Adversarial actions in bankruptcy should be dismissed when the underlying bankruptcy is dismissed

A related proceeding ordinarily should be dismissed following the termination of the underlying bankruptcy case. That general rule favors dismissal because a bankruptcy court’s jurisdiction over such related proceedings depends on the proceedings’ nexus to the underlying bankruptcy case. See In re Porges, 44 F.3d 159, 162 (2nd Cir.1995); accord In re Schottenstein, 371 B.R. 276, 280 (S.D.Ohio 2007); accord In re Federalpha Steel LLC, 341 B.R. 872, 881; accord In re Smith, Adv. Proc. No. 05-1183, Doc. #10 at *1 (N.D.Ohio, Dec.29, 2005). “Although a bankruptcy court may retain jurisdiction of some adversary proceedings despite the dismissal of the underlying case, those situations typically involve retention for the purpose of vindicating the court’s own authority and to enforce its own orders.” In re Smith at *3; accord In re Foley, 08-43794 (N.D.Ohio, June 11, 2009). Further, good cause must be shown for the court to retain jurisdiction. In re Schottenstein, 371 B.R. at 280. Such are not the circumstances in the present case.Some courts that have applied a four factor test for a bankruptcy court to retain jurisdiction over an adversary proceeding based on “related to” jurisdiction after the underlying bankruptcy case has been dismissed. Those factors are economy, convenience, fairness and comity. Id. at 281, citing Matter of Querner, 7 F.3d 1199, 1202 (5th Cir.1993). The first three factors favor dismissal when an adversarial proceeding is at its earliest stages. In re Schottenstein, 371 B.R. at 281. In Schottenstein, the court held that the first three factors were not met where the court had only recently issued a scheduling order, the parties had not substantially litigated the case, little discovery was completed, and the trial date was far away. Id. Fourth, comity is a concept that means that “all else being equal, state issues ought to be decided by state courts.” Id., citing In re Casamont Investors, Ltd., 196 B.R. 517, 524 (9th Cir.1996).