Shifrin et al v. Yankovich

Filing 12

ORDER. Defendant's Motion for withdrawal (Doc. # 2 ) is DENIED. The Clerk of the Court shall ADMINISTRATIVELY CLOSE this action pursuant to D.C.COLO.LCivR 41.2. The parties shall file a joint status report every six months, beginning on October 28, 2015. By Judge Christine M. Arguello on 04/29/2015. (athom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 14-cv-02693-CMA-CBS
In re:
LEONID SHIFRIN,
Debtor,
HARVEY SENDER, Chapter 7 Trustee,
Plaintiff,
v.
SUSAN YANKOVICH,
Defendant.

ORDER DENYING MOTION FOR WITHDRAWAL OF REFERENCE

This matter is before the Court on Defendant Susan Yankovich’s (Defendant’s)
Demand for Jury Trial and Motion for Withdrawal of Reference (Doc. # 2). Plaintiff
objects to the requested relief (Doc. # 4). Because withdrawal would be premature at
this time, Defendant’s Motion is denied, as provided below.
I. BACKGROUND
Defendant’s Motion arises from an adversary proceeding currently pending in the
United States Bankruptcy Court for the District of Colorado (No. 14-1297-MER).
On June 17, 2012, the Debtor filed his petition for bankruptcy relief pursuant to
Chapter 7 of Title 11 of the United States Code (the “Bankruptcy Code”). The

Bankruptcy Court has been administering the Debtor’s Bankruptcy Case and the
Bankruptcy Estate since that time. In June of 2014, the Trustee commenced 28
adversary proceedings, including the instant case, against numerous individuals and
entities, asserting claims under 11 U.S.C. §§ 544, 548, 549 and 550 and the Colorado
Uniform Fraudulent Transfer Act. On July 1, 2014, to reduce the pretrial burdens on
the Bankruptcy Court and allow for coordinated discovery, the Bankruptcy Court
ordered the joint administration of the Avoidance Actions for purposes of Fed. R. Bankr.
P. 7016, which are currently administratively consolidated for purposes of discovery and
pretrial proceedings, at Bankruptcy Court Case No. 14-9991-MER. (Doc. # 4 at 5.) As
such, this adversary proceeding represents just one of 30 litigation matters (including
the Bankruptcy Case, the Discharge Action, and the Jointly Administered Cases) that
arise out of a similar set of facts, all of which are currently being administered by the
Bankruptcy Court. (Id.)
II. ANALYSIS
28 U.S.C. § 157(d) provides that a district court “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 cause shown.” (Emphasis added). 1 In determining whether
cause for withdrawal exists, courts consider the goals of promoting uniformity in
bankruptcy administration, the prevention of forum shopping, judicial economy,
conserving debtors’ and creditors’ resources, expediting the bankruptcy process, and
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The second sentence of 28 U.S.C. § 157(d), which does not apply here, provides that the
district court “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. (Doc. # 2 at 1.)
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the right to a jury trial. Centrix Fin. Liquidating Trust v. Nat’l Union Fire Ins. Co., et al.
(In re Centrix Fin. LLC), No. 09-cv-01542-PAB-CBS, 2011 WL 63505, at *4-6 (D. Colo.
Jan. 7, 2011).
In Granfinanciera, S.A. v. Nordberg, the United States Supreme Court held that
defendants in fraudulent transfer actions brought by trustees are entitled to jury trials if
they have not filed claims against the estate. 492 U.S. 33, 58–59, 64 (1989).
Additionally, 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. Granfinanciera, however, “certainly does not hold that
references of such actions must be withdrawn immediately upon jury demand.” In re
Kirk E. Douglas, Inc., 170 B.R. 169, 170 (D. Colo. 1994) (internal citation omitted).
Instead, although the right to jury trial must be preserved, the bankruptcy court may still
supervise discovery, conduct pre-trial conferences and rule on pending motions –
including dispositive motions resolving whether a trial is necessary – notwithstanding a
party’s valid jury demand and eventual jury trial in district court. In re M & L Bus. Mach.
Co., Inc., 159 B.R. 932, 934-35 (D. Colo. 1993); see also Matter of Lieb, 915 F.2d 180,
185 (5th Cir. 1990) (“If and when the threat to their Seventh Amendment rights becomes
concrete, . . . [defendants] may seek appropriate remedies at that time.”)
Defendant’s sole argument in support of the withdrawal of reference is that she is
entitled to a jury trial on her claims. Although that may ultimately be the case, the Court
concludes that withdrawal at this time is premature. First, this case may not require a
jury trial at all; rather, it may be resolved as a matter of law, for example, on summary

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judgment, or it may be settled out of court. Second, even if Defendant is ultimately
entitled to a jury trial, withdrawal of the reference is premature at this time because the
bankruptcy court is the more efficient and economical forum in which pre-trial activity
may be conducted. Indeed, the Bankruptcy Court is already presiding over 28 related
adversary proceedings that are based on nearly identical factual circumstances.
Significantly, in ordering that the Avoidance Actions be jointly administered, the
Bankruptcy Court specifically found that the adversary proceedings involve “overlapping
and similar issues.” (In re Shifrin, No. 12-22722-MER, Doc. #260.)
Concomitantly, Defendant does not show how she would be prejudiced by having
the bankruptcy court handle the pretrial matters and by having the case withdrawn only
if (and when) it is ready for trial. Defendant’s rights are not infringed by allowing the
bankruptcy court to retain jurisdiction over this matter for pre-trial proceedings. See In
re HealthCentral.com, 504 F.3d 775, 787–88 (9th Cir. 2007) (noting that the bankruptcy
“system promotes judicial economy and efficiency by making use of the bankruptcy
court’s unique knowledge of Title 11 and familiarity with the actions before them. . . .
Only by allowing the bankruptcy court to retain jurisdiction over the action until trial is
actually ready do we ensure that our bankruptcy system is carried out.”) Courts in this
District have repeatedly held that where the bankruptcy court possesses more familiarity
with facts of a case incident to its management of the bankruptcy proceedings,
withdrawal of the reference to bankruptcy court should be delayed until the case “trial
ready.” See In re Centrix Fin., 2011 WL 63505, at *4 (collecting cases); In re Hardesty,
190 B.R. 653, 656 (D. Kan. 1995) (internal quotation omitted) (“[A] rule that would

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require a district court to withdraw a reference simply because a party is entitled to a
jury trial, regardless of how far along toward trial a case may be, runs counter to the
policy favoring judicial economy that underlies the statutory scheme.”) Consideration of
a request for withdrawal of the reference is thus premature.
Accordingly, it is ORDERED that Defendant’s Motion for withdrawal (Doc. # 2) is
DENIED. Additionally, upon further review, the Court finds that rather than leaving this
case open for possibly months or years, this case should be administratively closed
pursuant to D.C.COLO.LCivR 41.2, with leave to be reopened for good cause shown.
Accordingly, it is
ORDERED that the Clerk of the Court shall ADMINISTRATIVELY CLOSE this
action pursuant to D.C.COLO.LCivR 41.2.
IT IS FURTHER ORDERED that the parties shall file a joint status report every
six months, beginning on October 28, 2015.
DATED: April 29, 2015
BY THE COURT:

_________________________
CHRISTINE M. ARGUELLO
United States District Judge

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