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Federal Court Lacked Jurisdiction Because Plaintiff’s State Consumer Protection Act Claims Were Not Sufficiently Related to His Prior Bankruptcy

Conley B. Sheets, Jr. v. Caliber Home Loans, Inc.
(January 14, 2016) United States District Court for the Northern District of West Virginia

by Matthew J. McCloskey, Associate
Semmes, Bowen & Semmes (

Available at:

In a recent opinion, the United States District Court for the Northern District of West Virginia held that it had no jurisdiction to adjudicate Plaintiff’s claims based on the West Virginia Consumer Credit and Protection Act (“WVCCPA”) because such claims did not arise under the Bankruptcy Code and were not related to Plaintiff’s bankruptcy.

On April 28, 2014, Plaintiff, Conley B. Sheets, Jr., filed for Chapter 7 Bankruptcy. On May 30, 2014, the trustee of Plaintiff’s bankruptcy estate reported that the estate had been fully administered. Nine (9) months later, on May 4, 2015, Plaintiff filed this case in state court against Defendant, Caliber Home Loans, Inc., alleging that Defendant violated the WVCCPA by: (1) attempting to contact him directly despite that it knew he was represented by an attorney; and (2) making false representations regarding the amount and status of Defendant’s claims against Plaintiff. Defendant removed the case to federal court, asserting that federal jurisdiction was proper because Plaintiff’s claims were related to interactions between Plaintiff and Defendant as a result of Plaintiff’s bankruptcy.

Plaintiff moved to remand. Plaintiff argued that none of his claims involved any provision of federal law, and that his claims did not “arise under,” “arise in,” or “relate to” Title 11 of the United States Code. Furthermore, Plaintiff asserted that, even if jurisdiction was proper, the Court should abstain from deciding this matter, which involved only state law. Defendant opposed Plaintiff’s motion, arguing that Plaintiff’s claims against it were a “core proceeding” arising under Title 11 because the claims were based on Plaintiff’s purported “freedom from creditor communications in light of his bankruptcy discharge.” Consequently, Defendant contended that the Northern District of West Virginia had exclusive jurisdiction over this matter.

Judge Gina M. Groh, writing for the Court, began by discussing the applicable law as to whether claims “arise under,” “arise in,” or are “related to” Title 11. A proceeding arises under Title 11 if the cause of action is created by the Bankruptcy Code and does not exist outside the context of bankruptcy. A proceeding arises in Title 11 when, even though it is not created by Title 11, it would not exist if it were not for the bankruptcy. A proceeding is related to Title 11 if the outcome of the case “could alter the debtor’s rights, liabilities, options, or freedom of action,” and the proceeding affects the administration of the bankruptcy estate in some way. Finally, the Court noted that, even if the Court were to have jurisdiction under the above theories, the Court could exercise permissive abstention in the interest of allowing state courts to settle matters of state law.

Applying these principles to the case, the Court concluded that a remand was proper. First, it noted that Plaintiff’s claims were not related to a Title 11 proceeding because the estate had been fully administered and, consequently, the administration of the bankruptcy estate could not be affected in any way. Second, Plaintiff’s claims did not arise in his bankruptcy because the nature of his claims, i.e., Defendant’s purported unlawful contact and false representations, “could survive in their own right, regardless of whether or not [Plaintiff] ever filed for bankruptcy.” Third, Plaintiff’s claims clearly were not created by Title 11, and therefore did not arise under Title 11. Finally, even if the Court had jurisdiction over the matter, Judge Groh noted that the Court would exercise abstention in the interest of allowing West Virginia’s state courts to decide the case. The Court, therefore, granted Plaintiff’s motion to remand.