Fiddler's Creek, LLC v. Naples Lending Group LC

Filing 67

ORDER TO SHOW CAUSE directing defendants to show cause within 14 days of this Order why the case should not be remanded to state court for lack of subject-matter jurisdiction; deferring 58 Motion for Leave to File Excess Pages pending a determination of jurisdiction; denying 63 Motion for Leave to File a Reply as no reply is required; granting 64 Motion to extend time to respond and the 66 Opposition is accepted as timely filed. Signed by Judge John E. Steele on 8/1/2014. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
IN RE:

FIDDLER’S CREEK, LLC

FIDDLER’S CREEK, LLC,
Plaintiff,
v.

Case No: 2:14-cv-379-FtM-29

NAPLES LENDING GROUP LC,
DANIEL
CARTER,
and
MMA
REALTY
CAPITAL
LLC,
Respondent,
Defendants.
ORDER TO SHOW CAUSE
This matter comes before the Court on a jurisdictional review
of the file.

Defendants Naples Lending Group, LC (Naples Lending)

and Daniel Carter (Carter) (collectively “defendants”) removed the
Complaint of plaintiff Fiddler’s Creek, LLC (Fiddler’s Creek or
plaintiff) from state court to the Bankruptcy Court before then
seeking to withdraw the reference from Bankruptcy Court to the
District Court.

The withdrawal of reference was granted and the

case was subsequently transferred to the Fort Myers Division.
I.

Proceedings in State Court

On February 23, 2010, plaintiff Fiddler’s Creek filed a
voluntary Petition (Bankr. Doc. #1) 1 under Chapter 11 of the

1

The Court will hereinafter reference documents filed with
the District Court as “Doc.”, documents filed in the Bankruptcy
case as “Bankr. Doc.”, and documents filed in the Adversary

Bankruptcy Code in the Middle District of Florida 2.

During the

pendency of its bankruptcy case, on April 1, 2011, Fiddler’s Creek
filed a Complaint against Naples Lending, Carter, and John Does
#1-20 in the Twentieth Judicial Circuit Court in and for Collier
County, Florida, alleging various state law claims with a jury
demand.
In the Complaint, plaintiff alleges that it is a Delaware
limited

liability

company

doing

business

in

Collier

County,

Florida, as a developer of the “Fiddler’s Creek” master-planned
community project.

Plaintiff alleges that the named John Does #1-

20, bondholders with an interest in the project, received and were
attempting to capitalize on, or improperly obtain, sensitive and
confidential information regarding the project with the assistance
of

co-defendants

Member.

Naples

Lending

and/or

Carter,

its

Managing

As the real estate market declined, in October of 2009,

Carter approached plaintiff about purchase outstanding bank debt
and restructuring the terms of plaintiff’s debt to enable it to
continue the project.

As a result, plaintiff and Naples Lending

entered into a Confidentiality and Non-circumvent Agreement before
disclosing confidential, non-public, and proprietary information

Proceeding as “Adv. Doc.” Copies of the relevant documents are
included in the record transmitted by the Bankruptcy Court or
otherwise available through PACER and judicially noticed.
2

The case was originally filed in the Fort Myers Division
Bankruptcy Court but transferred to the Tampa Division for
reassignment to a new a bankruptcy judge. (Doc. #1, p. 2 n.5.)
- 2 -

regarding

the

information,

project.

defendants

After

obtaining

terminated

the

investment

confidential

discussions

and

instead sought to purchase Community Development District bonds.
Plaintiff and affiliated entities subsequently sought bankruptcy
protection, and Carter became hostile by opposing the Plan and
working with third parties to oppose the plan to plaintiff’s
detriment.

Naples

Lending

improperly

disclosed

confidential

information to third parties, and conspired with John Does to
oppose plaintiff’s bankruptcy Plan.
are brought under state law.

All claims in the Complaint

Plaintiff later filed an Amended

Complaint (Doc. #2-8) still only asserting state law claims.

Both

pleadings contained a jury demand.
II.

Proceedings in Bankruptcy Court

On May 10, 2011, Naples Lending and Carter (collectively
“defendants”) filed a Notice of Removal (Doc. #2-15) with the
Bankruptcy Court in the Tampa Division pursuant to 11 U.S.C. §
1334 because the Complaint was “related to” Fiddler’s Creek’s
bankruptcy

case.

(Doc.

#2-28,

p.

217.)

On

June

9,

2011,

Fiddler’s Creek filed a Motion to Remand, or, in the Alternative,
Motion for Abstention (Doc. #2-6) arguing that the Complaint was
not related to the bankruptcy case and no independent basis for
federal jurisdiction existed.

Defendants filed a Memorandum in

Opposition (Doc. #2-7) and the Bankruptcy Court heard argument on
July 6, 2011.

At the hearing, the Bankruptcy Court found that the

- 3 -

contract at issue in the state court Complaint was an asset of the
Chapter 11 estate and a core matter.

(Doc. #2-13, pp. 38-39.)

Therefore, on July 14, 2011, the Bankruptcy Court denied the remand
for the reasons stated at the hearing.

(Adv. Doc. #15.)

On

November 8, 2011, plaintiff filed the Amended Complaint (Doc. #28) in the Adversary Proceeding.

Discovery continued for several

years in the Bankruptcy Court.
On August 29, 2011, the Bankruptcy Court issued a Memorandum
Opinion and Order Confirming the Debtors’ Second Amended Plans of
Reorganization

as

bankruptcy case.

Modified

(Doc.

#2-2)

in

the

underlying

On December 23, 2013, the Bankruptcy Court

issued a Final Decree (Doc. #2-4) and the bankruptcy case was
closed.

On January 6, 2014, plaintiff sought to withdraw its jury

demand in the adversary proceeding based on the presence of a
waiver in the confidentiality agreement at issue in the Complaint,
Doc. #2-14, but the motion was never heard or responded to because
defendants moved to withdraw the reference and transfer venue,
Doc. #1, on the same day.
III. Withdrawal to District Court
On

January

6,

2014,

Naples

Lending

filed

its

Motion

to

Withdraw the Reference and, to the Extent Applicable, Transfer
Venue (Doc. #1) and the Bankruptcy Court transmitted the motion
and underlying record to the District Court in the Tampa Division
of the Middle District of Florida.

- 4 -

After hearing argument on the

motion, docs. ##8-9, the Honorable James S. Moody, Jr. granted the
motion

to

withdraw

the

reference

but

deferred

the

issue

transferring venue to the Fort Myers Division, doc. #11.

of

On July

16, 2014, the case was transferred to the Fort Myers Division of
the Middle District of Florida, but without opining as to whether
the case should be heard or remanded to the state court.

(Doc.

#62.)
IV.

Jurisdiction of the District Court

In the February 24, 2014, Order (Doc. #11), Judge Moody found
that the withdrawal was timely made, that the reference should be
withdrawn.

More

specifically,

adversary

proceeding

no

longer

Judge

Moody

involved

a

found

that

bankruptcy

the

related

issue, and in fact the outcome would not have any impact on the
closed bankruptcy case, and that it was not a core proceeding in
the

bankruptcy

case.

Judge

Moody

further

found

that

the

bankruptcy court’s ruling was not dispositive on the issue of
withdrawal and was insufficient to prevent withdrawal of the
reference

under

Stern

v

Marshall,

131

S.

Ct.

2594

(2011).

Plaintiff’s request to withdraw the jury demand was found to be
improper because Carter had an independent right to a jury trial
that was not deemed waived under the Agreement at issue.
The Bankruptcy Court denied a remand without considering
Stern v. Marshall, the bankruptcy case is closed, and the district
court

has

found

that

the

claims

- 5 -

in

the

withdrawn

adversary

proceeding are not core, arising from, or related to the bankruptcy
case.

In fact, everyone agreed that the outcome of the suit would

have no effect on the administration of the estate.

(Doc. #9, pp.

29-30.)
Accordingly, it is hereby
ORDERED:
1. Defendants shall show cause within FOURTEEN (14) DAYS of
this Order why the case should not be remanded to state
court for lack of subject-matter jurisdiction.
2. Non-Party MMA Realty Capital LLC's Motion to Extend Time
to Respond to Plaintiff’s Renewed and Amended Motion to
Compel

(Doc.

#64)

is

GRANTED,

nunc

pro

tunc.

The

Opposition (Doc. #66) is accepted as timely filed.
3. Defendants’ Motion for Leave to File a Motion to Compel in
Excess of Twenty-Five Pages (Doc. #58) is DEFERRED pending
a determination of the Court’s jurisdiction.
4. Defendants’ Motion for Leave to File a Reply (Doc. #63) to
plaintiff’s Response and Opposition to Defendants’ Motion
for Leave to File a Motion to Compel in Excess of TwentyFive Pages (Doc. #59) is DENIED as no reply is required.
DONE and ORDERED at Fort Myers, Florida, this
August, 2014.

- 6 -

1st

day of

Copies:
Counsel of Record

- 7 -