United States District Court, D. Arizona
Margaret A. Gillespie, Plaintiff,
100% Natural Gourmet Incorporated, et al., Defendants.
G. MURRAY SNOW, District Judge.
Pending before the Court is the Motion to Withdraw the Reference to Bankruptcy and Demand for Jury Trial of Third-Party Defendants Concast, Inc., Dominic Jones, Robert Fox, Moirbia Peoriare, LLC, Moirbia Peoria, LLC, Moirbia Scottsdale, LLC (collectively "Third-Party Defendants"). (Doc. 2.) For the following reasons, the Motion is denied without prejudice.
On May 21, 2009, several years before Third-Party Defendants initiated the current action in this Court, Debtors Irish Pub-Arrowhead, LLC, and Irish Pub-Arrowhead Land, LLC filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Arizona ("Bankruptcy Court"). (Doc. 3 at 2.) The Trustee for the bankruptcy estate, Margaret A. Gillespie, filed an Adversary Complaint on April 1, 2011, and Third-Party Plaintiffs filed their Answer and Third-Party Complaint on June 29, 2011. ( Id. at 2-3.) Through five separate amendments, Third-Party Plaintiffs alleged in their Complaint, among other things, that Third-Party Defendant Concast, Inc. caused the bankruptcy by interfering with the contractual relationships of other parties. (Doc. 2 at 3.) Third Party Plaintiffs also raised the issue in their Complaint of who owns some of the intellectual property. ( Id. )
On August 21, 2012, the Bankruptcy Court granted the Trustee the right to sell personal property from the estate, including "all intellectual property" of the bankruptcy estate. (Doc. 3 at 3.) On November 4, 2014, Third-Party Plaintiff Steve Goumas filed a partial motion for summary judgment to determine whether liens filed by Third-Party Defendant Concast, Inc. constituted intentional interference with the contractual relationships between Goumas and Wells Fargo. ( Id. )
Before responding to Goumas' motion for summary judgment, Third-Party Defendants filed the current Motion, requesting withdrawal of the reference to Bankruptcy Court. ( Id. at 3-4.) Third-Party Defendants contend that withdrawal is appropriate because the claims in the Third-Party Complaint are not core bankruptcy claims and judicial economy would best be served by immediate withdrawal because they request a jury trial. (Doc. 2.)
I. Legal Standard
28 U.S.C. § 157 states, "Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district." 28 U.S.C. § 157(a). This District refers all bankruptcy cases to the Bankruptcy Court. See General Order 01-15 (June 29, 2001). However, district courts "may withdraw, in whole or in part, any case or proceeding referred [to the bankruptcy court] under this section, on its own motion or on timely motion of any party, for cause shown." 28 U.S.C. § 157(d).
When determining whether there is cause to withdraw, "a district court should consider the efficient use of judicial resources, delay and costs to the parties, uniformity of bankruptcy administration, the prevention of forum shopping, and other related factors." Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997) (citing In re Orion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993).
A. Core vs. Non-Core
In determining whether there is cause to withdraw, courts "should first evaluate whether the claim is core or non-core, since it is upon this issue that questions of efficiency and uniformity will turn." In re Orion, 4 F.3d at 1101 (cited approvingly by the Ninth Circuit in Sec. Farms, 124 F.3d at 1008). "[H]earing core matters in a district court could be an inefficient allocation of judicial resources given that the bankruptcy court generally will be more familiar with the facts and issues" and "may enter appropriate orders and judgments." Id. (internal quotation and citation omitted).
However, a determination that a claim is non-core does not necessarily mandate withdrawal because a bankruptcy court may also hear "a proceeding that is not a core proceeding but that is otherwise related to a case under title 11." 28 U.S.C. § 157(c)(1) (emphasis added). Where a bankruptcy court hears a case under its ...