Burford Abstention

Burford Abstention

      Peter Mahler, in his blog New York Business Divorce, has reviewed a recent New York decision on Buford Abstention in the context of the dissolution of a non-profit corporation.

      Under Burford Abstention, federal courts, although they would have the jurisdictional capability to do so, will defer to state courts with respect to matters particular to the organization of business organizations. The intent is to avoid creating conflicting law between state and federal courts. In this instance, where the common law dissolution of a non-profit membership corporation was sought, the federal court decided that it would be best for a state court to consider that question. This holding is consistent with prior New York law, reviewed by Peter, with respect to actions for a statutory judicial hearing.

      The title of the posting is Another Door Closes to Federal Court in Judicial Dissolution Cases; HERE IS A LINK to it.

      This decision stands in opposition to a 2019 decision of Judge Van Tatenhove of the Federal District Court for the Eastern District of Kentucky, wherein he held, on reconsideration, that Burford Abstention did not preclude him from ruling on a suit seeking judicial dissolution of a business corporation. That case was Henley Mining, Inc. v. Parton, Civ. No. 6:17-CV-00092-GFVT, 2019 WL 1048839 (E.D. Ky. March 5, 2019).  HERE IS A LINK to my review of it. It, in turn, includes a link to the decision rendered prior to Judge Van Tatenhove’s reconsideration of the matter and reversal of his prior decision.