In Re: Lancaster, et al

Filing 4

ORDER, the unopposed Motion to Withdraw the Reference to the Bankruptcy Court 2 is granted and reference of Debtor Douglas Lancaster's Objection to IRS Proof of Claim (Doc. 25 in case 3:11-bk-32905-RJH) is withdrawn pursuant to 28 U.S.C. § 157(d); all further proceedings in this adversary proceeding shall be before this Court. Signed by Judge G Murray Snow on 8/1/13.(REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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IN RE:

No. CV-13-08101-PCT-GMS

Douglas Lancaster, Diana Lancaster,

ORDER

Debtors.
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United States of America,
Movant.

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The United States has filed a Motion to Withdraw the Reference of the Debtors’

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Objection to the IRS Proof of Claim. (Doc. 2.) Debtors’ Objection was filed as part of

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their bankruptcy proceeding (Case No. 3:11-bk-32905-RJH). Debtors have not objected

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or responded to the Motion. The Motion is granted.

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Under the governing statute, “[e]ach district court may provide that any or all

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cases under title 11 and any or all proceedings arising under title 11 or arising in or

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related to a case under title 11 shall be referred to the bankruptcy judges for the district.”

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28 U .S.C. § 157(a). This District refers all bankruptcy cases to the bankruptcy court. See

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General Order 01–15 (June 29, 2001). However, district courts “may withdraw, in whole

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or in part, any case or proceeding referred [to the bankruptcy court] under this section, on

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its own motion or on timely motion of any party, for cause shown.” 28 U.S.C. § 157(d).

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When determining whether there is cause to withdraw, “a district court should

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consider the efficient use of judicial resources, delay and costs to the parties, uniformity

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of bankruptcy administration, the prevention of forum shopping, and other related

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factors.” Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers,

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124 F.3d 999, 1008 (9th Cir. 1997) (citing In re Orion Pictures Corp., 4 F.3d 1095, 1101

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(2d Cir. 1993). Further, courts “should first evaluate whether the claim is core or non-

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core, since it is upon this issue that questions of efficiency and uniformity will turn.” In

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re Orion, 4 F.3d at 1101 (cited approvingly by the Ninth Circuit in Sec. Farms, 124 F.3d

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at 1008). “[H]earing core matters in a district court could be an inefficient allocation of

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judicial resources given that the bankruptcy court generally will be more familiar with the

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facts and issues”, and “may enter appropriate orders and judgments.” Id. (internal

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quotation and citation omitted).

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The United States has not briefed the question of whether Debtors’ Objection to

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the IRS Proof of Claim (Doc. 25 in the bankruptcy matter) is a core claim. According to

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the government, the IRS filed a claim against the estate in the amount of $62,180.37

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based on violations of 26 U.S.C. § 6672. Debtor Douglas Lancaster has objected to the

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claim. The United States agrees that bankruptcy court has jurisdiction over the objection.

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See 11 U.S.C. § 505(a) (“[T]he court may determine the amount or legality of any tax,

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any fine or penalty relating to a tax, or any addition to tax, whether or not previously

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assessed, whether or not paid, and whether or not contested before and adjudicated by a

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judicial or administrative tribunal of competent jurisdiction.”)

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Core proceedings include allowance or disallowance of claims against the estate.

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28 U.S.C. § 157(b)(2)(B). Accordingly, the determination of a debtor’s tax liability when

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the IRS has filed a claim against the estate is a core claim. See, e.g., In re Educators Inv.

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Corp., 59 B.R. 910, 913–14 (Bankr. D. Nev. 1986); In re Lipetzky, 64 B.R. 431, 434

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(Bankr. D. Mont. 1986). Cf. Dunmore v. United States, 358 F.3d 1107, 1115 (9th Cir.

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2004) (finding non-core claim where plaintiff—whose estate was in bankruptcy—

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asserted a claim for a tax refund against the IRS).

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Nevertheless, “[t]he determination of whether claims are core or non-core is not

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dispositive of a motion to withdraw a reference . . . .” Hawaiian Airlines, Inc. v. Mesa Air

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Grp., Inc., 355 B.R. 214, 223 (D. Haw. 2006). Considerations of judicial economy and

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efficiency play an important role in these determinations. Id.; Sec. Farms, 124 F.3d at

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1008. Assessment of penalties under the relevant statute typically involves multiple

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parties. See Turner v. United States, 423 F.2d 448, 449 (9th Cir. 1970). As the United

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States emphasizes, in this particular type of case, proper consideration would allow the

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United States to name other non-debtor parties as counterdefendants. Withdrawal of the

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reference to the bankruptcy court would allow for efficient adjudication of the liability

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for all persons in one civil action as opposed to multiple suits. Thus, although Debtor

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Douglas Lancaster’s objection is a core claim, it is a discreet issue and considerations of

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judicial economy weigh in favor of withdrawal. In addition, the fact that Debtors did not

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file a Response or Objection “may be deemed consent to the . . . granting of the motion.”

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L.R. Civ. 7.2(i).

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IT IS THEREFORE ORDERED that the unopposed Motion to Withdraw the

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Reference to the Bankruptcy Court (Doc. 2) is GRANTED and reference of Debtor

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Douglas Lancaster’s Objection to IRS Proof of Claim (Doc. 25 in case 3:11-bk-32905-

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RJH) is withdrawn pursuant to 28 U.S.C. § 157(d). All further proceedings in this

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adversary proceeding shall be before this Court.

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Dated this 1st day of August, 2013.

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