Healy v. Bao et al

Filing 9

ORDER denying without prejudice 1 Motion to Withdraw Reference; denying without prejudice 2 Cross-Motion to Withdraw Reference. Directions to the Clerk of Court. See Order for details. Signed by Judge Marcia Morales Howard on 1/6/2025. (EJK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
In re:
PREMIER EXHIBITIONS, INC.
a/k/a PRYXIE LIQUIDATION
CORP., et al.,
Debtors.
_____________________________/
MARK C. HEALY of Michael
Moecker & Associates, Inc.,
Liquidating Trustee,
v.

Plaintiff,

Case No. 3:23-cv-1255-MMH
(Bankr. Case No. 3:16-bk-2232-BAJ)
(Bankr. Adv. Pro. No. 3:20-ap-51-BAJ)

DAOPING BAO, MICHAEL
EVANS, SID DUTCHAK, JEROME
HENSHALL, MARK BAINS, and
GUO “DAVID” DING,
Defendants.
_____________________________/
ORDER
THIS CAUSE is before the Court on Plaintiff’s Motion to Withdraw, In
Part, the Standing Order of Reference to Conduct a Jury Trial on Count I of the
Complaint (Doc. 1; Plaintiff’s Motion), filed on October 23, 2023, and
Defendants’ (I) Joint Response to Plaintiff’s Motion and (II) Cross-Motion to

Withdraw the Reference as to Counts I–IV of the Adversary Complaint (Doc. 2;
Defendants’ Response and Cross-Motion), filed on October 23, 2023. Upon
review of the Plaintiffs’ Motion and Defendants’ Response and Cross-Motion,
the Court finds it appropriate to deny the Motion and Cross-Motion without
prejudice.
This is the second time the Court has considered the parties’ motions to
withdraw the reference in the underlying adversary proceeding. See generally
Case No. 3:20-cv-1010-MMH. The Court previously denied Defendants’ request
to withdraw the reference without prejudice. See Case No. 3:20-cv-1010-MMH,
Order (Doc. 3; First Order), entered on March 28, 2023. In the First Order, the
Court summarized the procedural posture and facts of the underlying dispute
as set forth in the adversary complaint. See generally id.; Case No.
3:16-bk-2232-BAJ

(Bankruptcy

Proceedings);

Case

No.

3:20-ap-51-BAJ

(Adversary Proceedings); Adversary Complaint for Damages and Other Relief
and Demand for Jury Trial (Adversary Proceedings Doc. 1; Adversary
Complaint), filed on April 20, 2020. The Court assumes the parties are familiar
with the facts and does not recount them here. In short, Plaintiff asserts
Defendants wrongfully sold—or allowed to be sold—company assets (artifacts
from the Titanic) for less than market value, thereby injuring the bankruptcy
estate. See generally Adversary Complaint. Notably, after the Court entered
-2-

the First Order and the parties filed the Plaintiffs’ Motion and Defendants’
Response and Cross-Motion, the Bankruptcy Court determined that the claims
in Counts I and II of the Adversary Complaint—claims for breaches of fiduciary
duty—are non-core. See Order Granting Defendants’ Renewed Motion to
Determine that Counts I and II of Adversary Complaint are Non-Core
(Adversary Proceeding Doc. 280), entered on January 10, 2024.
In the Plaintiff’s Motion, Plaintiff requests the Court withdraw the
reference as to Count I only when Count I “is ready to be tried.” Plaintiffs’
Motion at 2. But Plaintiff requests the reference remain in place for all pretrial
matters. See generally id. Plaintiff argues that withdrawal is permissive under
28 U.S.C. § 157(d) and that the parties’ demand for a jury trial under the
Seventh Amendment constitutes sufficient cause to withdraw the reference
under that Section. See generally id. Defendants agree that the parties’ jury
trial rights constitute cause to withdraw the reference as to Count I and
cross-move to withdraw the reference as to all the other claims Plaintiff brings
in the Adversary Complaint. See generally Defendants’ Response and
Cross-Motion. Defendants also contend that the Bankruptcy Court cannot enter
final judgments and orders because the claims in Counts I and II are non-core.
See id. at 3 n.1. Nevertheless, Defendants agree that the Bankruptcy Court

-3-

should retain the case until it is ready for trial. See generally id. Plaintiff did
not respond to Defendants’ Cross-Motion.
As a preliminary matter, to the extent Defendants seek a ruling from the
Court as to the Bankruptcy Court’s authority to enter final orders, the Court
directs Defendants to the First Order, where the Court counseled:
To the extent Defendants seek a determination that the
Bankruptcy Court does not have jurisdiction to enter final
judgments as to any non-core claim, they simply seek a
re-statement of the law. Pursuant to 28 U.S.C. § 157(c), if a
Bankruptcy Court exercises jurisdiction over a related non-core
claim, in the absence of consent by all parties, the Bankruptcy
Court must submit proposed findings of fact and conclusions of law
on that claim to the district court after which the district court must
enter the final order or judgment.
First Order at 4. Turning to the merits of the requests to withdraw the
reference, while the parties heeded the Court’s instruction from the First Order
to discuss the factors relevant to withdrawal for cause, the Court concludes that
ruling on the Motion and Cross-Motion at this time would be advisory because
neither party wishes to withdraw the reference for pretrial matters. A review
of the Adversary Proceeding docket reveals that the parties are still engaged in
discovery. No motion for summary judgment has been filed. It appears possible
that the case will not proceed to trial at all, as the parties might settle or
disposition might be appropriate at summary judgment. Accordingly, an Order
withdrawing the reference for trial would have only hypothetical effect. As such,
-4-

the Court again finds the Motion and Cross-Motion are due to be denied without
prejudice to renewal at the appropriate time if warranted.
If the appropriate time does arise, the Court directs the parties to comply
with the Court’s Local Rules. See generally Local Rules, United States District
Court, Middle District of Florida (Local Rule(s)). In particular, Local Rule
3.01(g) requires that before filing a motion, a party must confer with the other
parties and that in the motion, the party must certify compliance with the Local
Rule and indicate whether the opposing party agrees on the resolution of all or
part of the motion. See Local Rule 3.01(g). 1
Moreover, the parties do not adequately address why the Seventh
Amendment applies to the claims in Counts I and II. 2 The parties appear to

1 In Defendants’ Response and Cross-Motion, Defendants did certify compliance with

“Local Rule 1001-2(e)(3).” Defendants’ Response and Cross-Motion at 13. This seems to be a
reference to what is now Rule 1001-2(g)(3) of the Local Rules for the United States Bankruptcy
Court for the Middle District of Florida. These rules are inapplicable in District Court, and
Local Rule 3.01(g) imposes a different conferral requirement. See Local Rule 3.01(g).
Defendants also stated in a footnote that they conferred with Plaintiff’s counsel to
determine the scope of relief Plaintiff intended to request in the Motion. Defendants’ Response
and Cross-Motion at 3 n.2. The confusion as to Plaintiff’s intended relief underscores the
importance of complying with Local Rule 3.01(g), which requires parties to identify which
specific relief is opposed and which is unopposed. See generally Local Rule 3.01(g).

The Seventh Amendment states: “In Suits at common law, where the value in
controversy shall exceed twenty dollars, the right of trial by jury shall be preserved … .” U.S.
Const. Am. VII. The threshold question, then, is to determine whether the action is an action
at common law. The term “common law” is used to distinguish suits in admiralty or equity.
See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989).
2

-5-

suggest that any demand for financial relief comes with the Seventh
Amendment right to trial by jury. See generally Plaintiffs’ Motion; Defendants’
Response and Cross-Motion. But the Supreme Court has recently reaffirmed
that both the cause of action and the remedy are important considerations in
determining whether the Seventh Amendment applies. See S.E.C. v. Jarkesy,
603 U.S. 109, 122–23 (2024) (“To determine whether a suit is legal in nature,
we directed courts to consider the cause of action and the remedy it provides.
Since some causes of action sound in both law and equity, we concluded that
the remedy was the ‘more important’ consideration.”) (quoted authority
omitted). The Supreme Court has also instructed that consideration as to the
cause of action requires the court to “compare the … action to 18th-century
actions brought in the courts of England prior to the merger of the courts of law
and equity.” Granfinanciera, 492 U.S. at 42 (internal quotation marks and
quoted authority omitted). Notably, courts have concluded that actions for
breach of fiduciary duty were historically tried in courts of equity. 3 See, e.g.,
Chauffers, Teamsters and Helpers, Local No. 391 v. Terry, 494 U.S. 558, 567
(1990) (“Such actions were within the exclusive jurisdiction of courts of

Indeed, Plaintiff acknowledges that “claims for breach of fiduciary duty are
historically actions in equity which carry no right to trial by jury,” Plaintiffs’ Motion at 1–2,
but does not explain why the demand for financial relief overpowers this consideration, see
generally id.
3

-6-

equity.”); Romano v. John Hancock Life Ins. Co. (USA), 2021 WL 949939, at *4
(S.D. Fla. March 12, 2021) (“In 18th-century actions in England, claims for
breach of fiduciary duty were commonly characterized as arising in equity.”)
(internal quotation marks and quoted authority omitted); In re RDM Sports
Grp., Inc., 260 B.R. 915, 919 (N.D. Ga. Bankr. 2001) (quoting Chauffers,
Teamsters and Helpers and stating that actions for breach of fiduciary duty
were once exclusively within the jurisdiction of equity courts). 4 As to the
remedy, the fact that a party seeks financial relief is not sufficient to trigger the
Seventh Amendment: the Supreme Court has noted that “monetary relief can
be legal or equitable … . What determines whether a monetary remedy is legal
is if it is designed to punish or deter the wrongdoer, or, on the other hand, solely
to ‘restore the status quo.’” Jarkesy, 603 U.S. at 123 (quoted authority omitted).
In sum, the Court advises the parties that, in any future motion to withdraw
the reference based on a purported Seventh Amendment right to a jury trial, a
more fulsome analysis of why the right applies to the claims in the Adversary
Complaint will be necessary.

4 The Court notes that although decisions of other district courts are not binding, they

may be cited as persuasive authority. See Stone v. First Union Corp., 371 F.3d 1305, 1310
(11th Cir. 2004) (noting that, “[a]lthough a district court would not be bound to follow any
other district court’s determination, the decision would have significant persuasive effects.”).
-7-

Accordingly, it is
ORDERED:
1. Plaintiff’s Motion to Withdraw, In Part, the Standing Order of
Reference (Doc. 1) is DENIED WITHOUT PREJUDICE.
2. Defendants’ Cross-Motion to Withdraw the Reference as to Counts
I–IV (Doc. 2) is DENIED WITHOUT PREJUDICE.
3. The Clerk of the Court is directed to close the file.
DONE AND ORDERED in Jacksonville, Florida this 6th day of
January, 2025.

lc33
Copies to:
Counsel of Record

-8-