Overland Direct, Inc. v. Houshang Aframian et al.

Summary

The United States District Court for the Central District of California denied Overland Direct, Inc.’s motion to remand and granted Houshang Aframian’s motion to transfer. The court held that the action was subject to federal bankruptcy jurisdiction because it implicated the automatic stay in the Homesite Holdings bankruptcy, and transferred the case to the Southern District of California for referral to that district’s bankruptcy court.

Holdings

1. Aframian timely removed the action because the second thirty-day removal period began when Payan filed the affirmative defense in this case, not when related documents were disclosed or filed in other proceedings.
2. The action was subject to federal bankruptcy jurisdiction because the settlement agreement and the claims implicated the automatic stay and sought to affect property of the Homesite bankruptcy estate; the action was therefore completely preempted.
3. Neither withdrawal of Payan's thirteenth affirmative defense nor the trustee-Payan settlement eliminated federal bankruptcy jurisdiction.
4. Transfer to the United States District Court for the Southern District of California was appropriate because that court could refer the action to the bankruptcy court already presiding over the Homesite bankruptcy.

Questions Presented

1. Whether Aframian timely removed the action under the second thirty-day removal period in 28 U.S.C. § 1446(b).
2. Whether Payan's affirmative defense and the settlement agreement triggered federal subject matter jurisdiction through complete preemption arising from the Bankruptcy Code and the automatic stay.
3. Whether withdrawal of the affirmative defense and a separate trustee settlement eliminated federal bankruptcy jurisdiction.
4. Whether the action should be transferred to the Southern District of California for referral to the bankruptcy court presiding over the Homesite bankruptcy.

Disposition

other