United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND RECOMMENDATION
Christina A. Bryan United States Magistrate Judge.
breach of contract action is before the court on Plaintiffs
Motion to Remand, (Dkt. 6), and Defendants' Motion to
Transfer Venue (Dkt. 5). Plaintiff does not oppose transfer of
its case against Mattress Pal Holdings, LLC to the United
States District Court for the Middle District of Florida,
where Mattress Pal's bankruptcy case is pending (Dkt. 6
at 2). Having reviewed the parties' submissions and the
law, the court recommends that Plaintiffs Motion to Remand be
granted as to SOS Furniture Company, Inc., and
Defendants' Motion to Transfer Venue be granted as to
Mattress Pal Holdings, LLC.
GITP filed this action in state court in May 2018 against
Mattress Pal and SOS Furniture alleging breach of a lease
agreement by Mattress Pal and liability for the breach under
a guaranty of the lease by SOS Furniture. Approximately one
year after GITP filed its state court lawsuit, Mattress Pal
filed for bankruptcy protection in federal court in Florida.
The state court denied GITP's subsequent motion to sever
the claims against Mattress Pal from those against SOS. On
May 29, 2019, Defendants Mattress Pal and SOS Furniture
removed the case to federal court pursuant to 28 U.S.C.
§ 1334(b) and § 1452(a). Plaintiff now moves to
remand its claims against SOS Furniture to state court.
concedes its case against SOS Furniture is "related
to" Mattress Pal's bankruptcy proceeding under 28
U.S.C. § 1334(b) and subject to removal under 28 U.S.C.
§ 1452(a). Dkt. 6 at 5. GITP seeks severance of the
claims against Mattress Pal from the claims against SOS, and
remand of the claims against SOS to state
court. In support of remand, GITP argues: (1)
this court must refrain from hearing the claims against SOS
under the mandatory abstention provision of 28 U.S.C. §
1334(c)(2); this court should refrain from hearing the claims
against SOS under the permissive abstention provision of 28
U.S.C. § 1334(c)(1); and this court should remand the
claims against SOS on equitable grounds pursuant to 28 U.S.C.
§ 1452(b). As set forth below, the Court recommends
permissive abstention and equitable remand of the claims
against SOS Furniture and transfer to the Middle District of
Florida of the claims against debtor, Mattress Pal.
Upon timely motion of a party in a proceeding based upon a
State law claim or State law cause of action, related to a
case under title 11 but not arising under title 11 or arising
in a case under title 11, with
respect to which an action could not have been commenced in a
court of the United States absent jurisdiction under this
section, the district court shall abstain from hearing such
proceeding if an action is commenced, and can
be timely adjudicated, in a State forum of appropriate
(emphasis added). GITP alleged in its state court petition
that it is a Texas limited partnership with its principal
place of business in Harris County, Texas; Mattress Pal is a
Florida limited liability company doing business in Harris
County that can be served through its registered agent in
Florida; and SOS Furniture is a Florida corporation doing
business in Harris County that can be served through its
registered agent in Florida. Dkt. 1 -1 at 1. GITP further
alleged it had damages of approximately $330, 000.00.
Id. at 4. Thus, according to facts alleged by GITP,
it could have commenced its breach of contract action in
federal court based on diversity jurisdiction pursuant
to28U.S.C. § 1332.
admits the parties are diverse, see Dkts. 9, 13, but
contends mandatory abstention applies because, due to SOS
having waived its right to remove the case by failing to do
so within thirty days of service of the state court action as
required by 28 U.S.C. § 1446(b)(1), diversity
jurisdiction no longer exists. However, the thirty-day
provision of § 1446(b)(1) is a procedural rule that does
not defeat subject matter jurisdiction. Barnes v.
Westinghouse Elec. Corp., 962 F.2d 513, 516
(5th Cir. 1992) (untimely removal is a procedural
defect that does not go to subject matter jurisdiction
(citing Baris v. Sulpicio Lines, Inc., 932 F.2d
1540, 1544) (5th Cir. 1991)); Ragas v. Tenn.
Gas Pipeline Co., 136 F.3d 455, 457 (5th Cir.
1998) (citing Williams v. AC Spark Plugs Div. of Gen.
Motors Corp., 985 F.2d 783, 787 (5th Cir.
1993) for proposition that all objections to removal other
than lack of subject matter jurisdiction are procedural).
GITP could have commenced this action in federal
court based on diversity jurisdiction. Therefore, §
1334(c)(2) does not apply in this case because in addition to
"related to" bankruptcy jurisdiction under 28
U.S.C. § 1334(b), diversity jurisdiction would have
allowed GITP to commence the case in federal court. Cf.
Edge Petroleum Operating Co. v. GPR Holdings LLC (In re TXNB
Internal Case), 483 F.3d 292, 299-300 (5th
Cir. 2007) (motion to abstain denied where federal court
supplemental jurisdiction existed).
Abstention and Equitable Remand.
permissive abstention doctrine is set forth in 28 U.S.C.
[N]othing in this section prevents a district court in the
interest of justice, or in the interest of comity with State
courts or respect for State law, from abstaining from hearing
a particular proceeding arising under title ...