Sussex et al v. Turnberry/MGM Grand Towers, LLC et al

Filing 208

ORDER. IT IS THEREFORE ORDERED that Turnberry/MGM GrandTowers, LLC's Motion to Refer All Claims and Causes of Action to the Bankruptcy Court 191 is Granted. This case is referred to the Bankruptcy Court (Case no. 15-13706-abl).IT IS FURTH ER ORDERED that Defendant's MGM Resorts International and MGM Grand Hotel, LLC's Motion for Determination of Non-Arbitrability of Claims Against Non- Signatory Defendants 177 is Denied without prejudice since the Court finds it appropri ate for the Bankruptcy Court to address this motion.The Clerk is directed to effectuate this referral order and close this case.Signed by Judge Miranda M. Du on 1/19/16. (Copies have been distributed pursuant to the NEF - PS) Certified copy of Order and Docket sheet to BK Court.

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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MARY ANN SUSSEX, et al.,

Case No. 2:08-cv-00773-MMD-PAL
Plaintiffs,

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v.

ORDER

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TURNBERRY/MGM GRAND TOWERS,
LLC, et al.,

(Def Motion to Refer Claims
dkt. no. 191)

Defendants.

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I.

SUMMARY

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This case is stayed pending arbitration. Before the Court is Defendant

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Motion to Refer All Claims and

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(Dkt. no. 191.) Plaintiffs have

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opposed (dkt. no. 195) and Defendant has replied (dkt. no. 196). For the reasons

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discussed below, the Motion is granted.

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II.

BACKGROUND

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This matter arises from a long-standing dispute brought by purchasers of

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condominium units developed and sold by Turnberry/MGM. The factual background of

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this case is

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will recite the procedural history that is pertinent to the Motion.

, Order. (Dkt. no. 64.) The Court

On June 16, 2009, the Court compelled Plaintiffs to arbitrate their claims in

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resp

. (Dkt no. 59.) As a result, there were several arbitration

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procedures that occurred until the latest stay. They involve plaintiffs in a consolidated

) and plaintiffs in the federal

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proceedings.1

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Brendan Hare as arbitrator in the Sussex arbitration on February 26, 2010. On

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December 31, 2012, Arbitrator Hare consolidated all of the arbitrations proceeding

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against Turnberry/MGM for the purposes of coordinated discovery, motion practice and

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ruling on common issues. (Dkt. no. 114-5, Appendix Vol. 1 at TMGM 166.)

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On August 9, 2013, the Court stayed this action pending arbitration. 2 (Dkt. no.

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113.) On September 11, 2013, Defendants filed a motion to disqualify Arbitrator Hare

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from the arbitration proceedings in this case and in the Abraham case. (See dkt. no. 114

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in Sussex; dkt. no. 61 in Abraham.) The Court granted the motion and disqualified

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Arbitrator Hare. (Dkt. no. 141.)

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petition for a writ of mandamus directing this Court to vacate its order removing Arbitrator

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Hare. (Dkt. no. 171.) On April 8, 2015, the Court vacated its order and reinstated

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Arbitrator Hare. (Dkt. no. 175.)

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About two months later, on June 30, 2015, Turnberry/MGM filed a notice of

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pending bankruptcy, informing the Court that it commenced a bankruptcy proceeding

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under Chapter 11 of Title 11 of the United States Code

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180.) Turnberry/MGM now moves to refer this case to the Bankruptcy Court.

. (Dkt. no.

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The Court held a status conference on January 19, 2016, to obtain an update on

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recent developments in the Bankruptcy Case that may affect the arbitration and two

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The federal proceedings include the instant case, Sussex v. Turnberry/MGM
Grand Towers, LLC, et al. (2:08-cv-00773) Sussex and Abraham et al v.
Turnberry/MGM Grand Towers, LLC et al, (2:11-cv-01007
Abraham
consolidated these actions under 2:08-cv-00773. (Dkt. no. 127.) Plaintiffs represent that
they have moved for an order to lift stay to permit them to proceed against non-debtor
defendants in the Sussex arbitration. (Dkt. no. 195 at 4 n. 1.)
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Turnberry/MGM suggests that despite the stay, this case remains active. (Dkt.
no. 196 at 5.) However, Defendants filed a majority of the motions since the Court
imposed the stay. (See, e.g., dkt. nos. 114, 124, 177.) It is disingenuous for
Turnberry/MGM to ask this Court to intervene in the arbitration proceedings and then cite
ns as evidence that the
stay is effectively meaningless.
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motions pending before this Court.3 (Dkt. no. 202.) The parties filed status reports in

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advance of the conference. (Dkt. nos. 204, 205.)

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III.

DISCUSSION

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Turnberry/MGM argues that referral to the Bankruptcy Court should have been

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automatic under Local Rules of Bankruptcy Practice of this Court because the

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(Dkt. no. 191 at 5-6.) It argues that at a

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minimum, the case should be referred to allow the Bankruptcy Court to determine

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because such determination is within the

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. (Id.) The Court agrees that this case should be
reasoning.

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District courts have original and exclusive jurisdiction over all cases under title

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have original but not exclusive jurisdiction

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of all civil proceedings arising under title 11, or arising in or related to cases under title

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11. 28 U.S.C. § 1334(b). District courts may refer three types of cases to bankruptcy

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courts in their own district

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28 U.S.C. § 157(a). The District of Nevada

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adopted LR 1001(b) to effectuate the referral of these proceedings to the bankruptcy

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court. LR 1001(b) does not, as Turnberry/MGM contends, mandate automatic referral of

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cases, such as this case, that have been pending in the district court to the bankruptcy

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court upon the initiation of a bankruptcy proceeding.

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Turnberry/MGM
ive jurisdiction

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. (Dkt. no. 191 at 5-6.) Turnberry/MGM has

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it backward. It

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In addition to the Motion, Defendants MGM Resorts International and MGM
Grand Hotel, LLC have filed a Motion for Determination of Non-Arbitrability of Claims
Against Non-Signatory Defendants. (Dkt. no. 177.)
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exclusive jurisdiction over all cases under title 11 and may refer certain types of cases

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to the bankruptcy courts. 28 U.S.C. § 1334(a); 28 U.S.C. § 157(a). As the Supreme

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Court recently explained, the Federal Judgeship Act of 1984 Act, 28 U.S.C. § 151 et.

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seq.,

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categories:

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Arkison, 134 S.Ct. 2165, 2171 (2014).

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judgment in a particular proceeding depends on whether th

nkruptcy court into two
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Executive Benefits Insurance Agency v.

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S.Ct. at 2172.

Id. at § 157(c); Executive Benefits, 134

§ 157 authorizes a bankruptcy court to adjudicate a claim in core

proceedings to final judgment, and to hear a non-core claim

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of all the parties. Id. at § 157(c); Executive Benefits, 134 S.Ct. at

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non-core, and the parties have not consented to final adjudication by the bankruptcy

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court, the bankruptcy judge must propose findings of fact and conclusions of law.

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Thus, the Court has jurisdiction over this case regardless of whether the claims in this
are

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a matter is

d to the Bankruptcy Case. However, as the

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Supreme Court in Executive Benefits

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whether each claim before it is core or non-

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(citing 28 U.S.C. § 157(b)(3)). In fact, this Court has found it proper to permit the

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bankruptcy court to determine whether claims are core, non-core or Stern claims and

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make final judgment or recommendations accordingly. See In re Access Ins. Services,

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Inc., No. 3:13-cv-00699-MMD (D.Nev. Nov. 11, 2014) (denying motion to withdraw

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reference).

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///

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Executive Benefits, 134 S.Ct. at 2171

However, in Stern v. Marshal, U.S. 131 S.Ct. 2594 (2011), the Supreme Court
held that the bankruptcy court may not enter final judgment on certain core proceedings.
For those Stern claims, the bankruptcy court has authority to enter findings of facts and
conclusions of law to the district court for de novo review. Executive Benefits, 134 S.Ct.
at 2173.

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Here, the Bankruptcy Court has found the claims in the removed State Court

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A

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appropriate for referral under LR 1001(b).5 (Dkt. no. 204 at 4; dkt. no. 205 at 2.) The

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parties do not dispute that those claims are essentially the same as the claims asserted

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in this case.

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arguments that referral would promote efficient use of judicial resources and uniformity

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of bankruptcy administration. The Court is therefore persuaded that this case should be

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referred to the Bankruptcy Court and will grant the Motion.

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IV.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several

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cases not discussed above. The Court has reviewed these arguments and cases and

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determines that they do not warrant discussion as they do not affect the outcome of the

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Motion.
It is therefore ordered that

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s Motion to Refer

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All Claims and Causes of Action to the Bankruptcy Court (dkt. no. 191) is granted. This

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case is referred to the Bankruptcy Court (in case no. 15-13706-abl).
It is further ordered that Defendants MGM Resorts International and MGM Grand

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Ho

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Signatory Defendants (dkt. no. 177) is denied without prejudice since the Court finds it

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appropriate for the Bankruptcy Court to address this motion.

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Motion for Determination of Non-Arbitrability of Claims Against Non-

The Clerk is directed to effectuate this referral order and close this case.
Dated this 19th day of January, 2015.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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