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Slinde & Nelson, LLC v. Luneke

United States District Court, D. Oregon

February 23, 2017

SLINDE & NELSON, LLC, dba SLINDE NELSON STANFORD, an Oregon limited liability company, Plaintiff,
v.
DAVID K. LUNEKE, an individual and RANBIR SANHI, an individual, Defendants.

          Philip J. Nelson Keith A. Pitt Colin G. Andries Slinde Nelson Stanford Attorneys for Plaintiff

          Clifford S. Davidson Sussman Shank LLP Attorney for Defendants

          OPINION & ORDER

          MARCO A. HERNÁNDEZ United States District Judge

         Defendants David Luneke and Ranbir Sanhi removed this action from Multnomah County Circuit Court[1] (“State Action”) to the District of Oregon pursuant to 28 U.S.C. § 1452. Before the Court are Plaintiff's motion to remand this matter back to Oregon state court and Defendants' motion to transfer to the Bankruptcy Court for the Central District of California. See Mot. to Remand, ECF 18; Mot. to Transfer, ECF 22. Plaintiff's Motion to Remand is GRANTED and Defendants' Motion to Transfer is DENIED.

         BACKGROUND

         This matter arises out of Defendants' failure to pay Plaintiff for representing them in an underlying litigation.[2] Plaintiff, a law firm located in Portland, Oregon, defended Luneke, Sanhi, and Lite Solar, LLC in Multnomah County Circuit Court in a suit brought by another solar company. Mot. to Remand at 3. Plaintiff entered into an Engagement Agreement with Luneke, Sanhi, and Lite Solar, LLC. Id.; Pitt. Decl. Ex. 2, ECF 19. The Engagement Agreement obligated Defendants and Lite Solar, LLC to pay Plaintiff for fees incurred during the underlying litigation. Compl. ¶ 9, ECF 1. Defendants refused to pay for Plaintiff's services and are indebted to Plaintiff for $79, 096.64. Id. at ¶ 12.

         On July 18, 2016, Sanhi merged Lite Solar, LLC into Lite Solar Corp., another company that he owned. Notice of Removal ¶ 1, ECF 1. Nine days later, on July 27, 2016, Lite Solar Corp. filed for bankruptcy under Chapter 11 in the Bankruptcy Court for the Central District of California (“Bankruptcy Proceeding”).[3] Id. at ¶ 4; Nov. 8, 2016, Davidson Decl. Ex. 5, ECF 24. In that petition, Lite Solar Corp. stated that it owed approximately $7.9 million to its twenty largest creditors, including $69, 433.81 to Plaintiff for “Professional Services.” Nov 8, 2016, Davidson Decl. Ex. 5 at 9. Additionally, the plaintiff from the underlying litigation has since filed a Proof of Claim for $12 million in the Bankruptcy Proceeding. Nov. 28, 2016, Davidson Decl. Ex. 1 at 2, ECF 30. On August 12, 2016, Plaintiff filed a Proof of Claim in the Bankruptcy Proceeding, claiming that Lite Solar Corp. owed it $79, 096.64 for legal services. On August 24, 2016, Plaintiff also brought the State Action against Sanhi and Luneke in Multnomah County Circuit Court seeking the same amount. Id. at ¶¶6-26. Neither Lite Solar, LLC nor Lite Solar Corp. are named defendants in the State Action. Defendants filed their notice to remove the State Action to this Court on September 29, 2016.

         Plaintiff now requests that the Court remand this matter back to Multnomah County Circuit Court. Conversely, Defendants seek to transfer this matter to the Bankruptcy Court for the Central District of California.

         STANDARDS

         Section 1452(a) of Title 28 of the United States Code provides that a party may remove a civil action to the district court where the civil action is pending, if the district court has jurisdiction over the matter under 28 U.S.C. § 1334. “The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground.” 28 U.S.C. § 1452(b). The Ninth Circuit applies a fourteen factor test, the “Cedar Funding Factors, ” for determining whether equitable grounds support remand:

(1) the effect or lack thereof on the efficient administration of the estate if the Court recommends [remand or] abstention;
(2) extent to which state law issues predominate over bankruptcy issues;
(3) difficult or unsettled nature of applicable law;
(4) presence of related proceeding commenced in state court or other nonbankruptcy proceeding;
(5) jurisdictional basis, if any, other than § 1334;
(6) degree of relatedness or remoteness of proceeding to main bankruptcy case;
(7) the substance rather than the 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 ...

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