The Court remanded this removed adversary proceeding to state court under the permissive abstention and equitable remand statutes:  28 U.S.C. § 1334(c)(1) and 28 U.S.C. § 1452(b). Plaintiff asserted state law claims against the debtor and his limited liability company (“LLC”) based on the LLC’s alleged breach of a business loan agreement and based on the debtor’s alleged breach of his personal guaranty of the LLC’s indebtedness to Plaintiff. Although mandatory abstention under 28 U.S.C. § 1334(c)(2) may apply to Plaintiff’s non-core claim against the LLC, the Court determined that equitable factors used to determine permissive abstention and equitable remand weighed in favor of remand. The Court noted that upon remand the automatic stay will continue to apply to the claim against the debtor unless and until the stay is modified with respect to the claim.

The Court denied Defendant’s request that the Court dismiss this adversary proceeding, brought by the United States Trustee (“UST”), due to improper venue. Defendant argued that the UST’s claims must be brought in the district in which he resides because her claims seek monetary relief in amounts below the limits in 28 U.S.C. § 1409(b), which governs venue for claims or proceedings brought by “a trustee in a case.” The Court concluded that “a trustee in a case” refers generally to a person who is appointed or selected to serve as trustee in a particular case under sections 701, 702, 703, 1104, 1163, 1183, 1202, or 1302, and that, while a United States trustee may serve in a dual capacity as a United States trustee and a trustee in a case under certain circumstances, the United States trustee does not act as a “trustee in a case” unless appointed or selected to do so in a specific case. Because the UST has not been appointed or selected to serve as a “trustee in a case” in Debtor’s bankruptcy, she was not serving in the capacity of a “trustee in a case” when she commenced this adversary proceeding. Hence, § 1409(b) does not limit venue to the district where Defendant resides. Rather, § 1409(a) permits the UST to bring this adversary proceeding in the District of New Mexico, the “home court.”

The Court denied Defendant Chuck McCune’s motion for summary judgment, in which he asserted, among other things, that Plaintiff Robert Pidcock, as personal representative of the estate of Thomas W. Kuehn, lacked standing in the adversary proceeding. After determining that Mr. Pidcock had constitutional and statutory standing, the Court addressed prudential standing. The Court explained that to have prudential standing before the bankruptcy court a plaintiff must assert a right to relief of its own, not a third party’s right to relief. However, Congress may expressly grant a right of action to persons who otherwise would be barred by prudential standing limitations. In this case, the Court determined that Mr. Pidcock has prudential standing because § 523 expressly grants a right of action to creditors (such as Mr. Pidcock) to object to the dischargeability of debts. In addition, the Court held that Mr. Pidcock has prudential standing because, as the personal representative of the Kuehn Estate, he is asserting his own rights on behalf of the Kuehn Estate, not the rights of a third party. Finally, the Court held that Mr. McCune’s summary judgment motion was untimely and, even if it had been timely, it would have been denied.

Creditor moved for reconsideration of an order ruling that creditor had violated the automatic stay by pursuing state court litigation postpetition. Creditor’s primary argument in support of reconsideration was the Rooker-Feldman doctrine. The court held that the Rooker-Feldman doctrine did not bar a bankruptcy court from determining whether post-petition pursuit of a state court action violated the stay, even if the state court ruled that the stay did not prevent pursuit of the litigation.