IN RE LUNT
In re: PHILIP DUANE LUNT, Chapter 7, Debtor.
Case No. 10-13712.
United States Bankruptcy Court, D. Kansas.
May 2, 2011.
MEMORANDUM OPINION AND ORDER DENYING MOTION TO EXERCISE DISCRETIONARY ABSTENTION
DALE L. SOMERS, Bankruptcy Judge
The matter before the Court, filed by Peoples Bank of Pratt (hereafter "Bank"), is the Motion to Exercise Discretionary Abstention as it Pertains to the Motion for Contempt filed by Debtor (hereafter "Motion to Abstain").1 Debtor Philip Lunt, opposes the Motion.2 This Chapter 7 case was originally filed in 1988 as Case no. 88-41511, and Debtor was granted a discharge on July 19, 1989. The case was reopened on August 31, 2010, with case no. 10-13712, to allow the Debtor to file a Motion to Find Peoples Bank in Contempt for Violating the Discharge Injunction (hereafter "Motion for Contempt"). The Motion for Contempt was filed on September 9, 2010. It alleges that the Bank, in its capacity as trustee of the Harry B. Lunt Trust, violated Debtor's discharge by applying trust distribution due the Debtor as payment on Debtor's note to the trust, the liability on which was discharged. The Bank objected to the Motion for Contempt on the merits, relying primarily upon the doctrine of recoupment, a well-established exception to the discharge injunction.3
The Bank also responded to the Motion for Contempt by filing the Motion to Abstain which is now before the Court. It argues that this Court should defer to the state court because the Motion for Contempt raises the same issues as currently pending in state court litigation brought by the Debtor, styled Lunt v. The Peoples Bank, et al., pending in the District Court of Pratt County Kansas, case no. 10 CV 52 (hereafter "State Court Litigation").
The statutory basis for permissive abstention is 28 U.S.C. § 1334(c)(1). It provides:
(c)(1) Except with respect to a case under chapter 15 of title 11, 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.