Herendeen v. Regions Bank

Filing 12

ORDER: Plaintiff's Motion to Withdraw the Reference 2 is DENIED. The Clerk is directed to CLOSE this case. Signed by Judge Virginia M. Hernandez Covington on 4/28/2015. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
IN RE:
YJNK XI CA, LLC,
Debtor,
____________________________
CHRISTINE HERENDEEN,
Plaintiff,
v.

Case No. 8:15-cv-665-T-33

REGIONS BANK,
Defendant.
____________________________/
ORDER
This matter comes before the Court pursuant to Plaintiff
Christine Herendeen’s Motion to Withdraw the Reference (Doc.
# 2) and Defendant Regions Bank’s response in opposition
thereto (Doc. # 3-1). For the reasons that follow, the Court
denies Plaintiff’s Motion.
I.

Background
On January 30, 2015, Plaintiff, as a Chapter 7 trustee

for several bankrupt entities, initiated sixteen adversary
proceedings

1

against

Regions

Bank.1

These

adversary

See In re Westward Ho II, LLC, Case No. 8:15-cv-653-T-33;
In re Preferable HQ, LLC, Case No. 8:15-cv-654-T-33; In re
Cecil B. DeBoone, LLC, Case No. 8:15-cv-655-T-33; In re ABTS
Holdings, LLC, Case No. 8:15-cv-656-T-33; In re Professional

proceedings, which allege similar claims against Regions
Bank, are currently pending before Judge Caryl E. Delano in
the United States Bankruptcy Court for the Middle District of
Florida.2

At this time, Plaintiff moves to withdraw the

reference in the present adversary proceeding.
II.

Jurisdiction
“The United States Code grants bankruptcy jurisdiction

to Article III district courts.” In re Organized Confusion,
LLP, No. 8:14-cv-3226-T-24, 2015 WL 728223, at *3 (M.D. Fla.
Feb. 19, 2015). Specifically, 28 U.S.C. § 1334(b) states that
“the district courts shall have original but not exclusive

Staffing-ABTS, Inc., Case No. 8:15-cv-657-T-33; In re
Rotrpick, LLC, Case No. 8:15-cv-658-T-33; In re Able Body
Temporary Services, Inc., Case No. 8:15-cv-659-T-33; In re
YJNK II, Inc., Case No. 8:15-cv-660-T-33; In re Organized
Confusion, LLP, Case No. 8:15-cv-661-T-33; In re USL&H
Staffing, LLP, Case No. 8:15-cv-662-T-33; In re YJNK VIII,
Inc., Case No, 8:15-cv-663-T-33; In re Training U, LLC, Case
No. 8:15-cv-664-T-33; In re YJNK XI CA, LLC, Case No. 8:15cv-665-T-33; In re YJNK III, Inc., Case No: 8:15-cv-666-T33; In re: Able Body Gulf Coast, Inc., Case No. 8:15-cv-667T-33; In re Westward Ho, LLC, Case No. 8:15-cv-698-T-23.
The related adversary proceedings are extensions of initial
adversary proceedings filed by Angela Welch, as Chapter 7
Trustee for the Estate of Frank Michael Mongelluzi in the
United States District Court for the Middle District of
Florida; specifically, Case No. 8:14-cv-187-T-33AEP and Case
No. 8:14-cv-188-T-17TGW. The initial adversary proceedings
were referred to the Bankruptcy Court by way of separate
Orders.
2

2

jurisdiction of all civil proceedings arising under [T]itle
11, or arising in or related to cases under [T]itle 11.”
Congress provided in 28 U.S.C. § 157(a) that each district
court may refer all cases “arising under,” “arising in,” or
“related to” Title 11 proceedings to the bankruptcy judges
for the district. “This Court has a standing order referring
all bankruptcy matters to the Bankruptcy Courts.” In re
Organized Confusion, LLP, 2015 WL 728223, at *3.
A finding that a matter is “related to” a bankruptcy
case confers subject matter jurisdiction to the Bankruptcy
Court and empowers it to hear the non-core matter. In re Happy
Hocker Pawn Shop, Inc., 212 F. App’x 811, 817 (11th Cir.
2006). “However, under § 157(c), the Bankruptcy Court’s power
to determine a non-core matter is limited, as compared to its
power to hear and determine core matters under § 157(b)(l).”
In re Organized Confusion, LLP, 2015 WL 728223, at *3.
Specifically, the Bankruptcy Court has the power to determine
matters properly before it under Title 11, but with respect
to “related to” or non-core matters, an Article III court
must render final judgment unless the parties consent to allow
the Bankruptcy Court to handle the matter. See 28 U.S.C. §
157(b) and (c).
III. Legal Standard - Permissive Withdrawal of Reference

3

The standard for permissive withdrawal is stated in 28
U.S.C. § 157(d): “[t]he district court may withdraw, in whole
or in part, any case or proceeding referred under [§ 157], on
its own motion or on timely motion of any party, for cause
shown.” Congress has not given a definition or explanation of
the

“cause”

required

for

permissive

withdrawal,

but

the

Eleventh Circuit has stated that cause “is not an empty
requirement.” In re Parklane/Atlanta Joint Venture, 927 F.2d
532, 536 (11th Cir. 1991). In determining whether the movant
has established sufficient cause to withdraw the reference,
“a district court should consider such goals as advancing
uniformity in bankruptcy administration, decreasing forum
shopping and confusion, promoting the economical use of the
parties’ resources, and facilitating the bankruptcy process.”
In re Advanced Telecomm. Network, Inc., No. 8:6-13-cv-700ORL-28, 2014 WL 2528844, at *1 (M.D. Fla. June 4, 2014)
(citing In re Simmons, 200 F.3d 738, 742 (11th Cir. 2000)
(citations omitted)).
Additional factors to consider include: (1) whether the
claim is core or non-core, (2) efficient use of judicial
resources, (3) a jury demand, and (4) prevention of delay.
Control Ctr., L.L.C. v. Lauer, 288 B.R. 269, 274 (M.D. Fla.
2002) (citations omitted). The Eleventh Circuit has noted

4

that “the cause prerequisite should not be used to prevent
the district court from properly withdrawing reference either
to ensure that the judicial power of the United States is
exercised by an Article III court or in order to fulfill its
supervisory function over the bankruptcy courts.” Parklane,
927 F.2d at 538. The determination of whether to grant a
motion

for

permissive

withdrawal

is

within

the

court’s

discretion. See In re Fundamental Long Term Care, Inc., No.
8:14-cv-1800-EAK, 2014 WL 4452711, at *1 (M.D. Fla. Sept. 9,
2014) (citing In re TPI Int’l Airways, 222 B.R. 663, 668 (S.D.
Ga. 1998) (citations omitted)).
IV.

Discussion
Plaintiff argues that the reference should be withdrawn

as the complaint’s claims are non-core because the claim
advanced in the adversary proceeding is independent of, and
precedes the bankruptcy. (Doc. # 2 at 3). Plaintiff further
argues

that

withdrawing

the

reference

would

promote

uniformity and the efficient use of economic and judicial
resources. (Id. at 4-5). Additionally, Plaintiff has demanded
a jury trial, and as such, Plaintiff contends that this is
another factor in support of withdrawal. (Id. at 5-6). As
discussed below, the Court determines that it is appropriate

5

for the reference to remain with the Bankruptcy Court and for
the Bankruptcy Court to address all matters at this time.
A.

Core or Non-Core Status

The Court has stated that the determination of whether
a matter is core or non-core “should first be made by the
Bankruptcy Court.” In re Fundamental Long Term Care, Inc.,
2014 WL 2882522, at *2 (citing In re Stone, No. 8:10-cv-2517JDW,

2010

WL

5069698,

at

*1

(M.D.

Fla.

Dec.

7,

2010)

(citations omitted)); see also 28 U.S.C. § 157(b)(3) (“The
bankruptcy judge shall determine, on the judge’s own motion
or on timely motion of a party, whether a proceeding is a
core proceeding under this subsection or is a proceeding that
is otherwise related to a case under [T]itle 11.”).
Neither party has argued that the Bankruptcy Court has
made

a

determination

regarding

whether

the

adversary

proceeding at issue is a core or non-core proceeding, and
this Court is not inclined to make that determination. As
such, the Court will not consider this factor in its analysis
of the appropriateness of withdrawal. See In re TPI Int'l
Airways, 222 B.R. at 668 (determining that the Court would
refrain from considering this factor as the parties failed to
move

for

the

Bankruptcy

Court

to

proceedings were core or non-core).

6

determine

whether

the

B.

Economic & Judicial Resources

Next, Plaintiff asserts that judicial economy, full and
complete

resolution

of

claims,

and

the

importance

of

consistent rulings weigh in favor of adjudication of this
matter by the district court. (Doc. # 2 at 4-5). Furthermore,
Plaintiff posits that withdrawal of the reference would be
more efficient, because the Bankruptcy Court would have to
make proposed findings of fact and conclusions of law on noncore claims, which would then be submitted to the district
court for de novo review, and as a result, will delay the
conclusion of these adversary proceedings. (Id.).
However, “[a] district court can allow the Bankruptcy
Court to retain jurisdiction to address all pretrial matters,
from

discovery

through

dispositive

motions

on

non-core

claims.” In re Organized Confusion, LLP, 2015 WL 728223, at
*4. Here, the Bankruptcy Court is already familiar with this
adversary proceeding and the bankruptcy case to which it
relates, and is suited to oversee discovery and other pretrial
matters. Accordingly, “[w]ithdrawal of the reference at this
stage would result in this Court losing the benefit of the
bankruptcy court's experience in both the law and facts, and
leading to an inefficient allocation of judicial resources.”

7

In re Rothstein, Rosenfeldt, Adler, P.A., No. 11-62612-CIV,
2012 WL 882497, at *4 (S.D. Fla. Mar. 14, 2012).
Therefore, in its discretion, the Court concludes that
allowing

this

Bankruptcy

adversary

Court

for

all

proceeding
pretrial

to

continue

matters

in

the

promotes

the

efficient use of judicial resources and will not result in
delay. See In re Gunnallen Fin., Inc., No. 8:10-cv-2855-T24, 2011 WL 398054, at *4 (M.D. Fla. Feb. 3, 2011)(citing In
re Stone, 2010 WL 5069698, at *1 (finding that the case did
not need to be immediately withdrawn from the bankruptcy court
and that the bankruptcy court could handle all pretrial
matters)). Withdrawal of the reference will be appropriate
only if and when this adversary proceeding becomes ready for
trial. See also In re Armenta, No. 13-15047-BKC-RBR, 2013 WL
4786584, at *2 (S.D. Fla. Sept. 6, 2013); Official Comm. of
Unsecured Creditors v. Schwartzman (In re Stansbury Poplar
Place, Inc.), 13 F.3d 122, 128 (4th Cir. 1993) (holding that
whether

to

refer

proceeding

for

pretrial

purposes

is

pragmatic decision left to district court); Boyd v. King Par,
LLC, No. 11–1106, 2011 WL 5509873, at *2 (W.D. Mich. Nov. 10,
2011)

(“[E]ven

if

there

is

uncertainty

regarding

the

bankruptcy court's ability to enter a final judgment . . .
that does not deprive the bankruptcy court of the power to

8

entertain

all

pre-trial

proceedings,

including

summary

judgment motions”); Apponline.Com., Inc., 303 B.R. 723, 728
(E.D.N.Y.

2004)

(declining

to

withdraw

reference

where

adversary proceeding was in preliminary stage, matter could
be resolved by dispositive motions, bankruptcy court had
presided over similar adversary proceedings, and bankruptcy
court had complete understanding of background of underlying
bankruptcy).
C.

Jury Demand

Plaintiff submits that withdrawal is proper as Plaintiff
has demanded a jury trial on all claims asserted in the
adversary proceeding. (Doc. # 2 at 5-6). In response, however,
Defendant provides that it “does not concede that Trustee
Herendeen is even entitled to a jury trial in this case.”
(Doc. # 3-1 at 5-6). Rather, Defendant cites to a recent
opinion for the proposition that a “trustee is never entitled
to jury trial in avoidance actions and waives any other right
to

jury

trial

where

creditor

files

proof

of

claim.”

(Id.)(citing Kapila v. Bank of Am., N.A. (In re Pearlman),
493 B.R. 878, 888 (Bankr. M.D. Fla. 2013)).
It is the initial prerogative of the Bankruptcy Court to
determine whether a party has a right to a jury trial. See In
re Rodgers & Sons, Inc., 48 B.R. 683 (Bankr. Okla. 1985).

9

Even where there is a right to a jury trial, such right does
not preclude the Bankruptcy Court from hearing a proceeding
up to and including the point of ruling on summary judgment.
City Fire Equip. Co. v. Ansul Fire Prot. Wormald U.S., Inc.,
125 B.R. 645, 650 (N.D. Ala. 1989)(concluding that “the
references should not be generally withdrawn until the cases
are ready for jury trial”). “[T]he bankruptcy judge is ‘fully
equipped’ with the necessary judicial skills to determine and
resolve all legal issues arising in this case prior to trial.”
Hvide Marine Towing, Inc. v. Kimbrell, 248 B.R. 841, 845 (M.D.
Fla. 2000). Thus, the mere assertion of a request for jury
trial has no bearing on this Court’s enforcement of the
Reference Orders. (See Doc. # 3-1 at 6). Should it become
necessary, the Court will revisit Plaintiff’s entitlement to
a jury trial at the appropriate time.
V.

Conclusion
Upon consideration, the Court declines to withdraw the

reference. The Court concludes that permitting this adversary
proceeding to remain in Bankruptcy Court for the disposition
of all pretrial matters, including any dispositive motions,
“(1) advances uniformity of bankruptcy administration, (2)
decreases

both

the

likelihood

of

confusion

and

the

opportunity to gain an advantage by forum shopping, (3)

10

promotes the economical use of the parties’ resources by
limiting the bulk of the action to a single forum, and (4)
facilitates the efficient administration of the debtor’s
estate.” In re Ernie Haire Ford, Inc., No. 8:12-MC-105-T-23,
2012 WL 4356161, at *2 (M.D. Fla. Sept. 24, 2012). Therefore,
Plaintiff’s Motion to Withdraw the Reference is denied.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Plaintiff’s Motion to Withdraw the Reference (Doc. # 2)
is DENIED.

(2)

The Clerk is directed to CLOSE this case.
DONE and ORDERED in Chambers in Tampa, Florida, this

28th day of April, 2015.

Copies: All counsel of record

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