Best Payphones, Inc.

UNITED STATES BANKRUPTCY COURT 	NOT FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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In re: 	:
: 	Chapter 11
BEST PAYPHONES, INC., 	: 	Case No. 01-15472(SMB)
:
Debtor. 	:
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OPINION AND ORDER REGARDING
MOTION FOR DISCRETIONARY ABSTENTION
A P P E A R A N C E S:
CHARLES H. RYANS, ESQ.
Attorney for Debtor
1674 Broadway – 7 th Floor
New York, New York 10019
MICHAEL A. CARDOZO
Corporation Counsel for the
City of New York
Attorney for the New York City Department
of Information Technology &
Telecommunications the New York City
Department of Transportation
100 Church Street
New York, New York 10007-2601
Gabriela P. Cacuci
Assistant Corporation Counsel
Of Counsel
STUART M. BERNSTEIN
Chief United States Bankruptcy Judge
The 	New 	York 	City 	Department 	of 	Information 	Technology 	&
Telecommunications 	(“DoITT”) 	and 	the 	New 	York 	City 	Department 	of
Transportation 	(“DOT”) 	filed 	claims 	in 	this 	confirmed 	chapter 	11
case for fees and/or fines arising from the debtor’s operation of
public 	payphones 	(“PPTs”). 	The 	debtor 	objected 	to 	the 	claims,
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DoITT 	withdrew 	the 	claim 	for 	fees, 	and 	with 	one 	exception, 	DoITT
and 	DOT 	have 	moved 	for 	discretionary 	abstention 	on 	the 	remaining
objection 	to 	the 	fines. 	The 	debtor 	opposes 	abstention. 	For 	the
reasons that follow, the motion is granted.
BACKGROUND
A. The Denial of the Franchise
The 	facts 	are 	set 	forth 	in 	greater 	detail 	in 	In 	re 	Best
Payphones, 	Inc., 	279 	B.R. 	92 	(Bankr. 	S.D.N.Y. 	2002). 	I 	assume
familiarity 	with 	that 	opinion, 	and 	highlight 	only 	the 	facts 	that
concern the current matter. 	At all relevant times, the debtor was
engaged 	in 	the 	business 	of 	operating 	PPTs 	in 	New 	York 	City 	(the
“City”). 	Over 	the 	years, 	the 	City, 	through 	DoITT, 	administered
various regulatory schemes to control such services.
On or about March 2, 1996, the City adopted a new regulatory
scheme that established a franchise system. 	During the transition
period, existing PPT operators, including the debtor, were placed
on 	an 	interim 	registry, 	and 	allowed 	to 	continue 	to 	operate. 	The
PPT 	operator 	remained 	on 	the 	interim 	registry 	until, 	inter 	alia,
the 	Commissioner 	of 	DoITT 	decided 	not 	recommend 	the 	award 	of 	a
franchise 	to 	the 	PPT 	operator 	or 	the 	New 	York 	City 	Franchise 	&
Concession Review Committee (the “Franchise Committee”) decided not
to approve a proposed franchise agreement. 	In either case, the PPT
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operator 	was 	entitled 	to 	appropriate 	notification 	of 	the 	adverse
decision. 	See N.Y. R. & R EGS . tit. 67, § 6-23 (2004); accord N.Y.
City 	Local 	Law 	68/1995 	§ 	6(a)(limiting 	notification 	period 	to 	30
days).
By resolution dated August 11, 1999, the Franchise Committee
approved 	the 	grant 	of 	a 	franchise 	to 	the 	debtor, 	as 	well 	as 	to
other PPT operators. 	The approval required the debtor to execute
and 	deliver 	the 	franchise agreement 	as 	a 	condition 	to 	the 	award,
but 	the 	debtor 	failed 	to 	return 	the 	completed 	materials. 	On
January 13, 2000, Assistant Corporation Counsel Bruce Regal wrote
to 	the 	debtor 	(the 	“Regal 	Letter”), 	stating 	that 	the 	Franchise
Committee’s approval of the franchise had been conditioned on the
execution 	and 	delivery 	of 	the 	franchise 	agreement 	and 	other
required closing documents, and the debtor had failed to meet the
condition. 	As a result, the Franchise Committee “can therefore be
deemed 	to 	have 	determined 	not 	to 	approve 	a 	franchise 	for 	[the
debtor].”
The Regal Letter granted the debtor a final, sixty day period
to 	submit 	the 	franchise 	documentation. 	If 	it 	did 	not, 	“[the
debtor’s] 	opportunity 	to 	become 	a 	franchise 	holder 	during 	the
current phase of franchise grants will end.” 	The January 13 Letter
reiterated this warning in its conclusion:
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1 The debtor alleges that DoITT also reissued the first 23 NOVs post-petition.
2 It confirmed a 100% plan in late 2002, and subsequently sold all of its assets to a
third-party.
4
If [the Debtor] fails within sixty days to (1) enter into
an 	agreement 	to 	sell 	its 	public 	pay 	telephones 	as
described 	above, 	or 	(2) 	to 	remove 	all 	its 	public 	pay
telephones 	from 	City 	property, 	or 	(3) 	submit 	executed
copies 	of 	the 	Franchise 	Agreement 	and 	all 	associated
closing documents (complete, accurate and in acceptable
form) 	as 	described 	above, 	then 	any 	and 	all 	of 	[the
Debtor’s] 	phones 	located 	on 	City 	property 	shall 	be
subject 	to 	removal 	by 	the 	City, 	pursuant 	to 	Section 	6-
26(c) of Title 67 of the Rules, and [the Debtor] shall be
considered 	for 	all 	purposes 	a 	non-holder 	of 	a 	City
franchise.
The 	debtor 	did 	not 	comply 	with 	any 	of 	the 	conditions 	in 	the
Regal Letter. 	As a result, DoITT removed 23 of the debtor’s public
payphones 	from 	City 	property 	between 	May 	8 	and 	May 	10, 	2000, 	and
issued 	23 	Notices 	of 	Violation 	(“NOV”). 	Post-petition, 	the 	City
issued an additional 36 NOVs for operating PPTs without a permit. 1
Each 	NOV 	carried 	a 	$1,000 	fine, 	and 	all 	were 	based 	on 	the 	same
theory; the debtor lost its right to operate PPTs because it failed
to 	comply 	with 	the 	Regal 	Letter 	and 	return 	the 	signed 	franchise
agreement.
B. 	The DoITT and DOT Claims and the Debtor’s Objections
The 	debtor 	filed 	this 	chapter 	11 	case 	on 	October 	23, 	2001. 2
DoITT filed a claim, dated February 1, 2002, for pre-petition fines
($23,000) 	and 	fees 	($37,048.15). 	(Declaration 	of 	Michael 	Chaite
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[etc.], 	dated 	Apr. 	1, 	2005, 	Ex. 	D)(ECF. 	Doc. 	# 	395.) 	DoITT 	also
filed 	an 	administrative 	claim, 	dated 	November 	13, 	2002, 	covering
post-petition fines ($36,000) and fees ($69,789.35). 	(Id., Ex I.)
Lastly, DOT filed an administrative claim, dated November 13, 2002,
for 	fines 	totaling 	$8,000. 	The 	DOT 	fines 	corresponded 	to 	eight
NOVs 	issued 	against 	eight 	PPTs 	allegedly 	installed 	without 	the
required permit. 	DoITT subsequently withdrew the portions of its
pre-petition 	and 	post-petition 	claims 	seeking 	fees, 	leaving 	only
pre-petition 	and 	post-petition 	claims 	for 	fines. 	(Opinion 	and
Order Regarding DoITT Claim for Interim Registry Fees, dated Oct.
21, 2005)(ECF Doc. # 445.)
The debtor filed a series of objections to the DoITT claims,
culminating in the Amended Objection to Proof of Claim of [DoITT],
dated 	July 	17, 	2003 	(“Amended 	Objection”)(ECF 	Doc. 	# 	273.) 	The
Amended 	Objection 	argued 	that 	the 	fines 	were 	unenforceable 	on
several grounds. 	At its core, the Amended Objection asserted that
the debtor remained on the interim registry despite its refusal to
execute 	the 	franchise 	agreement, 	and 	could 	not 	be 	fined 	for
operating 	without 	a 	permit. 	The 	debtor 	raised 	a 	host 	of
regulatory, statutory and Constitutional arguments, relying heavily
on 	the 	Telecommunications 	Act 	of 	1996. 	In 	addition, 	the 	debtor
maintained 	that 	the 	NOVs 	were 	not 	attached 	to 	the 	DoITT 	claims,
(Amended Objection, at ¶ 47), the NOVs are too vague and imprecise
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to 	apprise 	the 	debtor 	of 	the 	charges 	and 	allow 	it 	to 	prepare 	a
defense, 	(id., 	¶¶ 	73-74, 	84), 	the 	Regal 	Letter 	did 	not 	provide
sufficient 	notice 	of 	the 	termination 	of 	the 	debtor’s 	right 	to
maintain its listing on the interim registry, (id., at ¶¶ 77-79),
and DoITT selectively enforced its rules and regulations with the
intent to discriminate against the debtor and retaliate against the
debtor for challenging DoITT. 	(Id., at ¶¶ 81-82, 86-87, 90.)
The debtor also filed an Objection to Proof of Administrative
Claim 	Filed 	by 	[DOT], 	dated 	Dec. 	3, 	2002 	(ECF 	Doc. 	# 	202.) 	The
debtor asserted the same objections raised against the DoITT claims
for fines. 	(Id., at ¶ 4.) 	In addition, the debtor contended that
it had obtained permits to move the PPTs at issue. 	(Id., at ¶ 5.)
Finally, 	the 	debtor 	insisted 	that 	virtually 	every 	other 	PPT
operator had moved phones without being fined, and the imposition
of fines constituted selective enforcement and a violation of the
Telecommunications 	Act 	of 	1996 	by 	imposing 	charges 	in 	a
discriminatory manner. 	(Id., at ¶ 7.)
C. 	The First Abstention Ruling
On 	or 	about 	December 	27, 	2002, 	DoITT 	and 	DOT 	moved 	for
discretionary abstention, 28 U.S.C. § 1334(c)(1), with respect to
the 	issues 	raised 	by 	the 	objections. 	At 	the 	time, 	proceedings
between 	the 	parties 	were 	pending 	in 	the 	United 	States 	District
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3 The ECB rendered its decision on or about October 25, 2005, sustaining 51 NOVs
and dismissing nine others based on a failure of proof. A copy of the ECB Decision and Order is
attached to the letter dated Nov. 18, 2005, from Gabriela P. Cacuci, Assistant Corporation
Counsel, to the Court. (ECF Doc. # 461.)
7
Courts 	in 	Manhattan 	and 	Brooklyn, 	the 	New 	York 	State 	Appellate
Division, Second Department, the New York Civil Court and the New
York 	City 	Environmental 	Control 	Board 	(“ECB”), 	as 	well 	as 	this
Court.
The 	Court 	conducted 	a 	hearing 	on 	July 	24, 	2003, 	and 	granted
the motion in part. 	(See Order Granting Abstention [etc.], dated
Aug. 18, 2003)(ECF Doc. # 280.) 	The Court abstained from hearing
the 	violations 	asserted 	by 	DoITT 	and 	DOT 	pending 	before 	the 	ECB
“solely 	to 	the 	extent 	that 	the 	Debtor’s 	grounds 	for 	objecting 	to
the 	Violations 	are 	based 	on 	the 	failure 	of 	DoITT 	and/or 	DOT 	to
comply 	with 	the 	specific 	rules 	and 	regulations 	relating 	to 	the
issuance by DoITT and DOT of the Violations.” 	In other words, the
ECB 	would 	decide 	the 	“regulatory 	aspects” 	of 	the 	disputes, 	i.e.,
whether the agencies followed their own procedures in assessing the
fines. 3 	The 	remaining 	claims, 	including 	violations 	of 	the
Telecommunications 	Act 	of 	1996, 	preemption 	by 	federal 	and 	state
law, due process, First Amendment and equal protection violations,
selective enforcement, late filed claims and improperly documented
claims, 	would 	be 	heard 	and 	determined 	by 	a 	court 	having
jurisdiction over such claims.
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D. 	The Litigation in Other Courts
The 	abstention 	motion 	brought 	to 	light 	the 	host 	of 	lawsuits
commenced by the debtor against DoITT, the City and numerous City
officials. 	Concerned 	about 	the 	proliferation 	of 	litigation, 	and
the apparent failure by the debtor to prosecute these lawsuits, the
Court 	issued 	an 	order 	sua 	sponte, 	directing 	the 	debtor 	to 	show
cause 	why 	it 	should 	not 	be 	compelled 	to 	dismiss, 	consolidate 	or
prosecute 	these 	cases. 	(See 	Order 	to 	Show 	Cause 	Why 	the 	Court
Should Not Direct the Debtors to Dismiss, Consolidate or Prosecute
Certain 	Proceedings, 	dated 	Jan. 	23, 	2003)(ECF 	Doc. 	# 	243.) 	The
order identified three cases pending in the Eastern District of New
York, 	and 	two 	cases, 	an 	Article 	78 	proceeding 	and 	a 	Civil 	Court
action, 	pending 	in 	state 	court. 	In 	addition, 	an 	adversary
proceeding and a claim objection were pending in this Court.
During the ensuing 18 months, the Court conducted conferences
and set deadlines for the prosecution of the non-bankruptcy court
litigation. 	Eventually, all of the Eastern District litigation was
consolidated before Judge Gleeson. 	The New York Court of Appeals
eventually concluded that the debtor’s Article 78 proceeding, which
challenged 	the 	Regal 	Letter, 	was 	time-barred. 	In 	re 	Best
Payphones, Inc., 832 N.E.2d 38 (N.Y. 2005). 	The Civil Court action
was apparently discontinued. 	Finally, this Court granted DoITT’s
motion 	for 	summary 	judgment 	dismissing 	the 	debtor’s 	adversary
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4 The amended complaint in the adversary consisted of three claims for relief. The
District Court had withdrawn the reference with respect to the third claim, and Judge Hellerstein
subsequently dismissed the claim as moot. The Court of Appeals affirmed. See Best Payphones,
Inc. v. City of New York, 128 F.App’x 176 (2d Cir. 2005). This Court’s dismissal pertained to
the two other claims.
5 The debtor’s lawsuits bear the Civil Nos. 01-CV-3934, 01-CV-8506, 03-CV-
00192 and 04-CV-3541.
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proceeding. 4 	(See 	Transcript 	of 	Hearing, 	held 	June 	21, 	2005
(“Tr.”), 	at 	13)(ECF 	Doc. 	# 	448.) 	The 	order 	to 	show 	cause 	had
served its purpose, and the Court vacated it nearly two years after
it 	was 	issued. 	(See 	Order 	Vacating 	This 	Court’s 	Order 	to 	Show
Cause Dated January 23, 2003, dated Oct.7, 2004)(ECF Doc. # 336.)
In the Eastern District, Magistrate Judge Matsumoto supervised
pre-trial 	matters 	in 	the 	various 	litigations 	commenced 	against
DoITT, the City, and various City officials by the debtor and its
affiliate, 	New 	Phone 	Company 	(“New 	Phone”). 	The 	debtor 	was 	a
plaintiff 	in 	four 	lawsuits, 5 	and 	New 	Phone 	was 	a 	plaintiff 	in 	at
least 	two 	others. 	All 	of 	the 	litigation 	shared 	a 	common 	theme 	–
the defendants had enforced the City’s regulations in an unlawful
and 	discriminatory 	manner, 	either 	against 	New 	Phone 	and 	Best
Payphones 	or 	in 	favor 	of 	Verizon. 	New 	Phone 	Co. 	v. 	City 	of 	New
York, 	No. 	00 	CV 	2007, 	2005 	WL 	1902119, 	at 	*1 	(E.D.N.Y. 	Aug. 	5,
2005)(“New Phone”.)
On 	October 	14, 	2004, 	Magistrate 	Judge 	Matsumoto 	conducted 	a
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6 According to the docket in Case no. 03-CV-00192, the debtor filed a motion to
amend its four complaints on or about May 11, 2005. (See ECF Doc. # 55.) The docket does
not reflect a disposition of that motion.
10
conference with the parties, the results of which are reflected in
a Minute Entry, filed Oct. 16, 2004. 	(See Best Payphones, Inc. v.
City of New York, No. 03-CV-00192 (ECF Doc. # 25.) 	The debtor had
filed an amended complaint in Case no. 03-CV-00192 in August 2004,
and one of the issues addressed at the conference was whether the
debtor could file an amended consolidated complaint without leave
of 	the 	court. 	Magistrate 	Judge 	Matsumoto 	determined 	that 	the
debtor 	would 	have 	to 	seek 	leave 	of 	the 	court, 	and 	directed 	it 	to
file the motion by December 27, 2004.
The debtor failed to obey the direction. 	Instead, by letter
dated April 4, 2005, the debtor requested a pre-motion conference
with 	a 	view 	toward 	seeking 	leave 	to 	amend 	and 	supplement 	its
complaints. 6 	It sought to add four new contentions, two of which
related to the debtor: (1) DoITT had raised the fee to apply for a
permit to install a PPT, but exempted Verizon and (2) DoITT changed
an 	advertising 	rule, 	and 	the 	change 	unfairly 	benefitted 	Verizon.
New 	Phone, 	2005 	WL 	1902119, 	at 	*4 	(Report 	& 	Recommendation 	of
Matsumoto, M.J.). 	In addition, the debtor and New Phone filed yet
another 	complaint 	that 	incorporated 	three 	of 	the 	four 	new 	claims
that 	formed 	the 	basis 	of 	the 	motion 	to 	amend 	the 	six 	other
complaints. 	Id. 	at 	*5. 	Magistrate 	Judge 	Matsumoto 	recommended
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7 “Plaintiff” referred to both New Phone and the debtor. New Phone, 2005 WL
1902119, at *1 n.2.
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that 	the 	motions 	for 	leave 	to 	amend 	be 	denied 	and 	that 	the
plaintiffs 	be 	enjoined 	from 	filing 	further 	duplicative 	actions
without leave of that court. 	Id. at *8.
The plaintiffs objected to the report and recommendation, but
Judge Gleeson overruled the objection and dismissed the complaint
filed on April 4, 2005, as duplicative of the earlier complaints.
Id. at *1. 	The Court left open the possibility that the plaintiffs
could 	file 	new 	complaints 	raising 	matters 	that 	arose 	after 	the
earlier complaints. 	Id. at *2.
In 	addition, 	Judge 	Gleeson 	adopted 	Magistrate 	Judge
Matsumoto’s recommendation to enjoin future filings absent leave of
the 	court, 	a 	measure 	usually 	reserved 	for 	vexatious 	pro 	se
litigants. 	See, 	e.g., 	Iwachiw 	v. 	New 	York 	State 	Department 	of
Motor Vehicles, 396 F.3d 525 (2d Cir. 2005); Sassower v. Sansverie,
885 F.2d 9 (2d Cir. 1989); Safir v. United States Lines, Inc., 792
F.2d 19 (2d Cir. 1986); Martin-Trigona v. Lavien, 737 F.2d 1254 (2d
Cir. 1984). 	According to Judge Gleeson:
Plaintiff 7 has filed eight overlapping complaints on
the 	same 	subject 	matter, 	unnecessarily 	burdening 	this
Court’s 	ability 	to 	manage 	its 	docket 	and 	to 	adjudicate
the 	asserted 	claims. 	For 	the 	reasons 	set 	forth 	in 	the
R[eport] 	& 	R[ecommendation], 	the 	plaintiff 	is 	hereby
enjoined from filing, without leave of the court, any new
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action 	arising 	from 	or 	related 	to 	the 	enactment 	and
enforcement of the City’s regulatory system with respect
to public pay telephones in New York City and defendants’
alleged conspiracy to discriminate against plaintiff and
other public pay telephone operators.
New Phone, 2005 WL 1902119, at *4.
E. 	The Further Litigation In This Court
While 	matters 	proceeded 	in 	Brooklyn, 	the 	City 	renewed 	its
efforts 	in 	this 	Court 	to 	consolidate 	the 	disposition 	of 	the
debtor’s overlapping claims. 	In late December 2004, DoITT and DOT
filed 	their 	Response 	of 	[DoITT] 	and 	the 	[DOT] 	to 	the 	Debtor’s
Objections 	to 	DoITT’s 	and 	DOT’s 	Proofs 	of 	Claim, 	dated 	Dec. 	22,
2004 (the “City’s Response”)(ECF Doc. # 355.) 	The City’s Response
renewed 	the 	request 	for 	abstention, 	arguing 	that 	all 	of 	the
debtor’s remaining claims (other than the sufficiency of the proofs
of claim) were presently pending in other courts.
The 	debtor 	responded, 	identifying 	four 	issues 	that 	were 	not
pending in any other court:
Issues 	related 	to 	the 	DoITT 	NOV’s 	that 	are 	not 	being
considered in any other proceeding, include but are not
limited to: 1. how DoITT filled the “Detail of Violation”
section 	of 	the 	NOV 	itself 	(the 	NOV 	is 	ambiguous 	and
vague) 	2. 	how 	the 	hearings 	at 	the 	[ECB] 	are 	conducted
(the ECB allowed DoITT to change its theory for the same
NOV 	once 	DoITT 	realized 	its 	prior 	theory 	would 	be
defeated) 	3. 	the 	failure 	of 	DoITT 	to 	apply 	a 	policy 	to
Best 	that 	afforded 	other 	similarly 	situated 	[PPT]
providers an opportunity to avoid the NOVs and 4. DoITT’s
lack 	of 	enforcement 	on 	Verizon 	for 	identical 	alleged
infractions.
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8 Although the Debtor’s Reply used the phrase “include but are not limited to,”
these were the only issues that the debtor identified. It is not the Court’s job to search through
the substantial amount of paper in this case to find other issues the debtor did not identify. In
addition, the debtor’s counsel agreed at the oral argument that these were the only issues. After
the Court summarized its view of the issues raised in the Debtor’s Reply, the following colloquy
took place:
THE COURT: . . . That’s my understanding of what you contend are not the
subject of litigations elsewhere. Is there anything else I’m missing here?
MR. GLICK (the debtor’s attorney): No, I believe that capsulizes it, Judge.
(Tr. at 16) (emphasis added.)
13
Reply 	to 	the 	Response 	of 	[DoITT] 	and 	the 	[DOT] 	to 	the 	Debtor’s
Objections 	to 	DoITT’s 	and 	DOT’s 	Proofs 	of 	Claim, 	dated 	Mar. 	30,
2005, at 2 	(“Debtor’s Reply”) (ECF Doc. # 395)(footnote omitted.)8
The 	first 	two 	points 	were 	based 	on 	due 	process. 	The 	debtor
contended 	that 	the 	NOVs 	failed 	to 	specify 	the 	facts 	of 	the
violations or allow the debtor to prepare a defense. 	(Id., at 6.)
In 	addition, 	the 	ECB 	allowed 	DoITT 	the 	opportunity 	to 	change 	its
rationale for issuing the NOVs. 	(Id.)
The 	other 	two 	items 	involved 	new 	allegations 	of 	selective
enforcement. 	First, the debtor contended that DoITT had failed to
follow an unwritten policy under which it issued a written warning
(a “Five-Day Letter”) before imposing a fine. 	The Five-Day Letter
granted the PPT operator five days to contest the allegation. 	An
NOV would not issue until a final determination was made. 	(Id., at
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7-8.) 	According to the debtor, DoITT issued the pre-petition NOVs
before writing a Five-Day Letter, and issued the post-petition NOVs
before making a final determination. 	(Id., at 7-8.) 	Second, DoITT
allowed Verizon to operate all of its PPTs without a permit. 	(Id.)
The Court held a hearing on June 21, 2005, to consider whether
it should abstain from deciding the four issues highlighted in the
Debtor’s 	Reply. 	At 	oral 	argument, 	the 	debtor’s 	counsel 	admitted
that the first two issues, the vagueness of the notice provided by
the NOVs and DoITT’s change in theory, were raised before the ECB
administrative 	law 	judge, 	and 	rejected. 	(Tr. 	at 	21-22.)
Accordingly, the Court ruled from the bench that it would abstain
from deciding those same issues. 	(See id. at 57.)
The 	Court 	did 	not 	decide 	the 	other 	two 	issues 	at 	that 	time.
The attorney for DoITT and DOT argued that the decision by the New
York 	Court 	of 	Appeals 	affirming 	the 	dismissal 	of 	the 	debtor’s
Article 78 proceeding foreclosed any further challenge to the fines
reflected in the NOVs. 	I responded – repeatedly – 	that the City
had moved for abstention, and I would not hear a challenge on the
merits. 	I 	adjourned 	the 	abstention 	motion, 	and 	offered 	the 	City
the 	chance 	to 	move 	for 	summary 	judgment 	based 	on 	the 	Court 	of
Appeals 	decision. 	(Tr. 	at 	55-57). 	The 	City 	decided 	not 	to 	move
for 	summary 	judgment, 	and 	instead, 	chose 	to 	press 	the 	balance 	of
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9 Despite its decision, DoITT and DOT have continued to argue the preclusive
effect of the decision of the New York State Court of Appeals. (See Letter from Gabriela P.
Cacuci, Assistant Corporation Counsel to the Court, dated October 26, 2005) (ECF Doc. # 447.)
The Court will not consider the argument.
15
the abstention motion relating to the remaining issues. 9 	(Letter
from 	Gabriela 	P. 	Cacuci, 	Assistant 	Corporation 	Counsel 	to 	the
Court, dated June 28, 2005)(ECF Doc. # 465.)
DISCUSSION
Pursuant to 28 U.S.C. § 1334(c)(1), a court may abstain from
hearing 	a 	proceeding 	within 	its 	jurisdiction 	“in 	the 	interest 	of
justice, or in the interest of comity with State courts or respect
for 	State 	law.” 	Permissive 	or 	discretionary 	abstention 	was
intended 	to 	codify 	non-bankruptcy 	judicial 	abstention 	doctrines.
Coker v. Pan American World Airways (In re Pan American Corp.), 950
F.2d 	839, 	845 	(2d 	Cir. 	1991). 	The 	factors 	that 	generally 	govern
discretionary abstention include the following:
(1) 	the 	effect 	or 	lack 	thereof 	on 	the 	efficient
administration 	of 	the 	estate 	if 	a 	Court 	recommends
abstention, 	(2) 	the 	extent 	to 	which 	state 	law 	issues
predominate over bankruptcy issues, (3) the difficulty or
unsettled 	nature 	of 	the 	applicable 	state 	law, 	(4) 	the
presence of a related proceeding commenced in state court
or 	other 	nonbankruptcy 	court, 	(5) 	the 	jurisdictional
basis, if any, other than 28 U.S.C.
§ 	1334, 	(6) 	the 	degree 	of 	relatedness 	or 	remoteness 	of
the 	proceeding 	to 	the 	main 	bankruptcy 	case, 	(7) 	the
substance 	rather 	than 	form 	of 	an 	asserted 	‘core’
proceeding, 	(8) 	the 	feasibility 	of 	severing 	state 	law
claims from core bankruptcy matters to allow judgments to
be 	entered 	in 	state 	court 	with 	enforcement 	left 	to 	the
bankruptcy court, (9) the burden of [the court's] docket,
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(10) 	the 	likelihood 	that 	the 	commencement 	of 	the
proceeding in a bankruptcy court involves forum shopping
by one of the parties, (11) the existence of a right to
a jury trial, and (12) the presence in the proceeding of
nondebtor parties.
Peterson 	v. 	610 	W. 	142 	Owners 	Corp. 	(In 	re 	610 	W. 	142 	Owners
Corp.), 	94 	B 	44488, 	1999 	WL 	294995, 	*3 	(May 	11, 	1999
S.D.N.Y.)(quoting In re Craft Architectural Metals Corp., 115 B.R.
423, 432 (E.D.N.Y. 1989) ); accord Rahl v. Bande, 316 B.R. 127, 135
(S.D.N.Y. 	2004); 	Masterwear 	Corp. 	v. 	Rubin 	Baum 	Levin 	Constant 	&
Friedman 	(In 	re 	Masterwear 	Corp.), 	241 	B.R. 	511, 	520 	(Bankr.
S.D.N.Y. 1999).
This case is somewhat unusual because the movants have asked
me to abstain in favor of another federal court, not a state court.
Several of the abstention factors focus on the relationship between
the 	state 	and 	federal 	courts, 	i.e., 	comity, 	and 	do 	not 	apply.
Furthermore, the debtor’s chapter 11 case was confirmed three years
ago. 	While the dispute before me concerns the allowance of three
proofs 	of 	claim, 	the 	resolution 	of 	the 	dispute 	will 	have 	little
impact 	on 	the 	debtor 	and 	no 	impact 	on 	its 	creditors 	or, 	for 	that
matter, on an estate that ceased to exist when the property of the
estate 	vested 	in 	the 	debtor. 	See 	11 	U.S.C. 	§ 	1141(b).
Accordingly, judicial economy and judicial efficiency should drive
the Court’s decision. 	See Mt. McKinley Ins. Co. v. Corning Inc.,
No. 	02 	Civ. 	5835, 	2003 	WL 	1482786, 	at 	*7 	(S.D.N.Y. 	Mar. 	21,
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2003)(“Comity and federalism, judicial economy, and efficiency are
among the considerations relevant to a decision to abstain.”).
The question comes down to which federal court should decide
the parties’ disputes. 	At present, litigations are pending in this
Court 	and 	in 	the 	Eastern 	District 	of 	New 	York. 	In 	addition, 	the
debtor 	has 	moved 	to 	withdraw 	the 	reference 	of 	the 	part 	of 	its
objection based on the Telecommunications Act of 1996. 	The motion
implicitly acknowledges that this Court cannot resolve all of the
issues raised by the debtor’s objection. 	At a minimum, the debtor
believes 	that 	at 	least 	two 	courts 	– 	this 	Court 	and 	the 	United
States 	District 	Court 	for 	the 	Southern 	District 	of 	New 	York 	–
should consider its objections. 	DoITT, on the other hand, insists
that 	all 	of 	the 	issues 	(if 	not 	the 	specific 	factual 	contentions)
are raised in the Eastern District, and should be decided by Judge
Gleeson.
I do not presume to invade the territory of our own District
Court 	where 	the 	debtor’s 	motion 	to 	withdraw 	the 	reference 	is
pending 	but 	remains 	undecided. 	Moreover, 	that 	motion 	centers 	on
the 	provisions 	of 	the 	Telecommunications 	Act 	of 	1996, 	and 	the
debtor 	has 	understandably 	not 	argued 	that 	I 	should 	decide 	those
issues. 	Nevertheless, the new allegations of selective enforcement
raised by the debtor relate to the discrimination issues that form
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10 Since the debtor has not filed a consolidated complaint in Brooklyn federal court,
I am left with the latest versions of the complaints filed in that court. However, it is unnecessary
to look beyond the amended complaint in Case no. 03-CV-00192.
11 The complaint in Case no. 04-CV-3541, filed on the same day as the amended
complaint in Case no. 03-CV-00192, appears to be a carbon copy of the latter.
18
the crux of the Eastern District complaints. 10
The 	remaining 	issues 	identified 	in 	the 	Debtor’s 	Reply 	fall
into 	two 	general 	categories: 	(1) 	DoITT 	discriminated 	in 	favor 	of
Verizon, or (2) DoITT discriminated against the debtor by treating
it 	differently 	and 	less 	favorably 	than 	other 	PPT 	operators.
Several 	types 	of 	pro-Verizon 	discrimination 	are 	alleged 	in 	the
amended 	complaint 	in 	Case 	no. 	03-CV-00192. 11 	These 	include 	the
following: 	DoITT 	went 	out 	of 	its 	way 	to 	maintain 	the 	pre-eminent
position of Verizon, to the exclusion and detriment of other non-
favored 	companies 	like 	the 	debtor 	(¶ 	4); 	curb-side 	locations 	of
PPTs, 	the 	most 	lucrative 	locations, 	were 	exclusively 	licensed 	to
Verizon 	(¶ 	31); 	Verizon 	was 	not 	subject 	to 	the 	restrictions 	on
advertising 	(¶ 	68); 	the 	requirement 	that 	the 	building 	owner 	or
commercial lessee consent to the placement of a PPT within six feet
of 	the 	building 	line 	had 	a 	disproportionate 	impact 	on 	the 	PPT
providers, other than Verizon, that had the majority of their PPTs
near the building line (¶ 72); certain City regulations set forth
a 	“special 	and 	favorable 	process” 	that 	benefitted 	on 	Verizon 	(¶
77); Verizon was exempted from siting criteria governing operation
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and 	advertising 	that 	applies 	to 	other 	PPT 	operators 	(¶ 	78); 	the
regulations 	allowed 	DoITT 	to 	give 	a 	competitive 	advantage 	to
Verizon (¶ 80); and the security deposit requirements discriminated
in favor of Verizon. 	(¶ 141.)
The allegation in the Debtor’s Reply that Verizon is allowed
to 	operated 	PPTs 	without 	a 	permit 	(while 	the 	debtor, 	and,
presumably, 	other 	PPTs 	are 	not) 	is 	just 	another 	example 	of 	pro-
Verizon 	discrimination 	that 	permeates 	the 	Eastern 	District
pleadings. 	There 	is 	no 	reason 	to 	try 	this 	allegation 	of 	pro-
Verizon 	discrimination 	in 	this 	Court, 	and 	all 	of 	the 	other 	pro-
Verizon 	discrimination 	allegations 	in 	Brooklyn 	federal 	court.
Accordingly, I will abstain in the interest of judicial economy and
efficiency 	from 	hearing 	it. 	Whether 	the 	debtor 	can 	raise 	it 	in
Brooklyn in light of that Court’s injunction I leave to that Court.
I only note that the debtor would also have to convince me that its
assertion was timely.
The same conclusion applies to the allegations involving the
failure to follow an unwritten policy relating to the issuance of
NOVs. 	The amended complaint in Case no. 03-CV-00192 overflows with
allegations 	that 	the 	defendants 	have 	discriminated 	against 	the
debtor. 	The 	amended 	complaint 	includes 	the 	following 	averments:
DoITT 	selectively 	enforced 	its 	regulations 	in 	ways 	that 	favored
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former PPT operators’ expansion and growth and penalized the debtor
(and 	New 	Phone) 	(¶ 	6); 	DoITT’s 	seizure 	of 	the 	debtor’s 	PPTs
targeted the debtor while it allowed other PPT operators to operate
illegal 	PPTs 	(¶ 	9); 	the 	defendants’ 	conduct 	exhibited
discriminatory treatment of the debtor (¶ 26); no similar-situated
PPT operator (other than New Phone) was threatened with the removal
or 	destruction 	of 	its 	phones 	or 	the 	revocation 	of 	its 	franchise
simply 	because 	it 	did 	not 	execute 	the 	closing 	documents 	after
having been granted a franchise (¶¶ 159, 162, 181); the defendants
persecuted, 	harassed 	and 	subjected 	the 	debtor 	to 	discriminatory
treatment 	because 	the 	debtor 	challenged 	the 	City’s 	actions 	and
asserted 	its 	rights 	(¶¶ 	167-87); 	the 	defendants 	subjected 	the
debtor to “adverse,” “disparate,” “retaliatory,” “vindictive” and
“differential” treatment “based on an irrational hostility towards
Best” 	that 	was 	not 	suffered 	by 	others 	similarly 	situated 	in
violation of the Equal Protection Clauses of the United States and
New York State Constitutions and 42 U.S.C. § 1983 (¶¶ 213-14, 222-
23); and the defendants’ “unlawful and unreasonable removal of PPTs
owned by Best, and the targeted and discriminatory enforcement of
DoITT regulations against Best” prevented the debtor from competing
and violated 47 U.S.C. § 253(a). (¶ 281.)
The 	Debtor’s 	Reply 	charges 	that 	DoITT 	failed 	to 	abide 	by 	an
unwritten 	policy 	that 	before 	issuing 	a 	violation, 	it 	would 	first
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give 	the 	PPT 	operator 	a 	written 	warning 	and 	an 	opportunity 	to
contest DoITT’s position. 	In other words, the DoITT had a policy
that it applied to other PPT operators, but not the debtor. 	This
is another example of the type of selective enforcement alleged in
the Eastern District complaints. 	Once again, it makes no sense for
me 	to 	hear 	this 	one 	allegation 	(assuming 	it 	is 	timely) 	and 	for
Judge Gleeson to hear all of the other anti-debtor discrimination
claims. 	Accordingly, I will abstain from doing so in the exercise
of my discretion.
In conclusion, the Court will abstain from hearing the issues
raised by the debtor’s Amended Objection with one exception. 	The
debtor 	contends 	or 	implies 	that 	the 	DoITT 	claims 	should 	be
dismissed 	because 	DoITT 	did 	not 	attach 	the 	NOVs 	to 	its 	claims.
This is the only remaining issue that I must decide. 	If the debtor
believes that it is entitled to relief based on that deficiency, it
must file an appropriate motion with this Court by December 30,
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2005. 	The Court has considered the parties’ other arguments, and
concludes that they lack merit.
So ordered.
Dated: 	New York, New York
November 29, 2005
/s/ Stuart M. Bernstein
STUART M. BERNSTEIN
Chief United States Bankruptcy Judge
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