Cox v. Hendrix et al

Filing 3

MEMORANDUM OPINION AND ORDER granting 1 Motion to Withdraw Reference regarding Adversary Proceeding No. 4:11-ap-01090. Signed by Judge Susan Webber Wright on 7/7/11. (vjt)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION

RICHARD L COX, Trustee for AFFILIATED *
FOODS SOUTHWEST, INC.,
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Plaintiff,

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vs.

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Case No: 4:11MC00016

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DAVID HENDRIX, ET AL.,

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Defendants.

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Memorandum Opinion and Order
Affiliated Foods Southwest, Inc. (“Affiliated Foods”), a large wholesale grocery supplier,
filed for bankruptcy. Plaintiff Richard L. Cox is the Chapter 7 bankruptcy trustee for the
bankruptcy estate. He filed an adversary proceeding in the Bankruptcy Court against defendants
who are former officers and directors of Affiliated Foods for breach of fiduciary duty and
negligence. Thirteen of the sixteen named defendants filed demands for trial by jury and
motions to withdraw the reference. Separate defendant Hendrix included in his brief a motion to
abstain.1 Plaintiff responded to the motions, and separate defendant John Miller filed a reply.2

1

Separate defendants John Miller, Al Miller, Ron Rivers, Bob Hudson, Larry Cranford, Billy
Dickerson, Kevin Doucet, Tandy Key, Dwight Sawyer, Hiram Shute, Britt Wright, Vince Cannata, and
David Hendrix moved to withdraw the reference and demanded a jury trial.
2

Defendants Al Miller, Ron Rivers, and Bob Hudson adopted John Miller’s reply. See Case No.
4:11MC00016, docket entries 11 & 13.

For the reasons stated below, the Court grants the motions to withdraw reference. The Court
denies the motion to abstain without prejudice.
The Supreme Court has held that a person who has not filed a claim against the
bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover
allegedly fraudulent monetary transfers. Granfinanciera, S.A. v. Nordberg, 429 U.S. 33(1989).
The Bankruptcy Code provides: “If the right to a jury trial applies in a proceeding that may be
heard under this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial
if specifically designated to exercise such jurisdiction and with the express consent of all the
parties. “ 28 U.S.C. §157(e). See also Fed.R.Bankr.P. 9015(b) and Local Bankruptcy Rule
9015-1.
Plaintiff states that at least four of the defendants have filed proofs of claim against the
estate. The Court finds that separate defendants who have not made claims against the
bankruptcy estate have a right to a jury trial. Separate defendants who filed proofs of claim may
have waived their right to a jury trial. None of the separate defendants consent to having the
bankruptcy judge preside over the jury trial. The Court finds that conducting two separate trials
on essentially the same issues and using the same evidence would be a waste of judicial
resources and those of the parties. Therefore, the Court finds that a jury should hear and
determine the issues for all the defendants. The Court further finds that the reference should be
withdrawn immediately.
IT IS THEREFORE ORDERED that the motions to withdraw the reference are granted.
The reference is hereby withdrawn with respect to Richard L Cox, Trustee for Affiliated Foods
Southwest, Inc. v. David Hendrix, et al., United States Bankruptcy Court for the Eastern District
2

of Arkansas, Adversary Proceeding No. 4:11-ap-01090. The Clerk of the bankruptcy court and
the Clerk of this Court are directed to take appropriate action to transfer the adversary
proceeding to this Court where the proceeding will be docketed as a civil action.
The motion to abstain3 is denied without prejudice to a re-filing of a motion to abstain
now that the Court has withdraw the reference.4
DATED this 7th day of July, 2011.
/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE

3

Case. No. 4:11mc00023, docket entry 1, Attachment 1.

4

Defendant John Miller states he intends to file a motion to abstain. See docket entry 10 at 6.

3