Birgans v. Magnolia Auto Sales, Inc.
Decision Date | 29 November 2012 |
Docket Number | Civil Action No. MC-12-S-03830-NE |
Parties | CHARLES J. BIRGANS, Plaintiff, v. MAGNOLIA AUTO SALES, INC., Defendant. |
Court | U.S. District Court — Northern District of Alabama |
This action is before the court on a motion by plaintiff, Charles J. Birgans, to withdraw the reference of this action to the Bankruptcy Court.1 After plaintiff filed for Chapter 13 bankruptcy under 11 U.S.C. § 1301 et seq., defendant, Magnolia Auto Sales, Inc., filed a claim in its capacity as a creditor.2 Plaintiff then filed an adversary complaint alleging that defendant had violated the federal Truth in Lending Act, 15 U.S.C. §1601 et seq., and the Alabama Deceptive Trade Practices Act, Ala. Code § 8-19-1 et seq. (1975), and that defendant had committed state-law negligence and wantonness.3 Plaintiff alleged the claims to be non-core, but related to the bankruptcy case pursuant to 28 U.S.C. §157, and demanded a trial by jury.4
28 U.S.C. § 157(d) (emphasis supplied).
Accordingly, § 157 creates two separate standards for withdrawal of reference: i.e., mandatory withdrawal "if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce," and permissive withdrawal "for cause shown." See, e.g., Abrahams v. Phill-Con Servs., LLC, Case No. 10-0326, 2010 U.S. Dist. LEXIS 124379 at *4 (S.D. Ala. Nov. 23, 2010) (discussing mandatory withdrawal); id. at 11 (discussing permissive withdrawal). As plaintiff does not state whether he seeks mandatory or permissive withdrawal of reference, this court will consider the grounds for withdrawal under both standards in turn.
Abrahams, 2010 U.S. Dist. LEXIS 124379 at *4-6 (alterations in original; emphasis supplied).
"Courts employing the 'substantial and material' test have expressed concern that parties could undermine Congress' intent to give district courts the discretion to refer Title 11 cases to bankruptcy courts by alleging insubstantial claims involving non-bankruptcy code federal law." Safety Guide of Ala., LLC v. McKnight Construction Co., Case No. 08-03415, 2009 U.S. Dist. LEXIS 109957 at *5 (M.D. Ala. Nov. 24, 2009) (citing In re American Body Armor & Equipment, Inc., 155 B.R. 588, 591 (M.D. Fla. 1993); United States v. ILCO, Inc., 48 B.R. 1016, 1021 (N.D. Ala. 1985)). Accordingly, "[t]he party seeking withdrawal bears the burden of demonstrating that it is required." Abrahams, 2010 U.S. Dist. LEXIS 124379 at *10 (citing In re Vicars Insurance Agency, Inc., 96 F.3d 949, 954 (7th Cir. 1996)) (alteration and emphasis supplied).
As in Abrahams, the plaintiff in this action has "failed to show that this action requires significant interpretation of any non-bankruptcy law of the United States, and [he has] thus failed to meet [his] burden." See Abrahams, 2010 U.S. Dist. LEXIS124379 at *10 (alterations and emphasis supplied). The mere fact that plaintiff filed a claim under the federal Truth in Lending Act is not enough to show that "the issues in question require more than the mere application of well-settled or 'hornbook' non-bankruptcy law." See id. at 5 (emphasis supplied). That plaintiff only asserts a single count against defendant under federal law, and that he asserts two other counts against defendant under state law, also counsels against a finding that this action requires significant interpretation of any non-bankruptcy law of the United States. See McKnight, 2009 U.S. Dist. LEXIS 109957 at *5-6 ( )(alteration supplied). Likewise, that defendant has not opposed plaintiff's motion for withdrawal of reference is not dispositive of whether this court should grant the motion.7 See Abrahams, 2010 U.S. Dist. LEXIS 124379 at *10 -11 ( )(alteration supplied).
Section 157(d) also permits a district court to withdraw a reference "for cause shown." Abrahams, 2010 U.S. Dist. LEXIS 124379 at *10 -11. "The decision whether to withdraw the reference is committed to the district court's discretion." Abrahams, 2010 U.S. Dist. LEXIS 124379 at *11 (citing In re Tate, Case No. 09-0039, 2010 WL 320488 at *8 (S.D. Ala. Jan. 18, 2010)). In determining the existence of cause for withdrawal of reference, the Eleventh Circuit directs the courts to "consider such goals as advancing uniformity in bankruptcy administration, decreasing forum shopping and confusion, promoting the economical use of the parties' resources, and facilitating the bankruptcy process." Dionne v. Simmons (In re Simmons), 200 F.3d 738, 742 (11th Cir. 2000) (quoting In re Parklane/Atlanta Joint Venture, 927 F.2d 532, 536 n.5 (11th Cir.1991); Holland America Ins. Co. v. Succession of Roy, 777 F.2d 992, 998 (5th Cir.1985)).
"Additional factors that may be considered include: (1) whether the claim is core or non-core; (2) efficient use of judicial resources; (3) a jury demand; and (4) prevention of delay." In re Price, Case No. 06-3317, 2007 WL 2332536 at *2 (M.D. Ala. 2007); BankUnited Financial Corp. v. FDIC, 436 B.R. 216, 220 (S.D. Fla. 2010). Even so, "[t]he mere fact a bankruptcy proceeding is not a core proceeding is not a sufficient reason to grant a motion for the withdrawal of the reference." In re Tate,2010 WL 320488 at *10 (quoting Eide v. Haas (In re H & W Motor Express Co.), 343 B.R. 208, 215 (N.D. Iowa 2006)) (alteration supplied). Likewise, "'[f]ederal courts have universally held that a Seventh Amendment jury trial right does not mean the bankruptcy court must instantly give up jurisdiction.'" In re Tate, 2010 WL 320488 at *9 (quoting In re Healthcentral.com, 504 F.3d 775, 787 (9th Cir. 2007)) (alteration supplied).
Granting plaintiff's motion for withdrawal of reference would undermine the goals of promoting uniformity, economy, efficiency, and preventing forum shopping, confusion, and delay. As of November 6, 2012, the record in the bankruptcy proceeding contained fifty-four documents,8 and the record in the in the adversary proceeding contained twenty documents,9 including an amended complaint,10 an answer,11 and an order setting the trial of plaintiff's claims against defendant for February 4, 2013.12 Accordingly, the bankruptcy court is already familiar with the facts and law regarding plaintiff's various claims and has taken steps toward their resolution, while this court would effectively have to start from scratch.
For the reasons explained above, the motion to withdraw the reference of this action to the Bankruptcy Court is DENIED.
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1. Doc. no. 1 (Motion to Withdraw Reference).
2. Id. at 1.
3. Doc. no. 1-7 (First Amended Complaint).
4. Id. ¶ 2.
5. In support, the Abrahams opinion cites the following cases from courts within the Eleventh Circuit: Bank United Financial Corp. v. FDIC, 436 B.R. 216, 220 (S.D. Fla. 2010) (Huck, J.); In re Security Bank Corp., Case No. 09-52409, 2010 WL 2464966 at *3 (M.D. Ga. 2010) (Royal, J.); ...
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