FROELICH v. MARSHALL

Filing 8

ORDER of Referral to Bankruptcy Court (sclc2, COURT STAFF) (Filed on 8/24/2009)

1 2 3 4 5 6 7 8 9 10
For the Northern District of California

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

BRIAN P. FROELICH,

United States District Court

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

) ) Plaintiff, ) ) v. ) ) SEQUOIA LEISURE HOLDINGS, INC., et ) al., ) ) Defendants. ) )

No. 09-3095 SC ORDER OF REFERRAL TO BANKRUPTCY COURT

On July 2, 2009, this case was transferred from the District of New Jersey. ("Order"). See Docket No. 2 ("Mem. Op."); Docket No. 3

District Judge Mary L. Cooper transferred the case to

this Court so that it could be referred to the Bankruptcy Court for the Northern District of California based on her determination that the case is related to In re Bogar, Inc. d/b/a Happy Vacations, No. 09-53046 (Bankr. N.D. Cal. Apr. 23, 2009) ("In re Bogar"). Mem. Op. at 4. On August 6, 2009, the Court ordered

Plaintiff Brian Froelich ("Plaintiff") to show cause why this case should not be referred to this district's Bankruptcy Court. Docket No. 6 ("Order to Show Cause"). On August 14, 2009, Docket No. 7

Plaintiff responded to the Order to Show Cause. ("Resp.").

On June 5, 2009, Plaintiff sued Sequoia Leisure Holdings, Inc.("Sequoia") and David A. Marshall ("Marshall") for breach of

1 2 3 4 5 6 7 8 9 10
For the Northern District of California

contract, and breach of the implied covenant of good faith and fair dealing. Docket No. 1 ("Compl.") ¶¶ 44-56, 67-71. Plaintiff

sued Marshall for fraud and Plaintiff seeks a declaratory judgment. Id. ¶¶ 57-66. Plaintiff alleges that Marshall was a

shareholder and owner of Sequoia; that Sequoia was the sole owner of Bogar, Inc. d/b/a Happy Vacations ("Bogar"); that Plaintiff made a loan to Marshall, Bogar, and Sequoia; that Sequoia and Bogar executed a promissory note in favor of Plaintiff; and that Marshall guaranteed the note. Id. ¶¶ 6-7, 13-39. Plaintiff

alleges that Sequoia and Bogar subsequently defaulted on the note, and Marshall defaulted on the guarantee. Id. ¶¶ 40-42.

United States District Court

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Bogar filed for bankruptcy in this district on April 23, 2009. In re Bogar, Docket No. 1 ("Voluntary Petition"). Id.

Plaintiff is listed as a creditor in the Voluntary Petition. at 10.

Marshall has been designated as the responsible individual In re Bogar, Docket No. 24 ("Order Granting

for Bogar.

Application to Designate Responsible Individual David Marshall"). Plaintiff is listed on Bogar's Schedule D as a secured creditor. In re Bogar, Docket No. 20 ("Summary of Schedules, Statement of Financial Affairs"). On Bogar's Schedule H, Marshall is listed as Id. On the

a co-debtor, and Plaintiff is listed as a creditor.

Statement of Financial Affairs, Sequoia is listed as Bogar's sole shareholder. Id.

A civil proceeding is related to a bankruptcy matter when "the outcome of the proceeding could conceivably have any effect on the estate being administered in bankruptcy. . . . [T]he proceeding need not necessarily be against the debtor or against 2

1 2 3 4 5 6 7 8 9 10
For the Northern District of California

the debtor's property."

In re Fietz, 852 F.2d 455, 457 (9th Cir.

1988)(quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). Here, Plaintiff's action against Sequoia and Marshall,

originally filed in the District of New Jersey on June 5, 2009, is clearly related to In re Bogar. Although Bogar is not a defendant

in Plaintiff's suit, any determination in this case would have an effect on the estate being administered in In re Bogar, where Plaintiff is listed as a secured creditor, where Sequoia is listed as Bogar's sole shareholder, and where Marshall is designated as the individual responsible for Bogar. Plaintiff's arguments to the contrary are unavailing. Plaintiff cities to Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009), but in that case, the court did not discuss the test for determining whether a civil proceeding is related to a bankruptcy matter. Plaintiff points out that In re Bogar has been converted Resp. at 6.

United States District Court

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

from a Chapter 11 to a Chapter 7 bankruptcy.

However, this conversion has no impact on the Court's determination that this case is related to In re Bogar because a Chapter 7 bankruptcy is still a case under title 11 of the United States Code. re Bogar. /// /// /// /// /// /// 3 The Court concludes that this case is related to In

1 2 3 4 5 6 7 8 9 10
For the Northern District of California

28 U.S.C. section 157 provides that cases "related to a case under title 11 shall be referred to the bankruptcy judges for the district." 28 U.S.C. § 157(a). Because this case is related to

In re Bogar, the Court ORDERS that this case be referred to the San Jose Division of the Bankruptcy Court for the Northern District of California. The Court DIRECTS the Clerk to refer this

case to Bankruptcy Judge Roger L. Efremsky, the Bankruptcy Judge presiding over In re Bogar. The Court VACATES the Show Cause

Hearing scheduled for August 28, 2009.

United States District Court

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

IT IS SO ORDERED.

August 24, 2009 UNITED STATES DISTRICT JUDGE

4