Thompson v. Cardwell

Filing 2

MEMORANDUM OF OPINION AND ORDER For the reasons stated above, the parties' motion to withdraw the general order of reference 1 is GRANTED. This adversary proceeding (No. 20-80035-CRJ) is WITHDRAWN from the Bankruptcy Court for the Northern District of Alabama, Northeastern Division. The Clerk of the Court is DIRECTED to assign this case as a civil action and randomly assign the case to a judge who draws cases from that division. Signed by Judge L Scott Coogler on 7/1/2020. (PSM)

FILED
2020 Jul-01 PM 02:34
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
JUDITH THOMPSON, Trustee,
Plaintiff,
vs.
GREGORY CARDWELL,
Defendant.

)
)
)
)
)
)
)

5:20-mc-00776-LSC

MEMORANDUM OF OPINION AND ORDER
Before the Court is the joint motion brought by Plaintiff Judith Thompson,
(“Plaintiff” or “Thompson”) and Defendant Gregory Cardwell (“Defendant” or
“Cardwell”) to withdraw the automatic reference to bankruptcy court and to
proceed in the district court. (Doc. 1.) For the reasons discussed below, the motion
is due to be granted.
I.

BACKGROUND
On March 16, 2020, Judith Thompson, the Trustee of the Bankruptcy Estate

of debtor GBC, Inc., (“GBC” or “Debtor”), commenced an adversary proceeding
against Cardwell. Thompson asserted a claim under the Alabama Fraudulent
Transfer Act and demanded a jury trial. Cardwell filed his answer on or about April
16, 2020.

On May 27, 2020, the Bankruptcy Court held a status conference and
indicated that withdrawing the reference from all related adversary proceedings
would be in the best interest of the court, the various related cases, and the parties.
That conference led to the joint motion being filed on June 3, 2020.
II.

STANDARD
District courts possess “original and exclusive jurisdiction of all cases under

title 11.” 28 U.S.C. § 1334(a). However, district courts can provide that cases that
arise under title 11, arise in title 11, or relate to a case under title 11 may be referred
to the bankruptcy court of that district. 28 U.S.C. § 157(a). This Court has entered
a general order of reference automatically referring all such cases to the bankruptcy
judges for this district. See United States v. ILCO, Inc., 48 B.R. 1016, 1020 (N.D. Ala.
1985).
Section 157(d) allows for the withdrawal of the general order of reference
under certain circumstances. Withdrawal may be either mandatory or permissive.
See 28 U.S.C. § 157(d). The parties have not argued that mandatory withdrawal is
applicable. Therefore, the Court shall only address whether permissive withdrawal
is appropriate.
District courts may withdraw “in whole or in part any case or proceeding
referred under this section, on its own motion or on timely motion of any party, for
Page 2 of 5

cause shown.” 28 U.S.C. § 157(d). “The decision whether to withdraw the reference
is committed to the district court’s discretion.” Abrahams v. Phil–Con Serv., LLC,
No. 10–0326–WS–N, 2010 WL 4875581, at *3 (S.D. Ala. Nov. 23, 2010). In deciding
whether there is cause for withdrawal of a reference, this Court must “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.” In re Simmons, 200 F.3d 738, 742 (11th Cir.
2000) (quoting In re Parklane/Atl. Joint Venture, 927 F.2d 532, 536 n.5 (11th Cir.
1991)). “Additional factors 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 Childs, 342 B.R. 823, 827 (M.D. Ala. 2006).
III.

DISCUSSION

After considering the relevant factors, this Court, in its discretion, grants the
parties’ motion and withdraws this case from the general order of reference. First,
Plaintiff has made a jury demand and also seeks compensatory damages, which are
generally decided by a jury. See Burns v. Lawther, 53 F.3d 1237, 1240 (11th Cir. 1995)
(observing that the Seventh Amendment’s “right to a jury trial [is] fundamental,
[and] courts must indulge every reasonable presumption against waiver”); see also
Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352 (1998) (recognizing the
Page 3 of 5

general rule that monetary relief is legal in nature, and that such claims give rise to a
right to trial by jury). Because the parties have a fundamental right to a jury trial on
these issues, this counsels in favor of allowing the withdrawal to preserve that right.
See In re Small, No. 11-00169, 2011 WL 7645816, at *2 (Bankr. S.D. Ala. Nov. 22,
2011) (recommending withdrawal of the reference because plaintiff made jury
demand and sought compensatory and punitive damages); see also McGregor v. Asset
Acceptance, LLC, No. 1:15–mc–00143–RDP, 2015 WL 3751986, at *3 (N.D. Ala. June
16, 2015) (explaining that plaintiff’s jury demand weighs in favor of granting
withdrawal of the reference).
Additionally, Plaintiff asserts a claim under the Alabama Fraudulent Transfer
Act, which could require the Bankruptcy Court to interpret a non-Code statute in
deciding the claim. Cf. McGregor, 2015 WL 3751986, at *3 (likelihood that court
would have to interpret non-Code statute is a factor in favor of granting withdrawal).
Since a non-Code statute will likely have to be interpreted, withdrawing the
adversary proceeding is in the economic interest of both the parties and the judicial
system.
Finally, this withdrawal was recommended by the Bankruptcy Court. This
recommendation demonstrates that there is no concern about upsetting the
uniformity of bankruptcy laws. Additionally, the adversary proceeding has not gone
Page 4 of 5

far in the Bankruptcy Court, and withdrawal does not appear to be an attempt to
delay the proceedings. There is also no allegation or evidence that the parties are
forum shopping; instead, it appears that both parties are seeking the most efficient
means to resolve their dispute. While none of these factors alone is dispositive,
combined the parties have demonstrated that it is appropriate for the Court to
exercise its discretion and withdraw the case. See id. (granting withdrawal of
reference based on a combination of factors). Accordingly, the parties’ motion is due
to be granted.
IV.

CONCLUSION
For the reasons stated above, the parties’ motion to withdraw the general

order of reference (doc. 1) is GRANTED. This adversary proceeding (No. 2080035-CRJ) is WITHDRAWN from the Bankruptcy Court for the Northern District
of Alabama, Northeastern Division. The Clerk of the Court is DIRECTED to assign
this case as a civil action and randomly assign the case to a judge who draws cases
from that division.
DONE and ORDERED on July 1, 2020.

_____________________________
L. Scott Coogler
United States District Judge
199335

Page 5 of 5