U.S.C. § 1452 does not permit
18 removal from a federal district court directly to the bankruptcy
19 court cite two reasons: first, the plain language of the
20 statute does not support a contrary conclusion; and second, to
21 interpret the bankruptcy removal statute as Debtors urge would
22 thwart the district courts’ power to refer matters to bankruptcy
23 courts. We agree with those courts.
24 A. The plain language of 28 U.S.C. § 1452 does not support
25 Debtors’ interpretation.
26 28 U.S.C. § 1452 does not authorize removal to a bankruptcy
27 court. The statute authorizes removal “to the district court
28 for the district where such civil action is pending” if the
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1 district court has jurisdiction under 28 U.S.C. § 1334. As the
2 bankruptcy court recognized, it is illogical to interpret the
3 bankruptcy removal statute to authorize removal from a district
4 court to the district court in the same district. See In re
5 Mitchell, 206 B.R. at 209 (“It violates the plain language of 28
6 U.S.C. § 1452(a) to say that an action can be removed ‘to
7 district court’ when it is already pending in district court,
8 because the words ‘to district court’ by necessity involve the
9 concept of bringing the action to district court from some other
10 forum.”).
11 Given the clear language of the statute, and the sensible
12 meaning thereof adopted in the cases, we agree with the
13 bankruptcy court that one could not reasonably interpret the
14 statute as allowing a matter to be removed from a district court
15 to the same district court. Accordingly, we would affirm on
16 that basis.
17 B. Debtors’ interpretation of 28 U.S.C. § 1452 would raise
18 constitutional questions.
19 Accepting Debtor’s interpretation of 28 U.S.C. § 1452,
20 which would permit removal of an action in the district court to
21 a bankruptcy court, would, as many cases have held, interfere
22 with the district court’s power to control the referral of
23 matters to the bankruptcy court. See, e.g., Thomas Steel, 101
24 B.R. at 19-20; In re Sharif, 407 B.R. at 320. More
25 fundamentally, such an interpretation would ignore and
26 contravene Congress’ response to the constitutional infirmities
27 inherent in the broad jurisdictional grant to the bankruptcy
28 courts contained in the Bankruptcy Reform Act of 1978 (the “1978
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1 Act”). A brief history of the 1978 Act, the constitutional
2 problems it raised, and Congress’ solution thereto, will be
3 helpful.
4 The 1978 Act substantially rewrote the bankruptcy laws. Of
5 principal interest here, it created bankruptcy courts, as
6 “adjuncts” of the district courts, and vested in them original
7 jurisdiction to hear and determine cases and proceedings in
8 bankruptcy. 28 U.S.C. §§ 151(a), 1471(b). That jurisdictional
9 grant was challenged and found wanting in Northern Pipeline
10 Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982).
11 In Marathon, the debtor filed an adversary proceeding against
12 Marathon seeking to recover damages for the estate. The matter
13 had little relation to bankruptcy law – it was a simple contract
14 claim, governed by applicable state law – or the bankruptcy case
15 – as Marathon had not filed a proof of claim, and had no other
16 involvement in the bankruptcy case. A lawsuit asserting the
17 same claims was already pending in the District Court for the
18 Western District of Kentucky. Marathon moved to dismiss the
19 adversary proceeding for lack of jurisdiction, arguing that the
20 exercise of jurisdiction by the bankruptcy court was an
21 unconstitutional exercise of the jurisdictional power granted
22 solely to the courts of the United States under Article III.
23 The bankruptcy court denied the motion, but the district court
24 agreed with Marathon and dismissed the lawsuit.
25 The Supreme Court held that the bankruptcy court’s exercise
26 of jurisdiction and judicial power over the lawsuit, although
27 within the statutory authority of 28 U.S.C. § 1471, violated the
28 Constitution’s separation of powers doctrine insofar as it
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1 purported to permit a bankruptcy court, which was not a court
2 established under Article III of the Constitution, and lacked
3 the essential attributes of an Article III court (life tenure
4 and a prohibition on diminution of salary), to exercise the
5 judicial power of the United States. Id. at 86-87. For these
6 reasons, the Court held that the jurisdictional grant of the
7 1978 Act was unconstitutional.
8 In response to this ruling, Congress substantially rewrote
9 the portions of bankruptcy law governing jurisdiction and
10 judicial power in the Bankruptcy Amendments and Federal
11 Judgeship Act of 1984. Most importantly, they redrafted 28
12 U.S.C. § 1334 to make clear that the district courts (not
13 bankruptcy courts) had (i) original and exclusive jurisdiction
14 over bankruptcy cases, and (ii) original but not exclusive
15 jurisdiction over proceedings in a bankruptcy case.3 See also
16 28 U.S.C. § 151 (designating bankruptcy judges as a unit of the
17 district court). And to facilitate the efficient disposition of
18 bankruptcy matters, 28 U.S.C. § 157(a) states that the district
19 courts may provide for the referral of (i) bankruptcy cases, and
20
21 3
28 U.S.C. § 1334 provides, in relevant part:
22
(a) Except as provided in subsection (b) of this
23 section, the district courts shall have original and
exclusive jurisdiction of all cases under title 11.
24
25 (b) Except as provided in subsection (e)(2), and
notwithstanding any Act of Congress that confers
26 exclusive jurisdiction on a court or courts other than
the district courts, the district courts shall have
27 original but not exclusive jurisdiction of all civil
proceedings arising under title 11, or arising in or
28
related to cases under title 11.
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1 (ii) any or all proceedings arising in or related to bankruptcy
2 cases, to bankruptcy judges for the district.4 Once so
3 referred, 28 U.S.C. § 157(b) specifies which matters a
4 bankruptcy judge may hear and determine subject to traditional
5 principles of appellate review (“core matters,” consisting of
6 matters “arising under” or “arising in” a bankruptcy case) and
7 those matters which, absent the consent of the parties, the
8 bankruptcy court may hear, but not determine, but for which the
9 bankruptcy court must issue a “report and recommendation” to the
10 district court, subject to de novo review in all respects
11 (“noncore” matters, consisting of matters “related to” a
12 bankruptcy case).
13 Numerous cases have held, correctly, that a reading of 28
14 U.S.C. § 1452 that would permit a matter to be removed from a
15 district court to a bankruptcy court would impermissibly
16 undermine the district court’s power to refer matters to the
17 bankruptcy court (or to withdraw the reference). That referral
18 power reflects “the Article III supervision that Congress
19 intended as a remedy for the defects found by the Supreme Court
20 in Marathon.” Thomas Steel, 101 B.R. at 19-20. Moreover, the
21 Debtors’ interpretation would permit the bankruptcy court
22 unreviewable discretion under § 1452(b) to remand a claim or
23 cause of action to the district court. Id. See also In re
24
4
25 In accordance with this provision, Rule 5011-1(a) of the
Local Bankruptcy Rules for the Central District of California
26 provides: “Pursuant to 28 U.S.C. § 157(a), the district court
refers to the bankruptcy court for this district all cases under
27 title 11 and all proceedings under title 11 or arising in or
related to a case under title 11.”
28
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1 Sharif, 407 B.R. at 320 (noting that permitting removal from
2 federal district court to bankruptcy court would jeopardize the
3 district courts’ referral authority as well as their power of
4 appellate review of judgments, orders, and decrees of bankruptcy
5 courts under 28 U.S.C. § 158).
6 But we pause here to emphasize a fundamental and crucial
7 point. The determination of the issues raised by Debtors’
8 attempt to remove a matter from district court to bankruptcy
9 court implicates more than a question of statutory
10 interpretation. Similarly, the requirement that district courts
11 refer cases and proceedings to bankruptcy courts before those
12 courts may adjudicate them does not merely designate the
13 district courts as “Article III traffic police” for bankruptcy
14 matters. Rather, the statutory structure implicates issues of
15 the highest constitutional import. The predicate for the
16 referral power is the bedrock principle that the district courts
17 have jurisdiction over bankruptcy cases and proceedings; the
18 bankruptcy court’s jurisdiction over such matters is purely and
19 solely derivative of the district court’s jurisdiction. And the
20 bankruptcy court’s power to hear, or to hear and determine, as
21 the case may be, bankruptcy cases and proceedings is entirely
22 dependent upon the referral by the district court. Any
23 interpretation of a statute that would imply that the bankruptcy
24 courts had jurisdiction of bankruptcy cases and proceedings
25 separate and independent from, or even co-equal to, the
26 jurisdiction granted the Article III courts, or that would
27 interfere with the Article III courts’ exercise of that
28 jurisdiction and judicial power through the system of referral
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1 to the bankruptcy courts, or that, as here, would permit
2 bankruptcy courts to dispose of matters originating in the
3 district courts in apparent derogation of the power of those
4 courts to control their own proceedings, would be, for the
5 reasons described above, a constitutional non-starter.
6 We must interpret statutes so as to avoid constitutional
7 issues. I.N.S. v. St. Cyr, 533 U.S. 289, 299-300 (2001);
8 Crowell v. Benson, 285 U.S. 22, 62 (1932). Debtors’
9 interpretation of the bankruptcy removal statute would call into
10 question its constitutionality. Thus, we decline to adopt that
11 interpretation.
12 Debtors urge us to follow case law that is ostensibly to
13 the contrary, citing In re Philadephia Gold Corp., 56 B.R. 87
14 and MATV-Cable Satellite, 159 B.R. 56. We do not find these
15 cases persuasive.
16 In Philadelphia Gold, a case explicitly rejected by Judge
17 Wedoff in Thomas Steel, the bankruptcy court permitted a debtor
18 in a civil action pending in the U.S. District Court for the
19 Eastern District of Pennsylvania to remove that action to the
20 bankruptcy court in the same district. Although the bankruptcy
21 court examined 28 U.S.C. § 1452, its analysis was perfunctory
22 and did not take into account the plain language of the statute
23 or the constitutional concerns raised by its interpretation.
24 See In re Philadelphia Gold, 56 B.R. at 89-90.5
25 In MATV-Cable Satellite, a creditor in a bankruptcy case
26 pending in Maine sued another creditor in the Maine bankruptcy
27
5
Philadelphia Gold was also considered and rejected in
28
Doyle, Cornell, and Mitchell.
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1 in the U.S. District Court for the Southern District of Florida.
2 Thereafter, the defendant creditor filed a notice of removal to
3 the U.S. Bankruptcy Court for the Southern District of Florida
4 and requested a change of venue to the U.S. Bankruptcy Court for
5 the District of Maine. The plaintiff creditor moved to strike
6 the notice of removal. In its ruling, the bankruptcy court
7 noted that 28 U.S.C. § 1452 and Rule 9027 were “typically” used
8 to remove a state court action to the local federal district
9 court, which would automatically refer the action to the local
10 bankruptcy court. MATV-Cable Satellite, 159 B.R. at 59. The
11 court also noted that generally, a transfer of a case from a
12 non-bankruptcy court to the local district court is by removal,
13 while the transfer of a case from a district court to the
14 bankruptcy court is by referral. Id.
15 Without making a definitive ruling on the issue of whether
16 28 U.S.C. § 1452 authorized the removal of a case from federal
17 district court, the bankruptcy court denied the motion to strike
18 on practicality grounds. The court determined that it was more
19 important to decide where the case should be handled than
20 whether the transfer was accomplished by removal or referral.
21 Noting that neither litigant wanted the matter heard by the
22 Florida bankruptcy court, the court concluded, “pragmatism
23 dictates that the case has been properly removed and the notice
24 of removal will not be stricken.” Id. at 60. Its ruling thus
25 cleared the way for the parties to request a transfer of venue
26 to the Maine bankruptcy court.
27 Accordingly, MATV-Cable Satellite does not provide a solid
28 basis for interpreting 28 U.S.C. § 1452 to authorize removal
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1 from a federal district court to bankruptcy court, as urged by
2 Debtors.
3 Debtors argue that interpreting 28 U.S.C. § 1452 as
4 permitting removal of an action only to the district court where
5 the district court action is pending renders the statute
6 meaningless with respect to district court actions, violating
7 the canon of statutory construction that statutes should not be
8 interpreted in a manner that renders them unnecessary or
9 meaningless, citing Pennsylvania Dept. of Public Welfare v.
10 Davenport, 495 U.S. 552, 562 (1990). Debtors’ argument misses
11 the point that the statute intentionally applies only to removal
12 to bankruptcy court from state court and certain federal courts
13 but not district courts, for the reasons outlined above.
14 Litigants are not precluded from requesting transfer of a case
15 from a district court to a bankruptcy court. 28 U.S.C. § 1452
16 is simply the wrong vehicle to accomplish such a transfer.
17 The proper procedure for transferring a case from a federal
18 district court to bankruptcy court is to request a referral by
19 the district court. See Thomas Steel, 101 B.R. at 22; In re
20 Mitchell, 206 B.R. at 210; Centrust Sav. Bank, 131 B.R. at 66.
21 Here, because Debtors wish to transfer the case to a different
22 district, they would first need to request a change of venue
23 from the Eastern District of New York to the Central District of
24 California and then request a referral to the bankruptcy court
25 for the Central District of California.6
26
27
6
When the bankruptcy court pointed this out at the August
28
18, 2016 hearing, Ms. Shpak’s counsel stated that a motion to
transfer venue of the EDNY Lawsuit had previously been denied by
the District Court for the Eastern District of New York.
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1 CONCLUSION
2 Debtors have not demonstrated that the bankruptcy court
3 erred in its interpretation of 28 U.S.C. § 1452. For the
4 reasons explained above, that statute is not the proper
5 mechanism for transferring a case from a federal district court
6 to the bankruptcy court. Accordingly, we AFFIRM the bankruptcy
7 court’s order striking the notice of removal.7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
7
On November 2, 2016, after this appeal was filed, Ms.
23 Shpak filed an adversary proceeding against Debtors seeking a
declaration of nondischargeability of any debt owed to her
24 arising out of the allegations and claims asserted in the EDNY
25 Lawsuit. As pointed out by the bankruptcy court at the August 18
hearing, the EDNY Lawsuit is currently stayed due to Debtors’
26 bankruptcy filing, and the claims asserted in that litigation
will ultimately have to be determined in the bankruptcy court.
27 Because Debtors wanted those claims adjudicated in the bankruptcy
court, and that goal will be accomplished in the context of the
28
nondischargeability adversary proceeding, it is not clear why
Debtors continue to pursue this appeal.
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