Specialized Loan Servicing LLC v. Herendeen
Filing
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ORDER denying 1 Motion to Withdraw Reference. Signed by Judge Susan C Bucklew on 9/11/2015. (KTW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
In re:
NICHOLAS SINCLAIR FIELDS and
YHOTZMINE ELIZABETH FIELDS,
Debtors,
___________________________________
CHRISTINE L. HERENDEEN,
Plaintiff,
v.
Case No: 8:15-cv-1521-T-24
SPECIALIZED LOAN SERVICING LLC,
Defendant.
ORDER
This cause comes before the Court on Defendant’s Motion for Withdrawal of Reference
(Dkt. 1) and Plaintiff’s Response (Dkt. 4). The Court, having reviewed the motion, response, and
being otherwise advised, concludes that the motion to withdraw the reference should be denied.
I.
BACKGROUND
This is an adversary proceeding currently pending in the United States Bankruptcy Court
for the Middle District of Florida.1 The Complaint alleges Defendant violated Fla. Stat. §§ 559.55
et seq., the Florida Consumer Collection Practices Act (“FCCPA”) and 47 U.S.C. §§ 227 et seq.,
the Telephone Consumer Protection Act (“TCPA”) when Defendant made numerous calls to
1
In re: Nicholas Sinclair Fields and Yhotzmine Elizabeth Fields, Case No. 8:15-ap-00446-MGW (“Adversary
Proceeding”).
Debtors Nicholas Sinclair Fields and Yhotzmine Elizabeth Fields’ cell phone, attempting to collect
a debt.
Debtors filed a voluntary petition for bankruptcy under Chapter 7 of Title 11 of the United
States Code on August 12, 2014. Plaintiff Christine L. Herendeen was appointed as the Chapter 7
Trustee of the bankruptcy estate of Debtors. On September 12, 2014, a meeting of creditors was
held pursuant to 11 U.S.C. § 341 (the “Section 341 Meeting”).2 During the Section 341 Meeting,
Debtors testified regarding Defendant’s numerous calls to Debtors during the period of August 1,
2012 through July 31, 2014. Debtors testified that Defendant called their cell phone four to eight
times a day, every day of the week, and that Defendant continued to call Debtors’ cell phone after
Debtors told Defendant to stop calling Debtors’ cell phone. Debtors also testified that Defendant
told Debtors it had the right to continue calling Debtors after Debtors told them to stop calling and
that Defendant contacted Yhotzmine Elizabeth Fields’ mother attempting to reach Yhotzmine
Elizabeth Fields regarding “a business matter”. Adversary Proceeding (Dkt. 1 at 4).
On May 7, 2015, Plaintiff Christine L. Herendeen filed a Complaint in bankruptcy court
alleging Defendant violated the FCCPA and TCPA on the basis of Debtors’ testimony during the
Section 341 Meeting. On June 1, 2015, Defendant filed the instant motion for withdrawal of
reference.3
2
11 U.S.C. § 341 provides for an initial meeting of creditors, at which the debtor must undergo examination by the
Chapter 7 Trustee.
3
In addition, on June 1, 2015, Defendant filed a motion to determine non-core proceeding before the bankruptcy
court. Adversary Proceeding (Dkt. 7). On August 7, 2015, the bankruptcy court entered an order granting Defendant’s
motion to determine non-core proceeding, holding that this adversary proceeding is a non-core proceeding. Adversary
Proceeding (Dkt. 19). Plaintiff filed a motion for reconsideration of the bankruptcy court’s order, which the bankruptcy
court granted on September 8, 2015. Adversary Proceeding (Dkts. 20, 21). In its order on Plaintiff’s motion for
reconsideration, the bankruptcy court vacated its previous order in part, and held that the Adversary Proceeding is a
non-core proceeding and the bankruptcy court maintains “related to” jurisdiction over the proceeding. Adversary
Proceeding (Dkt. 21).
2
II.
JURISDICTIONAL ANALYSIS
Bankruptcy Court Jurisdiction
The United States Code grants bankruptcy jurisdiction to Article III district courts.
Specifically, 28 U.S.C. § 1334(b) states that “the district courts shall have original but not
exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases
under title 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.
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 Fed. 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). 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. 28 U.S.C. § 157(b) and (c).
III.
STANDARD GOVERNING PERMISSIVE WITHDRAWAL OF REFERENCE
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
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(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., 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 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., 2014 WL 4452711, at *1 (M.D. Fla. Sept. 9, 2014) (citing In re TPI lnt’l Airways,
222 B.R. 663, 668 (S.D.Ga.1998) (citations omitted)).
IV.
MOTION TO WITHDRAW THE REFERENCE
Defendant argues that the reference should be withdrawn because the complaint’s claims
are non-core, and withdrawal will promote the economical use of the parties’ resources and judicial
efficiency.
Non-Core Status of the Proceedings
Defendant argues the proceedings are non-core, and, therefore the reference should be
withdrawn. 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
4
WL 2882522, at *21 (M.D. Fla. Jun. 25, 2014) (citing In re stone, No. 8:10-cv-2517-T-27, 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 title 11.”)
Here, the bankruptcy court has made such a determination, finding that the underlying
adversary proceeding is a non-core proceeding.4 While a determination that a proceeding is noncore weighs in favor of transferring the matter to a district court, Control Ctr., L.L.C., 288 B.R. at
275, the Court must also consider the parties’ arguments regarding economic and judicial
resources.
Efficient Use of Economic and Judicial Resources
Defendant asserts adjudication of these matters by the district court in the first instance
would be more efficient because proposed findings of fact and conclusions of law made by the
bankruptcy court on non-core claims would be subject to de novo review by this Court, which
would cause delay. Further, Defendant argues the district court is “better positioned” to address
the claims alleged in the complaint. (Dkt. 1 at 4). Plaintiff asserts this factor does not support
withdrawing the reference because the bankruptcy court is already intimately involved with the
claims at issue in this case and is a sufficient venue in which to address such claims.5
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. See In re Gunnallen
4
See In re: Nicholas Sinclair Fields and Yhotzmine Elizabeth Fields, 8:15-ap-00446-MGW (Dkts. 19, 21).
5
In addition, the parties submit arguments regarding whether the bankruptcy court has “related to” jurisdiction over
this proceeding pursuant to 28 U.S.C. §1334. However, because the bankruptcy court has recently ruled that it has
“related to” jurisdiction over the instant proceeding, Adversary Proceeding (Dkt. 21), the Court will not address this
issue.
5
Financial, Inc., 2011 WL 398054, at *4 (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)). In addition, allowing the bankruptcy court to
dispose of all pretrial matters “promote[s] judicial economy and efficiency.” In re E. Coast Brokers
& Packers, Inc., No. 8:15-cv-824-T-17, 2015 WL 2452304, at *1 (M.D. Fla. May 21, 2015) (citing
In re Stone, 2010 WL 5069698, at *4).
Defendant’s arguments regarding judicial economy are unpersuasive. Eventual de novo
review does not extinguish the role of the bankruptcy court. Id. “If accepted, this kind of
reductionist reasoning would result in the reference always being withdrawn from the Bankruptcy
Court in the name of efficiency because of the omnipresent possibility of appeal.” Id. (citing In re
Fundamental Long Term Care, Inc., 2014 WL 4452711, at *2). Moreover, conducting pretrial
matters in the same court as the debtor’s estate “is a much more efficient use of judicial resources,
as opposed to ... pitting the case against the competing criminal and civil litigation demands of the
district court’s docket.” Id. at *2 (citing In re Stone, 2010 WL 5069698, at *6).
Finally, while Defendant argues that this Court is better positioned to address the claims at
issue, the Court finds that the bankruptcy court is sufficiently skilled and aptly prepared to handle
all pre-trial matters of this cause, including ruling on dispositive motions. See In re McDonald,
No. 8:11-MC-61-RAL, 2011 WL 2517236, at *2 (M.D. Fla. June 23, 2011) (denying motion to
withdraw the reference in a proceeding involving FCCPA, Fair Debt Collection Practices Act,
personal injury tort, and wrongful death claims). Therefore, it is the Court’s conclusion that
allowing these adversary proceedings to continue in the bankruptcy court for all pretrial matters
promotes the efficient use of judicial resources and will not result in delay.
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V.
CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED that Defendant’s Motion for
Withdrawal of Reference (Dkt. 1) is DENIED. The Clerk is directed to CLOSE this case.
DONE AND ORDERED at Tampa, Florida, this 11th day of September, 2015.
Copies To: Counsel of Record and Parties
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