Benjamin Schafer

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
BENJAMIN SCHAFER 	:
Debtor 	: 	Bankruptcy No. 05-15739F
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ORDER
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AND NOW, this 25th day of July 2005, upon motion of Linda Schafer for
relief from the automatic stay, or alternatively for abstention or dismissal of this case, and
for a declaration that any future state court judgments would be non-dischargeable,
And upon consideration of the debtor’s answer in opposition thereto,
And after an evidentiary hearing, during which the standing chapter 13
trustee participated,
And the above-captioned chapter 13 case commenced on April 22, 2005,
And prior to March 21, 2003, the movant, Linda Schafer, commenced a
divorce proceeding against the debtor in the Superior Court of New Jersey, Chancery
Division, Gloucester County, docketed at FM-08-641-03. Ex. A,
And in this divorce proceeding, Ms. Schafer sought a decree of divorce, as
well as alimony and equitable division of marital property under New Jersey law,
And on March 21, 2003, the state court entered an order enjoining both
parties from certain actions pending final resolution of the state court divorce proceeding.
Ex. A,
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And on March 13, 2004, the state court entered a consent order whereby
this divorce proceeding was dismissed without prejudice, but “[t]he prior Orders and
status quo in effect in the above matter shall remain in effect, and shall be considered as
incorporated into any subsequent docket number.” Ex. B,
And in April 2004, Ms. Schafer filed her second divorce complaint against
the debtor, in the same New Jersey state court, and docketed at FM-08-814-04. Ex. C.
This second complaint sought a decree of divorce, spousal support, equitable distribution
of all marital property, and counsel fees. Id.,
And in June 2004, the debtor filed an answer and counterclaim to this
divorce complaint. Ex. D. In this pleading, the debtor also sought a divorce decree, as
well as a restraining order against the plaintiff, equitable distribution of the marital
property, support and counsel fees. Id.,
And among the marital property at issue in this divorce action are two
residential real properties, two boats (or the sale proceeds thereof), two cars, the debtor’s
interest in a Midas Muffler franchise, and the debtor’s interest in a retirement account,
And on December 8, 2004, a case management order was entered by the
state court. Among other issues, this management order established deadlines for
discovery. Id.,
And the debtor asserts that he fully complied with all reasonable discovery
requests. See generally Exs. D-1 through D-5. Ms. Schafer does not concur, and has
filed a motion for sanctions against the debtor. That sanctions motion was pending when
the debtor filed this voluntary chapter 13 bankruptcy petition,
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The motion also refers to a desire to continue with custody litigation; however,1
from the testimony offered there appear to be no minor children and no pending custody disputes.
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And Ms. Schafer has now filed a motion seeking modification of the
bankruptcy stay so that she may prosecute the divorce proceeding now pending in state
court, including her request for alimony, support, equitable distribution, and counsel fees.
Motion (“Wherefore clause”). 	Alternatively, Ms. Schafer requests that this court abstain1
in favor of the New Jersey state court “to render all decisions and afford all rights and
remedies” in the matter of Schafer v. Schafer. As a second alternative, Ms. Schafer seeks
dismissal of this bankruptcy case as filed in bad faith. Id.,
And in addition to this relief, Ms. Schafer also seeks a “finding . . . that any
judgments entered hereafter by the [state court] create post-petition obligations that are
not discharged in this bankruptcy case.” Motion, Wherefore clause, ¶ c,
And the debtor’s answer to the instant motion simply requests that all relief
be denied. At the hearing, however, his counsel agreed, that the bankruptcy stay should
be modified so that the state court could enter an appropriate divorce decree, as well as
resolve the parties’ dispute over alimony, support and counsel fees. The debtor remains
opposed to the modification of the stay as to the equitable distribution claim. He wants
that matter litigated in this bankruptcy forum,
And the debtor asserts that litigation of the equitable distribution issue in
this federal court will allow the chapter 13 bankruptcy trustee to participate on behalf of
his creditors and would be less expensive to the parties. Ms. Schafer contends that the
debtor is simply dissatisfied with the New Jersey state court and is seeking another forum
that he believes will be more favorable,
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And turning first to Ms. Schafer’s request for abstention, 11 U.S.C. § 305(a)
empowers a court to abstain and thereby dismiss an entire bankruptcy case if the interests
of creditors and debtor would be better served by such dismissal. Here, Ms. Schafer has
offered no evidence that dismissal of the case would be beneficial to the debtor and his
creditors. See generally In re Eastman, 188 B.R. 621, 624 (B.A.P. 9th Cir. 1995),
And 28 U.S.C. 1334(c) authorizes a bankruptcy court to abstain from
hearing a particular adversary proceeding. In this instance, there is no proceeding
between these parties presently before me from which I could abstain. Neither party has
commenced any proceeding in this court to which the issue of abstention could attach.
The only disputes between them now pending involve the instant motion, as well as Ms.
Schafer’s objection to confirmation, both of which lie within the exclusive jurisdiction of
this court. See 11 U.S.C. §§ 362(d), 1325; see also Constitution Bank v. Tubbs, 68 F.3d
685, 691 (3d Cir. 1995) (“Relief from the stay can be granted only by the bankruptcy
court having jurisdiction over a debtor's case.”); Maritime Elec. Co., Inc. v. United Jersey
Bank, 959 F.2d 1194, 1204 (3d Cir. 1991) (“Only the bankruptcy court with jurisdiction
over a debtor's case has the authority to grant relief from the stay of judicial proceedings
against the debtor.”); In re Birting Fisheries, Inc., 300 B.R. 489, 501 (B.A.P. 9th Cir.
2003) (“[T]he bankruptcy court had exclusive jurisdiction to interpret and enforce its Plan
and Confirmation Order”). Compare, e.g., Carver v. Carver, 954 F.2d 1573 (11th Cir.),
cert. denied, 506 U.S. 986 (1992) (abstention issue relevant when debtor files an against
his former wife and her attorney for violation of the stay under 11 U.S.C. § 362(h)).
Moreover, no litigation has been removed from state court to this court pursuant to 28
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U.S.C. § 1452 and Fed. R. Bankr. P. 9027 from which abstention or remand might be
applicable,
Accordingly, it is hereby ordered that abstention is not appropriate,
And similarly, Ms. Schafer’s request to a determination concerning the
dischargeability of future rulings by the state court seeks an inappropriate advisory
opinion. See generally Coffin v. Malvern Federal Sav. Bank, 90 F.3d 851 (3d Cir. 1996);
In re Nelson, 234 B.R. 528, 538-39 (Bankr. M.D. Fla. 1999),
And that leaves Ms. Schafer’s primary request to modify the automatic stay.
The debtor does not oppose this relief except as it concerns the issue of equitable division
of marital property,
And as a general principle, whether to terminate, modify, condition, or
annul the bankruptcy stay under section 362(d)(1) is committed to bankruptcy court
discretion, see Matter of Holtkamp, 669 F.2d 505 (7th Cir. 1982); In re Ingebrethsen,
1998 WL 351730, at *2 (E.D. Pa. 1998); In re Shariyf, 68 B.R. 604 (E.D. Pa. 1986), and
is to be determined by examining the totality of the circumstances. Matter of Baptist
Medical Center of New York, Inc., 52 B.R. 417, 425 (E.D.N.Y. 1985), aff'd, 781 F.2d
973 (2d Cir. 1986), 	And, as noted by the Fourth Circuit Court of Appeals:
Congress, however, has granted broad discretion to
bankruptcy courts to lift the automatic stay to permit
enforcement of rights against property of the estate. . . .
Because the Bankruptcy Code provides no definition of what
constitutes “cause,” the courts must determine when
discretionary relief is appropriate on a case-by-case basis. . . .
We will reverse a decision to lift the automatic stay “for
cause” only when an abuse of discretion has occurred.
Claughton v. Mixson, 33 F.3d 4, 5 (4th Cir. 1994) (citations and statutory quotation
omitted),
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And when considering whether to terminate or modify the bankruptcy stay
so that a state court may proceed with a determination of equitable distribution of marital
property ancillary to a divorce proceeding, most bankruptcy courts will grant such relief.
See, e.g., Roberge v. Buis, 95 F.3d 42 (Table), 1996 WL 482686 (4th Cir. 1996); Clayton
v. Mixson; In re Robbins, 964 F.2d 342 (4th Cir. 1992); In re White, 851 F.2d 170, 174
(6th Cir. 1988); In re Cole, 202 B.R. 356, 362 (Bankr. S.D.N.Y. 1996); In re Moses, 194
B.R. 777, 780 (Bankr. E.D. Pa. 1996); In re Wilson, 85 B.R. 722, 728-29 (Bankr. E.D. Pa.
1988),
And such relief is usually granted because the legal issues involved in
equitable distribution are solely matters of state law with which state court judges have
far greater expertise. See, e.g., Matter of Hursa, 87 B.R. 313 (Bankr. D.N.J. 1988);
Matter of Baker, 75 B.R. 120, 121 (Bankr. D. Del. 1987); Varela v. Varela, 343 N.J.
Super. 395, 397 (2000); see also In re Perry, 131 B.R. 763, 770 (Bankr. D. Mass. 1991).
Moreover, federal courts, as a matter of comity, generally conclude that “domestic
relations matters . . . should properly be reserved to the state courts.” In re Harrell, 754
F.2d 902, 907 (11th Cir. 1985); accord Thompson v. Thompson, 484 U.S. 174 (1988);
Roberge v. Buis, 1996 WL 482686, at *2,
And, in addition to these factors, by the time the lift-stay motion arises in
bankruptcy court, usually there have been one or more hearings in state court on the
question of property division or some collateral issues. Congress has noted in connection
with the legislative history surrounding termination of the bankruptcy stay for cause under
section 362(d)(1) that:
[I]t will often be more appropriate to permit proceedings to
continue in their place of origin, when no great prejudice to
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the bankruptcy case will result, in order to leave the parties to
their chosen forum and to relieve the bankruptcy court from
many duties that may be handled elsewhere.
S. Rep. No. 989, 95th Cong., 2d Sess. 50 (1978).
And based upon the above-quoted legislative history, courts have long
concluded that it is within the sound discretion of the bankruptcy courts to grant relief
from the automatic stay to defer to a non-bankruptcy forum which has jurisdiction over a
dispute, and in which significant time and funds have already been expended. See, e.g.,
In re Robbins, 964 F.2d at 345-46; Matter of Holtkamp; In re Castlerock Properties, 781
F.2d 159, 163 (9th Cir. 1986); In re Olmstead, 608 F.2d 1365 (10th Cir. 1979); In re
Hoffman, 33 B.R. 937 (Bankr. W.D. Okla. 1983); In re Philadelphia Athletic Club, Inc., 9
B.R. 280 (Bankr. E.D. Pa. 1981),
And in this contested matter, the evidence demonstrates: that the divorce
action and its ancillary issues, including equitable distribution, have been pending in the
state court system for some time; that the state court has greater familiarity with the facts
and legal issues surrounding equitable distribution than does this court; that there was no
proof that it would be less expensive to try the issue in this forum than in the state
forum—indeed, it would be more economical to try the property division, alimony,
support and counsel fees in one forum than in two; and that the standing chapter 13
trustee, at the conclusion of the hearing, supported Ms. Schafer’s motion to modify the
bankruptcy stay and have the equitable distribution dispute resolved in New Jersey state
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Presumably, the trustee, if he so chooses, may participate in the state court2
proceeding on the issue of equitable distribution of marital property. See Varela v. Varela.
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court, where it is now pending. 	See generally In re Leonard, 231 B.R. 884, 889 (E.D. Pa.2
1999):
Among the factors which may be considered in determining
whether a state court should be allowed to decide a domestic
matter, are (1) whether the issues in the pending litigation
involve only state law, so the expertise of the bankruptcy
court is unnecessary; (2) whether modifying the stay will
promote judicial economy and whether there would be greater
interference with the bankruptcy case if the stay were not
lifted because matters would have to be litigated in the
bankruptcy court; and (3) whether the estate can be protected
properly by a requirement that creditors seek enforcement of
any judgment through the bankruptcy court.
Accordingly, it is hereby ordered that the automatic stay is modified so that
Ms. and Mr. Schafer may exercise their non-bankruptcy law rights and prosecute their
matrimonial litigation, docketed at FM-08-814-04 in New Jersey state court. Enforcement
of any judgment regarding equitable distribution, however, remains stayed pending
further order of this court. See Roberge v. Buis, 1996 WL 482686, at *2.
BRUCE FOX
United States Bankruptcy Judge
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copies to:
Mr. Benjamin Schafer
6551 Cottage Street
Philadelphia, PA 19135
Robert Neil Braverman, Esq.
Kasen, Kasen & Braverman
1845 Walnut Street, Suite 2500
Philadelphia, PA 19103
Steven R. Neuner Esq.
Neuner and Ventura LLP
750 Route 73 South, Suite 210
Marlton, NJ 08053
William C. Miller, Esq.
Chapter 13 Trustee
111 S. Independence Mall
Suite 583
Philadelphia, PA 19106
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