In re Kiefer

• Decision Date: 17 April 2002
• Docket Number: Civ. No. 01-40129.
• Citation: 276 B.R. 196
• Parties: In re Walter Frank KIEFER, Debtor. Laborers' Pension Trust Fund-Detroit and Vicinity, et al., Plaintiffs, v. Walter Frank Kiefer, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

276 B.R. 196

In re Walter Frank KIEFER, Debtor.

Laborers' Pension Trust Fund-Detroit and Vicinity, et al., Plaintiffs, v. Walter Frank Kiefer, Defendant.

Civ. No. 01-40129.

United States District Court, E.D. Michigan, Southern Division.

April 17, 2002.

Earle I. Erman, Craig E. Zucker, Erman, Teicher, Southfield, MI, for Laborers Pension Trust Fund, Laborers Vacation and Holiday Trust Fund, Detroit and Vicinity, Laborers and Poured Concrete Workers Insurance Fund, and Michigan Laborers Training Fund.

OPINION AND ORDER

GADOLA, District Judge.

Before the Court is "Plaintiffs' motion for reconsideration of order entered on March 27, 2002" [docket entry 10]. Pursuant to Local Rule 7.1(e), the Court concludes that a hearing would not aid substantially in the disposition of this motion. For the reasons set forth below, the Court shall grant Plaintiffs' motion and withdraw this proceeding from the Bankruptcy Court.

I BACKGROUND

On March 27, 2002, this Court ordered that Plaintiffs' motion pursuant to 28 U.S.C. § 157(d) and Federal Rule of Bankruptcy Procedure 5011(a) to withdraw the reference of adversary proceeding from the bankruptcy court [docket entry 1] be denied. In large part, the Court so ruled because Plaintiffs' brief in support of their motion was not presented to this Court.

As is plain from the brief in support of Plaintiffs' motion for reconsideration, however, Plaintiffs properly filed a brief in support of their motion. Plaintiffs filed that brief in the Bankruptcy Court. The Bankruptcy Court, however, seems to have committed an administrative error by not forwarding that brief to this Court. See Local Rule 83.5(e)(1)(C).

In other words, Plaintiffs' counsel filed a brief correctly. Through no fault of Plaintiffs' counsel, that brief never reached this Court. Because this Court did not have Plaintiffs' brief in support of the motion, and because of the arguments in Defendant's response brief, this Court denied withdrawal on March 27, 2002. Plaintiffs now move for this Court to reconsider its order of March 27, 2002.

II LEGAL STANDARD

To succeed on a motion for reconsideration, the moving party "must not only demonstrate a palpable defect by which the court and the parties have been misled but also must show that correcting the defect will result in a different disposition of the case." E.D. Mich. Local Rule 7.1(g)(3). A "palpable defect" is a defect that is obvious, clear, unmistakable, manifest or plain. See Blacks Law Dictionary 1110 (6th ed.1990); Webster's New World Dictionary 974 (3rd Ed.1988); Webster's New World Thesaurus 544 (Rev. Ed.1985). "Generally ... the court will not grant motions for ... reconsideration that merely present the same issues ruled upon by the court, either expressly or by reasonable implication." E.D. Mich. Local Rule 7.1(g)(3).

III ANALYSIS

In this case, a palpable defect — the mistaken belief that Plaintiffs had not properly filed a brief in support of their motion for a withdrawal of the reference — underlay this Court's order of March 27. Whether Plaintiffs succeed on their motion for reconsideration thus turns on whether correcting that defect (i.e., considering Plaintiffs' brief in support of the motion for withdrawal) would change the disposition of the matter. For the reasons set forth below, the Court resolves this question in the affirmative.

Plaintiffs first argue that withdrawal is mandatory. Under § 157(d), withdrawal is required where the movant establishes that: (1) the movant is a party; (2) the motion is timely; and (3) resolution of the proceeding before the Bankruptcy Court requires consideration of both Title 11 and another federal law regulating organizations or activities affecting interstate commerce. In re Baldwin-United Corp., 47 B.R. 898, 899 (S.D.Ohio 1984).

The movants are parties to this action. As per the Honorable Burton Perlman's order of January 17, 2002, with which this Court agrees, this motion is timely. Therefore, the determinative question is whether "resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce." 28 U.S.C. § 157(d). If so, this Court "shall" withdraw the proceeding. Id.

Plaintiffs argue in the affirmative, maintaining in their motion that the "reference should be withdrawn from the Bankruptcy Court because ... this matter requires, in part, the consideration of" the Employee Retirement Income Security Act of 1974 as amended ("ERISA"), 28 U.S.C. § 1001, et seq. (Mot. at ¶ 1.) Plaintiffs elaborate on this point in their brief, stating that, during a scheduling conference, "Defendant asserted that he disputed several issues of liability" requiring the consideration of federal laws outside the Bankruptcy Code that affect interstate commerce. (Pl. Br. at 5.) It appears that one of these disputed issues of liability is, as Defendant admits in his response brief, "whether Defendant acted as a fiduciary for purposes of ERISA." (Def. Br. at 9.) Plaintiffs have filed a reply brief in which they echo Defendant's response brief on this point, asserting that whether Defendant violated a fiduciary duty under ERISA is at issue in this proceeding. (Pl. Reply Br. at 3.)

It thus appears that all parties agree that there are two disputed issues necessary to the resolution of this case that require consideration of a statute that is both outside of the Bankruptcy Code and affecting interstate commerce: (1) whether Defendant was an ERISA fiduciary; and, if so, (2) whether Defendant violated that fiduciary duty. This would seem to settle the matter. Section 157(d), as discussed above, mandates withdrawal whenever "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 ERISA is obviously a statute that affects interstate commerce.

Quoting In re White Motor Corp., 42 B.R. 693 (N.D.Ohio 1984), however, Defendant argues that § 157(d) mandates withdrawal of the reference only where "resolution of the claims will require substantial and material consideration of ... non-Code statutes." Id. at 705. The White court enunciated this "substantial and material consideration" test only after examining the structure and legislative history of § 157(d), concluding that Congress intended courts to apply a more restrictive interpretation of the provision than its text alone would suggest.

Plaintiffs, on the other hand, urge the Court to interpret § 157(d) as per Martin v. Friedman, 133 B.R. 609 (N.D.Ohio 1991). The Martin court held that, where the defendant's fiduciary duties under ERISA are an issue necessary to the resolution of the case, withdrawal is mandated. Id. at 611-12. In reaching this conclusion, the district court relied upon the plain language of § 157(d), reasoning that withdrawal was mandatory because resolving the action would merely "require consideration of federal laws [ERISA] regulating interstate commerce, in addition to title 11 of the Bankruptcy Code." Id. at 612. Defendant admits that this case requires consideration of whether Defendant has violated a fiduciary duty under ERISA; i.e., Defendant admits that resolution of this case requires at least some consideration of a federal law outside of Title 11. Therefore, were this Court to follow the Martin court's literal interpretation of § 157(d), it is clear that withdrawal would be mandatory. For the following reasons, this Court shall follow Martin, decline to follow White, and order withdrawal of this proceeding.

As a matter of statutory interpretation, Martin provides the superior approach. When interpreting the meaning of a statutory text, the Court looks "for a sort of `objectified' intent — the intent that a reasonable person would gather from the text of the law, placed alongside the remainder of the corpus juris." Antonin Scalia, A Matter of Interpretation 17 (Amy Gutmann ed., 1997). This is so because "[t]he text is the law, and it is the text that must be observed." Id. at 22. That is to say, the Court is not concerned with the legislature's subjective intent, but with what the words of a statute actually mean. Id. at 23.

The Court must begin this process "with the statutory language itself, considering both the text and the structure of the statute." Key v. Grayson, 163 F.Supp.2d 697, 703 (E.D.Mich.2001) (Gadola, J.). The statutory language in this case is plain: withdrawal is mandated whenever a party moves for withdrawal and "resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce." 28 U.S.C. § 157(d). As all parties have made clear, resolution of the proceeding at bar requires consideration of federal laws outside of Title 11 insofar as a court must determine whether Defendant violated a fiduciary duty under ERISA. Therefore, the plain meaning of the statute dictates that this Court must withdraw the proceeding. Where, as here, the text of a statute is plain, the Court's inquiry is at an end. Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992).

In White, however, the district court relied upon the Bankruptcy Code's structure and legislative history when it delineated the "substantial and material consideration" test. Id. at 699-705. Were the Court to follow White, it might rule in Defendant's favor. This is so because, although the record makes clear that resolution of this case requires a decision as to whether Defendant violated a fiduciary obligation under ERISA, it is not at all clear that resolution of the ERISA issue will require substantial consideration. See generally Herman v. Stetler, 241 B.R. 206, 210 (E.D.Wis.1999) (discussing the difference between Martin's literal interpretation of the statute and the "substantial and material...