IMPROVING JURISDICTION AND PROCEDURE
PROPOSAL #8: MANDATORY ABSTENTION
Title 28 provides that on timely motion of a party, the district court shall abstain from a
proceeding if an action related to a case under title 11 but not arising in or under a case under title
11 that could not have been brought in federal court absent jurisdiction under section 1334 is
commenced and can be timely adjudicated in a proper state forum. 28 U.S.C. § 1334(c)(2).
The mandatory abstention provisions of 28 U.S.C. § 1334(c)(2) should be
deleted in favor of the permissive abstention provisions contained in 28 U.S.C.
Reasons for the Change
Mandatory abstention of proceedings in bankruptcy cases was added to the Judicial
Code in the Bankruptcy Amendments and Federal Judgeship Act of 1984. It did not exist
prior to enactment of that legislation. As written, it requires abstention if (1) a timely motion is
made; (2) the "related to" proceeding could not have been brought in federal court
absent the intervening bankruptcy; and (3) is commenced in a proper state forum and can be
timely adjudicated in that forum.
Discretionary abstention serves to buttress the federalism and state law comity issues of the
bankruptcy judicial process by permitting state law actions to be litigated in the state forum in the
interests of justice and in the interest of state law comity. The discretionary abstention provisions
include proceedings "arising under", "arising in" or "related
to" a case under title 11. Thus, discretionary abstention applies to all bankruptcy
proceedings (core as well as noncore) whereas mandatory abstention only applies to
"related to" or noncore proceedings. There is nothing about mandatory withdrawal
that is required for the constitutionality of the bankruptcy judicial system.
The cases in which mandatory abstention has been requested are in disarray even as to the
meaning and application of the above mentioned provision in § 1334(c)(2). Confusion has
arisen over whether the state action has to have been commenced prior to the commencement of
the bankruptcy case. [ FN: One of the earlier
drafts of section 1334(c)(2) required a state court action which "has been or will be timely
instituted, " while the section as enacted states only that an action is commenced and can be
timely adjudicated. See S. Bill 1013 (passed by Senate on April 27, 1983).]
As drafted, section 1334(c)(2) opens the possibility that it does not apply unless that state law
action had been commenced prior to the commencement of the bankruptcy case. Such litigation
does not go to the merits of the litigated dispute and only serves to delay both its resolution and
the progress of the title 11 case as a whole if resolution is a key element in the estate.
Mandatory abstention has led to further confusion over what constitutes a timelyadjudication
in the state forum. [ FN: See , e.g. ,
Acolyte Electric Co. V. City of New York , 69 B.R. 155 (Bankr. E.D.N.Y. 1986) (holding that
the fact that it would take longer to adjudicate the action in state court was determinative); J.D.
Marshall Int l Inc. V. Redstart Inc. , 74 B.R. 651 (N.D. Ill. 1987) (precluding mandatory
abstention on grounds that action would take four or five years to adjudicate in state
court).] Rather than disputes being focused in the bankruptcy court for
hearing, this portion of section 1334(c)(2) requires that some disputes instead go to the state
Additionally, mandatory abstention is a limitation on the original intent to invest the
bankruptcy court with a broad jurisdictional base as evidenced in the 1978 Bankruptcy Reform
Act. Such jurisdiction promotes the most efficient and least costly process for the resolution of
disputes that are related to bankruptcy cases.
The Proposal would merely eliminate the mandatory feature of abstention; but would retain
discretion in the district judge to order abstention in the interests of justice or in the interest of
comity with state courts and state law.
It may be argued that when a "related to" state law proceeding is the focus of the
litigation with the debtor, a state court is the more appropriate adjudicative forum if the claim can
be timely adjudicated there.