Long

UNITED STATES BANKRUPTCY COURT

DISTRICT OF IDAHO

In re:

ERIC FRANCIS LONG and LARISSA Case No. 25-40809-BRW

SAPEGIN LONG,

Chapter 7

Debtors.

ERIC FRANCIS LONG and LARISSA

SAPEGIN LONG

Plaintiffs,

vs.

Adv. No. 26-08002-BRW

MORTGAGE SOLUTIONS OF

COLORADO, LLC, DBA MORTGAGE

SOLUTIONS FINANCIAL

Defendant.

MEMORANDUM DECISION

Appearances:

Eric Francis Long, Twin Falls, Idaho, Plaintiff pro se.

Larissa Sapegin Long, Twin Falls, Idaho, Plaintiff pro se.

Jesse Baker, Aldrige Pite, LLP, San Diego, California, counsel for Defendant.

Defendant Mortgage Solutions of Colorado, LLC, dba Mortgage Solutions Financial

(“Defendant”)1 filed its “Motion for Discretionary Abstention or Alternatively to Dismiss the

Complaint,” (Doc. No. 11) on April 22, 2026, and subsequently amended it on May 13, 2026

1 Reference to “Defendant” includes both Defendant and its Servicer, MSF Servicing, a division

of Mortgage Solutions of Colorado, LLC.

(Doc. No. 15) (collectively, the “Motion”).2 The Motion seeks dismissal of the Complaint (Doc.

No. 1) (the “Complaint”) filed by pro se chapter 7 debtors Eric Francis Long and Larissa Sapegin

Long (“Plaintiffs”), through this Court’s exercise of discretionary abstention under 28 U.S.C.

§ 1334(c)(1), or alternatively for failure to state a claim upon which relief may be granted and

violation of Federal Rule of Civil Procedure 8.3 Plaintiffs filed an Opposition to Defendant’s

Motion (Doc. No. 12) on April 29, 2026, to which Defendant filed a Reply (Doc. No. 16) on

May 13, 2026.

On May 20, 2026, the Court held a telephonic hearing on the Motion and took the matter

under advisement. After considering the Complaint, the applicable law, and arguments of the

parties, the following is the Court’s decision on the Motion. Rule 7052.

I. SUBJECT MATTER JURISDICTION, AUTHORITY, AND VENUE

This Court has subject matter jurisdiction over this adversary proceeding as referred to it

by the district court pursuant to 28 U.S.C. §§ 157(a) and 1334(b). This adversary proceeding

involves “related to” claims despite the general “core” designation found at 28 U.S.C.

§ 157(b)(2)(A) and (O). See Certain Underwriters at Lloyds v. GACN, Inc. (GACN, Inc.), 555

B.R. 684, 694-98 (9th Cir. BAP 2016) (collecting and analyzing Ninth Circuit case authority and

concluding that a declaratory relief claim commenced as an adversary by the debtor as to a

prepetition contact, which was governed by state law, is not a “core” proceeding). However,

ruling on an abstention motion is a “core” proceeding within the Court’s constitutional authority

2 Defendant filed the amended motion to correct an error in including paragraph II, C in the

original motion to correct Defendant’s prior assertion that Plaintiffs had filed bankruptcy previously.

Otherwise, the substance of the original motion remains the same.

3 Hereinafter, unless otherwise indicated, all statutory citations are to the Bankruptcy Code, 11

U.S.C. §§ 101–1532, and all citations to a “Rule” are to the Federal Rules of Bankruptcy Procedure. All

citations to “Civil Rule” are to the Federal Rules of Civil Procedure.

to determine via final order. See In re SCS Logistics, Inc., 671 B.R. 224, 234 (Bankr. S.D. Ohio

2025) (stating that abstention is a core proceeding because it involves a matter concerning the

administration of the estate) (citations omitted). Finally, venue is appropriate in this Court

pursuant to 28 U.S.C. §§ 1408 and 1409.

II. RELEVANT FACTS

A. Procedural Background

Plaintiffs filed their chapter 7 bankruptcy case on December 1, 2025. Since filing, they

have advanced several different motions and requests, most of which have the same goal: to

prevent the foreclosure of a deed of trust on their residence based on allegedly inaccurate and

inconsistent accounting of payments under the loan since June of 2024. This adversary

proceeding, filed on March 23, 2026, is a culmination of these issues.

On March 23, 2026, Plaintiffs filed this adversary proceeding, seeking declaratory relief,

accounting, and injunctive relief. Doc. No. 1. In addition to requesting injunctive relief in the

Complaint, Plaintiffs also filed a separate Motion for Injunctive Relief Pursuant to 11 U.S.C.

§ 105(a) seeking to “[e]njoin Defendant from proceeding with foreclosure pending resolution of

the adversary proceeding.” Doc. No. 6 at 3. On April 10, 2026, after not receiving a response by

the Defendant, Plaintiffs filed a “Notice of Non-Opposition” to their motion. Doc. No. 9.

Defendant then filed a response to the Motion for Injunctive Relief on April 15, 2026,

asserting that Plaintiffs’ motion is moot and should be denied because the automatic stay

prevents Defendant from proceeding with foreclosure. Doc. No. 10.

Subsequently, Defendant filed the Motion. As indicated above, the Motion seeks

dismissal of the Complaint either through the Court’s exercise of discretionary abstention under

28 U.S.C. § 1334(c)(1), or in the alternative for failure to state a claim and violation of Civil

Rule 8. Doc. No. 11.

In response, Plaintiffs filed an Opposition to the Motion insisting that this adversary

proceeding concerning the validity and amount of Defendant’s asserted arrearage is central to the

bankruptcy case and abstention is not warranted because it is closely related to the bankruptcy,

not purely a state law dispute, and such abstention would result in inefficiency and delay. Doc.

No. 12. Further, Plaintiffs counter that the Complaint contains sufficiently detailed factual

allegations to comply with Rule 8 and the Iqbal/Twombly standards. Id.

Subsequently, Defendant filed a Reply to Plaintiffs’ opposition addressing the error in the

original motion and providing a reinstatement amount of $33,170.06 to be paid on or before May

29, 2026, with the hope of resolving the matter without further litigation. Doc. No. 16.

B. Factual Allegations as Stated in the Complaint

Prior to filing this bankruptcy, on July 30, 2021, Plaintiffs executed a note and deed of

trust with Defendant obtaining a $329,650 mortgage loan secured by Plaintiffs’ residence at 1237

Knoll Ridge Rd, Twin Falls, Idaho. Doc. No. 1 ¶¶ 6-8, Ex. A. In June of 2024, Defendant

transitioned the servicing of the loan to a new platform. Doc. No. 1 ¶ 19. During this time, on

June 24, 2024, Defendant notified Plaintiffs that a temporary servicing website would be used

while the new, permanent system was implemented. Id. ¶ 22, Ex. D. However, Plaintiffs’ online

access to their account was terminated, limiting their access to their account. Id. ¶ 20, Ex. B.

Plaintiffs were never able to access their account from either the temporary system or the new

servicing website. Id. ¶ 24.

After this servicing transition, Plaintiffs noticed discrepancies between their personal

payment records and Defendant’s mortgage statements. Id. ¶ 25. On August 1, 2024, Plaintiffs

emailed Defendant to report and correct the discrepancies. Id. ¶ 26, Ex. E at 2. Plaintiffs sent a

follow up email to Defendant on August 13, 2024. Id. Defendant responded that same day,

August 13, 2024,4 stating that the matter was “currently under review.” Id. at Ex. E at 1.

Plaintiffs continued to submit multiple written Notices of Error to Defendant regarding

the inaccuracies in their loan including missed and misapplied payments and inaccurate account

balances. Doc. No. 1 ¶¶ 43, 117. On October 4, 2024, Defendant sent Plaintiffs a letter

indicating they had received their October 1, 2024, inquiry regarding their mortgage loan, were

researching their account, and would respond “within thirty (30) business days of receiving your

inquiry or as required by applicable state law.” Id. at Ex. G. On November 11, 2024, Defendant

followed up on their previous letter and advised that they have not completed their investigation

and would need an additional 15 days to respond. Id. at Ex. H. Plaintiffs finally received the

outcome of the review on January 3, 2025. Id. at Ex. I. Such correspondence indicated that “the

total amount needed to make the October, November, and December 2024 payments, including

NSF fees, is $4,196.95.” Id. at Ex. I at 2. The correspondence otherwise failed to provide a

complete and accurate response addressing the identified errors or a reconciled accounting. Id.

¶¶ 118, 119.

Also in January of 2025, Plaintiff Larissa Long contacted Defendant by phone regarding

the account balance. Id. ¶ 48. Defendant’s representative indicated that there were extra

payments credited to the account and as a result the January payment was not necessary. Id.

¶¶ 49, 50, Ex. F. Plaintiffs relied on these representations. Id. ¶ 52, Ex. F.

At some point, Plaintiffs pursued qualification for a loan modification. On February 13,

2025, Plaintiffs received confirmation that Defendant received their complete financial package

4 The Complaint states that Defendant acknowledged that the payment records did not match in

this email on August 14, 2024. Doc. No. 1 ¶ 27. However, the provided Exhibit lists the date as August

13, 2024.

and would review to determine their qualification status. Id. at Ex. J. Less than a month later, on

March 5, 2025, Plaintiffs received a loan modification proposal to prevent foreclosure. Id. at Ex.

K.

On July 28, 2025, Defendant’s trustee, Brigham Lundberg at Halliday, Watkins, & Mann,

P.C., sent a Default Demand Letter to Plaintiffs indicating a payment of $15,802.00 by August

27, 2025, was necessary to cure the current delinquency. Id. ¶ 54, Ex. L. The Default Demand

Letter further stated that if the full amount of the default was not received by August 27, 2025,

they “shall accelerate the entire sum of both principal and interest due and payable, and invoke

any remedies provided for in the Note and the Deed of Trust, including but not limited to the

foreclosure sale of the property.” Id. However, the cure amount did not account for payments

made or other amounts previously asserted by Defendant. Id. ¶¶ 55, 56.

Plaintiff Larissa Long attempted to make the demanded payment by telephone on August

26, 2025, but Defendant refused to accept the payment through its normal servicing channel. Id.

¶¶ 60, 61. Instead, Plaintiffs obtained and mailed a cashier’s check in the amount of $15,802.00

on August 28, 2025, and notified Defendant’s Servicer of the mailed payment made in protest

via email. Id. ¶¶ 62, 64, Ex. M at 2, Ex. N.5 Defendant received the check on September 11,

2025, and on September 15, 2025, rejected the check stating that they were unable to process the

check due to “[a]ctive foreclosure, unable to accept less than full reinstatme[nt].” Id. ¶¶ 66-69,

Ex. O at 2. Defendant did not otherwise explain why the $15,802 in the Default Demand Letter

was no longer sufficient nor did they allow Plaintiffs’ attempt to cure through the typical

servicing channels or certified funds. Id. ¶¶ 70, 71. Prior to receiving the check, on September

5, 2025, Defendant’s Trustee issued a Notice of Default, notifying Plaintiffs of Defendant’s

5 However, the Cashier’s Check indicates a date of “08/29/2025.” Doc. No. 1 at Ex. N.

election to sell the property and foreclose under Idaho Code § 45-1505. Id. at Ex. R.

On November 14, 2025, Defendant’s Trustee provided Notice of Trustee’s Sale to take

place on March 25, 2026, due to Plaintiffs’ default by failing to make their monthly payments

beginning December 1, 2024. Id. at Ex. P. On that same date, Defendant’s Trustee provided

further notice indicating Plaintiffs had not fulfilled their obligations under their loan, and under

Idaho law, the property could be sold to satisfy the obligation. Id. at Ex. Q at 1. This notice also

provided that payment of $22,970.13 was needed as of December 3, 2025, to bring the loan

current and if they could not afford their loan payments they could apply for loan modification.

Id.

Throughout this time, Plaintiffs were unable to determine the amount owed on the loan

due to inconsistencies between the monthly statements, communications from Defendant’s

servicer and Trustee, and Plaintiffs’ own records. This includes “payments being returned,

placed into suspense, or not credited despite acknowledge receipt of payment activity,”

“payments that were applied, reversed, and reapplied in identical or offsetting amounts without

explanation, including repeated entries for ‘escrow advance’ and ‘escrow advance refund,’” and

mortgage statements where the explanation of amounts due did not add up to the total amount

due. Id. ¶¶ 74, 83, 88, 89. The mortgage statements from December 2024, the date identified by

Defendant as the time of default, demonstrate such credited and reversed entries. Id. ¶ 84. At

one point in time, on the mortgage statement dated September 3, 2024, there was a partial

payment/unapplied balance of $9,958.81 which Defendant did not apply to the loan in

contravention of the Deed of Trust, which requires payments received to be applied to principal

and interest and allows reinstatement of the loan upon payment of the cure amount. Id. ¶¶ 95-98.

Plaintiffs have suffered damages in the costs incurred in attempting to obtain accurate

information, emotional distress, and the threat of wrongful foreclosure. Id. ¶ 121.

Plaintiffs filed the underlying bankruptcy on December 1, 2025, and subsequently this

adversary proceeding on March 23, 20226, with many of the above-mentioned issues persisting.

III. APPLICABLE LAW & ANALYSIS

A. Discretionary Abstention under § 1334(c)(1)

Under 28 U.S.C. § 1334(c), a bankruptcy court may abstain from hearing certain matters

it otherwise has jurisdiction to hear. This can take the form of mandatory abstention or

permissive abstention.

Defendant seeks discretionary abstention under 28 U.S.C. § 1334(c)(1). That statute

provides:

nothing in this section prevents a district court in the interest of

justice, or in the interest of comity with State courts or with respect

for State law, from abstaining from hearing a particular proceeding

arising under title 11 or arising in or related to cases under title 11.

28 U.S.C. § 1334(c)(1).

In determining whether to exercise this discretion, the Ninth Circuit has established

twelve (12) factors for consideration:

(1) the effect or lack thereof on the efficient administration of the

estate if a Court recommends abstention, (2) the extent to which

state law issues predominate over bankruptcy issues, (3) the

difficulty or unsettled nature of the applicable law, (4) the presence

of a related proceeding commenced in state court or other

nonbankruptcy court, (5) the jurisdictional basis, if any, other

than 28 U.S.C. § 1334, (6) the degree of relatedness or remoteness

of the proceeding to the main bankruptcy case, (7) the substance

rather than 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 enforcement left to the

bankruptcy court, (9) the burden of [the bankruptcy court’s] docket,

(10) the likelihood that the commencement of the proceeding in

bankruptcy court involves forum shopping by one of the parties,

(11) the existence of a right to a jury trial, and (12) the presence in

the proceeding of nondebtor parties.

Christensen v. Tucson Estates., Inc. (In re Tucson Estates., Inc.), 912 F.2d 1162, 1167 (9th Cir.

1990).

The Court will consider each of these in turn.

1. The effect or lack thereof on the efficient administration of the estate if a

Court recommends abstention

In this case, abstaining would not influence the administration of the estate. Principally,

Plaintiffs seek determination as to the amount owing on their mortgage, claiming that there are

discrepancies and errors in the Defendant’s accounting precipitating their attempt at foreclosure.

However, such discrepancies are not of consequence to the bankruptcy estate.

First, the Defendant has not filed a proof of claim.6 Generally, the filing of a proof of

claim is required to deem that interest as allowed against the assets of the bankruptcy estate. 4

COLLIER ON BANKRUPTCY ¶ 501.01[2][a] (Richard Levin & Henry J. Sommers eds., 16th ed.).

However, a secured creditor need not file a proof of claim. Bisch v. United States (In re

Bisch), 159 B.R. 546, 549 (9th Cir. BAP 1993). While “[f]ailure to file a secured proof of claim

in a bankruptcy case might mean that the lienholder will not receive a distribution from the

estate,” it alone does not invalidate the lien. Id. Instead, the secured creditor’s lien, and right to

foreclose, “survives or passes through the bankruptcy.” Johnson v. Home State Bank, 501 U.S.

78, 83 (1991). Moreover, the discharge does not affect a creditor’s in rem rights, but only the

debtor’s personal liability. Reed v. Nielsen (In re Reed), 640 B.R. 932, 938-39 (9th Cir. BAP

2022).

6 The Court previously overruled the Plaintiff-Debtors’ objection to Defendant-Creditor’s claim

in the underlying bankruptcy for lack of a filed proof of claim. In re Long, 25-40809-BRW, at Doc. No.

63. References to the underlying bankruptcy docket will be designated as “BK Doc.”

Given that the creditor has not filed a proof of claim, the creditor is not entitled to receive

distributions from the estate and thus the amount owing to that creditor is not necessary for this

Court to determine. Once the bankruptcy case concludes, the creditor may enforce its lien

through the applicable nonbankruptcy law and the debtor may defend against such action.

The Court acknowledges that there are scenarios in which the exact amount due on the

mortgage would affect the administration of the estate. One such instance includes where the

trustee seeks to sell the property for the benefit of the estate. In that instance, a determination of

the outstanding balance would be necessary to ensure proper distributions are made to the

secured creditor, the debtors under their claimed homestead exemption, and the bankruptcy

estate for unsecured creditors. However, as confirmed by Plaintiffs at the May 20, 2026,

hearing, no such sale is contemplated here.7

Another scenario includes chapter 13 cases where the mortgage and any arrearage are

paid through the plan. In this scenario, the exact arrearage amount is necessary so that it can be

sufficiently and accurately cured through the required monthly plan payments. Even here, a

creditor must have an allowed claim to receive such distribution from the estate under the

confirmed plan. 4 COLLIER ON BANKRUPTCY ¶ 501.01[2][b] (Richard Levin & Henry J.

Sommers eds., 16th ed.). As such, any dispute as to the claims of a creditor to be paid through

the plan affects the administration of the bankruptcy estate.

7 While not making any findings on the issue, the Court notes that any such sale would likely not

affect the estate given that there is apparently no equity in Plaintiffs’ real property, or “value, above all

secured claims against the property, that can be realized from the sale of the property for the benefit of the

unsecured creditors.” In re Polla, 2015 WL 3745294, at *2 n.9, *2 (Bankr. D. Idaho 2015); see id. (stating

that a chapter 7 debtor’s objection to relief from the stay is extremely suspect where there is no equity for

the estate in excess of the liens and a debtor’s homestead exemption) (citation and quotation marks omitted);

see also BK Doc. No. 1 at 11 (listing the value of the real property of $392,000 in Plaintiffs’ schedules);

Id. at 29 (claiming the equity in the real property as exempt in the amount of $84,000); Id. at 30 (stating the

secured debt on the real property totals $308,000); BK Doc. No. 16 at ¶ 6 (creditor claim of amount due

under the note secured by the real property of $323,784.40 as of the date of the motion).

At the May 20, 2026, hearing, Plaintiffs cited to Neria v. Wells Fargo (In re Neria), 2022

WL 17254478 (Bankr. N.D. Tex. Nov. 28, 2022) for the assertion that bankruptcy courts have

jurisdiction to adjudicate servicer disputes even where no proof of claim is filed because the

underlying servicing causes of action are intertwined. However, such a reading is not entirely

accurate; the court in that case did not discuss the propriety of hearing disputes where no proof

of claim was filed. While the court in Neria did hear and address disputes between the debtor

and the mortgage servicer, a proof of claim of a defendant8 had been filed and intertwined with

all causes of action.9 Id. at *1 n.3. Additionally, Neria was a chapter 13 case rather than chapter

7 case, affecting the type of treatment the mortgage servicer received. As discussed, in this

chapter 7 case, the issues raised by Plaintiffs do not have an effect on the bankruptcy estate and

are merely between Plaintiffs and Defendant. This factor favors abstention.

2. The extent to which state law issues predominate over bankruptcy issues

Plaintiffs’ adversary complaint lists various causes of action and requests for relief. Doc.

No. 1. The Complaint asserts five claims for relief: judicial accounting, breach of contract,

declaratory relief by determining the correct amount of arrears, injunctive relief under 11 U.S.C.

§ 105 and Rule 7065, and violation of RESPA 12 U.S.C. § 2605. Id.

While the Plaintiffs’ claims facially implicate bankruptcy law, at the heart of the

Complaint are state law issues.

First, Plaintiffs seek an injunction pursuant to § 105(a) to prevent a foreclosure of their

home due to the alleged inconsistent and inaccurate accounting. As previously addressed in the

8 Although it is true that Wells Fargo did not file a proof of claim on its own behalf, Wilmington

Trust, the entity for which Wells Fargo acted as servicer, did file a proof of claim. Id. at *5.

9 Many of the instances of alleged mortgage servicer misconduct in Neria took place post-

petition, further blending the issues with the bankruptcy. See In re Neria, 2022 WL 17254478.

underlying bankruptcy on the record at a hearing on the Plaintiffs’ Motion for Temporary

Injunction on February 27, 2026, (BK Doc. No. 42), and in a footnote of the Court’s Order

Granting Debtors’ Second Motion to Defer Entry of Discharge (BK Doc. No. 64) entered on

April 30, 2026, an injunction is unnecessary by virtue of the already imposed automatic stay,

which currently prevents any actions from proceeding against property of the estate until such

property is no longer property of the estate.10 § 362(c)(1). Plaintiffs have enjoyed the benefit of

the automatic stay since the inception of this bankruptcy case.

Plaintiffs’ claim for declaratory relief, on the other hand, seeks a determination of the

validity and extent of Defendant’s lien, or an accounting of the arrearage, and the ability to

enforce the lien through foreclosure. Such issues regarding foreclosure are generally state law

claims. As this Court has recognized in the context of relief from the automatic stay:

If chapter 7 debtors have issues with a creditor’s assertion of the

amount in default (“we have made all or some of the allegedly

missed payments”), or with the creditor’s waiver or limitation of

foreclosure rights (“we received or are negotiating a forbearance

agreement”), the debtor’s defenses are assertable in state court or

processes after stay relief.

In re Polla, 2015 WL 3745294, at *2.

Moreover, in a different context, this Court in In re Steinhaus noted that:

an order “authorizing” foreclosure would appear to place this Court

in the stead of the state court which, following stay termination and

effective abandonment of the collateral under § 521(a)(6), will be

the forum to decide the propriety of “action[s] as to such property as

[are] permitted by applicable nonbankruptcy law.” This Court has

no reason to usurp the role or prerogatives of the state court in such

matters.

10 While a discharge terminates the automatic stay under § 362(c)(2)(C), it only does so as to the

Debtor, not property of the estate. Further, even after a debtor receives a discharge and the automatic stay

is terminated as to him, § 524(a) protects him from personal liability. In re Polla, 2015 WL 3745294, at

*2 n.4 (Bankr. D. Idaho 2015).

In re Steinhaus, 349 B.R. 694, 709 (Bankr. D. Idaho 2006). Such an order authorizing a

creditor’s foreclosure “would be a gratuitous semaphore to the Idaho state court . . . .” Id.

While not addressing a real property dispute, the sentiments in In re Steinhaus still ring

true. The automatic stay prevents any foreclosure from taking place during the bankruptcy,

absent termination or relief from the stay, and the secured creditor’s rights following its

termination, whether from relief from the stay or by natural operation of § 362(c)(2), pass

through and become actionable through the applicable nonbankruptcy law. Thus, Plaintiffs’

primary request for declaratory relief as to the correct arrearage amount and the Defendant’s lien

enforcement rights ultimately stem from state law issues irrespective of this bankruptcy.

Intertwined with this requested relief is Plaintiffs’ breach of contract claim under the Deed of

Trust, which clearly involves state law.

The only claim that does not arise from state law is the alleged RESPA violation.

However, such federal jurisdiction is not exclusive, as state courts share concurrent jurisdiction

over such claims. See Plascencia v. BNC Mortgage, Inc. (In re Plascencia), 2012 WL 2161412,

at *14 (Bankr. N.D. Cal. June 12, 2012) (noting that state courts have “concurrent jurisdiction”

over RESPA claims); 12 U.S.C. § 2614 (stating that any action under section 2605, 2607, or

2608 “may be brought in the United States district court or in any other court of competent

jurisdiction”).

Despite the RESPA claim and other issues arising under the guise of bankruptcy law,

state law predominates. Thus, this factor weighs in favor of abstention.

3. The difficulty or unsettled nature of the applicable law

Abstention is favored where the applicable state law is unsettled or complex. See

Eastport Estates v. City of Los Angeles (In re Eastport Associates), 935 F.2d 1071, 1078 (9th

Cir. 1991) (finding that this factor weighed in favor of abstention where the state law involved

was considered relatively difficult and unsettled). Because the accounting accuracy and

foreclosure issues raised by Plaintiffs are typical state court issues, they do not require the

specialty of the Bankruptcy Court, despite Plaintiffs’ assertions otherwise. As a result, this

factor is neutral. See Moore v. Hatfield (In re Hatfield), 2009 WL 2849538, at *1 (Bankr. N.D.

Cal. July 17, 2009) (finding that this factor was neutral where the state law claims of conversion

and abuse of process were not unsettled or unusually difficult).

4. The presence of a related proceeding commenced in state court or other

nonbankruptcy court

“[U]nlike mandatory discretion under [28 U.S.C.] § 1334(c)(2), discretionary abstention

under [28 U.S.C.] § 1334(c)(1) does not require that there be a parallel proceeding in state

court.” Turturici v. National Mortg. Serv., LP (In re Turturici), 2010 WL 9477615, at *2 (Bankr.

E.D. Cal. Oct. 4, 2010). Instead, a decision to exercise discretionary abstention requires the

balancing of competing factors, only one of which is the pendency of a state court proceeding.

In re Eastport Assocs., 935 F.2d 1071, 1078-79; Vitamins Online, Inc. v. HeartWise, Inc. (In re

HeartWise, Inc.), 2022 WL 17178503, at *6 (9th Cir. BAP Nov. 23, 2022); Moore v. Hatfield (In

re Hatfield), 2009 WL 2849538, at * 2 (Bankr. N.D. Cal. July 17, 2009). In fact, where there

was no pending state court action, “the Ninth Circuit treated that fact merely as a consideration

weighting against abstention, and not as a bar against abstention.” In re HeartWise, Inc., 2022

WL 17178503, at *6 (quoting In re Hatfield, 2009 WL 2849538, at * 2 (citing In re Eastport

Associates, 935 F.2d 1071 (9th Cir. 1991))). Thus, in this case, the fact that there is, to this

Court’s knowledge, no state court action currently pending between Plaintiffs and Defendant is

merely one factor weighing against abstention.

5. The jurisdictional basis, if any, other than 28 U.S.C. § 1334

The only other jurisdictional basis for Plaintiffs’ claims come from federal question

jurisdiction, but only as to their claim under RESPA. As such, the Court deems this factor as

neutral.

6. The degree of relatedness or remoteness of the proceeding to the main

bankruptcy case

Under 28 U.S.C. § 1334, a proceeding is “related to” the bankruptcy where the outcome

“could conceivably have any effect on the estate being administered in bankruptcy.” In re Fietz,

852 F.2d 455, 457 (9th Cir. 1988) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.

1984)); see also Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995) (agreeing with the Third

Circuit’s view in Pacor that Congress intended to grant bankruptcy courts with “comprehensive

jurisdiction” to “deal efficiently and expeditiously with all matters connected with the

bankruptcy estate” but also agreeing that such jurisdiction cannot be limitless (quotations

omitted)). This includes where the “outcome could alter the debtor’s rights, liabilities, options,

or freedom of action (either positively or negatively) and which in any way impacts upon the

handling and administration of the bankrupt estate.” In re Fietz, 852 F.2d at 457 (quoting Pacor,

743 F.2d at 994). While, as noted by Plaintiffs, this is a fairly broad standard, “[t]he jurisdiction

of bankruptcy courts may extend more broadly in the former [chapter 11 reorganization] case

than in the latter [a liquidation under chapter 7].” Celotex Corp. v. Edwards, 514 U.S. at 310.

Plaintiffs contend that this proceeding is central to the main bankruptcy case because it

affects the treatment of Defendant’s secured interest and clearly fits within the conceivable effect

standard. Doc. No. 12 at ¶ 12. While the outcome could conceivably have an effect in the

bankruptcy generally, under the facts presented and as already discussed, such effect is unlikely.

The proceeding is “related to” the main bankruptcy, but such relatedness is remote. Therefore,

this factor weighs in favor of abstention.

7. The substance rather than form of an asserted “core” proceeding

A determination whether this proceeding is core or noncore is relevant to this factor.

Bowen Corp., Inc. v. Security Pac. Bank Idaho, F.S.B., 150 B.R. 777, 784 (Bankr. D. Idaho

1993). Section 157(b)(2) of Title 28 non-exhaustively enumerates proceedings that are

considered “core.” See 28 U.S.C. § 157(b)(2)(A)-(P). Generally, “a core proceeding is one that

‘invokes a substantive right provided by title 11 or . . . a proceeding that, by its nature, could

arise only in the context of a bankruptcy case.’” Battle Ground Plaza, LLC v. Ray (In re Ray),

624 F.3d 1124, 1131 (9th Cir. 2010) (quoting Gruntz v. County of L.A. (In re Gruntz), 202 F.3d

1074, 1081 (9th Cir. 2000)); see also Stern v. Marshall, 564 U.S. 462, 476–77 (2011) (stating

that “core proceedings are those that arise in a bankruptcy case or under Title 11.”). Thus,

proceedings “arising under” or “arising in” Title 11 are core. In re Rtech Fabrications, LLC.,

635 B.R. 559, 567 (Bankr. D. Idaho 2021). A matter “arises under” Title 11 if it “involves a

cause of action created or determined by a statutory provision of the Bankruptcy Code” while a

matter “arises in” Title 11 “if it is an administrative matter unique to the bankruptcy process that

has no independent existence outside of bankruptcy and could not be brought in another forum,

but whose cause of action is not expressly rooted in the Bankruptcy Code.” In re Ray, 624 F.3d

at 1125-31; In re Rtech Fabrications, LLC., 635 B.R. at 567.

On the other hand, non-core proceedings are not explicitly defined. The Ninth Circuit

has held that proceedings are considered non-core “if they do not depend on the Bankruptcy

Code for their existence and they could proceed in another court.” In re Ray, 624 F.3d at 1131

(quoting Dunmore v. United States, 358 F.3d 1107, 1114 (9th Cir. 2004)).

Plaintiffs seek declaratory relief to determine the validity or extent of Defendant’s

prepetition lien, given the alleged accounting errors, and whether the Defendant may enforce its

lien through foreclosure. In doing so, the Plaintiffs assert that this is a core proceeding or at a

minimum closely related to bankruptcy proceedings because it is a dispute affecting the

allowance and enforcement of claims. Doc. No. 12 at ¶ 12 (citing Maitland v. Mitchell (In re

Harris Pine Mills), 44 F.3d 1431 (9th Cir. 1995)).11 However, “[o]ften a proceeding, cast in the

language of a core proceeding, merely shrouds state law actions under the guise of a bankruptcy

issue.” In re Republic Reader’s Serv., Inc., 81 B.R. 422, 427 (Bankr. S.D. Tex 1987). This is

the case here. Despite arguably fitting into the literal wording of the enumerated core

proceedings in 28 U.S.C. § 157(b)(2)(A) and (O), declaratory actions such as these “can and do

exist outside the bankruptcy court.” Maxwell v. HSBC Mortg. Corp. (In re Maxwell), 2012 WL

3678609, at *2 (Bankr. N.D. Ga. Aug. 22, 2012). Considering the nature of the claims,

ultimately based on discrepancies in accounting that occurred prior to this bankruptcy under a

prepetition contract, which could be brought in another court, this proceeding is a non-core

matter. But whether classified as core or non-core, 28 U.S.C. § 1334(c)(1) and the Tucson

Estates factors nevertheless allow courts to exercise their discretion to abstain from adjudicating

those claims. Pineda v. Bank of Am., N.A. (In re Pineda), 2013 WL 1749554, at *13 (9th Cir.

BAP Apr. 23, 2013).

While the determination of lien validity under 28 U.S.C. § 157(b)(2)(K) sought by

Plaintiffs nominally qualifies as a core proceeding, its substance here has no effect on the

bankruptcy estate. Thus, this factor favors abstention. See In re Pineda, 2013 WL 1749554, at

11 Plaintiffs also cited this case during the May 20, 2026, arguing the case confirms that matters

concerning property of the estate are core under 28 U.S.C. § 157(b)(2) when the lender’s conduct is

inextricably intertwined with the sale or administration of the property. In In re Harris Pine, the

plaintiffs’ (purchasers of the debtor company) state law claims were in fact core because they were

asserted against the bankruptcy trustee for his conduct connected to the trustee’s sale of property of the

chapter 11 bankruptcy estate. In re Harris Pine Mills, 44 F.3d at 1438. Clearly, the facts of that case are

distinguishable from those presented in the case at bar.

*13 (finding that abstention was warranted under this factor because there was no substance to

plaintiff-debtor’s lien validity “core” claim where the adversary proceeding would have no

impact on the bankruptcy case or estate because the case was essentially complete).

8. The feasibility of severing state law claims from core bankruptcy matters to

allow judgments to be entered in state court with enforcement left to the

bankruptcy court

The premise of nearly all the claims in this adversary proceeding stem from state law.

Therefore, any severance of claims is feasible, and any judgment entered in state court regarding

these matters may be enforced in bankruptcy court, to the extent necessary. This factor favors

abstention.

9. The burden of [the bankruptcy court’s] docket

As with any court’s docket, the Court sees a fluctuation of cases and matters. This factor

is neutral.

10. The likelihood that the commencement of the proceeding in bankruptcy

court involves forum shopping by one of the parties

This factor seeks “to protect both the state and federal court systems from the illegitimate

gamesmanship involved in forum shopping.” In re Republic Readers Serv., Inc., 81 B.R. at 428.

Defendant asserts that Plaintiffs may have filed their adversary complaint to stall the discharge

and closing of their underlying bankruptcy case as evidenced by their Motion to Defer

Discharge. Doc. No. 15 at ¶ 10. Plaintiffs, on the other hand, contend that they filed this matter

in accordance with the requirement that injunctions and related relief be pursued by an adversary

proceeding and that the issue of the Defendant’s asserted arrearage is central to the bankruptcy

case and would otherwise delay the case if pursued in another forum. Doc. No. 12 at ¶¶ 29, 30.

While Plaintiffs may have pursued this bankruptcy in part to prevent foreclosure of their

residence, they do not appear to be engaged in abusive forum shopping as contemplated by this

factor.12 This factor is neutral.

11. The existence of a right to a jury trial

Neither party has asserted the right to a jury trial. This factor is neutral.

12. The presence in the proceeding of nondebtor parties

This factor weighs neutral in the analysis of whether this Court should abstain. “With the

rare exception of actions by and between only debtors in the same case, every bankruptcy

proceeding necessarily involves one or more nondebtor parties.” In re Hiefield, 671 B.R. 80, 92

(Bankr. D. Or. 2025). It is unusual for an action to only involve debtors, therefore, with the

presence of debtors and nondebtors in this case, this factor is neutral. See In re SCS Logistics,

Inc., 671 B.R. at 242; In re Hiefield, 671 B.R. at 91.

In considering all twelve of the Tucson Estates factors, “one should not be beguiled into a

false sense that a head count will yield the answer with mathematical certainty.” In re

Heartwise, 2022 WL 17178503, at *6 (quoting Fidelity Nat’l Title Ins. Co. v. Franklin (In re

Franklin), 179 B.R. 913, 928 (Bankr. E.D. Cal. 1995)). Instead, it is a balancing of competing

factors. Here, factors 1, 2, 6, 7, and 8 favor abstention; factors 3, 5, 9, 10, 11, and 12 are neutral;

and factor 4 weighs against abstention. Upon consideration of these factors, the balance favors

abstention. While undertaking this analysis, the Court considered all the cases cited by Plaintiffs

12 The Court acknowledges Plaintiffs’ concerns regarding Defendant’s inaccurate mention of a

previously filed bankruptcy case in its Motion, which was subsequently corrected by its amended Motion.

However, the Court disagrees with Plaintiffs’ assertion that this error, despite its correction, served as the

basis of Defendant’s argument. Nevertheless, the Court did not consider any such argument in its

analysis of this factor.

at the May 20, 2026, hearing.13 However, many of these cases do not support the proposition for

which they were cited or are inapplicable based upon the specific circumstances of this case.

Most notably, the majority of these cases were not chapter 7 bankruptcies, which as discussed

above, often changes the applicability of these issues to the bankruptcy estate.14

Additionally, the Court notes that this decision in no way forces the Plaintiffs’ out of their

bankruptcy. All the rights afforded to debtors and inherent within the main bankruptcy case

remain intact, including the right to a fresh start. The Court is merely declining to exercise

jurisdiction over a matter that does not have an effect on the administration of the chapter 7

bankruptcy estate.

VI. CONCLUSION

For the reasons set forth above, the Motion for Discretionary Abstention is granted, and

the Court will abstain. Given this decision, the Defendant’s alternative argument seeking

dismissal of this case under Civil Rule 8 will not be addressed and is deemed moot.

13 This includes Neria v. Wells Fargo (In re Neria), 2022 WL 17254478 (Bankr. N.D. Tex. Nov.

28, 2022), Wellness Int’l Network, LTD. v. Sharif, 575 U.S. 665 (2015), Thrash v. Ocwen Loan Servicing,

LLC (In re Thrash), 433 B.R. 585 (Bankr. N.D. Tex. 2010), Celotex Corp. v. Edwards, 514 U.S. 300

(1995), Maitland v. Mitchell (In re Harris Pine Mills), 44 F.3d 1431 (9th Cir. 1995), and Johnson v.

Home State Bank, 501 U.S. 78 (1991).

14 For example, while In re Thrash factually involves many of the same alleged issues as in this

case, it is distinguishable because it was a chapter 13 case where the defendant had filed a proof of claim,

and plaintiffs properly objected to that claim. In re Thrash, 433 B.R. at 590. Similar facts are not found

in the present case.

Moreover, because the Motion for Discretionary Abstention is granted, this adversary

proceeding will be dismissed, and Plaintiffs’ Motion for Injunctive Relief is deemed moot.

A separate order will be entered.

DATED: May 26, 2026

i iW Brent R. Wilson

5 U.S. Bankruptcy Judge

MEMORANDUM DECISION - 21