Debtors dismissed their Chapter 13 case while an adversary proceeding initiated by Plaintiffs was pending. Debtor defendants argued that although the Court had the ability to retain jurisdiction of the adversary proceeding, it should exercise its discretion and dismiss the adversary. The Plaintiffs argued jurisdiction should be retained because of the substantial time the parties had devoted to the issue. The Court found that the considerations of retention (i.e., judicial economy, federal interest, effect of the proceeding on the bankruptcy case) did not weigh in favor of the Court retaining jurisdiction. The Court found that the remaining issues were solely state law claims and the adversary proceeding had not advanced to a point where it would be unfair to the parties to litigate the matter in state court as exhibits had not been filed and a hearing had not yet occurred. The Court exercised its discretion and dismissed the adversary proceeding.
Jurisdiction of Adversary Proceedings