Bronson v. Thompson (In re Bronson)

Ninth Circuit Bankruptcy Appellate Case No. AZ-16-1050-JuFL (October 12, 2016) Not for Publication
The bankruptcy court did not abuse its discretion in dismissing the Debtors' state law claims and closing the adversary. When determining whether to retain jurisdiction or send a claim to state court, the bankruptcy court must consider the economy, convenience, fairness, and comity of the issues.
Procedural context:
Debtors filed a Motion for Summary Judgment in an adversary against Thomas M. Thompson ("TMT"). The bankruptcy court denied the motion for summary judgment finding that a genuine issue of material fact existed as to the fair market value of the real property foreclosed upon by TMT. The bankruptcy court further ruled that the Debtors alleged deficiency claim had no impact on the Debtors' case; therefore, the bankruptcy court lacked jurisdiction over the matter.
The Debtors defaulted on a loan for commercial real property wherein TMT was the beneficiary of the deed of trust. Shortly before TMT noticed trustee sale, the Debtors sought relief under Chapter 11 of the Bankruptcy Code. TMT sought and obtained relief from the automatic stay, later, conducting its trustee sale and gaining title to the commercial real property through credit bid. The Debtors assert that the credit bid was below market value for the real property; therefore, they have a claim against TMT. Therefore, the Debtors commenced an adversary proceeding against TMT in the bankruptcy court. The Chapter 11 was converted to Chapter 7, and, eventually the Chapter 7 Trustee abandoned any interest the Estate may have had in the litigation against TMT. The Chapter 7 Trustee filed a report of no distribution and the administrative case was closed. The Debtors maintained that they had claims against TMT and continue to pursue the same through the adversary and the filing of a motion for summary judgment.

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