VESCIO v. THE MERCHANTS BANK, (D.Vt. 2001)

WILLIAM K. SESSIONS III, United States District Judge.

There remain two outstanding motion filed by the parties. First, Debtors Pasquale and Vatsala Vescio filed a Motion for Clarification of the Court's Denial of AMRESCO's Motion to Dismiss Vescios' Supplemental Objection to AMRESCO's Proof of Claim (Paper 61), filed on May 18, 2001. AMRESCO filed a Motion to Reconsider and a Supplemental Motion to Dismiss (Paper 63) on May 31, 2001. Both motions seek clarification or reconsideration of the Court's Order of May 11, 2001, by which it denied AMRESCO's Motion to Dismiss Vescios' Objection to AMRESCO's Proof of Claim. The Court denied the motion based upon its determination that the matter should be resolved in Bankruptcy Court.

On December 9, 1996, U.S. Bankruptcy Judge Francis Conrad merged the Vescios' objection to AMRESCO's Proof of Claim into the pending adversary proceeding against The Merchants Bank, AP 96-1015. This Court withdrew the reference to the adversary proceeding against The Merchants Bank on September 9, 1999. The withdrawal of reference technically included the Vescios' Objection to AMRESCO's proof of claim. By order of this date, the adversary proceeding involving the Vescios' claims against The Merchants Bank has been completed.

The Vescios tiled a supplemental objection to AMRESCO's proof of claims on September 21, 2000. AMRESCO moved to dismiss those supplemental claims on a variety of grounds on October 10, 2000. The Court denied AMRESCO's Motion to Dismiss on May 11, 2001, finding that the motion should have been filed in bankruptcy court. AMRESCO now argues that if this Court has no jurisdiction to hear the motion to dismiss the Vescios' objections, then it also has no jurisdiction to consider those same objections to their proof of claim. The Court agrees.

The Court's intention in its order granting the withdrawal of reference was to rule upon the adversary proceeding against The Merchants Bank. The U.S. Bankruptcy Court is best suited to consider respective proofs of claims in bankruptcy matters, subject to this Court's appellate review. All matters regarding AMRESCO's proof of claim and the Vescios' objections should be decided initially by the Bankruptcy Court.

The Court hereby Grants in part and Denies in AMRESCO's Motion to Reconsider and Supplemental Motion to Dismiss (Paper 63). The motion to reconsider is DENTED; the supplemental motion to dismiss is GRANTED without prejudice, so that the Vescios may refile their supplemental objections to AMRESCO'S proof of claim in Bankruptcy Court. The Vescios' Motion for Clarification is DENIED (Paper 61). The Court REMANDS all issues regarding AMRESCO's proof of claim to the U.S. Bankruptcy Court.