UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT DIVISION

IN RE:

GRW INDUSTRIES, INC.

DEBTOR CASE NO. 91-30567

DANA CORPORATION PLAINTIFF

VS. ADV. NO. 92-3005

GRW INDUSTRIES, INC., et al. DEFENDANTS

MEMORANDUM OPINION

This matter is before the Court on the plaintiff's Motion for Discharge. This Court received this adversary proceeding from the United States Bankruptcy Court for the Western District of Kentucky on March 11, 1992, that Court having entered an Order Granting Change of Venue on that date. The debtor had previously removed the proceeding from United States District Court to the Bankruptcy Court. The debtor has alleged that this is a core proceeding. Defendant Royal Bank of Canada ("Royal Bank") disputes the core nature of the proceeding and does not consent to the entry of final judgment by this Court. The plaintiff and the remaining defendants have not made any allegations concerning the nature of the proceeding.

The debtor's characterization of this proceeding as core is unsupported by so much as a reference to a Code provision. As defendant Royal Bank points out, the Court must look behind any mere characterization and determine the nature of the relief sought. Royal Bank cites In re Northeast Dairy Co-op. Federation, Inc., 72 B.R. 663, 673-675 (Bkrtcy.N.D.N.Y. 1987), aff'd, 76 B.R. 910 (N.D.N.Y. 1987), in support of its position. In this case, the debtor, Nedco, filed an adversary complaint to compel turnover of property pursuant to 11 U.S.C. '542. It sought an order directing one of the defendants, Dellwood, to pay over a certain sum.

At the same time, all the parties to the adversary proceeding were parties to an interpleader action commenced in United States District Court by Dellwood. The District Court judge, mindful of the automatic stay, declined to proceed with the interpleader action. The Bankruptcy Court, therefore, did not have the actual interpleader action before it, as this Court does, but was called upon to "determine the priority of interests in the sums deposited by Dellwood." Id, at 674. The court opined that it, as well as the District Court, had jurisdiction to make this determination. The court did not believe, however, that the debtor's action to compel turnover of property constituted a core proceeding, but that it was a non-core, related proceeding in which it would submit proposed findings of fact and conclusions of law to the District Court.

This Court is inclined to agree with the Northeast Dairy Co-op. court's reasoning, and in the absence of any reference to statutory or case law support of the debtor's position, finds that it has jurisdiction to hear this matter as a non-core, related proceeding in which it will recommend proposed findings of fact and conclusions of law to the United States District Court for the Eastern District of Kentucky.

As concerns the plaintiff's Motion for Discharge, the plaintiff maintains that it is a disinterested stakeholder seeking only to avoid paying the same debt more than once. None of the other parties to this action disputes the plaintiff's position in this regard. The cases and authorities cited by the plaintiff support its position, and no other party has cited any authority in opposition. This Court therefore finds that the plaintiff's Motion for Discharge should be sustained. The only issue remaining to be determined in this regard is the plaintiff's entitlement to attorney fees relative to the interpleader action.

The plaintiff has made application to this Court for attorney fees and expenses in the amount of $6589.38. As pointed out in In re OEM Industrial Corporation, 135 B.R. 247, 249-250 (Bkrtcy.W.D.Pa. 1991), courts may award attorney fees and costs to the stakeholder in an interpleader action. The court must decide if the award is appropriate under the circumstances of the case, and must balance the stakeholder's right to recover its fees against the true beneficiary's right to the full amount of the interpleaded funds.