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McElveen v. Waterman Steamship Corporation

United States District Court, E.D. Louisiana

October 23, 2017

JACK MCELVEEN
v.
WATERMAN STEAMSHIP CORPORATION, ET AL

         SECTION A(1)

          ORDER AND REASONS

          JAY C. ZAINEY UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion to Transfer (Rec. Doc. 6) submitted by Defendant Waterman Steamship Corporation (“Waterman”). Plaintiff Jack McElveen (“McElveen”) opposes this motion (Rec. Doc. 9) and Defendant has replied. (Rec. Doc. 11). Also before the Court is a Motion to Remand or, Alternatively, for Abstention (Rec. Doc. 10) submitted by Plaintiff McElveen. Defendant opposes this motion (Rec. Doc. 11) and Plaintiff has replied. (Rec. Doc. 21). The motions, both set for submission on September 20, 2017, are before the Court on the briefs without oral argument. The Court will address and rule on both motions in this Order and Reasons. Having considered the motion and memoranda of counsel, the record, and the applicable law, the Court finds that Plaintiff's motion to remand is GRANTED for the reasons set forth below. Having granted Plaintiff's motion to remand, this Court denies Defendant's motion to transfer.

         I. Background

         According to his state court Petition, Plaintiff worked as a Jones Act seaman aboard the M/V Maersk Alabama. (Rec. Doc. 1-2, p. 2). On or about July 24, 2012, Plaintiff was instructed to clean out the ship's freezer. Id. Plaintiff allegedly fell twisting his knee and hitting his back while moving a box out of the freezer. Id. Plaintiff's injuries allegedly occurred from this accident and Plaintiff seeks damages for his injuries, as well as maintenance and cure benefits, and attorney's fees. Id. at p. 5.

         On October 11, 2013, Plaintiff filed suit against Waterman and ABC Insurance Company. (Rec. Doc. 10-1).[1] Plaintiff's suit seeks damages from Waterman pursuant to the Jones Act and general maritime law, unseaworthiness, and maintenance and cure. Id. On November 5, 2013, Waterman answered Plaintiff's Petition for Damages generally denying the allegations of Plaintiff. Id. at p. 3.

         After several years of litigation, Waterman filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on July 31, 2016. (Rec. Doc. 6-1, p. 2). On March 2, 2017, the U.S. Bankruptcy Court for the Southern District of New York issued a “Findings of Fact, Conclusions of Law and an Order Confirming First Amended Modified Joint Chapter 11 Plan of Reorganization for International Shipholding Corporation and Its Affiliated Debtors.” Id. at pp. 1-2. On July 3, 2017, Waterman emerged from bankruptcy. (Rec. Doc. 6-1, p. 2).

         On August 2, 2017, Waterman removed this action from state court to this Court. (Rec. Doc. 1). Waterman removed pursuant to 28 U.S.C. §§ 1441(a) and 1452(a), as well as Rule 9027 of the Federal Rules of Bankruptcy Procedure and alleges jurisdiction pursuant to 28 U.S.C. §§ 157(b), 1331, and 1334(b). (Rec. Doc. 1, p. 2).

         Thereafter, on August 22, 2017, Waterman filed a Motion to Transfer Case to the U.S. Bankruptcy Court for the Southern District of New York or Alternatively, to Refer to the U.S. Bankruptcy Court for the Eastern District of Louisiana. (Rec. Doc. 6). On August 31, 2017, Plaintiff filed a Motion to Remand or, Alternatively, for Abstention. (Rec. Doc. 10). Both parties have filed their respective oppositions and replies. The Court has consolidated its analysis of each motion, and will rule on each motion in this Order and Reasons.

         II. Standard

         A defendant may remove a civil action filed in a state court if it at least relates to a bankruptcy case. See 28 U.S.C. §§ 1334, 1452(a). “The removing party bears the burden of establishing that federal jurisdiction exists” at the time of removal. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995); see also Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995) (“[T]he jurisdictional facts that support removal must be judged at the time of removal . . . .”). A district court must act on a timely motion to remand based on a defect in removal procedure. 28 U.S.C. § 1447(c); see also Butcher v. F.D.I.C., 981 F.2d 816, 819 (5th Cir. 1993). A district court also must remand an action if at any time before final judgment it appears that the court lacks subject matter jurisdiction. Id.

         III. Law and Analysis

         Defendant's motion first argues that this matter should be transferred to the U.S. Bankruptcy Court for the Southern District of New York. (Rec. Doc. 6-1, p. 2). This argument initially relies on 28 U.S.C. § 1409[2] which specifies the proper venue for civil proceedings that arise during the course of a title 11 case and are brought in bankruptcy court. 1-4 Collier on Bankruptcy ¶ 4.03 (16th ed. 2017). Defendant then cites 28 U.S.C. § 1412 as the proper procedural mechanism to transfer the case to the proper venue. (Rec. Doc. 6-1, p. 2). 28 U.S.C. § 1412 states that “[a] district court may transfer a case or proceeding under title 11 . . . to a district court for another district, in the interest of justice or for the convenience of the parties.” Defendant finds additional support for transfer in 28 U.S.C. § 157(a).[3] Defendant contends that this case is related to the bankruptcy proceeding because Plaintiff is seeking to recover from a party who went through Chapter 11 bankruptcy, and therefore any of Defendant's potential obligations may have an effect on the administration of the estate. (Rec. Doc. 6-1, p. 3).

         Alternatively, Defendant argues this Court should refer the matter to the U.S. Bankruptcy Court for the Eastern District of Louisiana for eventual transfer to the U.S. Bankruptcy Court for the Southern District of New York. (Rec. Doc. 6-1, p. 4). In support, Defendant relies on Local Rule 83.4[4] read in conjunction with 28 U.S.C. § 157(b)(5)[5] of the Bankruptcy Code to argue that ...


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