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In re Bill Johnsons Restaurants, Inc.

United States District Court, D. Arizona

December 30, 2016

In re BILL JOHNSON'S RESTAURANTS, INC., Debtors,
v.
PLATTNER, SCHNEIDMAN, SCHNEIDER, JEFFRIES & PLATTNER, P.C., et al., Defendants. BILL JOHNSON'S RESTAURANTS, INC., et al., Plaintiffs, Bankruptcy No. 2:11-bk-22441-PS Adversary Proc. No. 2:13-ap-00526-PS

          ORDER MOTION FOR WITHDRAWAL OF REFERENCE

          H. Russel Holland United States District Judge.

         The Harmon and Plattner defendants move for an order withdrawing the reference of this adversary proceeding (No. 2:13-ap-00526-PS) from the bankruptcy court.[1] This motion is opposed.[2] Oral argument was requested but is not deemed necessary.

         Background

         On August 4, 2011, Bill Johnson's Restaurants, Inc. (BJR) filed a petition for bankruptcy protection under Chapter 11 (the Administrative Case). The Plan of Reorganization was confirmed on May 1, 2013 by Judge Sarah Sharer Curley. Judge Curley also oversaw numerous disputes related to administrative expenses. As part of the Plan of Reorganization, the CT Trust was created for the benefit of creditors and shareholders of the estate.

         On May 3, 2013, the complaint in the adversary proceeding was filed. In that complaint, BJR alleged a variety of claims against the Harmon defendants, who were BJR's CPA, and the Plattner defendants, who were BJR's legal counsel, arising out of their involvement in the administration and termination of BJR's Pension Plan. More specifically, BJR asserted professional negligence, breach of fiduciary duty, aiding and abetting, and conspiracy claims against the Harmon and Plattner defendants. In the adversary proceeding, Judge Curley decided a motion to intervene, two motions to dismiss, a motion to consolidate, and a motion to stay.

         On May 1, 2014, the Administrative Case and the adversary proceeding were reassigned to Judge Paul Sala because Judge Curley was retiring. Since the Administrative Case was reassigned to him, Judge Sala has approved a number of stipulated settlements. Since the adversary proceeding was reassigned to him, Judge Sala has approved several stipulated settlements, a stipulation to file a Third Amended Complaint, stipulated motions to modify the scheduling order, and a discovery motion.

         On May 27, 2014, this court denied a motion for withdrawal of reference brought by the Plattner defendants and joined in by the Harmon defendants.[3] The court found that

in light of the bankruptcy court's prior experience with this case, as well as the fact that the adversary proceeding is conceded to involve a mixture of core and non-core issues, ... it will in this case be more efficient for the adversary proceeding[] to continue before the bankruptcy court for discovery, preliminary motion practice, and the sorting of core and non-core issues.[4]

         The court, however, gave defendants leave to renew their motion for withdrawal of reference “once dispositive motions have been briefed” but prior to those motions being reviewed by the bankruptcy court.[5]

         In the Third Amended Complaint in the adversary proceeding, plaintiffs BJR and the CT Trust assert claims of professional negligence, violation of the Trust Fund Doctrine, aiding and abetting, and civil conspiracy against the Harmon and Plattner defendants. Plaintiffs have filed a motion for partial summary judgment asking the court to find that defendants waived their right to object to the amount of the claims filed by creditors of the estate, and defendants have each filed a motion for summary judgment contending that plaintiffs have failed to meet their burden of proof as to each of their claims. These summary judgment motions are fully briefed. The bankruptcy court had scheduled oral argument on these motions in December, but argument has now been continued until early January, pending the resolution of the instant motion.

         The Harmon and Plattner defendants now renew their motion for an order withdrawing the reference of the adversary proceeding from the bankruptcy court.

         Discussion

         Section 157(d) of Title 28 of the United States Code “governs the district court's authority to withdraw the reference....” Security Farms v. Int'l Broth. of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997). The court may order a withdrawal “‘for cause shown.'” Id. (quoting 28 U.S.C. § 157(d) (emphasis added)). “In determining whether cause exists, 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.” Id.

         judicial ...


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