3PL4PL, LLC et al v. Turner et al
ORDER granting 1 Motion to Withdraw Automatic Reference to the Bankruptcy Court; That the Joint Motion of Defendants Sherman & Howard L.L.C., Haynes and Boone, LLP, and Allen & Vellone, P.C., to Withdraw Automatic Reference to the Bankruptcy Court 11 is GRANTED as to Defendants Sherman & Howard L.L.C. and Haynes and Boone, LLP and DENIED AS MOOT as to Defendant Allen & Vellone, P.C., by Judge Raymond P. Moore on 12/09/2015.(cthom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore
Civil Action No. 15-cv-01403-RM
In re: 3PL4PL, LLC,
JARED WALTERS, Chapter 7 Trustee of 3PL4PL,
LLC, Debtor, BIA INVESTORS, L.L.C., a Colorado
Limited Liability Company, SFCRT, L.L.C., a
Colorado Limited Liability Company, and SFHT,
L.L.C., a Colorado limited liability company
BRIAN TUNER, an individual, JERRY
GREENBERG, an individual, LORI SCHUYLER, an
individual, RICHARD REPLIN, an individual,
REPLIN FAMILY LLC, a Colorado limited liability
company, CRESTCO HOLDINGS, LLC, a Colorado
limited liability company, RON GUILLOT, an
individual, KEVIN B. LYNCH, a resident of
California, JOHN SNEDEGAR, a resident of
California, JOHN SNEDEGAR, Trustee of the
Apollos Company 401(k) Plan, JOHN SNEDEGAR,
Trustee of the Apollos Pension and Profit Sharing Plan
Trust, CHARLES R. WALKER, a resident of
California, DAVID KLAWANS, a resident of
California, PAUL T. LUBAR, a resident of California,
GREGORY LUBAR, a resident of the District of
Columbia, RICHARD G. SMITH, a resident of
California, TIM WALKER, a resident of California,
LOGISTICSFINANCE, INC., a California
Corporation, HAYNES & BOONE LLP, a Texas
partnership, SHERMAN & HOWARD LLC, a
Delaware limited liability company, BERTRAND
HERMAN WEIDBERG a resident of the State of
California, ALLEN & VELLONE, P.C. a Colorado
Corporation, and DOES nos. 1 through 3,
This matter is before the Court on the “Joint Motion of Defendants Sherman & Howard
L.L.C., Haynes and Boone, LLP, and Allen & Vellone, P.C., to Withdraw Automatic Reference
to the Bankruptcy Court” (the “Joint Motion”) (ECF No. 11), and the Motion to Withdraw
Automatic Reference to the Bankruptcy Court (the “Motion”) (ECF No. 1) filed by Bertrand
Herman Weidberg (incorrectly named as Betrand Herman Weidberg) (“Mr. Weidberg”) (the
Joint Motion and Motion are hereafter, collectively, the “Motions”). The Motions request the
Court to withdraw, in part, the automatic reference of this action under D.C.COLO.LCivR
84.1(a) and L.B.R. 5011-1. Plaintiffs filed a “Response to Motions to Withdraw the Reference”
(ECF No. 12).
No party objects to the withdrawal of reference, and the parties who have submitted
papers for the Court’s consideration all request the Court to conduct the pretrial conference, the
trial, and all post-trial matters. This Court has subject matter jurisdiction pursuant to 28 U.S.C.
§ 1334. Upon consideration of the Motions, the Response, the Court file, the applicable portions
of the Bankruptcy Court file, and the applicable statutes, rules, and case law, and being otherwise
fully advised, the Motions are granted as stated herein as to the Sherman Firm, the Haynes Firm,
and Mr. Weidberg, but denied as moot as to the Allen Firm.
On September 9, 2014, Plaintiffs BIA Investors, LLC, SFCRT, L.L.C, and SFHT, LLC
(collectively, the “Creditors”), initiated an involuntary Chapter 7 bankruptcy case against
Plaintiff/Debtor 3PL4PL, LLC. (Bankruptcy Case No. 14-22402-SBB, ECF No. 3.) On March
25, 2015, the bankruptcy trustee, Jared Walters, and the Creditors (collectively, “Plaintiffs”) filed
an adversarial proceeding in the bankruptcy action against numerous defendants, including Mr.
Weidberg and the law firms of Haynes and Boone, LLP (the “Haynes Firm”), Sherman &
Howard L.L.C. (the “Sherman Firm”), and Allen & Vellone, P.C. (the “Allen Firm”)
(collectively, the “Law Firm Defendants”). (Case No. 15-01120-SBB, ECF No. 1.) On April 3,
2015, Plaintiffs filed an amended complaint. (Case No. 15-01120-SBB, ECF No. 5.)
Generally, the amended complaint alleges that Debtor borrowed money from the
Creditors, and wrongfully transferred funds from certain bank accounts in which Creditors have
a perfected security interest. Among other things, Plaintiffs seek to recover the amount equal to
the identifiable proceeds from such wrongful transfers. The amended complaint contains 30
claims for relief, including claims seeking damages based on conversion, fraudulent
conveyances, and/or preferential transfers against the Law Firm Defendants and Mr. Weidberg.
There is no contention that these defendants have submitted a claim in the bankruptcy
proceeding, and the Law Firm Defendants have affirmatively represented they have not done so.
On June 1, 2015, the Law Firm Defendants and Mr. Weidberg separately moved the
district court to withdraw the automatic reference of the proceeding pending before the
Bankruptcy Court. (ECF Nos. 1, 11.) Also on that date, the Sherman Firm, Haynes Firm, and
Mr. Weidberg each filed a notice of jury demand on all issues so triable in this case. (ECF Nos.
6, 7, 13.) No jury demand was filed for the Allen Firm.1 After the briefing was completed on
the Motions, the Bankruptcy Court ordered that the Motions be referred to the District Court for
further action. (ECF No. 4.) The case was ultimately assigned to this Court for resolution.
The Joint Motion represents that each of the Law Firm Defendants were filing a jury demand contemporaneously
but the Court was unable to locate a jury demand filed by the Allen Firm.
Generally, pursuant to 28 U.S.C. § 157(a) and D.C.COLO.LCivR 84.1(a), cases under
Title 11, and proceedings arising under or related to cases under Title 11, are initially referred to
the bankruptcy judges for this district. The district court may, however, withdraw, in whole or in
part, any case or proceeding referred “for cause shown.” 28 U.S.C. § 157(d). In this case, the
Law Firm Defendants and Mr. Weidberg (collectively, the “Movants”) request withdrawal on
two bases, the first of which is the right to a jury trial.
Specifically, the Movants assert they have a right to a jury trial on the claims seeking
damages for conversion, fraudulent conveyances, and preferential transfers. The Court agrees
that these claims are legal and, accordingly, the Movants are entitled to a jury trial on these
claims. Ross v. Bernhard, 396 U.S. 531, 533 (1970) (right to jury for claim of conversion of
personal property); In re Aichinger, No. 15-cv-00188-RBJ, 2015 WL 790536, at * 1 (D. Colo.
Feb. 23, 2015) (unpublished) (citing Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 43-46
(1989)) (claims for preferential or fraudulent transfers); In re Foresight Applications & Systems
Technologies, LLC, No. 14-cv-02007-MSK (D. Colo. April 22, 2015) (unpublished) (fraudulent
transfer claim). As such, cause has been shown for the withdrawal of the reference as the
Bankruptcy Court is not authorized to conduct the jury trial demanded in this case. See 28
U.S.C. § 157(e) (bankruptcy judge may conduct jury trial only if specifically designated to do so
by the district court and with the parties’ express consent); In re Aichinger, 2015 WL 790536, at
* 1.2 Accordingly, as jury demands have been made by the Haynes Firm, the Sherman Firm, and
Mr. Weidberg, the Motions are granted as to these defendants.
In In re Kaiser Steel Corp., 911 F.2d 380 (1990) and In re Latimer, 918 F.2d 136, 137 (10th Cir. 1990) the Tenth
Circuit held that bankruptcy courts lack the power to conduct jury trials. These decisions, however, were issued
before the 1994 amendment which added § 157(e) allowing jury trials under specific circumstances.
As the Court agrees that the right to a jury trial is sufficient cause shown for the
withdrawal of the reference, it need not decide whether withdrawal may also be proper under the
second basis asserted (claims neither derived from nor dependent upon bankruptcy law). And,
although the Court does not grant the Joint Motion as to the Allen Firm on the basis of the right
to a jury trial, the Allen Firm nonetheless receives the relief it seeks as the order granting the
Motions as to the other Movants withdraws the proceeding as to all parties.
Although the proceeding is withdrawn as to all parties, the proceeding is withdrawn only
in part, largely as requested by the parities. The Court finds the Bankruptcy Court should retain
its authority to supervise and resolve all pretrial matters, including scheduling, discovery, nondispositive motions, dispositive motions, and entry of a final pretrial order. The Final Trial
Preparation Conference, trial, and post-trial matters, however, will be before this Court.
Based on the foregoing, it is ORDERED
That the Joint Motion of Defendants Sherman & Howard L.L.C., Haynes and
Boone, LLP, and Allen & Vellone, P.C., to Withdraw Automatic Reference to the
Bankruptcy Court (ECF No. 11) is GRANTED as to Defendants Sherman & Howard
L.L.C. and Haynes and Boone, LLP and DENIED AS MOOT as to Defendant Allen &
That Defendant Bertrand Herman Weidberg’s Motion to Withdraw Automatic
Reference to the Bankruptcy Court (ECF No. 1) is GRANTED;
That the automatic reference of this proceeding to the Bankruptcy Court is
WITHDRAWN only for the purpose of the Final Trial Preparation Conference, the
Trial, and all post-trial matters. The Bankruptcy Judge shall retain jurisdiction over
the adversary proceeding for supervision and resolution of all pretrial matters, including
scheduling, discovery, non-dispositive motions, dispositive motions, and entry of a final
pretrial order; and
That upon the completion of the Final Pretrial Conference and issuance of the
Final Pretrial Order, the parties shall jointly contact Chambers to set the case for a Final
Trial Preparation Conference and Trial.
DATED this 9th day of December, 2015.
BY THE COURT:
RAYMOND P. MOORE
United States District Judge
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