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reorganization had been confirmed, which weakened the debtor's argument that venue should remain before the bankruptcy court. The court further recognized that substantially all of the evidence and witnesses were in California, and that the debtor had retained legal counsel for other somewhat related matters in California. In the interest of justice and convenience, then, the court concluded that a transfer of venue to the Central District of California was proper.
* CH Props., Inc. v. Comite De Vecinos De Isla Verde (In re CH Props., Inc.), 381 B.R. 20, (D.P.R. Dec. 2007) (Garcia-Gregory, J.)
Can an order abstaining from rendering a final judgment on the merits be a final judgment on the merits? The debtor held a 99 year lease in real estate owned by a municipality in Puerto Rico. Before the commencement of the bankruptcycase, a superior court in Puerto Rico found the lease to be void ab initio as violating public policy against perpetual lease interests. An appellate court reversed and remanded that decision, but the matter was still pending before the superior court when the debtor commenced this bankruptcy case. When the debtor filed a motion to assume the lease (its primary asset in the case), the bankruptcy court abstained from determining the merits in light of the matters pending before the Puerto Rico courts. The debtor did not appeal the initial abstention order, but did file an adversary proceeding to determine the validity of the lease (which was dismissed in light of the abstention order) and a second motion to assume the lease (which was also denied in light of the abstention order). The debtor appealed these latter two orders, which were consolidated before the district court. The district court dismissed the two appeals, however, concluding that the initial order of abstention was final and, therefore, precluded the debtor from re-litigating the merits of its lease assumption motion.
* Nickels Midway Pier, LLC v. Wild Waves, LLC (In re Nickels Midway Pier, LLC), 372 B.R. 218 (D.N.J. Aug. 2007) (Irenas, J.)
The requirements of mandatory abstention must be analyzed separately for each proceeding. The chapter 11 debtor sought to reject a lease agreement under section 365. In a separate motion, the debtor sought damages for the pre-petition breaches of the lease and a determination that the breach effectively terminated the lease prior to the commencement of the bankruptcy case. The landlord responded with the assertion that the court was mandated to abstain from determining the effect of the pre-petition breach and any damages arising from the breach. The bankruptcy court, recognizing that both motions were integrally related and that at least the rejection motion was a core proceeding, concluded that abstention was not mandatory as to either of the two proceeding.
On appeal, the district court reversed, holding that the mandatory abstention analysis should have been applied to each motion separately -- that is to say, just because one matter is a core proceeding does not mean that mandatory abstention would not apply to the related non-core proceeding. The district court, nevertheless, reached the same conclusion as the bankruptcy court -- abstention was neither mandatory nor discretionary -- because the two proceeding were integrally related, and because abstention from the non-core matter would disrupt the course of the case by having to await adjudication.
