In re: XP Entertainment, LLC et al

Filing 8

ORDER granting 1 Motion to Withdraw Reference. ORDERED that this matter is REMANDED to the Bankruptcy Court for that court to consider and determine all pre-trial issues. ORDERED that once discovery and other pre-trial phases of the case (including approval of the final pre-trial order) are completed, I will schedule and conduct by Chief Judge Wiley Y. Daniel on 05/07/12.(jjhsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No.

11-cv-03392-WYD

IN RE: XP ENTERTAINMENT, LLC
EIN: 04-3639786
Debtor,

JEFFREY L. HILL, Chapter 7 Trustee,
Plaintiff,
v.
FELD MOTOR SPORTS, INC.,
Defendant.

ORDER
THIS MATTER comes before the Court on Defendant’s Motion for Withdrawal of
Reference (ECF No. 1), filed December 28, 2011. Defendant=s motion was transmitted
from the Bankruptcy Court and assigned to me. Defendant seeks a permissive
withdrawal of the Complaint in the Adversary Proceeding pursuant to 28 U.S.C. § 157(d),
which asserts one claim for a preferential transfer under 11 U.S.C. § 547(b).
By way of background, the Trustee filed the Adversary Proceeding Complaint on
September 23, 2011. In its answer, the Defendant, among other things, requested a jury
trial. Related to its request for a jury trial, Defendant filed the pending Motion for
Withdrawal of Reference, arguing that it is entitled to a jury trial.1 Plaintiff opposes the
1

Defendant does not consent to a jury trial in the Bankruptcy Court.

motion, asserting that while Defendant may be entitled to a jury trial, “withdrawal of the
reference is not appropriate at this stage of the instant adversary proceeding.” (Resp. at
3, ECF No. 3). For the reasons stated below, I find that the motion should be granted.
Under 28 U.S.C. § 157(d), the district court may withdraw its reference of a case to
the Bankruptcy Court on motion of a party or on its own motion “for cause shown” and
must withdraw the reference in certain circumstances where the proceedings implicate
both the provisions of Title 11 of the United States Code and other sources of federal law.
28 U.S.C. § 157(d) (2006). Neither Plaintiff nor Defendant contends that withdrawal is
mandatory in this case, and I agree. Because bankruptcy courts may not conduct jury
trials, In re Kaiser Steel Corp., 911 F.2d 380, 392 (10th Cir. 1990), proof of a right to a jury
trial may constitute cause for permissive withdrawal. See In re Orion Pictures Corp.,
4 F.3d 1095, 1101 (2d Cir. 1993). Moreover, it appears that Plaintiff does not contest the
fact that Defendant is entitled to a jury trial on the preferential transfer claim. Instead,
Plaintiff bases its opposition on the grounds of judicial economy and the fact that the
Bankruptcy Court is more familiar with the underlying facts of this matter.
I find that the reference should be withdrawn because the Defendant has a
seventh amendment right to a jury trial when sued by a trustee to recover an alleged
preferential transfer. Langenkamp v. C.A. Culp, 498 U.S. 42, 45 (1991); see
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 64 (1989). However, I am mindful of
Plaintiff’s judicial economy argument, and I agree that the Bankruptcy Court is more
familiar with the background of this case and its core bankruptcy issues. Thus, while I
am granting the Defendant’s motion to withdraw the reference, I find that it is appropriate
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to remand this action to the Bankruptcy Court to consider and determine all pre-trial
issues including discovery and the approval of the final pre-trial order. Once all pre-trial
matters are completed, I will schedule and conduct a jury trial on the merits. Accordingly,
it is
ORDERED that Defendant’s Motion for Withdrawal of Reference (ECF No. 1) is
GRANTED. It is
FURTHER ORDERED that this matter is REMANDED to the Bankruptcy Court for
that court to consider and determine all pre-trial issues. It is
FURTHER ORDERED that once discovery and other pre-trial phases of the case
(including approval of the final pre-trial order) are completed, I will schedule and conduct
a jury trial on the merits.
Dated: May 7, 2012
BY THE COURT:

s/ Wiley Y. Daniel
Wiley Y. Daniel
Chief United States District Judge

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