HOLBER et al v. PORTNOY et al

Filing 10

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE GENE E.K. PRATTER ON 7/24/2017. 7/24/2017 ENTERED AND COPIES E-MAILED AND MAILED TO ATTY KURTZMAN.(sme, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MISCELLANEOUS ACTION NO. 17-38
IN RE: BARRY PORTNOY
:
(Bankruptcy No. 14-16081)
_________________________________________ :___________________________________
:
ROBERT H. HOLBER
:
As Chapter 7 Trustee of the Estate of
:
(Adversary Proceeding No. 16-248)
Barry Portnoy,
:
Plaintiff,
:
:
v.
:
:
BARRY PORTNOY et al.,
:
Defendants.
:
:
_________________________________________ :___________________________________
:
REPUBLIC FIRST BANK d/b/a
:
REPUBLIC BANK
:
(Adversary Proceeding No. 16-409)
Plaintiff,
:
:
v.
:
:
ALTCHEM ENVIRONMENTAL
:
SERVICES, INC. et al.,
:
Defendants.
:
:
_________________________________________ :___________________________________
:
REPUBLIC FIRST BANK d/b/a
:
REPUBLIC BANK
:
(Adversary Proceeding No. 15-37)
Plaintiff,
:
:
v.
:
:
BARRY PORTNOY,
:
Defendant.
:
:

1

PRATTER, J.

JULY 24, 2017

MEMORANDUM
Danielle Portnoy; Samantha Portnoy; Zachary Portnoy; Altchem Environmental Services,
Inc.; Samzach Partners, L.P.; Sam-Zachary Partners, LLC; BF Services, L.P.; Maxis
Construction Group; 1 Danielle Portnoy as co-trustee of the Revocable Deed of Trust of Danielle
M. Portnoy; Danielle Portnoy as custodian for Zachary Portnoy and Samantha Portnoy; and
Danielle Portnoy as Trustee of the SamZach Irrevocable Trust (“Movants”) 2 move for
withdrawal of the above-captioned consolidated adversary proceeding reference, Adv. Pro. No.
16-248, pursuant to 28 U.S.C. § 157(d) and Local Bankruptcy Rule 5011-1. The Court will deny
Movants’ Motion without prejudice because Movants have not met their burden to show cause
why this Court should withdraw the consolidated adversary proceeding at this stage of the
litigation.
I.

FACTUAL AND PROCEDURAL HISTORY
The consolidated adversary proceeding at issue consists of three adversary proceedings

filed in, or removed to, the United States Bankruptcy Court for the Eastern District of
Pennsylvania in connection with Debtor Barry Portnoy’s July 30, 2014 Chapter 7 bankruptcy
petition. The three proceedings are each premised on a similar set of facts.
Republic First Bank (“Republic Bank”) and Robert Holber, Chapter 7 Trustee of the
Estate of Barry Portnoy (the “Trustee,” and together with Republic Bank, “Plaintiffs”) allege that
1

Maxis Construction Group was sued under the name Maxsys, Inc.

2

Movants are twelve of the thirteen named defendants in the above-captioned consolidated
adversary proceeding. The debtor in the underlying bankruptcy case, Barry Portnoy, is also a
named defendant in the consolidated adversary proceeding, but has not joined the pending
Motion.
2

Mr. Portnoy fraudulently transferred real estate and other assets, facilitated sham mortgages,
took deliberate actions to cloud title to his assets, and used companies he controlled to hide
personal assets so that he could appear, on paper, to be insolvent. Plaintiffs allege Mr. Portnoy
took these actions in order to avoid repaying over $2 million of loans extended to him (or
companies controlled by him) by Republic Bank on which he had defaulted. The allegations
concern alleged pre-petition conduct.
The first adversary proceeding involves two state court complaints (“Republic Bank’s
First Proceeding”). Republic Bank first filed suit on October 30, 2014 against Danielle Portnoy;
Samantha Portnoy; Zachary Portnoy; Danielle Portnoy as co-trustee of the Revocable Deed of
Trust of Danielle M. Portnoy; Danielle Portnoy as custodian for Zachary Portnoy and Samantha
Portnoy; Danielle Portnoy as Trustee of the SamZach Irrevocable Trust; Altchem Environmental
Services, Inc.; Samzach Partners, L.P.; Sam-Zachary Partners, LLC; BF Services, L.P.; and
Maxis, Inc. alleging: (i) fraudulent transfer, (ii) unjust enrichment, (iii) civil conspiracy, and (iv)
equitable relief to impose a constructive trust and attach assets. Republic Bank next filed suit on
August 18, 2015 against Maxis Construction Group, Inc. alleging: (i) fraudulent transfer, (ii)
unjust enrichment, and (iii) equitable relief to impose a constructive trust and attach assets. The
Defendants’ answers to both state court complaints included jury trial demands. On November
16, 2016, Plaintiffs removed the Bank’s First Proceeding to bankruptcy court. See Republic
First Bank d/b/a Republic Bank v. Altchem Environmental Servs., Inc., Adv. Pro. No. 16-409.
The second adversary proceeding involves Republic Bank’s adversary complaint filed in
bankruptcy court on January 30, 2015 against Mr. Portnoy containing four denial of discharge
claims pursuant to 11 U.S.C. § 727(a)(2)-(5) (“Republic Bank’s Second Proceeding”). See

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Republic First Bank d/b/a Republic Bank v. Portnoy, Adv. Pro. No. 15-37. There is a pending
motion for summary judgment in Republic Bank’s Second Proceeding.
The third adversary proceeding involves the Trustee’s adversary complaint filed in
bankruptcy court on July 29, 2016 against Movants, Mr. Portnoy, Frederick Robinson, and Linda
Robinson alleging: (i) fraudulent transfer pursuant to the Pennsylvania Uniform Fraudulent
Transfer Act (“PUFTA”), 12 Pa. C.S. § 5104, (ii) fraudulent transfer pursuant to PUFTA, Pa.
C.S. § 5105, (iii) avoidance of fraudulent conveyances pursuant to 11 U.S.C. § 548(A)(1)(A),
(iv) avoidance of fraudulent conveyances pursuant to 11 U.S.C. § 548(A)(1)(B), (v) recovery of
avoided transfers pursuant to 11 U.S.C § 550, (vi) disallowance of all claims pursuant to 11
U.S.C § 502(D), (J), (vii) turnover of property of estate pursuant to 11 U.S.C § 542, (viii) unjust
enrichment, and (ix) conspiracy (“Trustee’s Proceeding”). See Holber v. Portnoy, Adv. Pro. No.
16-248. While Movants did not assert their right to a jury trial when answering the Trustee’s
adversary complaint, the bankruptcy court entered a stipulation in January 2017 by which the
court deemed Movants (and Mr. Portnoy) to have requested a jury trial.
The bankruptcy court consolidated these three adversary proceedings into Adv. Pro.
No. 16-248 on December 20, 2016. Movants moved on March 27, 2017 for withdrawal of the
thus consolidated adversary proceeding reference to this Court.
II.

LEGAL STANDARDS
Section 157(d) of 28 U.S.C. authorizes district courts to “withdraw, in whole or in part,

any case or proceeding referred under this section [to the Bankruptcy Court], on its own motion
or on timely motion . . . for cause shown.” 28 U.S.C. § 157(d). Withdrawal of a reference is at
the discretion of the district court unless “resolution of the proceeding requires consideration of

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both title 11 and other laws of the United States regulating organizations or activities affecting
interstate commerce,” in which case withdrawal is mandatory. 28 U.S.C. § 157(d); Nw. Inst. of
Psychiatry, Inc. v. Travelers Indem. Co., 272 B.R. 104, 107 (E.D. Pa. 2001).
A court’s exercise of discretion to withdraw is guided by whether (i) the underlying
proceeding involves “core” or “non-core” claims, and (ii) any party has asserted a right to a jury
trial to which it is constitutionally entitled. Shubert v. Law Offices of Paul J. Winterhalter, 531
B.R. 546, 550 (E.D. Pa. 2015); Feldman v. ABN AMRO Mortg. Grp. Inc., 515 B.R. 443, 446
(E.D. Pa. 2014).
The Third Circuit Court of Appeal has also identified five factors for courts to consider
when determining whether cause exists to withdraw a reference: (i) the promotion of uniformity
in bankruptcy administration, (ii) the reduction of forum shopping and confusion, (iii) the
economical use of the parties’ resources, (iv) expediting the bankruptcy process, and (v) the
timing of the motion for withdrawal. In re Pruitt, 910 F.2d 1160, 1168 (3d Cir. 1990). The
party seeking to withdraw the reference bears the burden to show cause. Feldman, 515 B.R. at
452.
III.

DISCUSSION
Movants seek a discretionary withdrawal of the consolidated adversary proceeding

reference. Movants primarily argue that the Court should withdraw the reference because they
are constitutionally entitled to a jury trial on certain claims asserted against them in the
consolidated adversary proceeding. Plaintiffs argue that Movants have not met their burden to
establish cause for withdrawal pursuant to § 157(d). All parties argue in the alternative that this

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Court should deny Movants’ Motion without prejudice, with leave to re-file when this case
becomes ready for trial.
A.

“Core” vs. “Non-Core” Proceeding

A proceeding is “core” if it invokes a substantive right provided by the Bankruptcy Code
or if the claim could arise only in the context of a bankruptcy case. Halper v. Halper, 164 F.3d
830, 836 (3d Cir. 1999) (citing In re Guild & Gallery Plus, Inc., 72 F.3d 1171, 1178 (3d Cir.
1996)). Section 157(b)(2) provides a non-exhaustive list of core proceedings. 28 U.S.C.
§ 157(b)(2). “Non-core proceedings include the broader universe of all proceedings that are not
core proceedings but are nevertheless ‘related to’ a bankruptcy case.” Halper, 164 F.3d at 837.
Section 157(b)(1) authorizes bankruptcy courts to enter final orders and judgments in core
proceedings. While bankruptcy courts are authorized to oversee non-core proceedings, the
bankruptcy court cannot enter final orders or judgments in non-core proceedings. Rather, the
bankruptcy court must (absent consent of the parties) submit proposed findings of fact and
conclusions of law to the district court to review de novo. 28 U.S.C. § 157(c); Shubert, 531 B.R.
at 550. 3 This dichotomy in the bankruptcy court’s statutory authority often makes a non-core
proceeding a better candidate for a motion for withdrawal because it alleviates the need for a de
novo review by the district court. In re Orion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993);
Valley Forge Plaza Assocs. v. Fireman’s Fund Ins. Cos., 107 B.R. 514, 516 (E.D. Pa. 1989).
3

Some claims statutorily defined as “core” pursuant to 28 U.S.C. § 157(b)(2) may not, as a
constitutional matter, be finally adjudicated by the bankruptcy court. Executive Benefits Ins.
Agency v. Arkison (In re Bellingham), 134 S. Ct. 2165, 2172 (2014); Stern v. Marshall, 564 U.S.
462, 482, 499 (2011). The Supreme Court has instructed that such claims, colloquially referred
to as Stern claims, should proceed pursuant to 28 U.S.C. § 157(c) as if they were non-core
claims. In re Bellingham, 134 S. Ct. at 2173. Accordingly, when faced with a Stern claim, a
bankruptcy court must (absent consent of the parties) submit proposed findings of fact and
conclusions of law to the district court to review de novo. Id.
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The district court, however, retains its discretion to withdraw or not to withdraw a reference
regardless of a proceeding’s characterization as core or non-core. Valley Forge, 107 B.R. at 516
n.4; Katzev v. Dunavant, No. 97-3941, 1997 WL 786461, at *5 (E.D. Pa. Nov. 20, 1997).
The parties here basically fail to address whether the claims at issue in the consolidated
adversary proceeding are core or non-core. 4 Fortunately for them, the Court does not need to
make a final determination on the nature of the claims at issue to resolve this Motion because the
characterization of the claims as core or non-core is not a dispositive factor in the withdrawal
analysis. For purposes of this Motion the Court will assume, without deciding on a claim-byclaim basis, that the consolidated adversary proceeding involves a mixture of core, non-core, and
Stern claims. See, e.g., 28 U.S.C. § 157(b)(2)(J) (listing “objections to discharges” as core
proceedings); In re Bellingham, 134 S. Ct. at 2174 (assuming without deciding that fraudulent
conveyance claims are Stern claims); In re Pa. Gear Corp., Adv. Nos. 03-940, 03-942, 2008 WL
2370169, at *5 (Bankr. E.D. Pa. Apr. 22, 2008) (describing unjust enrichment as a “clear noncore” proceeding).
The mixed nature of the consolidated adversary proceeding does not weigh in favor of
withdrawing the reference at this stage of the litigation. The Court finds that judicial efficiency
and economy are best served by allowing all claims to proceed together before the bankruptcy
court for pretrial and discovery purposes. Cf. In re: Rite Way Elec., Inc., Misc. Nos. 14-231, 14232, 2017 WL 660856, at *6 n.27 (E.D. Pa. Feb. 17, 2017) (“Assuming some claims are ‘core’
and others ‘non-core’—as the defendants imply—there is no prejudice to the defendants in
4

The only mention in the five briefs that the parties have filed in this action on the
core/non-core distinction is in footnote 9 of Republic Bank’s brief in opposition. See Republic
Bank Br. in Opp. at 4 n.9 (Doc. No. 4) (“The majority of claims asserted against Defendants are
within the Bankruptcy Court’s ‘core’ jurisdiction.”).
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delaying [ruling on the characterization of the claims]. The claims would proceed together during
pre-trial because they appear to be ‘intertwined.’”). The bankruptcy court is authorized to enter
final judgment on all (non-Stern) core claims and can address any dispositive motions on
Stern/non-core claims through a report and recommendation that this Court would review de
novo.
B.

Right to a Jury Trial

When a party has a Seventh Amendment right to a jury trial with respect to a given claim,
the bankruptcy court can only conduct the trial “with the express consent of all the parties.” 28
U.S.C. § 157(e). Here, Movants argue for withdrawal of the entire consolidated adversary
proceeding reference because they have asserted their right to a jury trial and the parties have not
consented to a jury trial before the bankruptcy court.
Despite the fact that Movants’ primary argument in favor of withdrawal is their right to a
jury trial, Movants’ briefs address only their Seventh Amendment right to a jury trial with regard
to the fraudulent conveyance claims pursuant to Granfinanciera, S.A. v. Nordberg, 492 U.S. 33
(1989). They do not address whether or not Movants are entitled to a jury trial on the remainder
of claims asserted against them in the consolidated adversary proceeding. The Plaintiffs, while
arguing that Movants do not have a constitutional right to a jury trial on certain of the equitable
claims at issue (an argument Movants have not disputed), make no compelling argument against
Movants’ entitlement to a jury trial on the fraudulent conveyance claims. 5 The Court will

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The Trustee appears to concede that Movants have a right to a jury trial on the fraudulent
conveyance claims but argues that Movants have waived that right by actively litigating disputes
that have arisen in the consolidated adversary proceeding in bankruptcy court. The Trustee does
not provide any case law to support its position and, given the uncontested fact that Movants
have not filed any proofs of claim in the underlying bankruptcy, the Court is skeptical of the
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assume for purposes of this Motion that Movants have a constitutional right to a jury trial on
some, but not all, of the claims at issue. 6 See, e.g., Granfinanciera, 492 U.S. at 41 (setting out
framework to determine when a claim is subject to the Seventh Amendment right to a jury trial
and explaining that a right to a jury trial attaches to legal claims, not equitable claims); Shubert,
531 B.R. at 552 (“Common law claims for money damages, such as those brought by Plaintiffs,
are paradigmatic examples of legal claims.”); In re Dizinno, 532 B.R. 231, 240 (Bankr. M.D. Pa.
2015) (“[I]n an action to deny or revoke a debtor's discharge, neither party has the right to a jury
trial because a complaint under § 727 is equitable in nature.”).
A party’s constitutional right to a jury trial, however, is not the determinative factor in the
withdrawal analysis. It is just one factor to consider. See, e.g., Nw. Inst. of Psychiatry, 272 B.R.
at 111 (considering a movant’s constitutional right to a jury trial as one factor in the analysis and
then moving onto consideration of the Pruitt factors). District courts within the Third Circuit
have consistently explained that “[a]ssertion of a Seventh Amendment right to a jury trial,

Trustee’s argument that Movants have provided the express consent to the bankruptcy court’s
jurisdiction that is required by 28 U.S.C. § 157. See, e.g., Langenkamp v. Culp, 498 U.S. 42, 45
(1990) (explaining that when no proof of claim has been filed, “the trustee can recover allegedly
preferential transfers only by filing what amounts to a legal action to recover a monetary transfer.
In those circumstances the preference defendant is entitled to a jury trial.”); In re Arbco Capital
Mgmt., LLP, 479 B.R. 254, 266-67 (S.D.N.Y. 2012) (rejecting argument that participating in
hearings before the bankruptcy court without objecting to the bankruptcy court’s jurisdiction
amounted to consent to the bankruptcy court’s jurisdiction within the meaning of 28 U.S.C.
§ 157).
6

Given the constitutional implications of this issue, the Court declines to make a final
determination at this stage with regard to Movants’ right to a jury trial in connection with each of
the claims at issue in the consolidated adversary proceeding. Accord Rite Way, 2017 WL
660856, at *7 (finding it “imprudent” to make a final determination on a party’s constitutional
right to a jury trial “without full briefing on the relevant legal questions”). If Movants re-file
their motion prior to trial, the Court urges the parties to address the relevant legal framework set
out by Granfinanciera with regard to Movants’ right to a jury trial on each claim then extant.
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coupled with a refusal to consent to such trial before the Bankruptcy Court, is not of itself
sufficient cause for discretionary withdrawal.” Pa. Academy of Music v. Regitz, No. 10-172,
2010 WL 4909952, at *2 (E.D. Pa. Nov. 30, 2010) (citing Williams v. Avnet, Inc. (In re Techs.
Liquidations Co.), No. 07-177, 2007 WL 1152518, at *1 (W.D. Pa. Apr. 17, 2007)); see also In
re Nortel Networks, Inc., 539 B.R. 704, 710 (D. Del. 2015) (“The fact that [movant] has
requested a jury trial, however, does not necessarily mandate withdrawal. This Court has
explained that even for non-core claims for which a jury trial is requested, a bankruptcy court is
capable of functioning in a role similar to that of a magistrate by handling pre-trial issues.”); In
re Carpenter, No. 12-21, 2012 WL 5990222, at *3 (W.D. Pa. Nov. 30, 2012) (“However, the
possibility that a jury trial might be held in the future does not require that the reference be
immediately withdrawn. A district court may deny a motion to withdraw until the case is ‘trial
ready.’” (citation omitted)).
Courts routinely permit the bankruptcy court to oversee pretrial matters, even in
proceedings involving non-core claims to which a party has a jury trial right. See Feldman, 515
B.R. at 453 (explaining that because the Supreme Court’s opinion in In re Bellingham made
clear that the bankruptcy court can preside over pretrial matters, “the prospect of a jury trial at
some later date [does not mandate] immediate withdrawal”); Pa. Academy, 2010 WL 4909952,
at *2 (“Courts have recognized that it serves the interests of judicial economy and efficiency to
keep an action in Bankruptcy Court for the resolution of pre-trial, managerial matters, even if the
action will ultimately be transferred to a district court for trial.” (citation omitted)); In re Nw.
Inst. of Psychiatry, Inc., 268 B.R. 79, 84 (Bankr. E.D. Pa. 2001) (“[I]t is not uncommon for
district courts to defer withdrawal of the reference to allow the bankruptcy court to handle a

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proceeding until such time as the district court determines that the bankruptcy court may not do
so. Many district courts have held that withdrawal of the reference on the ground that a party is
entitled to a jury trial should be deferred until the case is trial ready.” (quotation marks and
citation omitted)).
Accordingly, the Court will consider whether Movants have met their burden to
demonstrate cause for withdrawal pursuant to the Pruitt factor analysis.
C.

Pruitt Factors

The first factor, whether withdrawing the reference would promote uniformity in
bankruptcy administration, weighs against withdrawal. Where the bankruptcy court has
overseen the underlying bankruptcy case for years and has already made rulings and presided
over hearings with regard to the reference sought to be withdrawn, uniformity in bankruptcy
administration is most advanced by the reference remaining in bankruptcy court. See Rite Way,
2017 WL 660856, at *5 (finding that the first Pruitt factor weighed against withdrawal where the
bankruptcy court oversaw the bankruptcy estate for years and presided over the adversary
proceeding for months); In re AgFeed USA, LLC, 565 B.R. 556, 564 (D. Del. 2016) (explaining
that consistent findings and rulings across bankruptcy case and related adversary proceedings
promotes uniformity in bankruptcy administration). Here, the bankruptcy court has overseen the
underlying bankruptcy proceeding for nearly three years and has presided over the adversary
proceedings at issue since their commencement in, or removal to, bankruptcy court. There is no
question that the bankruptcy court, through its years-long involvement with this bankruptcy, has
become intimately familiar with the facts, parties, and issues involved in the consolidated
adversary proceeding. This familiarity puts the bankruptcy court in the better position to ensure

11

uniformity across the bankruptcy case and the consolidated adversary proceeding. Accordingly,
the Court finds that keeping the consolidated adversary proceeding in bankruptcy court better
promotes uniformity in bankruptcy administration.
The second factor, whether withdrawing the reference would reduce forum shopping and
confusion, also weighs against withdrawal. While the Court will not presume that Movants’
Motion is an attempt to improperly “forum shop,” the Court remains concerned that withdrawal
at this juncture could encourage forum shopping in the future. Two facts in particular underscore
the Court’s concern. First, the parties have been actively litigating aspects of these adversary
proceedings for over a year. There is a concern that permitting withdrawal after the bankruptcy
court has already ruled on a number of disputes would encourage a party to seek withdrawal only
after receiving unfavorable rulings. See, e.g., Feldman, 515 B.R. at 452 (explaining that seeking
withdrawal of a reference after litigating in bankruptcy court and receiving unfavorable rulings
weighs against withdrawal). Second, the consolidated adversary proceeding involves certain
claims that are undisputedly part of the bankruptcy court’s core jurisdiction. Withdrawing the
entire consolidated adversary reference could be construed as the Court allowing Movants—all
insiders to Debtor Portnoy—to assist Debtor Portnoy in avoiding the bankruptcy court’s review
of those claims. Accordingly, the Court finds that keeping the consolidated adversary
proceeding in bankruptcy court is the course of action that will discourage forum shopping in the
future.
The third factor, whether withdrawing the reference would allow for the most economical
use of the parties’ resources, too weighs against withdrawal. The parties have already expended
a significant amount of time and resources in bankruptcy court, both in connection with the

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underlying bankruptcy and the consolidated adversary proceeding. Withdrawing the
consolidated adversary proceeding reference would require the parties to devote even more time
and money to bring this Court up to speed on the myriad issues relevant to the consolidated
adversary proceeding, issues with which the bankruptcy court is already familiar. Accordingly,
the Court finds that keeping the consolidated adversary proceeding in bankruptcy court allows
for the most economical use of the parties’ resources. See Rite Way, 2017 WL 660856, at *5
(explaining that it is most economical for the bankruptcy court to oversee proceedings where the
bankruptcy court is “more familiar with the facts of the[] proceedings and the relevant law”);
AgFeed USA, 565 B.R. at 565 (finding that “the Bankruptcy Court’s familiarity with the
underlying facts and issues” weighed against withdrawal because “[d]uplicating those efforts at
an early stage of the case may result in unnecessary expenses for the parties, particularly given
that dispositive motions and settlement may resolve the proceeding in advance of trial”).
The fourth factor, whether withdrawing the reference would expedite the bankruptcy
process, likewise weighs against withdrawal. If the Court were to withdraw the entire
consolidated adversary proceeding reference, the underlying bankruptcy case could well be
delayed until this Court had the opportunity to oversee the consolidated adversary proceeding to
its eventual resolution. Even if this Court must withdraw the reference to conduct an eventual
jury trial, having the bankruptcy court preside over all pretrial proceedings will allow the
bankruptcy process to move forward most expeditiously. Accordingly, the Court finds that
keeping the consolidated adversary proceeding in bankruptcy court will expedite the bankruptcy
process.

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The fifth factor, whether the moving party made a timely motion for withdrawal of the
reference, weighs against withdrawal. “A § 157(d) motion is timely if it is filed at the first
reasonable opportunity after the movant has notice of the grounds for removal, taking into
consideration the circumstances of the proceeding.” In re Schlein, 188 B.R. 13, 14 (E.D. Pa.
1995). Here, the first opportunity to file a motion for withdrawal was in July 2016 when the
Trustee initiated an adversary proceeding containing fraudulent transfer claims, the precise
claims Movants now argue entitle them to a jury trial and withdrawal of the reference. 7 See
Feldman, 515 B.R. at 453 (finding that Granfinanciera put movant on notice of the right to a
jury trial on a fraudulent transfer claim and that litigating such claims in bankruptcy court
“without making a jury demand or moving to withdraw” weighed against withdrawal). The
underlying dockets in the consolidated adversary proceeding make clear that Movants litigated
disputes related to these proceedings prior to seeking withdrawal of the reference. Accordingly,
the Court finds that Movants’ delay in seeking withdrawal militates against granting their motion
at this time. See Shubert, 531 B.R. at 554 (“[T]he timing of Defendants’ request, following
several months of litigation in the adversary proceeding and the receipt of an adverse ruling from
the Bankruptcy Court, also cuts against withdrawal of reference.”).
*

*

*

After consideration of all the pertinent factors, the Court determines that Movants failed
to meet their burden to show cause for withdrawal at this juncture. Furthermore, the Court finds
7

Movants did not assert their right to a jury trial when answering the Trustee’s adversary
complaint. Rather, nearly six months after the Trustee initiated the adversary proceeding, the
bankruptcy court entered a stipulation deeming Movants (and Mr. Portnoy) to have requested a
jury trial. See Holber v. Portnoy, Adv. Proc. No. 16-248 (Bankr. E.D. Pa. Jan. 18, 2017), Doc.
No. 57. The fact that Movants belatedly perfected their right to a jury trial does not make their
present Motion any more timely.
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permitting this action to proceed in bankruptcy court for all pretrial purposes is in the interests of
judicial efficiency and economy and will promote the most efficient use of the parties’ resources.
The bankruptcy court will have the opportunity to resolve motions for summary judgment
covering claims on which the bankruptcy court is constitutionally authorized to enter final
judgment. On all other claims, the bankruptcy court can proceed through a report and
recommendation to this Court for de novo review. If, and when, this case appears ready for trial,
Movants can re-file their motion for withdrawal of the consolidated adversary proceeding
reference. At that time, if Movants are constitutionally entitled to a jury trial on any remaining
claims, the Court will consider withdrawing the entire consolidated adversary proceeding for a
single trial before this Court.
IV.

CONCLUSION
For the forgoing reasons, the Court will deny Movants’ Motion for Withdrawal of

Reference of Consolidated Adversary Proceeding.
*

*

*

An appropriate Order follows.

BY THE COURT:
S/Gene E.K. Pratter
GENE E.K. PRATTER
United States District Judge

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