CA6 (Bankruptcy): Lowenbraun v. Canary [WD Ky. Lou; 7/6/2006)

Lowenbraun v. Canary
Bankruptcy; Immunity of trustee; jurisdiction

Western District of Kentucky at Louisville
06a0230p.06 7/6/2006

RONALD LEE GILMAN, Circuit Judge. Ethel Lowenbraun was married to Stanley Lowenbraun, once a successful oncologist who fell into financial ruin due to a gambling addiction. Ethel and Stanley legally separated in 1998, and Stanley filed a Chapter 7 bankruptcy petition shortly thereafter. Thomas Canary, along with his law firm Mapother and Mapother (collectively, Canary), was hired by the trustee of the bankruptcy estate to investigate whether some of the transfers made from Stanley to Ethel pursuant to their legal separation constituted an improper diversion of funds from the bankruptcy estate. In the course of his duties, Canary brought contempt proceedings against Ethel and Stanley.

Ethel subsequently filed suit in a state trial court in Kentucky, accusing Canary of libel, slander, abuse of process, wrongful use of civil proceedings, and outrageous conduct. Canary removed the action to the Bankruptcy Court for the Western District of Kentucky, which decided to retain jurisdiction over the matter despite Ethel’s motions for mandatory abstention and for remand to the Kentucky state court. The bankruptcy court held as a matter of law that Canary was entitled to absolute immunity for his statements and, in the alternative, that Canary was entitled to summary judgment on the merits of the case. This decision was affirmed by the district court, and Ethel timely appealed.

For the reasons set forth below, we AFFIRM the judgment of the district court.

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