Opposition Brief — Unanue-Casal v. Goya Foods, Inc., 115 S. Ct. 1098 (1995) (No. 94-1025)
Supreme Court brief1995
Ask Donna
What actually matters in this document.
Text
\
™ /
No. 94-1025
IN THE
Supreme Court of the Wnite?
OCTOBER TERM, 1994
ULPIANO UNANUE-CASAL, a/k/a CHARLES UNANUE,
Petitioner,
GOYA FOODS, INC., et al.,
Respondents.
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
RESPONDENTS’ BRIEF IN OPPOSITION
ARTURO J. GARCIA-SOLA
(Counsel of Record)
MCCONNELL VALDES
P.O. Box 364225
San Juan, Puerto Rico 00936
(809) 759-9292
Attorneys for Respondents
January 9, 1995
COUNTERSTATEMENT OF QUESTIONS PRESENTED
1. Should certiorari be granted to review a decision made
under the bankruptcy abstention statute, 28 U.S.C. § 1334(c),
although the statute provides that a decision thereunder “is not
reviewable . . . by the Supreme Court of the United States”,
and this provision was recently amended to eliminate any
ambiguity that might formerly have existed as to its scope?
2. Should certiorari be granted to review a judgment
directing a bankruptcy court to abstain from resolving a
dispute and allow a state court to do so, when the dispute has
now been substantially decided by the state court, so that
review of the abstention decision would have little or no
practical effect?
3. Should certiorari be granted at the. request of a
Petitioner who presented none of the contentions upon which
he seeks review to any of the courts below?
4. Should certiorari be granted to review a decision that a
bankruptcy court should abstain in favor of a state court,
where the Petitioner’s arguments that the bankruptcy court
lacked power to abstain are unsupported by any relevant
authority, there is no conflict of decisions, and the courts
below applied well-settled standards in allowing state-law
issues to be determined in the seven-year-old state-court
action that had repeatedly been disrupted by Petitioner’s
improper forum-shopping tactics?
PARTIES TO THE PROCEEDING
The parties are identified in the petition for writ of
certiorari. (Pet. ii).
RULE 29.1 LISTING
Pursuant to Rule 29.1 of the Rules of this Court,
Respondents state that none of the corporate Respondents has
any parent corporations or subsidiaries (other than wholly
owned subsidiaries), except as follows:
Respondent Goya Foods, Inc. is the corporate parent of
Respondent Zolmar Realty Corp. In addition, Bison Canning
Co., Inc., Cardet Wholesale Foods, Inc., and Cuban
Portorrican American Products, Inc. are subsidiaries of Goya
Foods, Inc.
Respondent Goya de Puerto Rico, Inc. is the corporate
parent of Respondent Tradewind Foods, Inc.
"Petitioner's enumeration of the parties includes Gerardo A. Quiros-Lopez,
Esq., the trustee of Petitioner’s estate in bankruptcy, as a party, but does not
designate Mr. Quiros-Lopez as either a petitioner or a respondent in this
Court. Under this Court’s Rule 12.4, Mr. Quiros-Lopez is a respondent to
the petition. However, as used in this Brief in Opposition, the term
“Respondents” does not include Mr. Quiros-Lopez.
a
TABLE OF CONTENTS
COUNTERSTATEMENT OF QUESTIONS
eID sdessuctdreececeseicnsensvesocceunecessesesaseeses 1
The New Jersey Action........c.cccccccscccssssssssseseceeeeee.
Petitioner’s Bankruptcy .............cccccscscsesseceseceseeees
The Relief-From-Stay Decisions...............cc.e.0000+.
Oo ce in Lh WW
The Abstention Decisions..............cc0cc.0-0--00-6-.....
I. THIS COURT LACKS
JURISDICTION TO REVIEW THE
DISTRICT COURT’S ABSTENTION
EC 12
II. BECAUSE THE NEW JERSEY
SUPERIOR COURT HAS
RESOLVED THE MERITS OF THE
PARTIES’ DISPUTE, THE
ABSTENTION ISSUE IS LARGELY
ES 16
iv
Page
Hl. PETITIONER FAILED TO PRESENT
ANY OF HIS ARGUMENTS IN THE
Cee I weticativcatbencnevetccateeninccsios 18
IV. PETITIONER’S CONTENTIONS
RAISE NO SIGNIFICANT LEGAL
ISSUE WORTHY OF
CONSIDERATION BY THIS COURT... 20
A. THE DECISION TO ABSTAIN
REPRESENTED A ROUTINE
EXERCISE OF DISCRETION .......... 20
B. PETITIONEP’S DUE PROCESS
CLAIM IS ALSO MERITLESG......... 26
Ra UIET > vincisdnntindenicsiptwuadbnnesdendeimabeiottulains ; 30
TABLE OF AUTHORITIES
CASES Page
Adams v. Sidney Schafer & Assocs., Inc. (In re
Adams), 809 F.2d 1187 (Sth Cir. 1987)........00000.. 15
Barclay's American/Business Credit, Inc. v. Radio
WBHP, Inc. (In re Dixie Broadcasting, Inc.),
871 F.2d 1023 (11th Cir.), cert. denied, 493
Bi ee Ce cretsavisindinticannccinaiscininmenraisotiaton 28
Ben Cooper, Inc. v. Insurance Co. of Pa. (In re Ben
Cooper, Inc.), 924 F.2d 36 (2d Cir.), cert.
Marae, FIO UB. Foe CVD nrccncssecvsnceisarsasinesessies 15
In re Bicoastal Corp., 158 B.R. 237 (Bankr. M.D.
Py SU iacssinisckesccscteoadaecdocounssaeakionantianicaidenasociais 23
California State Board of Equalization v. Sierra
Summit, Inc. (In re China Peak Resort), 847
F.2d 570 (9th Cir. 1988), vacated on other
grounds, 490 U.S. 844 (1989).........cccecceeeeeceeeees 15
Central Bank of Denver, N.A. v. First Interstate
Bank, N.A., 1148S. Ct. 1439 (1994) oo. 14
Chemical Bank v. Togut (In re Axona International
Credit & Commerce Ltd.), 924 F.2d 31 (2d Cir.
In re Chicago, Milwaukee, St. Paul & Pacific R.R.
Co., 6 F.3d 1184 (7th Cir. 1993).............ccsseeereees 22
Christensen v. Tucson Estates, Inc. (In re Tucson
Estates, Inc.), 912 F.2d 1162 (9th Cir. 1990).......
tO
tO
iia eanaieaataeaa ene
vi
CASES Page
Coker v. Pan American World Airways, Inc. (In re
Pan American Corp.), 950 F.2d 839 (2d Cir.
Pal hsshiastictnciessesapneneleaarsanepaiamanauaneiomapiadres 15
In re Denton, 161 B.R. 987 (Bankr. E.D. Ark. 1993) 23
District of Columbia Court of Appeals v. Feldman,
ree SE IU fis open cocoate enenbaspicnceberenmiaions 17
Farm Credit Bank v. Bott (In re Stigge), 167 B.R.
ee CIE EF. MeO. Te iciassiccceniccnnvaspcessernsanses 13, 15
First Jersey National Bank v. Brown (Jn re Brown), -
FO) F de DOS CSG CW, BGT) cevecccncosccnescrcesesnsnnseces 17, 22
Flores Rivera v. Telemundo Group, 133 B.R. 674
SE ED scosevscksatessnasidconeieadiesates taomasdimnmatinaes 22
Gallo v. Herpich (In re Cemetery Dev. Corp.), 59
B.R. 115 (Bankr. M.D. La. 1986)..................0.0.. 15
Gardner v. New Jersey, 329 U.S. 572 (1947)............ 24
Goya Foods, Inc. v. Unanue-Casal (In re
Unanue-Casal), 164 B.R. 216 (D.P.R. 1993),
aff'd, 32 F.3d 561 (1st Cir. 1994)... ee 10, 11,
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33
RENIN cuncidpoasiincévnsasien ieeniada mania nelcesaiieusiididsseanias 19
Grogan v. Garner, 498 U.S. 279 (1991)... 17
Vii
CASES Page
Gulf States Exploration Co. v. Manville Forest
Products Corp. (In re Manville Forest Products
Corp.), 896 F.2d 1384 (2d Cir. 1990) 0... 25
Heiser v. Woodruff, 327 U.S. 726 (1946) ...........:000 24
Hernandez v. Brakegate, Ltd., 942 F.2d 1223 (7th
ait MSA ach al asdives Seniehdenunssdenansatdneesaneenineeinneses 13
Matter of Unanue, 255 N.J. Super. 362, 605 A.2d
NSE icitttctemnscapiictncstctuntoneentnansins 6
Montalvo v. Banco Comercial de Mayaguez (In re
Montalvo), 157 B.R. 510 (D.P.R. 1993).............. 24
Mosey Manufacturing Co., Inc. v. NLRB, 701 F.2d
Tre, Le Ay c) tt” °.) eonenenrernee 19
In re Nova Real Estate Inv. Trust, 23 B.R. 62
I, Bees Ws. SNE ondtcieseesicanicionectantteosannccins 25
In re Parque Forestal, Inc., 949 F.2d 504 (ist Cir.
POTEE Piicehunisacutseisaatesntinecconarsdnercamannamcnniomadints 13-14
In re Pitts, 31 B.R. 90 (Bankr. N.D. Ga. 1983)......... 24
Packerland Packing Co., Inc. v. Griffith Brokerage
Co. (In re Kemble), 776 F.2d 802 (9th Cir.
Pursifull v. Eakin, 814 F.2d 1501 (10th Cir. 1987)... 22
Quiros-Lopez v. Unanue-Casal (In re
Unanue-Casal), 998 F.2d 28 (1st Cir. 1993),
aff’g 144 B.R. 604 (D.P.R. 1992) .......cccceeeeeteeees 6
Viii
CASES Page
Republic Reader's Service, Inc. v. Magazine Service
Bureau, Inc. (In re Republic Reader’s Service,
Inc.), 81 B.R. 422 (Bankr. S.D. Tex. 1987) ........ 22, 24
Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923).... 17
Southmark Prime Plus, L.P. v. Southmark Storage
Assocs. Ltd. Partnership (In re Southmark
Storage Assocs. Ltd. Partnership), 132 B.R. 231
CR | eer eee 23
Swift v. Bellucci (In re Bellucci), 119 B.R. 763
SIN, Bee By BE asic ciriscdacaceainaneiscecsnsesces 22
Thermtron Products, Inc. v. Hermansdorfer, 423
Fa i ciiceseadienbiiuamcbiasenam taint acesciticnedss 13
Thompson v. Magnolia Petroleum Co., 309 U.S.
eR acdiaostnionicainiatacaiecGe oan inkacsee ecient 24-25
Ticor Title Ins. Co. v. Brown, 114 S. Ct. 1359
ae thsasiesnicaviniakataniticesamina tse delat adel al ai 16
Unanue-Casal v. Unanue-Casal, 132 F.R.D. 146
(D.N.J. 1989), aff'd without opn., 914 F.2d 244
ey i acecetivsnrcssaect dedscnpadeas nacetededsinansaes 4,5
Unanue-Casal v. Unanue-Casal, 898 F.2d 839 (1st
NMG IE inane cieusabincaeopiadcanpadanenaunds cebutiidnccibicsnin 5
Unanue-Casal v. Unanue-Casal (In re
Unanue-Casal), 159 B.R. 90 (D.P.R. 1993),
aff'd, 23 F.3d 395 (1st Cir. 1994)... eeeeeeees 8, 9,
ix
CASES Page
Williams v. Associates Finance, Inc. (In re
Williams), 88 B.R. 187 (Bankr. N.D. Ill. 1988).. 23
Wood v. Wood (In re Wood), 825 F.2d 90 (Sth Cir.
PAPE Misc anecibipiphcdlaatincstiscdhetepiadtananionrteanmeataancssaiices 21, 24-25
STATUTES
Oe Ry OF Peiistiscaitcntihsnmabiencasdoaaeseee 22
Fe ae I tii inessbise tina cnedacntanoiaemancin 6, 27
Be Regs. I aaitbihclecinencsancccenoncneegdennstleusnutane 29
55 Seen Ue I nsciiediasacuainsseiinnnsspetduaabdietdacrtubsiner, 24
PR ORs I sd edicts taricceatecniticantadestnkdpaeerios 25
Be UO CE Miticesaied tiie aa 14
A es Fe tscindactiihenpsiaridlentithadaamenan pm
I ae CP ibinichidcissatielacncéaatabeantaoaaiouds 14
28 U.S.C. § 1254(1) ins cleastiasnecienlkiaek tnaanesonemeaenesdiacions l
ee Ci iktiscipcssnrtnoveenienetehiertaelie 1, 14,
15-16, 21
Pe Ae FE ibiicthikessinstnnancmeenmaen me be
ee WIS Piseicsiidevtscacensidicacedntlaccdinataton passim
es Oe OE ivnccbecncchssvdncicanovsdioccbadeatacobancades passim
AT a PO etait acpasielaistsastitsricectnnaisieastatssnen 29
STATUTES Page
ee 0 PIE as catreerinaarctiteetsenretenmiidinaanen 13
28 U.S.C. § 1471¢d) (repeaied).........6:.cseccccrecserecsevsses 22
Se IED ees icsasscceenlen alent a ocenrceomenceee 9
NN i rtsczincgnnraenabianeteniateacinaain 27
Bankruptcy Amendments and Federal Judgeships
Act of 1984, Pub. L. No. 98-353, 98 Stat. 333... 14
Bankruptcy Reform Act of 1994, Pub. L. 103-394,
i IN PII a csis tbe saelcasatweinehinssivacantessiaceacanioen 1, 16
RULES
a eee eo titccasichncia dun ncéstealetinenacennioeane 12, 20
NN: PER CB caver coscrsaseivesnseteavessnoibavnns comnpenmecanasansn 9
Me arseraas oss ciseysialniteebincerpmcsncmcnonoies 3
Fed. R. Bankr. P. 5011(b), 1991 Advisory
RN SINE soning acre daacnttcac ceccinncerecnevmonsennsoierse 13
OE Ne Ce PE oS wi ceesviesntcecsciievnsssicsonnasenreiees 9,11
OTHER AUTHORITIES
L. Filson, The Legislative Drafter 's Desk Reference
fe PUTED caters Cabececnleccunmissodectausabiickenmurcnraliagsaabeiniociaain 14-15
D. Hirsch, Drafting Federal Law (2d ed. 1989)........ 15
R. Stern, E. Gressman ef al., Supreme Court
FOIE CH FE castncstnniestccsrecstieessesvinciveens 16, 19
j
No. 94-1025
IN THE
Supreme Court of the United States
OCTOBER TERM, 1994
ee aap ae
ULPIANO UNANUE-CASAL, a/k/a CHARLES UNANUE,
Petitioner,
Vv
GOYA FOODS, INC., et ai.,
Respondents.
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
RESPONDENTS’ BRIEF IN OPPOSITION
OPINIONS BELOW AND JURISDICTION
The opinions below are set forth in the Appendix to the
Petition. (Pet. la-33a). While Petitioner invokes the juris-
diction of this Court under 28 U.S.C. § 1254(1), Respondents
dispute this Court’s jurisdiction on the grounds set forth under
the Reasons for Denying the Writ.
STATUTES INVOLVED
28 U.S.C. § 1334. Bankruptcy cases and proceedings.’
(a) Except as provided in subsection (b) of this
section, the district court shall have original and
exclusive jurisdiction of all cases under title 11.
' 28 U.S.C. § 1334 is set forth here in its form applicable to this case. The
Statute has since been amended by section 104(b) of the Bankruptcy
Reform Act of 1994, Pub. L. No. 103-394, 108 Stat. 4106, 4109, effective
in all bankruptcy cases filed after October 22, 1994. The significance of
this amendment is discussed infra under Point | of the Reasons for
Denying the Writ.
(b) Notwithstanding any Act of Congress that
confers exclusive jurisdiction on a court or courts
other than the district courts, the district courts shall
have original but not exclusive jurisdiction of all
civil proceedings arising under title 11, or arising in
or related to cases under title 11.
(c) (1) Nothing 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 11 or arising in or
related to a case under title 11.
(2) Upon timely motion of a party in a pro-
ceeding 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
jurisdiction. Any decision to-abstain or not to
abstain made under this subsection is not reviewable
by appeal or otherwise by the court of appeals under
section 158(d), 1291, or 1292 of this title or by the
Supreme Court of the United States under section
1254 of this title. This subsection shall not be
construed to limit the applicability of the stay
provided for by section 362 of title 11, United
States Code, as such section applies to an action
affecting the property of the estate in bankruptcy.
(d) The district court in which a case under title
11 is commenced or is pending shall have exclusive
ee eee
ee ee ee
jurisdiction of all of the property, wherever located,
of the debtor as of the commencement of such case,
and of property of the estate.
COUNTERSTATEMENT OF THE CASE
This petition continues several years of bitter litigation
fomented by Petitioner, Charles Unanue, against various
members of his family and family-owned companies.
Petitioner has sought (1) an inheritance from his late father,
who died in 1976 without leaving him any assets; and (2) the
nullification of two settlement contracts that he executed in
1972 (the “1972 Agreement”) and 1974 (the “1974
Amendment”), in which prior family litigation was resolved
through Respondents’ purchase of Petitioner’s interests in the
various companies for millions of dollars in cash.”
After years of litigation, the New Jersey Superior Court
rejected Petitioner’s inheritance and contract claims, on their
merits, in November 1993. (See infra, pp. A-9-A-22).° Petitioner
> Petitioner's Statement of the Case (Pet. 3-11) contains scurrilous
allegations of wrongdoing, by Respondents and others, extending as far
back as 1969. These allegations have little relevance to the parties’
substantive inheritance and contract disputes, and none at all to the
abstention issue on which Petitioner seeks certiorari. That being the case,
Respondents will confine their Counterstatement to the relevant facts,
including those bearing upon the issues that would be before this Court if
certiorari were granted. (See Sup. Ct. R. 15.1.) Respondents’ failure to
respond to Petitioner’s other allegations should not be deemed an admis-
sion of their correctness. In particular and without limitation, Respondents
expressly deny Petitioner's allegations concerning “a massive tax fraud
scheme,” his description of the contents of the 1972 Agreement and 1974
Amendment, and his “estimates” of the value of his parents’ estates.
* Since the contract issues as well as the inheritance issues have been
heard and resolved in the New Jersey Action, Petitioner’s representation
that the parties’ litigation since 1987 “has focused exclusively on
Petitioner’s claim to inherit his share of his parents’ estates” (Pet. 3) is
clearly inaccurate.
now asks this Court to hold that a federal bankruptcy court
should have decided these issues, while entirely disregarding
the fact that the state court has already decided them.
The New Jersey Action
Petitioner began this round of family litigation by
asserting his inheritance claim in 1987. Upon receiving Peti-
tioner’s demand, his father’s executors and trustees com-
menced a declaratory judgment action against Petitioner (the
“New Jersey Action”) in the Probate Part of the Superior
Court of Bergen County, New Jersey, where the father’s will
had been probated 11 years before and a trust created by the
father had long been administered. In addition to Petitioner’s
inheritance claim, the issues in the New Jersey Action in-
cluded the validity of the 1972 Agreement and 1974 Amend-
ment, under which Petitioner received more than $4 million in
cash in return for surrendering his interests in the companies
and agreeing, inter alia, never to contest his father’s estate
plan or to seek an inheritance from his father’s estate or trust.
Since the inception of the New Jersey Action, Petitioner
has engaged in a persistent and extraordinary series of
obstructive tactics designed to thwart or delay its resolution.
See, e.g., Unanue-Casal v. Unanue-Casal, 132 F.R.D. 146,
148-49 (D.N.J. 1989) (describing some of Petitioner’s abusive
conduct), aff'd without opn., 914 F.2d 244 (3d Cir. 1990). His
avowed purpose has been to secure what he perceives to be a
more favorable forum -- a court located in Puerto Rico, rather
than the New Jersey state court -- to hear his inheritance and
contract claims. Among other things, in 1987 and 1988, Peti-
tioner filed two unnecessary, duplicative actions against Re-
spondents in the Superior Court of Puerto Rico. The Puerto Rico
courts have stayed these actions pending resolution of the New
Jersey Action, while harshly criticizing Petitioner’s improper
claim-splitting and efforts to manipulate the judicial system.
Despite Petitioner’s unremitting obstructionism, pretrial
proceedings in the New Jersey Action were completed in the
spring of 1989, and trial on the domicile of Petitioner’s father,
an important issue in that action, was set to begin in July.
Petitioner did not allow the trial to begin without a final burst
of efforts to thwart it. Late in the afternoon of the business
day before trial was to commence, Petitioner filed a
manifestly frivolous petition to remove the two-year-old New
Jersey Action from the New Jersey Superior Court to the
United States District Court for the District of Puerto Rico,
1500 miles away. On the morning of trial, Petitioner again
sought removal, this time in the District of New Jersey. These
removal attempts -- jurisdictionally baseless, untimely, and
improvident on their face -- were rejected by federal judges in
both New Jersey and Puerto Rico, and Petitioner was
sanctioned by both courts pursuant to Rule 11 of the Federal
Rules of Civil Procedure, in orders affirmed by the First and
Third Circuit Courts of Appeals, both because the removal
petitions were objectively baseless and because
[T]here [was] good reason to believe that
[Petitioner] filed the removal petitions for “an
improper purpose,” namely, to harass, or to delay
the start of the New Jersey trial... . [T)he filing of
the removal petition, at the eve of trial, many
months after the state court suit began, in a clearly
improper forum, tended to undermine the goals that
Rule 11 seeks to advance.
Unanue-Casal y. Unanue-Casal, 898 F.2d 839, 842 a st Cir.
1990) (Breyer, C.J.); see also Unanue-Casal v. Unanue-
Casal, 132 F.R.D. at 150-51.
Petitioner’s Bankruptcy
With the removal attempts rejected, and Petitioner’ s other
last-ditch efforts to enjoin the proceedings also turned away,
the lengthy New Jersey trial began on July 10, 1989. The trial
had substantially concluded, and the parties were preparing
their post-trial memoranda, when Petitioner filed a voluntary
Chapter 7 bankruptcy petition in the District of Puerto Rico
on August 29, 1990."
Petitioner promptly sought to transform his Puerto Rico
bankruptcy case into “the central arena for the continued
struggle among the Unanue brothers.” (Pet. 6). He pursued
this goal in two ways. First, after the bankruptcy filing
automatically stayed the New Jersey Action under 11 U.S.C.
§ 362(a), Petitioner vigorously opposed his adversaries’
attempts to obtain relief from that stay to permit the action to
resume and be concluded. In February 1991, over Petitioner’s
objection, the bankruptcy court granted limited relief from the
stay to permit the New Jersey court to resolve the domicile
issue. In December 1991, the New Jersey court handed down
a lengthy opinion squarely rejecting Petitioner's position on
that issue and finding that Petitioner’s father had been dom-
iciled in New Jersey, as Respondents had contended, at all
relevant times. See Matter of Unanue, 255 N.J. Super. 362, 605
A.2d 279 (Law Div. 1991) (opinion abridged for publication).
As another means to bring the litigation to the bankruptcy
court, and thereby oust the jurisdiction of the New Jersey
court, Petitioner insisted that his creditors file formal proofs
of claim in the bankruptcy case before he would proceed with
a court-ordered examination of his financial condition.
Petitioner's bankruptcy schedules recited that he owned negligible
tangible assets, while he had liabilities of more than $1 million. This claim
was, and remains, difficult to accept given Petitioner’s receipt of more than
$4.3 million in cash between 1972 and 1975 pursuant to the 1972
Agreement and 1974 Amendment, as well as several series of highly
suspicious financial transactions to which Petitioner was a party, and the
invocation by Petitioner and his wife of the Fifth Amendment privilege
against self-incrimination when questioned concerning these transactions.
See Quiros-Lopez v. Unanue-Casal (In re Unanue-Casal), 998 F.2d 28, 34
(Ist Cir. 1993) (reviewing financial history of Petitioner and finding
“reasonable ‘likelihood of recovery’ on bankruptcy trustee’s causes of
action for Petitioner’s allegedly fraudulent transfers of property), aff'g 144
B.R. 604 (D.P.R. 1992).
Because the 1974 Amendment had a_prevailing-party
attorneys’-fee clause, those Respondents who had borne the
heavy legal bills created by Petitioner’s baseless inheritance
and contract claims would be entitled to recover their
reasonable legal expenses from Petitioner if they ultimately
prevailed in the pending actions, including the New Jersey
Action. Accordingly, two of the Respondents filed contingent
claims for estimated amounts of these expenses.” Thereupon,
Petitioner filed objections to these attorneys’-fee claims,
based principally on his contention that the claims must be
invalid because the 1974 Amendment on which they were
based was null and void in its entirety, and he demanded that
the bankruptcy court rule on this state-law issue, although the
identical issue had by then already been pending in the New
Jersey Action for more than three years.
While Petitioner was misusing his bankruptcy filing to
stall the New Jersey Action and provide him with a new
Puerto Rico forum to adjudicate his contract invalidity
argument, a series of highly unusual events was taking place
within the bankruptcy case itself. In the summer of 1991,
Petitioner caused his wife to purchase the claims of ail the
scheduled creditors who held liquidated, dischargeable debts,
and to file an instrument waiving her entitlement to pursue
any claim against the estate. Petitioner thus eliminated any
colorable purpose that his bankruptcy case might have had,
even as considered from the “debtor’s” own point of view,
except as a forum-shopping mechanism for him to use in the
ongoing family litigation between himself and Respondents.
* The Respondents who filed contingent proofs of claim for their estimated
attorneys’ fees and litigation expenses were Goya Foods, Inc. and Gi@ya de
Puerto Rico, Inc. None of the dozen other Respondents ever filed , of
claim in Petitioner's bankruptcy case, nor did any of the other parties to the
New Jersey Action do so.
The Relief-From-Stay Decisions
Soon after the New Jersey court held that Petitioner’s
father had been domiciled in that state, the plaintiffs in the
New Jersey Action asked the bankruptcy court to grant further
relief from the automatic stay to permit that action to be
concluded. In an Opinion and Order dated May 15, 1992, the
bankruptcy court denied this application. The plaintiffs
appealed this ruling to the United States District Court for the
District of Puerto Rico.
On August 3, 1993, the district court reversed the bank-
ruptcy court’s denial of relief from the stay, holding in a com-
prehensive opinion that the- New Jersey state court was the
proper forum for the parties’ substantive disputes. Unanue-
Casal v. Unanue-Casal (In re Unanue-Casal), 159 B.R. 90
(D.P.R. 1993). Petitioner’s motion for an emergency stay was
denied by the First Circuit Court of Appeals (Breyer, Selya
and Cyr, JJ.) on November 16, 1993. (/nfra, pp. A-1-A-3).
Demonstrating the appropriateness of vacating the stay,
the New Jersey court was able to decide the merits of the
parties’ disputes within a few months after the stay was lifted.
The court upheld Respondents’ positions and rejected those of
Petitioner, finding that both the 1972 Agreement and the 1974
Amendment were valid in their entirety, and that Petitioner
had no inheritance rights to any of the assets he was seeking.
(See infra, pp. A-9-A-22). Subsequently, the New Jersey court
also held that under the 1974 Amendment, Petitioner is
required to pay his adversaries’ reasonable expenses and at-
torneys’ fees incurred in the New Jersey Action.”
On May 12, 1994, the First Circuit (Selya, Coffin and
Bownes, JJ.) issued a brief, unpublished per curiam opinion
° Determination of the exact amount of the costs and attorneys’ fees to be
paid by Petitioner -- the last remaining issue in the New Jersey Action -- was
referred to a special master for consideration. The master held an evidentiary
hearing on this issue in August 1994, and his report is expected shortly.
baa dshd Silo it Si saa eae,
9
pursuant to its Local Rule 27.1,’ affirming the district court’s
decision to lift the stay. After describing Petitioner’s “fierce
tenacity” in the litigation as “misplaced,” the First Circuit
relied on “the district court’s well-conceived opinion” in
summarily affirming. Unanue-Casal vy. Unanue-Casal, 23
F.3d 395 (1st Cir. 1994) (table) (infra, pp. A-4-A-7). On June
3, 1994, the First Circuit denied Petitioner’s motion for
rehearing, without opinion. (/nfra, p. A-8). Petitioner did not
seek review of the First Circuit’s decision in this Court; his
time to do so expired on September 1, 1994. See 28 U.S.C. §
2101(c); Sup. Ct. R. 13.1.
The Abstention Decisions
Meanwhile, in March 1992, Petitioner filed a new
“Amended Counterclaim” against Respondents in his bank-
ruptcy case. This pleading renewed Petitioner’s contentions
that the 1972 Agreement and 1974 Amendment should be
invalidated in their entirety, so that Petitioner should receive
millions of dollars in damages as well as stock interests in all
the family-owned companies, and also reasserted Petitioner’s
inheritance claims. Respondents asked the bankruptcy court to
abstain from deciding the state-law issues presented by the
Amended Counterclaim, and instead to allow them to be
resolved in the New Jersey Action where they had already
been pending for five years. See 28 U.S.C. § 1334(c)(1), (2).
By Opinion and Order dated November 20, 1992, the
bankruptcy court refused to abstain from resolving the
Amended Counterclaim, under either the “mandatory
abstention” statute, 28 U.S.C. § 1334(c)(2), or the “dis-
cretionary abstention” statute, 28 U.S.C. § 1334(c)(1). (Pet.
7
Local Rule 27.1 of the Rules of the United States Court of Appeals for the
First Circuit, entitled “Summary Disposition,” provides that “(a]t any time,
...the court may...affirm and enforce the judgment or order below...if it
shall clearly appear that no substantial question is presented.”
10
20a-33a).* The grounds for the bankruptcy court’s ruling were
closely related to those that had grounded its denial of relief
from the automatic stay six months earlier.
Respondents appealed to the district court, which again re-
versed.” Goya Foods, Inc. v. Unanue-Casal (In re Unanue-Casal),
164 B.R. 216 (D.P.R. 1993) (Pet. 3a-16a). The district court
first held that the Amended Counterclaim was subject to
mandatory abstention, finding that all the — statutory
prerequisites under § 1334(c)(2) were met. (164 B.R. at 221-
22: Pet. 10a-12a). The court then continued: “We now turn to
the question of discretionary abstention, and find that even
were mandatory [abstention] not as clearly warranted as we
find it is, that it was an abuse of the bankruptcy court's
discretion not to abstain under the doctrine of discretionary
abstention.” (164 B.R. at 222; Pet. 13a). In reaching this
conclusion, the district court relied upon a well-recognized
list of factors relevant to discretionary abstention decisions,
More soecifically, the bankruptcy court attempted to “sever” Petitioner’s
objection to the two proofs of claim from the other issues raised in the
Amended Counterclaim. However, Petitioner’s objection to claims was prin-
cipally based on his assertion that the entire 1974 Amendment upon which
the claims were based, as well as the antecedent 1972 Agreement, were null
and void nn their entirety -- a contention that, if accepted by the bankruptcy
court, would have had consequences far more wide-ranging than disallow-
ance of the claims. Moreover, since the claims represented attorneys’ fees
and legal 2xpenses that would be owed by Petitioner only if Respondents
won the New Jersey Action and other litigation, liquidating or estimating the
claims could have required the bankruptcy court to examine the merits of all
the substaative contract and inheritance issues involved in that litigation.
Thus, despite Petitioner's emphasis on the supposedly limited issue the
bankruptcy court had “severed” for consideration (see Pet. 8-9), in truth
there woud have been little, if any, practical difference between the bank-
ruptcy cout’s resolving the “severed issue” it had identified and its resolving
the entire series of contract issues raised by the Amended Counterclaim.
Althoigh the abstention appeal was ultimately assigned to the same
district judge before whom the relief-from-stay appeal was pending (Chief
Judge Gilterto Gierbolini of the District of Puerto Rico), the two appeals
were docktted, briefed, and decided separately.
11
which the bankruptcy court had not analyzed. (164 B.R. at
221; Pet. 13a). The court also quoted from its earlier relief-
from-stay decision with regard to (1) the interests of judicial
economy that would be served by allowing the New Jersey
Action to proceed; (2) “the New Jersey court’s familiarity
with the entire history of this festering family fiasco”: (3) the
lack of interference that would be caused to the bankruptcy
case by abstention; and (4) Petitioner’s evident misuse of the
bankruptcy process as a means of forum-shopping. (164 B.R.
at 222-23; Pet. 14a-16a, citing 159 B.R. at 98-102).
Petitioner, in turn, again appealed to the First Circuit. On
August 5, 1994, that court (Selya, Coffin and Bownes, JJ.)
issued an unpublished, one-paragraph per curiam opinion,
again pursuant to its Local Rule 27.1, holding that
“[e]ssentially for the reasons stated by the district court in its
opinion, we find that the bankruptcy court abused its
discretion in declining to abstain pursuant to 28 U.S.C.
§ 1334(c)(1).” Goya Foods, Inc. v. Unanue-Casal, 32 F.3d
561 (Ist Cir. 1994) (table) (Pet. 1a).'? On September 9, 1994,
the court of appeals denied Petitioner’s motion for rehearing,
without opinion. (Pet. 19a). Petitioner filed this petition for
certiorari on December 8, 1994.
REASONS FOR DENYING THE WRIT
For several reasons -- all ignored in the petition -- this
case is not suitable for review on certiorari.
First, this Court lacks jurisdiction over the petition because
Congress has specifically precluded this Court’s review of
bankruptcy abstention decisions under 28 U.S.C. § 1334(c).
Because it found that abstention was appropriate under § 1334(c)(1), the
First Circuit did not address the district court’s conclusion that abstention
was also required under the mandatory abstention statute, § 1334(c)(2).
Petitioner’s attempt to infer legal conclusions about what the First Circuit
“recogniz[ed]” based on its failure to reach the mandatory abstention issue
(Pet. 10) is baseless.
12
Second, virtually all the substantive disputes between
Petitioner and Respondents have already been resolved in the
New Jersey Action, so that the forum-selection issue raised by
Petitioner is substantially moot, and revisiting it at this point
would serve no meaningful purpose.
Third, Petitioner’s contentions are all unpreserved for this
Court’s review because he did not present any of his current
arguments in any of the courts below, and many of them do
not even relate to the abstention decisions whose review
Petitioner is seeking.
Fourth, even apart from all these jurisdictional and pro-
cedural concerns, this case involves no issue worthy of this
Court’s attention. Petitioner has identified no conflict in deci-
sions among the lower courts, no violation of any principle
announced in a prior decision of this Court, no unsettled and
important legal issue calling for this Court’s resolution, and
no departure from the “accepted and usual course of judicial
proceedings” below. See Sup. Ct. R. 10.1. To the contrary,
although Petitioner argues that abstention was improper here
as a matter of law, he has not cited a single relevant authority
to that effect, nor has he offered any cogent policy argument
for the rule he seeks. At its heart, this case simply involves
the application of well-recognized standards for discretionary
abstention, as authorized by statute, to the particular, highly
unusual circumstances of a single bankruptcy case.
I. THIS COURT LACKS JURISDICTION
TO REVIEW THE DISTRICT COURT’S
ABSTENTION DECISION
Petitioner contends that the bankruptcy court should not
have been directed to abstain. Abstention in bankruptcy
proceedings is expressly authorized by 28 U.S.C. § 1334(c),
which provides for two types of abstention: discretionary
abstention “in the interest of justice, or in the interest of
comity with State courts or respect for State law,” 28 U.S.C.
13
§ 1334(c)(1), and mandatory abstention when certain
statutory prerequisites are satisfied, 28 U.S.C. § 1334(c)(2).
At least since 1990, decisions on abstention have been
made by the bankruptcy court (rather than the district court) in
the first instance. See 1991 Advisory Committee Note to Fed.
R. Bankr. P. 5011(b). The bankruptcy court’s decision is sub-
ject to one level of appellate review in the district court. /d.:
see, e.g., Farm Credit Bank v. Bott (In re Stigge), 167 B.R.
961, 965 (Bankr. D. Kan. 1994). However, Congress has
determined that beyond the district court level, further
appellate review of these procedural decisions is not war-
ranted: too much time should not be spent determining which
court should decide a substantive dispute, at the expense of
expeditiously resolving the merits of the dispute itself. See
Chemical Bank v. Togut (In re Axona Int’! Credit & Com-
merce Ltd.), 924 F.2d 31, 35 (2d Cir. 1991); see also Therm-
tron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 351 (1976)
(similar rationale as to nonreviewability of remand orders under
28 U.S.C. § 1447(d)); Hernandez v. Brakegate, Ltd, 942 F.2d
1223, 1226 (7th Cir. 1991). Accordingly, after setting out the
discretionary and mandatory abstention doctrines, the
abstention statute (in the form applicable to this case) provides:
Any decision to abstain or not to abstain made under
this subsection is not reviewable by appeal or other-
wise by the court of appeals under section 158(d),
1291, or 1292 of this title or by the Supreme Court of
the United States under section 1254 of this title.
28 U.S.C. § 1334(c)(2). If this proscription of review applies
here -- that is, if the decisions below to abstain were “made
under this subsection” -- then this Court lacks jurisdiction.
This nonreviewability provision appears in 28 U.S.C.
§ 1334(c)(2), the same paragraph of § 1334 that contains the
mandatory abstention provision. Accordingly, this Court
clearly may not review a mandatory abstention decision. Cf
In re Parque Forestal, Inc., 949 F.2d 504, 511 n.8 (1st Cir.
————
14
1991) (dismissing appeal from denial of mandatory abstention
pursuant to § 1334(c)(2)). Here, the district court relied on
mandatory abstention as one ground for ordering the
bankruptcy court to abstain. That mandatory abstention order,
unreviewable by the court of appeals or this Court, will
remain intact irrespective of any disposition that might be
made here of Petitioner’s discretionary abstention arguments,
and will independently bar the bankruptcy court from taking
up Petitioner's Amended Counterclaim. Under these
circumstances, Petitioner’s present attack on the discretionary
abstention decisions is entirely academic, and this Court lacks
jurisdiction over it for that reason.
Even if this case involved only discretionary abstention
under 28 U.S.C. § 1334(c)(1), this Court would still lack
jurisdiction. To be sure, the statutory proscription of review
(in the form applicable to this case) is arguably ambiguous as
applied to discretionary abstention, because the sentence
barring review appears in § 1334(c)(2) and not in
§ 1334(c)(1). However, § 1334(c)(2) bars this Court’s review
of an abstention “decision . . . made under this subsection” --
not “this paragraph.” As used in the United States Code, the
word “subsection” refers to a principal, lettered subdivision of
a section of the Code.'! Thus, the reference in 28 U.S.C.
'' For example: 28 U.S.C. § 1334 is a “section” of the Code; section 1334
is divided into four “subsections” lettered (a), (b), (c) and (d); and subsection
(c), in turn, is divided into two “paragraphs” numbered (1) and (2). The
words “subsection” and “paragraph” are consistently used in this manner
throughout the Code, including title 11 (the Bankruptcy Code) and title 28
(the Judicial Code). In particular, the words are so used in all the other
provisions of title 28 that were added or rewritten by the Bankruptcy
Amendments and Federal Judgeships Act of 1984, Put ©. No. 98-353, 98
Stat. 333, which enacted § 1334(c). See, eg, 28 U.S.C. §§ 152(a)(1),
157(c)(2). The consistent usage of a term in “numerous provisions” within a
particular statute is significant evidence of its intended meaning elsewhere in
that statute. Central Bank of Denver, N.A. v. First Interstate Bank, N.A., 114
S. Ct. 1439, 1447-48 (1994). See also L. Filson, The Legislative Drafter's
(Footnote continued)
15
§ 1334(c)(2) to a “decision . . . made under this subsection”
refers to “subsection (c)” in its entirety -- even though
subsection (c) is, in turn, divided into the two paragraphs (1)
and (2) -- and thus refers to discretionary as well as
mandatory abstention. The two courts that have noted the
significance of the word “subsection” in this context have
reached precisely this conclusion. In re Stigge, 167 B.R. at
965 & n.3; Gallo v. Herpich (In re Cemetery Dev. Corp.), 59
B.R. 115, 127-28 & n.32 (Bankr. M.D. La. 1986).’? Hence,
given its words’ ordinary meaning, the nonreviewability
language of 28 U.S.C. § 1334(c)(2) applies to abstention
decisions under either paragraph of “this subsection” (c).
Accordingly, the petition for certiorari must be denied or
dismissed for want of jurisdiction. At a minimum, the Court
would have to expend substantial efforts resolving the
jurisdictional issue before it could take up the issues
Petitioner seeks to present -- efforts that there is no reason to
expend because Congress has recently amended 28 U.S.C.
Desk Reference §§ 20.3, 24.9 (1992) (discussing designation of Code
provisions); D. Hirsch, Drafting Federal Law § 5.16 (2d ed. 1989) (same).
'? Accord Adams v. Sidney Schafer & Assocs., Inc. (In re Adams), 809 F.2d
1187, 1190 (Sth Cir. 1987) (“The [district] court . . . had authority to abstain
pursuant to § 1334(c)(1), hence its reasoning is not for us to review or
reconsider.”). There is some court of appeals authority to the contrary,
holding that appellate review of discretionary abstention decisions is
permitted. Ben Cooper, Inc. v. Insurance Co. of Pa. (In re Ben Cooper,
Inc.), 924 F.2d 36, 38 (2d Cir.), cert. denied, 500 U.S. 928 (1991); Coker v.
Pan American World Airways, Inc. (In re Pan American Corp.), 950 F.2d
839, 843-44 (2d Cir. 1991); California State Board of Equalization v. Sierra
Summit, Inc. (In re China Peak Resort), 847 F.2d 570, 572 (9th Cir. 1988),
vacated on other grounds, 490 U.S. 844 (1989). However, in none of these
cases did the courts of appeals consider the meaning of the word
“subsection” as used in § 1334(c)(2), as discussed above. Nor did any of
these cases scrutinize the drafting history of the 1984 amendments to the
Statute, which provides strong confirmatory evidence of Congress’ intent
that both discretionary and mandatory abstention decisions be
nonreviewable by the courts of appeals and this Court.
16
§ 1334 in a way that will prevent the arguable ambiguity
present in this case from ever recurring. See Bankruptcy
Reform Act of 1994, Pub. L. 103-394, sec. 104(b), 108 Stat.
4106, 4109 (removing nonreviewability language from same
paragraph as mandatory abstention provision and instead
placing it in a separate subdivision). Although the amendment
does not apply retroactively to this case, see id., sec. 702(a),
108 Stat. at 4150, its enactment eliminates any arguable need
for authoritative construction of the former provision (a task
for which this case would have provided a strikingly poor
vehicle in any event). See R. Stern, E. Gressman et al., Supreme
Court Practice 172 (7th ed. 1993); cf Ticor Title Ins. Co. v.
Brown, 114 S. Ct. 1359, 1362 (1994) (certiorari is not granted
to address an issue that will not recur in any other case).
Because this Court lacks jurisdiction, the petition for
certiorari must be denied or dismissed.
Il. BECAUSE THE NEW _ JERSEY
SUPERIOR COURT HAS RESOLVED
THE MERITS OF THE PARTIES’
DISPUTE, THE ABSTENTION ISSUE IS
LARGELY ACADEMIC
Although Petitioner grudgingly concedes that “the New
Jersey action .. . is proceeding” (Pet. 11), the petition is
grossly misleading in its failure to mention the key rulings
that have been issued since that litigation resumed in 1993, or
the effect they might have on the issues presented for review.
In fact, as detailed above, the New Jersey court has already
resolved substantially all of the parties’ substantive
inheritance and contract disputes. (See infra, pp. A-9-A-22).
In doing so, the New Jersey court rejected almost all the very
same factual and legal contentions that Petitioner asserted in
his bankruptcy court Amended Counterclaim, including his
contention that the 1974 Amendment was invalid, and held
that Respondents are entitled to an award of litigation
expenses and attorneys’ fees pursuant to that contract.
FE
i,
17
The New Jersey court’s rulings have substantially
reduced the importance of the abstention issue in this case.
Petitioner's contention that the 1974 Amendment was invalid
(and therefore could not support a claim for attorneys’ fees).
contained in his Amended Counterclaim, has now been ruled
on and rejected in New Jersey. Since the New Jersey state
court’s determinations are binding on the bankruptcy court,
see, e.g., Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991)
(collateral estoppel principles are fully applicable in
bankruptcy); First Jersey National Bank v. Brown (In re
Brown), 951 F.2d 564, 570-71 (3d Cir. 1991), Petitioner’s
assertion that the bankruptcy court should have been allowed
to decide the contract’s validity in the first instance is no
longer a live issue.'* The relative unimportance of the absten-
tion decision to the ultimate outcome of the parties’ disputes,
given the current procedural posture, provides ample basis
for denying the writ.'*
The only remaining issue raised by Petitioner’s objection to claims -- the
precise amount of the expenses and attorneys’ fees that Petitioner must pay
to Respondents -- is now under consideration in the New Jersey Action with
a decision expected shortly. Following resolution of that issue, Petitioner
will have the right to appeal the New Jersey Superior Court’s rulings. That
review must, of course, be sought within the New Jersey state appellate
system, and not in a bankruptcy court or any other federal court. See Rooker
v. Fidelity Trust Co., 263 U.S. 413, 415-16 (1923) (lower federal courts
cannot sit in review of state court decisions); District of Columbia Court of
Appeals v. Feldman, 460 U.S. 462, 476 (1983). Under New Jersey practice,
the pendency of appellate proceedings would not suspend the finality of the
trial-court judgment for issue-preclusion purposes, in a bankruptcy court or
elsewhere. /n re Brown, 951 F.2d at 568-70.
'* Even if the New Jersey court had not yet resolved the merits of this case
and substantially mooted the abstention dispute, Petitioner’s failure to seek
this Court’s review of the automatic stay decision would substantially limit
the scope of review available on his present petition for review of the
abstention decision. The district court’s discussion of discretionary
abstention relied heavily on its analysis in its relief-from-stay opinion issued
four months earlier. This was perfectly appropriate, because the essential
(Footnote continued)
18
lil. PETITIONER FAILED TO PRESENT
ANY OF HIS ARGUMENTS IN THE
COURTS BELOW
The principal contention of the petition for certiorari is
that a bankruptcy court may never exercise its express
statutory authority to abstain from resolving a state-law
dispute if a party to the dispute has filed a proof of claim in
the bankruptcy case, because the statute erects “an absolute
bar to the exercise of discretion under 28 U.S.C. § 1334(c)(1)
to abstain” under these circumstances. (Pet. 16). The first
three of Petitioner's four arguments for the writ are all
variations on this theme. (Pet. 11-17).
Petitioner's challenge to the legality of the discretionary
abstention decision should not be considered because
Petitioner failed to present his present theory to any of the
courts below. Insofar as they dealt with abstention under
§ 1334(c)(1), Petitioner’s briefs in both the court of appeals
and the district court argued only that the bankruptcy court
had properly exercised its discretion by declining to abstain.
Petitioner has never before argued that there exists “an
absolute bar to the exercise of discretion” applicable in this
case, nor has he ever cited a large majority of the authorities
on which he now relies in any of his prior discussions of
discretionary abstention.”
question in both cases was which court should hear and resolve the parties’
substantive disputes. Once the district court (affirmed by the court of
appeals) found that the New Jersey Superior Court should hear and decide
the issues, it inexorably followed that the bankruptcy court should not hear
and decide the very same issues, and should therefore abstain.
See Goya Foods, Inc. v. Unanue-Casal, No. 94-1065, Brief of Debtor-
Respondent-Appellant (‘‘Pet. Ist Cir. Br.”) at 27-30 (1st Cir. May 23, 1994);
id., Reply Brief of Debtor-Respondent-Appellant at 11-17 (July 18, 1994);
Goya Foods, Inc. v. Unanue-Casal, No. 94-2909 (GG), Appellee’s Brief on
Appeal (D.P.R. Feb. 19, 1993).
19
For example, Petitioner framed the question before the
First Circuit as “[w]hether the bankruptcy court’s decision to
deny [Respondents’] motion for abstention was Clearly
erroneous and an abuse of its discretion” (Pet. Ist Cir. Br. at
2), and he asserted that the abstention decision should be
reviewed under the deferential “abuse of discretion” standard
because “the factors that are supposed to dominate the
decision cannot be evaluated by the reviewing court [and] the
decision is supposed to be made on the basis of subjective
rather than objective factors -- the individual judgment of the
judge . . . rather than some articulable legal standard. . . .” Jd.
at 27, quoting Mosey Mfg. Co., Inc. v. NLRB, 701 F.2d 610.
615 (7th Cir. 1983) (en banc). This description is diamet-
rically opposed to the view Petitioner now presents: that the
filing of proofs of claim by two Respondents automatically
barred them from asking the bankruptcy court to abstain.
It has long been this Court’s salutary practice not to
consider issues and arguments that went unpresented in the
lower courts. See R. Stern, E. Gressman et al., Supreme Court
Practice § 6.26 (7th ed. 1993). It is particularly inappropriate
for a petitioner to seek certiorari where his arguments in this
Court not only are unpreserved, but are flatly inconsistent
with the arguments that were presented below. See Gran-
financiera, S.A. v. Nordberg, 492 U.S. 33, 38-39 & n2 (1989).
And it is extraordinarily inappropriate for Petitioner to invoke
this Court’s certiorari jurisdiction to avoid “erroneous
precedent” (Pet. 14) on an allegedly “important issue” (Pet. 11),
after contending in the court of appeals that “uniformity among
decisions is not important” on the discretionary abstention
issue. Pet. Ist Cir. Br. at 27, quoting Mosey, 701 F.2d at 615.
Petitioner's final argument is that he was somehow
denied due process because the district court’s relief-from-
stay and abstention decisions contain language critical of
Petitioner. (Pet. 18-20). This contention, too, is entirely
unpreserved: Although Petitioner challenges some findings
20
contained in the district court's abstention opinion, he never
presented his due process argument to the court of appeals.
Petitioner's briefs in the First Circuit abstention appeal did
net even mention the due process clause or the Fifth
Amendment. Even more seriously, most of the findings to
which Petitioner objects (see Pet. 17; see also Pet. 9-10) were
not made in this case at all: they are found in the district
court's relief-from-stay opinion, not its abstention opinion. As
noted above, Petitioner never sought this Court’s review in
the relief-from-stay case, and his time to do so has long since
expired. Petitioner's attacks on the abstention opinion are
thoroughly intertwined with his criticism of the earlier
decision, which is not, and cannot be brought, before this
Court. Certiorari should not be granted where the Court's
review would be so unduly restricted.
IV. PETITIONER’S CONTENTIONS RAISE
NO SIGNIFICANT LEGAL — ISSUE
WORTHY OF CONSIDERATION BY
THIS COURT
ven if this Court had jurisdiction and if the case
presented one or more live issues properly preserved for
review, Petitioner has failed to demonstrate any “special and
important reasons” that this Court should grant review. See
Sup. Ct. R. 10.1.
A. THE DECISION TO ABSTAIN
REPRESENTED A ROUTINE
EXERCISE OF DISCRETION
Petitioner argues that it was improper as a matter of law
to direct the bankruptcy court to abstain in this case,
irrespective of all the other factors that overwhelmingly
counseled in favor of abstention, because two Respondents
had filed proofs of claim. Petitioner’s attempt to eliminate an
entire category of proceedings from the bankruptcy court's
statutory authority to abstain is entirely unsupported either by
authority or by bankruptcy policy. Far from being constrained
21
by rigid rules such as the one proposed by Petitioner, 28
U.S.C. § 1334(c)(1) was intended to vest courts with wide
discretion to evaluate all relevant factors before deciding
whether to abstain, not to make any single factor dispositive.
The plenary scope of the discretion to abstain with which
§ 1334(c)(1) vests the courts was noted in a case relied on by
Petitioner himself. Wood v. Wood (In re Wood), 825 F.2d 90
(Sth Cir. 1987) (Pet. 13. 16). In Wood. Judge Wisdom
explained his view that federal bankruptcy jurisdiction should
be interpreted broadly, even though situations would arise
where it would be inappropriate to exercise that Jurisdiction at
the expense of a state court, because the bankruptcy court
would have the ability to abstain from any unwarranted
exercise of jurisdiction:
The district court expressed its concern that an
overbroad interpretation of [28 U.S.C.] section 1334
would bring into federal court matters that should
be left to state courts to decide. We have also
expressed the same concern. There is no necessary
reason why that concern must be met by restrictive
interpretations of the statutory grant of jurisdiction
under section 1334. The Act grants the district court
broad power to abstain whenever appropriate “in
the interest of justice, or in the interest of comity
with State courts or respect for State law.” The
abstention provisions of the Act demonstrate the
intent of Congress that concerns of comity and
judicial convenience should be met. not by rigid
limitations on the jurisdiction of federal courts. but
by the discretionary exercise of abstention when
appropriate in a particular case.
Id. at 93 (emphasis added; citations omitted). No per se rules
are to be found in the abstention statute or elsewhere limiting
the circumstances under which “the discretionary exercise of
abstention” would be “appropriate in a particular case.”
22
Although the courts have been applying the discretionary
abstention provisions of 28 U.S.C. § 1334(c)(1) and its pre-
decessor, former 28 U.S.C. § 1471(d), to a great variety of
bankruptcy situations for more than fifteen years, the statute has
provided no difficulties of management or administration in the
bankruptcy and district courts that would require guidance from
this Court. The courts have evolved a list of 12 factors relevant
to discretionary abstention, first enumerated in Republic
Reader's Service, Inc. v. Magazine Service Bureau, Inc. (In re
Republic Reader’s Service, Inc.), 81 B.R. 422, 429 (Bankr.
S.D. Tex. 1987), widely followed throughout the country, see,
e.g., In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co., 6
F.3d 1184, 1189 (7th Cir. 1993); Christensen v. Tucson Estates,
Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166-67 (9th
Cir. 1990), and firmly grounded in “common sense.” Swift v.
Bellucci (In re Bellucci), 119 B.R. 763, 772 (Bankr. E.D. Cal.
1990). The district court’s decision herein, affirmed by the
court of appeals, was based in large measure on the application
of these factors. (164 B.R. at 222; Pet. 13a, citing Flores Rivera
v. Telemundo Group, 133 B.R. 674, 677 (D.P.R. 1991)).
Indeed, for all the many reasons set forth by the district
court, affirmed by the court of appeals, in both their relief-
from-stay and abstention decisions, this represents a para-
digmatic example of a case in which abstention is warranted “in
the interest of justice, [and] in the interest of comity with State
courts [and] respect for State law’, to allow a series of state-law
issues to be resolved in a state-court case that had been pending
and actively litigated for several years before the bankruptcy
case and Amended Counterclaim were filed. Under circum-
stances like these, courts routinely lift the automatic stay of the
state-court case under 1] U.S.C. § 362, and abstain from
themselves deciding the identical issues to be decided by the
State court. Indeed, in such a case, it is a reversible abuse of
discretion for the bankruptcy court to fail to defer to the state
court by lifting the stay and abstaining. See, e.g., In re Brown,
951 F.2d at 570; In re Tucson Estates, 912 F.2d at 1166-70;
Pursifull v. Eakin, 814 F.2d 1501, 1505-06 (10th Cir. 1987).
23
Notwithstanding these elementary principles and their
obvious applicability to this case, Petitioner asserts that the
filing of proofs of claim by two Respondents automatically
precluded abstention. He cites no authority of any kind for
this view -- not a single decision of any bankruptcy court,
district court or court of appeals, much less of this Court. A
fortiori, there is no conflict of decisions on this issue. Even
the bankruptcy court here, while declining to abstain, had no
doubt about its discretion to do so. (See Pet. 29a-3 la).
To be sure, bankruptcy courts will frequently choose to
scrutinize objections to proofs of claim themselves. However,
this practice has a “well-recognized exception”: “when the claim
under challenge is unliquidated or contingent, . . . if the claim
under consideration is already being litigated in a non-
bankruptcy forum, and the litigation could be speedily resolved
without undue delay of the administration of the estate. it is
appropriate for the Bankruptcy court to abstain....” Jn re
Bicoastal Corp., 158 B.R. 237, 240 (Bankr. M.D. Fla. 1993)
(emphasis added). In other words, “[{t]he fact that the dispute
arises in the context of an objection to claim does not preclude
abstention.” Jn re Denton, 161 B.R. 987, 988 n.2 (Bankr. E.D.
Ark. 1993) (abstaining under § 1334(c)( 1) from resolving
objection to proof of claim). Where, as here, resolution of an
unliquidated claim depends upon a determination of state-law
issues and a state-court judgment would provide a basis for
allowing or disallowing the claim, the “clearest case” for
abstention is presented. Southmark Prime Plus, LP. y
Southmark Storage Assocs. Ltd Partnership (In re Southmark
Storage Assocs. Ltd. Partnership), 132 B.R. 231, 233 (Bankr. D.
Conn. 1991) (emphasis added), quoting Williams v. Associates
Finance, Inc. (In re Williams), 88 B.R. 187, 189 (Bankr. N.D. Ill.
1988). Or, as stated in a seminal abstention case:
Where a claim asserted against an estate
involves legal issues in which state law predom-
inates, a claim can be litigated in state court to the
24
point of judgment, with enforcement of the
judgment stayed until further order of the bank-
ruptcy court. This result follows even though a formal
proof of claim... . has been filed against the estate.
In re Republic Reader's Service, 81 B.R. at 426 (emphasis
added).
In view of these cases, Petitioner’s contention that the
First Circuit’s decision in this case has “carve[d] out... an
entirely new exception to bankruptcy jurisdiction” (Pet. 11) is
simply false. Far from representing an “entirely new”
departure from ordinary bankruptcy procedure, the decision to
abstain was a routine, fact-bound application of “well-settled”
principles to the “clearest case” for a decision to abstain.
Petitioner's arguments to the contrary are (in the words of
the First Circuit in a related context) “mere makeweights” to
support the result he seeks. (See infra, p. A-5). First, Peti-
tioner’s reliance on 11 U.S.C. § 502(b), which directs the
bankruptcy court to “adjudicate” proofs of claim, is clearly
misplaced. (Pet. 14-16).'° Section 502 has nothing to do with
the choice-of-forum issues raised by a motion to abstain. All
the cases relied upon by Petitioner in his § 502(b) argument
either are irrelevant -- failing even to mention the abstention
Statute -- or they strongly support Respondents’ position. See
Gardner v. New Jersey, 329 U.S. 565, 583-84 (1947) (Pet. 13)
(recognizing bankruptcy court’s authority to abstain from
addressing state-law issues raised by claim asserted against
bankruptcy estate, citing Thompson v. Magnolia Petroleum
Co., 309 U.S. 478 (1940)); In re Wood, 825 F.2d at 92-93
'° As the cases discussed above hold, it is entirely proper for the bankruptcy
court to “adjudicate” an unliquidated claim by allowing its validity and
amount to be determined in a state court of appropriate jurisdiction, and then
according appropriate res judicata effect to the resulting state-court
judgment. See, e.g., Heiser v. Woodruff, 327 U.S. 726 (1946); Montalvo v.
Banco Comercial de Mayaguez (In re Montalvo), 157 B.R. 510 (D.P.R.
1993); In re Republic Reader's Service, 8\ B.R. at 426-27; In re Pitts, 31
B.R. 90, 92 (Bankr. N.D. Ga. 1983).
25
(Pet. 13, 16) (discussing “broad power” of bankruptcy court
to abstain); /n re Nova Real Estate Inv. Trust, 23 B.R. 62, 65-
66 (Bankr. E.D. Va. 1982) (Pet. 14) (“estimating” claim
pursuant to 11 U.S.C. § 502(c) to provide interim valuation
for inclusion in reorganization plan, but noting prior decision
to remand case to state court and lift automatic stay so that
creditor could “proceed to liquidate his claim in the Florida
[state] court”),'’
Similarly, Petitioner’s second argument, that a creditor’s
filing of a proof of claim should automatically constitute a
waiver of the right to seek abstention, is unsupported. (Pet.
14-16). '§ Once again, Petitioner offers no authority that the law
is to this effect -- it clearly is not -- and no reason that it should
be. Finally, Petitioner’s third argument for the writ is a re-
statement adding nothing to the earlier arguments. (Pet. 16-17).
The decision to abstain in this case broke no new ground:
the district court, affirmed by the court of appeals, simply
17
The language on which Petitioner relies in Jn re Wood, 825 F.2d at 96-
97, and Gulf States Exploration Co. v. Manville F orest Products Corp. (In
re Manville Forest Products Corp.), 896 F.2d 1384, 1389-90 (2d Cir. 1990)
(Pet. 13), dealt with the jurisdictional distinction between “core” and “non-
core” matters under 28 U.S.C. § 157(b). Here, the district court properly
held the dispute to be a “non-core,” “related to” proceeding. (164 B.R. at
221; Pet. 10a-12a). In any event, while the status of a proceeding as core or
non-core may be dispositive on a motion for mandatory abstention under 28
U.S.C. § 1334(c)(2), Petitioner properly concedes that discretionary
abstention under § 1334(c)(1) can be ordered even in a core proceeding (Pet.
16), so that this issue is irrelevant here.
* In this regard, the cases relied on by Petitioner (see Pet. 14-15) indicate
that a bankruptcy court will usually have jurisdiction to evaluate a proof of
claim filed in a case before it. However, this principle has nothing to do with
discretionary abstention: In seeking discretionary abstention, a party con-
cedes (at least arguendo) that the bankruptcy court has jurisdiction, but asserts
that “in the interest of justice, . . . comity with State courts or respect for State
law,” the court should refrain from exercising its jurisdiction. Cases
addressing parties’ constitutional rights to a trial before a jury, or before a court
created under Article III (see Pet. 14-15), define the bounds of bankruptcy
court jurisdiction; they in no way cabin the court’s discretion to abstain.
26
applied a series of recognized standards to a particular, some-
what unusual factual setting, and determined that abstention
was appropriate. Petitioner has offered no good reason for this
Court to grant certiorari to review that determination.
B. PETITIONER’S DUE PROCESS
CLAIM IS ALSO MERITLESS
As his final argument in support of certiorari, Petitioner
alleges that he was denied due process because the district
court, affirmed by the court of appeals, made findings of fact
with which he disagrees. (Pet. 17-18). As noted above,
Petitioner has not only failed to preserve this argument, but he
offers it in the wrong case, so that his request for certiorari is
meritless on its face.
A grant of certiorari to consider Petitioner's belated due
process argument would also be inappropriate for a further
procedural reason: the opinions below strongly suggest that
the result would have been identical even if those findings of
which Petitioner complains were stripped away. In lifting the
stay and ordering the bankruptcy court to abstain, the district
court relied heavily on many other factors germane to
requests for those forms of relief, many of which are
described above. The cumulative weight of these factors,
discussed at length in the district court’s relief-from-stay
opinion (159 B.R. at 96-100) as well as its abstention opinion
(164 B.R. at 222-23; Pet. 13a-15a), makes it clear that the
district court would have reached the same results even if it
had not found, as it properly did, that Petitioner’s bankruptcy
case was filed for improper purposes and was a sham.
Once again, however, even if Petitioner had properly
preserved his claims and even if their resolution would affect
the result of the case, Petitioner's due process argument is
without substance, for there was no abridgement of
Petitioner’s procedural rights in the nearly four years of
relief-from-stay and abstention litigation. Petitioner’s cursory
(three-page) due process argument offers no precedent or
27
policy to support its contention that a testimonial hearing
(which Petitioner never even asked for in the abstention
proceedings) would be required before a court may determine
to abstain, pursuant to Statutory authority, so as to allow
another court to adjudicate substantive issues on their merits.
In deciding the relief-from-stay and abstention matters.
the role of the courts below was neither to rule on Petitioner’s
entitlement to economic relief under the Bankruptcy Code,
nor to finally adjudicate the disputes between Petitioner and
Respondents. The courts were simply asked to select the court
that would ultimately resolve the parties’ inheritance and cont-
ract law contentions: Petitioner contended that the bankruptcy
court should rule on the parties’ state-law disputes, while
Respondents contended that the long-pending New Jersey
Action represented the appropriate forum to resolve them.
When called on to choose between these positions, it was
entirely appropriate for the courts below to consider, as one
relevant factor, whether Petitioner’s bankruptcy appeared to
be a legitimate bankruptcy case filed and maintained in good
faith. The automatic stay under 11 U.S.C. § 362(a) acts as an
injunction against the further pursuit of claims against a
debtor, and where state-court litigation is involved, constitutes
a rare exception to the Anti-Injunction Act, 28 U.S.C. § 2243.
Petitioner’s invocation of the bankruptcy court’s authority to
adjudicate claims similarly had the effect of Ousting the state
court's jurisdiction to do so in a long-pending action. These
preemptions of state-court authority generally serve legitimate
and important purposes for the benefit of debtors and
creditors, but they cannot be justified in cases that are filed or
maintained in bad faith for the primary purpose of obtaining a
forum-shopping advantage, rather than the “breathing spell”
and “fresh start” contemplated by the Bankruptcy Code.
The district court’s view that Petitioner’s did not appear to
be a legitimate bankruptcy case was supported by compelling
facts. First, the financial circumstances of the filing were
28
dubious on their face: Petitioner had failed to offer any
reasonable accounting of the $4.3 million in cash he had
received under the 1972 Agreement and 1974 Amendment, he
had engaged in a pattern of highly suspicious transactions
with his wife and a dummy Panamanian corporation over a
period of years, and he asserted the Fifth Amendment
privilege against self-incrimination at his opening examina-
tion in the bankruptcy case. Second, even assuming arguendo
that the petition had been filed in good faith in the first
instance, any need for bankruptcy protection evaporated less
than a year later, when Petitioner’s wife purchased all the
liquidated, dischargeable claims against his estate and agreed
not to pursue them. Third, the bankruptcy case was obviously
being misused as a forum-shopping device. The petition was
filed on the eve of a critical determination in the New Jersey
Action, three full years into the litigation, by a litigant whose
past record left little doubt about his willingness to use every
conceivable means to obstruct and delay that action, so as to
relocate the venue for his claims to a court located in Puerto
Rico -- first the Puerto Rico local courts, later the United
States District Court, and now the bankruptcy court.
In the absence of actual debts that Petitioner sought to
discharge, the only purpose Petitioner could be seeking through
his bankruptcy case was to gain an automatic stay of the New
Jersey Action that represented the parties’ appropriate forum,
while simultaneously obtaining the Puerto Rico forum he had
long sought. Tactics such as these are disfavored under any cir-
cumstances. See, e.g., Barclay’s American/Business Credit, Inc.
v. Radio WBHP, Inc. (In re Dixie Broadcasting, Inc.), 871 F.2d
1023, 1027 (11th Cir.), cert. denied, 493 U.S. 853 (1989);
Packerland Packing Co., Inc. v. Griffith Brokerage Co. (In re
Kemble), 776 F.2d 802, 806-07 (9th Cir. 1985). Given Peti-
tioner’s grotesque record of unabated misconduct throughout
the family litigations, now in their eighth year, the time had
certainly come to put an end to them once and for all.
29
In resolving the abstention application (like the earlier
relief-from-stay application), the district court and the court of
appeals properly questioned the bona fides of Petitioner’s
bankruptcy case in the course of ruling against him. However,
contrary to Petitioner’s suggestions (see Pet. 18), the findings
contained in the abstention decision have not resulted in dis-
missal of his bankruptcy petition, the denial of his discharge,
or the denial of dischargeability of any debt. Rather, the
abstention decision had only one legal consequence: it
confirmed that plenary adjudication of the parties’ substantive
disputes -- of which Petitioner has completely lost sight
amidst all his procedural jockeying -- would take place in the
New Jersey Action rather than the bankruptcy court. In this
context, Petitioner should not be heard to urge that more than
three and one-half years of proceedings were required before
the threshold forum-selection issues could be resolved,
particularly in view of Congress’ commands that relief-from-
stay and abstention applications are to be resolved promptly
and with a minimum of delay. See 11 U.S.C. § 362(e); 28
U.S.C. § 1334(c)(2) (now § 1334(d)).
Petitioner concedes that this Court rarely reviews a claim
of “an injustice perpetrated on a single litigant,” and that that
is all his due process argument represents. (Pet. 17, 19). Here,
even Petitioner’s individual claim of injustice rings utterly
hollow given the nature of the issues, the thoroughness of the
proceedings below, the clear correctness of the results
reached, and the failure to raise the due process claim at any
previous stage of the abstention proceedings. Certiorari
should be denied.
30
CONCLUSION
For the reasons stated above, the petition for a writ of
certiorari should be denied.
Respectfully submitted,
ARTURO J. GARCIA-SOLA
(Counsel of Record)
McCONNELL VALDES
P.O. Box 364225
San Juan, Puerto Rico 00936
(809) 759-9292
Attorneys for Respondents
January 9, 1995
RE EE EP EE EERE RIOT eR Kiger em
Decisions Of The First Circuit Court of Appeals
In The Relief-From-Stay Proceeding*
UNITED STATES COURT OF APPEALS
FOR THE
FIRST CIRCUIT
No. 93-2186
JOSEPH A. UNANUE, et al,
Appellees,
V.
ULPIANO UNANUE-CASAL a/k/a CHARLES UNANUE,
Appellant.
Before
Breyer, Chief Judge,
Selya and Cyr, Circuit Judges.
ORDER OF COURT
Entered November 16, 1993
Movant/appellant Ulpiano Unanue-Casal moves for a
Stay pending appeal, pursuant to Fed. R. App. P. 8, of the
district court order lifting the stay on proceedings in the New
Jersey Superior Court. We deny the motion.
" [Set forth here are the decisions of the First Circuit Court of Appeals in
Petitioner’s appea! from the “relief-from-stay” decision of the district
court reported at 159 B.R. 90 (D.P.R. 1993). Petitioner did not seek this
Court’s review of any of these rulings. }
A-2
First, for the reasons stated by the district court in its
opinion dated August 3, 1993, movant has not established a
sufficiently strong likelihood of success on the merits.
Movant’s contention that the district court erred in not
remanding the case to the bankruptcy court after it found that
appellees had met their prima facie burden of proof is not
convincing. Before making its decision concerning the lifting
of the stay in the New Jersey action, the bankruptcy court had
already decided that the only evidence that movant proffered
at the bankruptcy hearing was irrelevant. Since all relevant
evidence was before both the bankruptcy and the district
courts, a remand would serve no useful purpose. We also note
that the record strongly suggests that the movant has been
manipulating the bankruptcy process to avoid determination
of the merits of the underlying dispute. Cf Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 814 F.2d 844, 847
(Ist Cir. 1987) (affirming decision granting relief from
automatic stay without any testimonial hearing on ground that
debtor was misusing bankruptcy protection to avoid decision
on merits of dispute).
Second, movant has failed to establish that he would
suffer any irreparable harm if the stay is not granted. Denial
of the stay would only allow the New Jersey action to
proceed.’ Movant has a right to participate in that action and
to avail himself of the state appellate process should he so
choose. Being required to litigate in state court rather than
bankruptcy court does not constitute irreparable harm. /n re
Thomases, 28 B.R. 961, 962-63 (Bankr. S.D.N.Y. 1983). Nor
Movant’s contention that his interests will not be represented in the
New Jersey action because the bankruptcy trustee is unwilling or unable
to appear is without merit. The New Jersey court has indicated that it
would permit movant to appear on his own behalf. As the district court
wrote, and as the record amply supports, movant “has demonstrated no
problems hiring numerous lawyers and law firms for all of his suits.”
A-3
is the fact that movant’s appeal in this court may be mooted
by the New Jersey action a basis for a stay without a showing
that a stay is otherwise appropriate. See Ramsdell v. G.H
Coffey Co., 632 F.2d 162 (1st Cir. 1980) (denying stay
pending appeal, even though case may become moot, since
there was no other showing of entitlement to extraordinary
relief). Movant has made no such showing here.
Movant’s request for oral argument is denied Movant’s
request for a stay pending appeal is denied
By the Court:
/s/ FRANCIS P. SCIGLIANO
Clerk
A-4
UNITED STATES COURT OF APPEALS
FOR THE
FIRST CIRCUIT
No. 93-2186
IN RE ULPIANO UNANUE-CASAL,
a/k/a CHARLES UNANUE,
Debtor.
JOSEPH A. UNANUE, ef al.,
Petitioners, Appellees,
V.
ULPIANO UNANUE-CASAL
a/k/a CHARLES UNANUE,
Respondent, Appellant.
Appeal from the United States District Court
for the District of Puerto Rico
[Hon. Gilberto Gierbolini, U.S. District Judge |
Before
Selya, Circuit Judge,
Coffin and Bownes, Senior Circuit Judges.
A-5
Per Curiam. This is the latest chapter in a dispute that has
been litigated with fierce tenacity by the debtor, Ulpiano
Unanue-Casal, a/k/a Charles Unanue. See. e g., In re Unanue-
Casal, 998 F.2d 28 (1st Cir. 1993); Unanue-Casal v. Unanue-
Casal, 898 F.2d 839 (ist Cir. 1990). Although tenacity is to
be admired, it is sometimes misplaced. So it is here.
We have carefully reviewed the voluminous record and
the parties’ briefs, and have duly considered the matters raised
at oral argument. In the end, we are persuaded that the district
court did not err in reversing the bankruptcy court’s refusal to
lift the automatic stay, 11 U.S.C. § 362. The district court’s
well-conceived opinion, see Jn re Unanue-Casal, Civ. No. 92-
1796 GG (D.P.R. Aug. 3, 1993) (unpublished) [now reported
at 159 B.R. 90], adequately elucidates the reasoning that is
controlling on the central issue presented by this appeal, and
no useful purpose would be served by rehearsing that
reasoning. Similarly, we see no basis for a remand to the
bankruptcy court for further exploration of this issue. And.
finally, appellant’s other arguments are mere makeweights.
We need go no further. Because this appeal presents no
substantial question of law or fact, we summarily affirm the
judgment below. '
Affirmed. See \st Cir. Loc. R. 27.1
' We take no view of appellees’ claim that the appeal is moot, as the
appeal is impuissant in any event.
UNITED STATES COURT OF APPEALS
FOR THE
FIRST CIRCUIT
No. 93-2186
IN RE: ULPIANO UNANUE-CASAL,
aka CHARLES UNANUE,
Debtor.
JOSEPH A. UNANUE, et al.,
Petitioners, Appellees,
v.
ULPIANO UNANUE-CASAL
aka CHARLES UNANUE,
Respondent, Appellant.
JUDGMENT
Entered: May 12, 1994
This cause came on to be heard on appeal from the
United States District Court for the District of Puerto Rico,
and was argued by counsel.
A-7
Upon consideration whereof, it is now here ordered,
adjudged and decreed as follows: The judgment is affirmed.
By the Court:
/s) FRANCIS P. SCIGLIANO
Clerk
A-8
UNITED STATES COURT OF APPEALS
FOR THE
FIRST CIRCUIT
No. 93-2186
JOSEPH A. UNANUE, et al.,
Appellees,
V.
ULPIANO UNANUE-CASAL a/k/a CHARLES UNANUE,
Appellant.
ORDER OF THE COURT
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
Coffin, Senior Circuit Judge.
Entered: June 3, 1994
Upon consideration of appellant’s petition for rehearing,
It is ordered that the said petition be denied.
By the Court:
/s/ FRANCIS P. SCIGLIANO
Clerk
A-9
November 19, 1993 Opinion and Order
of the New Jersey Superior Court
In the Matter of the Settlement of the
Accounts of JOSEPH UNANUE and | SUPERIOR
FRANK UNANUE, Trustees Under COURT OF NEW
the Trust Agreement Dated JERSEY
November 16, 1970, as Amended, CHANCERY
By and Among PRUDENCIO DIV.: BERGEN
UNANUE, as Grantor, and COUNTY
PRUDENCIO UNANUE, JOSEPH
UNANUE and ANTHONY DOCKET NO.
UNANUE, as Trustees of Sixteen M-128817
Trusts Thereunder.
November 19, 1993
Hackensack, New Jersey
BEFORE:
THE HONORABLE ARTHUR J. LESEMANN, J.S.C.
ORAL OPINION OF THE COURT’
THE COURT: We’ve had argument now that has gone
on for close to two hours. I have here in my hand that I’m
holding the briefs and appendices that were submitted in
connection with the present proceeding, that being only, of
course, a small fraction of what is really involved in this case.
As I read all of this material I had the strange feeling that
we were almost over-intellectualizing something that seems
relatively simple. * * * I think to an extent there has been
something of an over-intellectualization of this matter. And I
: [The court delivered its opinion orally at the conclusion of argument on
cross-motions for summary judgment. Immaterial typographical errors in
the court reporter’s transcript have been corrected. ]
A-10
don’t mean to be critical when I say that because I understand
why. The Unanue family, | would think, should be shell-
shocked by this time. * * *
We begin with a trust agreement and a Will in 1970 and,
of course, that preceded by actions in 1969 involving the
removal of Charles Unanue by Prudencio.
Now, whether the present difficulties had a genesis even
before that, I don’t know. In 1972, 21 years ago, it seemed as
though the matters which had torn the family apart had been
settled by comprehensive agreements that called for Charles
to be paid 4.5 million dollars. Well, | guess the ink hardly
dried before everybody was going around again in 1973, and
then in July 1974 we had the agreement which some people
have spoken about so much here today.
It’s difficult for me to conceive of how anyone could
make the language of the 1974 agreements any broader,
definitive and all-inclusive than they were. To begin with, the
agreement began by a reference to a desire to finish these
matters once and for all. The agreement, of course, sets out
payments of substantial monies to Charles Unanue, something
over four million dollars.
In Section 6.03, which is entitled “Covenant not to
Contest Disposition of Property by Prudencio Unanue.” That
is the language I referred to. Charles covenants and agrees --
read the next language -- for the benefit of the companies, the
additional companies, Charles’ brothers, Prudencio and their
estates, heirs, beneficiaries, et cetera -- he agrees for the
benefit of all of those entities, he irrevocably disclaims,
renounces any and all interest he may have or may hereafter
have in the assets or estate of Prudencio Unanue, whether
under any will, trust, by intestacy, by virtue of relationship,
by other operation of law or otherwise.
A-I1
It’s an exercise in legalese, designed to see whether there
is any conceivable word that one could think of that’s not
covered in this, and I think whoever wrote it passed the test.
You can’t think of anything else you could put in there to
make it any more inclusive than that.
If you move on after the beginning portions of 6.03, you
come to extraordinary provisions, subparagraphs A and B.
These say -- well, subparagraph A starts this way: In the event
that Charles receives in any way, any stock or interest in any
of the companies, he agrees to immediately sell it. And there
is a provision for fixing the price.
Subparagraph B contains another provision. If in any way
Charles gets any stock or any interest in these companies, he’s
going to sell it immediately back to the company.
In other words, in no way whatsoever is he to have any
ownership in the companies, nor, of course, is he to have any-
claim to any interest that Prudencio had or Prudencio’s estate
had.
Then in Section 6.08 we have the covenant not to sue
which is really a repetition of what I already said, and Charles
agreed that he would forever refrain from instituting and
prosecuting any suit against the company, Charles’ brothers,
Prudencio, any of their estates.
It’s difficult to understand why, in the light of that kind
of language, and the receipt of four million dollars, we should
even be here today. I confess that after I heard of Judge
Kole’s decision on the domicile question, my conclusion, my
initial conclusion was that this matter was now finished. And
I assumed I would have some formal document or other to
sign, but surely the only issues in the case were now put to
rest.
A-12
I understood the original claim didn’t seem to me to have
much merit, but I understood the claim that if Prudencio was
indeed a domiciliary of Puerto Rico at the time of the trust
and at the time of his death, then Puerto Rican law would
govern the trust and the Will. Puerto Rican law, | was told,
had the forced heirship concept, and if Puerto Rican law
governed, then that entire settlement was subject to being set
aside.
And, of course, it’s a familiar principle that we live with
that normally it’s law of the place where one is domiciled at
the time of death governs his Will.
Well, as we know in a decision that went for over 100
pages, which is some sort of record in terms of trial time in
this courthouse, 147 pages, Judge Kole found that both
critical times, the date of the trust and the date of the death,
Prudencio was, and for many, many years, had been a
domiciliary of New Jersey.
Now, of course, we have another contest. We have a
contention that, in essence, Prudencio cheated his wife out of
her interest in the * * * [c]onjugal partnership, and what we
have is Charles Unanue flatly and unequivocally challenging
Prudencio’s right to dispose of his assets as he chose to do.
How one can justify that in view of the express language
of the 1974 agreements in which Charles agreed in about
eight different ways never to do that, is beyond me.
I am satisfied, without any question or reservation, that
Charles Unanue is barred by the 1974 agreements from even
raising the attack based on the alleged deprivation of his
mother by his father.
Frankly, it’s a little difficult to listen to claims of “fraud
on my mother” to use Charles Unanue’s language, and Mrs.
Unanue is not here claiming this fraud and to pretend to
A-13
accept the fiction that in some way Charles Unanue is
defending the rights of his mother or is concerned about a
fraud on his mother is, of course, absurd.
The claim is being submitted as a method by which
Charles Unanue is attempting to do precisely what he agreed
in 1974 that he would never do. And. of course, we have the
fact that in 1974 Charles Unanue was paid something over
four million dollars in consideration for his promise not to do
that.
The presentation of a few moments ago in which Mr.
Unanue talked about economic duress was, frankly, mind
boggling. I have never quite heard anybody say that he really
didn’t get much because it’s almost a quote to say he netted a
little over two million dollars which, quote, “lasted a few
years.” That’s a difficult concept to accept. It’s particularly
difficult if it’s being submitted as a basis for my refusing to
enforce this agreement or my finding some form of economic
duress.
The argument as to why I should not enforce the 1974
agreement, of course, is based on the claim that I should apply
Puerto Rican law. The claim is that the Puerto Rican law
would invalidate the 1974 agreement. I find absolutely no
basis on which I should apply -- for me to apply Puerto Rican
law to invalidate the 1974 agreement.
First of all, there is a clear provision in that agreement
that the parties agree that the agreement shall be governed by
New York law.
Now, on the face of things, I see no reason whatsoever
why I should decline to enforce that. Admittedly, there could
be circumstances when such a freely negotiated choice of law
provision might be ignored by a court. There could
conceivably be circumstances which so strongly argue for
application of the law of some other jurisdiction that a judge
A-14
might say that notwithstanding the parties’ selection of the
law of one state, | will not apply that. That is clearly not this
case. There are clearly, and without contradiction, substantial
contacts with the State of New York in addition to contacts
with the State of New Jersey.
Certainly Goya Foods was a key part of that entire
agreement. Goya was a New York corporation. Goya was
primarily located in the State of New York. Excuse me. The
corporation was located in New York. Mr. Unanue himself
was at that time a domiciliary of New Jersey, not New York
but certainly a state with a body of law virtually identical with
that of New York as concerns the issues of which we’re
talking.
There was litigation in the federal courts of New York
which was being settled and resolved by this agreement. So
clearly there were significant contacts with the State of New
York.
Further, we have the policy of this forum state. | am
sitting in a court in New Jersey and I cannot ignore the policy
of this state. If it were clear, unambiguous and the reasons
were compelling as to why I had to apply the law of Puerto
Rico, of course | would do so, but to do so would certainly
violate some strong, important precepts of the law of this state
and to apply the law of New York would not violate those
precepts.
One of the strong precepts of the law of this state is that
when one freely enters into an agreement and enjoys the
benefits of that agreement, one should not be free many years
later to attempt to renounce that agreement, to attempt to set
aside the agreement and to renege on all of the obligations
that one has undertaken under that agreement, particularly
when one has received some four million dollars.
A-15
Another strong precept of the policy of this state is the
right of any domiciliary of this state to dispose of his assets as
he sees fit.
Now, an essential part of that 1974 agreement and a
critical part of it was the undertaking of Charles Unanue not
to challenge Prudencio’s right to exercise that New Jersey
right that one has to dispose of one’s assets as one chooses.
Were I to apply Puerto Rican law, I would also have to
set aside, if I accept Mr. Unanue’s argument, that strongly
held principle of this state.
It would be difficult to conceive of or create an argument
to set aside this agreement if one did it in 1975, 1976, 1977.
To do it in 1986 or 1987 is virtually impossible. We heard
Mr. Unanue address the question of why he delayed in
launching this attack, and frankly, the reasons, stated simply,
didn’t constitute any reasons.
He contended, and I’m sure it’s true, that Goya Foods
and Mr. Unanue’s brothers had substantial assets, and |
discount the statement about political influence. I don’t know
what that means. Certainly they had assets, but so did Mr.
Unanue. He had four million dollars worth of assets and if he
were determined to attack this agreement, even if he only had
two million dollars left after paying the other bills, that
certainly would have financed a proper attack on the
agreement.
It was interesting that one of the other reasons --
incredibly as it seems, incredibly as it sounds -- one of the
reasons why he didn’t launch an earlier attack, he said, was
because he would have had to pay back the money. That I
find mind boggling. Of course he would have had to pay back
the money. That’s exactly the point and that’s exactly why a
court should be extremely reluctant to entertain any attack
such as this at this time.
A-16
Claims of duress, in short, are submitted in conclusory
language without any substance whatsoever. Claims of fraud
are submitted on the same basis.
I note, incidentally, that much of the argument that was
submitted this afternoon by Mr. Unanue were based on
statements not in the record, statements which were not even
included in the brief that was submitted. I chose to accept
them but many of them are simply without foundation.
I am satisfied that at all relevant times, as Judge Kole
found, from 1929 on, Prudencio Unanue was a domiciliary of
this state. I am satisfied, without any question, that the
applicable law which governs disposition of assets is not the
law that was in effect in a state where one married many years
before.
Rather, the argument submitted by Mr. Griffinger in his
brief is correct. It is virtually the unanimous rule in this
country, and just about every state | guess that has considered
the issue, in all of the treatises and the Restatement of
Conflict of Laws, that the law that governs the ownership of
assets is the law of the state one lives in, one is a domiciliary
of, at the time one acquires the asset.
Simply because Prudencio and Carolina were married in
Puerto Rico in the 1920’s or before, does not mean that the
law of Puerto Rico governs their acquisition of assets for the
rest of their lives. Similarly, the fact that they were citizens of
Spain at that time certainly does not govern their acquisition
of assets for the rest of their lives.
As noted, Prudencio was a domiciliary of this country
and the state of New Jersey since at least 1929. There is no
indication that the assets in question were received before
1936. One could take 1936 as a base year in view of the
bankruptcy of Prudencio, and certainly the acquisition of
j
A-17
assets thereafter while Prudencio was a domiciliary of New
Jersey is governed by the law of New Jersey.
Those assets did not become subject to conjugal
partnership laws of Puerto Rico simply because the couple
had been married there many years before but were no longer
domiciliaries of Puerto Rico.
I'm also satisfied that even if one were to apply the law
of Puerto Rico under the case discussed and analyzed in the
reply brief submitted by the beneficiaries, and one were to
apply the tests set out in the Toppel case in which one seeks
the greatest contacts with the transaction, the most rational
conclusion is that the law of New Jersey and not that of
Puerto Rico would determine whether assets were or were not
subject to conjugal partnership laws of Puerto Rico.
The two parties, Carolina and Prudencio, were
domiciliaries of New Jersey. Their business was primarily
located in New York or New Jersey. They had become
citizens of the United States. They were not domiciliaries of
Puerto Rico and therefore, even under that test, I would find
again that the law of New Jersey rather than that of Puerto
Rico applies.
In view of all of the foregoing, I will sign an order first
approving the accounting that has been submitted. The
accounting was satisfactory and is approved.
The only challenge to the accounting is based on the
arguments of Charles Unanue which I have already addressed
and if there are some that I neglected to address, let me Just
note that I have considered them, I have not overlooked them,
and it’s only because of the very broad approach that was
submitted by Mr. Unanue this afternoon that I may overlook
specific comment on some of them.
A-18
With respect to all of the arguments submitted, I am
satisfied they are without merit. None should stand in the way
or will stand in the way of my approval of the accounting.
I’m satisfied that the 1974 agreement is valid, is
enforceable. I’m satisfied that all of the attacks on that
agreement, all of the attacks on the trust that precedes the
1974 agreement -- the 1970 trust that is -- or any attack on the
disposition provisions of the Will of Prudencio Unanue, if
there was any of that, all of them are without merit and must
be rejected.
Claims of fraud, conspiracy, duress are all rejected as
being without merit.
The assets with which we are concerned are not subject to
the law of Puerto Rico concerning conjugal partnership. They
are subject to the laws of this state which, of course, do not
include that concept.
The 1974 agreement, as I’ve said, not only bars Charles
Unanue’s attacks, direct attacks on the trust, on the Will, or
any other disposition by Prudencio. It also bars the challenge
clothed in an attack seeking to enforce rights of the late Mrs.
Unanue. That is nothing more than an indirect method of
attempting to accomplish what Charles Unanue is barred from
doing directly.
| have a form of order that was submitted.
[The court then signed the Order set forth on the next page. ]
A-19
In the Matter of the Settlement of the
Accounts of JOSEPH UNANUE and pao aati
FRANK UNANUE, Trustees Under
the Trust Agreement Dated JERSEY
November 16, 1970, as Amended, CHANCERY
By and Among PRUDENCIO DIV.: BERGEN
UNANUE, as Grantor, and COUNTY
PRUDENCIO UNANUE, JOSEPH
UNANUE and ANTHONY DOCKET NO.
UNANUE, as Trustees of Sixteen M-128817
Trusts Thereunder.
Civil Action
ORDER
This matter having been opened before the Court on the
joint application of the Trustees, the Beneficiaries, the
guardian ad litem for Jorge Unanue, and Goya Foods, Inc.,
and the Court having directed the submissions of all interested
parties in accordance with its Order dated October 15, 1993,
and a hearing having been held before the Court on November
19, 1993 with the attorneys for all parties to this action
appearing, to wit, Quirk & Gallagher, attorneys for the
Trustees (N. Patrick Quirk, Esq., appearing); Crummy, Del
Deo, Dolan, Griffinger & Vecchione, A Professional
Corporation, attorneys for the Beneficiaries (Michael R.
Griffinger, Esq., appearing); Durkin & Boggia, Esqs.,
guardian ad litem for Jorge Unanue (Martin T. Durkin, Esq.,
appearing); Saiber Schlesinger Satz & Goldstein, attorneys for
Goya Foods, Inc. (David M. Satz, Jr., Esq., appearing); and
Charles Unanue appearing pro se; and the Court having heard
A-20
and considered oral argument, and having read and considered
all the papers and exhibits submitted;
IT IS on this 19th day of November, 1993:
ORDERED, that the Second Accounting of Joseph
Unanue and Frank Unanue, Trustees under the Trust
Agreement dated November 16, 1970, as submitted with the
Verified Complaint and as supplemented and amended
through and including June 30, 1993, be and hereby is
approved as filed; and it is
FURTHER ORDERED, that this Court finds, determines
and declares that Charles Unanue and the bankruptcy estate of
Charles Unanue, each had and has no right whatsoever to
receive any assets from Prudencio Unanue’s estate or from the
Trust created by Prudencio Unanue on November 16, 1970, or
from any of the follow-on trusts created under said Trust; it
being specifically found that the fifty-three (53) shares of
Goya Foods, Inc. stock placed into said Trust by Prudencio
Unanue and administered under the Trust Agreement were
solely the property of Prudencio Unanue and were properly
included in the Trust and that Charles Unanue and the
bankruptcy estate of Charles Unanue have no interest therein,
direct or indirect; and it is
FURTHER ORDERED, that the final paragraph of this
Court’s Order of December 7, 1987 and paragraph 5 of this
Court’s Order of January 4, 1988 are hereby vacated; and it is
FURTHER ORDERED, that the Trustees are hereby
expressly authorized and directed to distribute forthwith from
the follow-on trusts the property interests of each Beneficiary
in each such trust to such Beneficiaries as have attained the
age of twenty-five (25) years; and it is
A-21
FURTHER ORDERED, that on Charles Unanue’s
Amended Counterclaim against Joseph Unanue, Frank
Unanue et al., as corrected by letter dated January 5, 1990,
judgment be and hereby is entered in favor of the
counterclaim defendants and against Charles Unanue on the
merits of said Counterclaim; and it is
FURTHER ORDERED, that this Court finds, determines
and declares that the contract known as the “Amendment
dated July 31, 1974 to Agreement dated June 9, 1972 for Sale
of Interests of Charles Unanue in Goya Foods, Inc. and
Affiliated Companies,” and each and every provision thereof,
was and is valid and enforceable and that Charles Unanue and
the bankruptcy estate of Charles Unanue each are bound
thereby; and it is
FURTHER ORDERED, that this Court finds, determines
and declares that the contract known as the “Agreement dated
June 9, 1972 for Sale of Interests of Charles Unanue in Goya
Foods, Inc. and Affiliated Companies” (except insofar as it
was expressly modified or superseded by the 1974
Amendment), and each and every provision thereof, was and
is valid and enforceable and that Charles Unanue and the
bankruptcy estate of Charles Unanue each are bound thereby;
and it is
FURTHER ORDERED, that this Court finds, determines
and declares that Charles Unanue has materially breached and
continues in material breach of the 1974 Amendment by
reason of his violations of Sections 6.02, 6.03, 6.04 and 6.08
thereof in this action and in other litigations, and the Court
reserves jurisdiction for the purpose of determining the
appropriate remedy or remedies for Charles Unanue’s breach
of contract; and it is
A-22
FURTHER ORDERED, that Charles Unanue’s Cross-
Motion dated November 8, 1993 for the relief requested
therein be and it hereby is denied in its entirety; and it is
FURTHER ORDERED, that on defendant Charles
Unanue’s Counterclaim against Goya Foods, Inc. ef al.
judgment be and it hereby is entered in favor of the
counterclaim defendants and against Charles Unanue on the
merits of said Counterclaim.
/s) ARTHUR J. LESEMANN, J.S.C.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.