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Case 1:04-cv-00265-GI\/IS Document 9-7 Filed O3/07/2005 Page1 0f 3

Case 1:O4—cv-00265-Gl\/IS Document 9-7 Filed O3/07/2005 Page 2 of 3
\/lkstlaw
Not Reported in B.R. Page l
(Cite as: 1995 WL 311867 (Bankr.M.D.Pa.))
Only the Westlaw citation is currently available. American Insurance Company is indebted to the IRS
in the approximate amount of One Hundred Twenty-
Six Thousand Five Hundred Eighty—Eight and 38r' 100
Dollars ($126,588.38). This responsibility stems from
Unjggd Statgs Bankruptcy Cnni·t_ M_D_ pcnncylynnin the fact that the Debtor, as a responsible officer of
Varsity Sodding, is personally obligated for payment
In tc jclin YARQSZI l)cl,tni_ of the withholding taxes and, therefore, National
John YAR()gZ_ plaintiff, American Insurance Company should be required to
v_ pay the same in order to relieve the Debtor of this
NATIONAL AMERIC AN INSURANCE liability. The Debtor asserts standing by arguing that
COMPANY and Midwcst lndcinnity Cci~p_ he is third-party beneficiary under the terms of the
D€fgnda_ntS_ contract and, as a Debtor-in-Possession, this court has
jurisdiction over this case.
Bankruptcy No. 5-94-00199. Adv. N0. 5-94-
0gi6]A_ The Defendants respond by filing the instant Motion
to Dismiss. Among a number of responses by the
March 24, l995_ Defendants are that the Debtor, if claiming third-
party beneficiary status, must accept contract burdens
Robgn gniclninn, Blccnicbnigy PA] {ni as well as benefits. One of those burdens is to be
dgbtgrfplaintlffi subject to the contractual forum selection clause
found in the bonds which places resolution of any
Donrla M. Millar, earner Valley, PA, rar aaranrlanra. disputes under did bunds in dw sms cuurt ur the
district court in which the contract was performed.
Alternatively, the Defendants argue that the employer
OPINION/{ND ORDER withholding taxes are not payable by a surety under
the bonds and, because withholding taxes under the
JOHN I THOMAS1 Bankruptcy Judge- Internal Revenue Code are taxes and not wages, they
are equally not payable by a surety under the bond.
,,1 Before the emm is e eempleim Of the Debtor, liinally, the Defendants argue that the Debtor has no
John Yemezl (hereinafter ..DebtO1,..)’ Seeking an right to action under the bonds because he is not a
order of this court to compel the Defendants, Clmmam under the bOndS‘
National American Insurance Company and Midwest ____
Indemnity Corporation, (hereinafter "Defendants"), to The cqum at thls pmmr IS hcsmmt t0 addrcss
pay Form 941 taxes to the IRS pursuant to Leterrlg substantive issues under the terms of the bond
Revenue Code Section 6672, 1lU.S.C.§ 507|aland mchldlng the Enforcement Of the cmmlacmal
ll29lalt9)(Cl. The facts are not in dispute and can be pmvlsums Of the bend? cljmccrmng the forum
summarized briefly as fenewe selection clause. A determination as to effect of that
provision requires a resolution of a substantive issue
In of about October ef 1991, Varsity Seddine concerning the rights ofthe parties under the terms of
ssrrrra Inc. arraraa rrrra rwa rn subcontracts with the *>¤1?d· S0 t¤¤ would *>s_=· d¤=<=%S¤¤¤ as is Whether Or
George Hyman Cenmuemm Company fm, the not this Debtor can claim third-party beneficiary
construction of the National Archive Building Project Status under the C°nm’l°tS‘
in College Park, Maryland, and for the constmction * _ _ _ l
ar rrra Naval lnrallrganrra narrrar in Suitland, _ 2_ Nether Sus he put me f¤<=uS ds ¤¤¤¥tS
Maryland. National American Insurance Company J““Sd‘°T1°““1 hwg {Of h°“““€ the undcdymg
arpprraa parrarrrrarraa an payrrrarr rrarrar rar sarr ar ·i=¤r¤¤1su*- I¤ Ode Wsfds dee the ¤¤u¤ have
tra irraiaarr. rraraanar, Varna saaarrrg rnraa to pay J““Sd‘°“°“ under the Pr¤,yu¤¤¤5 sf
employer withholding taxes for both of the projects. and Lil I1? mnjlmctlon Wlth this
The complaint alleges that this refusal or inability to qucstmm nmthcr of tha pal-ms presented Or f¤==¤S·==d
pay the withholding taxes constituted a aararrlr by °“‘h°P°S“““ °f‘h° °*”° “S°l£
varsity sodding under the terms of the bonds. Based _
upon rrara rrarr, rra complaint allegra rrar nrrrarar This DEM he ¤ ¤¤¤¤md Charm ll da udsr
Copr. © West 2004 No Claim to Orig. U.S. Govt. Works

Case 1:O4—cv-00265-Gl\/IS Document 9-7 Filed O3/07/2005 Page 3 of 3
Not Reported in B.R. Page 2
(Cite as: 1995 WL 311867 (Bankr.M.D.Pa.))
which, presumably, the Debtor has been fulfilling its law, (4) the presence of a related proceeding
responsibilities. One of the terms of the plan was a commenced in state court or other nonbankruptcy
jurisdictional reservation in this court of all court, (5) the jurisdictional basis, if any, other than
adversaries pending at the time of the confirmation of 28 U.S.C. § 1334, (6) the degree of relatedness or
the plan. But, what is the gravamen of the instant remoteness of the proceeding to the main
complaint? The Debtor, as a third—party beneficiary bankruptcy case, (7) the substance rather than the
to a contract, requests this court to force the fomi of an asserted 'core' proceeding, (8) the
Defendants, as the promisor under a surety bond, i.e. feasibility of severing state law claims from core
a contract, to perform its obligations under the terms bankruptcy matters to allow judgments to be
of that bond. In essence, the court is presented with a entered in state court with enforcement left to the
breach of contract action or an action to compel bankruptcy court, (9) the burden of my docket, (10)
specific performance of the temis of a contract. This the likelihood that the commencement of the
court has earlier held that enforcement of pre-petition proceeding in bankruptcy court involves forum
contract actions or breaches of that contract are non- shopping by one of the parties, (1 1) the existence
core related proceedings. See A gri—Concrete of a right to a jury trial, and (12) the presence in the
Products v. Fabcor & Mr. Pocono 153 B.R. 673 proceeding of nondebtor parties.
(Bankr.M.D.Pa. 1993g.
*3 The twelve (12) factors listed by the In Re
In this action, the Debtor is requesting the court to Republic Readers case are not in the conjunctive.
force the Defendants to comply with the terms of this Therefore, the court does not need to find each of the
pre-petition contract. Is the matter a core proceeding twelve (12) factors present to exercise its
giving this court jurisdiction to proceed or is it a non- discretionary abstention.
related matter to which this court may have
jurisdiction but may decline to exercise that The court has determined that the overall effect on
jurisdiction? Under the terms of the Third Circuit the efficient administration of this instant bankruptcy
case of Pacor v. Higgins, 743 F.2cl 984 (3rd. Cir. estate is nominal. There are no core bankruptcy
1984) the instant matter is a related non- core matters to be severed from the state law claim
proceeding. It is tme that there conceivably will be an thereby rendering any impediment to the entering of
increase in the distribution to be made to this Debtor's a judgment in state court with enforcement left to the
unsecured creditors should it be successful on the bankruptcy court. With no apparent creditor activity
merits of the underlying complaint but, that in itself and a presumption that the Debtor is fulfilling the
does not render the instant mattera core proceeding. terms of the continued plan, the instant matter is
remote to the continued proceeding of the main
After a review ofthe complaint, the pre-trial motions bankruptcy case. Finally, the com has determined,
and all supporting documents filed thereto, the court based upon the arguments made by the Debtor in his
has determined that, since it cannot enter a final brief concerning the alleged difficulties of presenting
order, it will abstain from hearing this matter. This this adversary in the courts of Maryland, that there is
court exercises that discretionary abstention sua a strong likelihood that this case is presently in the
sponte. See Scherer v. Carroll, 150 B. R. 549, 552 bankruptcy court as a result of the Defendant forum
{D.}/t. 19931; ln Re Cloverlv Associates, Ltd. shopping.
Partnership, 1993 Ban1cr.Lexis 405 (Bkrtcy.E.D.Pa.
1993). Based upon the foregoing, the court has determined
to exercise its discretionary abstention powers under
Many of the commonly accepted factors a court 28 U.S.C. § l334(c)(l[. The court does not render
should look to when determining whether to exercise any decision on the merits of any of the arguments
its discretionary abstention powers are those which raised in the complaint and the Motion to dismiss and
courts look to in a withdrawal of reference situation. the change of venue. By abstaining from this instant
These factors are set forth in Republic Readers matter, the court considers the complaint and Motion
Service, Inc. v. Magazine Service Bureau Inc. {In Re to dismiss to be moot at this point.
Republic Rearler'sl, 81 B.R. 422, 429 [Bankr.S.D. Tex.
1987) and they are as follows: 1995 WL 311867 (Bankr.M.D.Pa.)
(1) the effect or lack thereof on the efficient
administration of the estate if a court recommends END OF DOCUMENT
abstention, (2) the extent to which state law issues
predominate over bankruptcy issues, (3) the
difficulty or unsettled nature of the applicable state
Copr. © West 2004 No Claim to Orig. U.S. Govt. Works

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