Muskin, Inc. v. APA Transport Corp. (In re Little Lake Industries, Inc.)

ORDER GRANTING MOTION TO DISMISS

In this adversary proceeding, the debtor in possession has sued out-of-district defendant Strippit, Inc., seeking a preference recovery of under $1000.00. Disagreeing with In re Van Huffel Tube Corp., 71 B.R. 155 (Bankr.N.D.Ohio 1987), the court grants the motion of Strippit to dismiss the complaint.

28 U.S.C. section 1409 (b) provides in pertinent part that “a trustee in a case under Title 11 may commence a proceeding arising in or related to such a case to recover a money judgment ... less than ... $1000.00 ... only in the district court for the district in which the defendant resides.” If one reviews the legislative history, and determines that the phrases “arising in” and “related to” in the statute are terms of art intended by Congress to apply only to those disputes which arise in the course of a bankruptcy proceeding but are not based on provisions of the Bankruptcy Code, then Van Huffel Tube is correct and the motion should be denied. However, the plain meaning of the statute is that if an action for less than $1000.00 arises in a bankruptcy or is related to a bankruptcy, it must be commenced in the district where the defendant resides.…