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Szanto v. Szanto

United States District Court, D. Oregon

May 1, 2019

PETER SZANTO, Plaintiff,
v.
EVYE SANTO, et al., Defendants.

          Peter Szanto, Plaintiff pro se.

          Nicholas J. Henderson and Troy Garrett Sexton, Motschenbacher & Blattner, LLP, Of Attorneys for Defendants Evye Szanto, Victor Szanto, Nicole Szanto, Kimberley Szanto, Mariette Szanto, Anthony Szanto, Austin Bell, and Barbara Szanto Alexander.

          Gary L. Blacklidge, Jordan Ramis PC, 2 Centerpointe Drive, Of Attorneys for the Trustee, Stephen P. Arnot.

          OPINION AND ORDER

          Michael H. Simon United States District Judge

         Before the Court is Plaintiff pro se Peter Szanto's motion to withdraw the reference to the bankruptcy court of one of the proceedings involving Plaintiff.[1] Plaintiff argues that withdrawal is mandatory under 28 U.S.C. § 157(d), and, alternatively, that the Court should exercise its discretion and grant permissive withdrawal under the statute. Defendants argue that withdrawal is not warranted. For the reasons discussed below, the Court denies Plaintiff's motion.

         STANDARDS

         The United States District Courts have original, but not exclusive, jurisdiction over bankruptcy proceedings. 28 U.S.C. § 1334(b); Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997). District courts also have the authority to refer bankruptcy proceedings to the bankruptcy judges in their district. 28 U.S.C. § 157(a). The U.S. District Court for the District of Oregon has adopted a Local Rule of Bankruptcy Procedure (“Local Rules”) that automatically refers “all cases Under Title 11 and all proceedings arising under Title 11 or arising in or related to cases under Title 11” to the bankruptcy court.[2] LR 2100-1(a).

         The parameters of a bankruptcy court's jurisdiction to hear and adjudicate cases and proceedings referred by the district court are classified as either “core proceedings” or “non-core proceedings.” 28 U.S.C. § 157(b). “In general, a ‘core proceeding' in bankruptcy is one that invokes a substantive right provided by title 11 or . . . a proceeding that, by its nature, could arise only in the context of a bankruptcy case.” In re Gruntz, 202 F.3d 1074, 1081 (9th Cir. 2000) (quotation marks omitted) (alteration in original). “‘Non-core proceedings' are those not integral to the restructuring of debtor-creditor relations and not involving a cause of action arising under title 11.” Id. The bankruptcy court may enter final judgments in core proceedings. 28 U.S.C. § 157(b)(1). In non-core proceedings, unless the parties consent, the bankruptcy court may not enter a final judgment, but must submit proposed findings of fact and conclusions of law to the district court for de novo review. 28 U.S.C. § 157(c); Sec. Farms, 124 F.3d at 1008.

         Parties in an adversary proceeding retain the right to a jury trial if that right would exist outside of bankruptcy. See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 58-64 (1989). A party, however, may be found to have waived that right if it submitted a proof of claim in the bankruptcy proceeding, subjecting itself to the bankruptcy court's equitable power to disallow such claims and adjudicate any of the debtor's opposing counterclaims. Langenkamp v. Culp, 498 U.S. 42, 44-45 (1990). If there is an unwaived right to a jury trial in a proceeding pending in bankruptcy court, the bankruptcy judge may conduct the jury trial only if all parties consent. 28 U.S.C. § 157(e). If the parties do not consent, the Local Rules provide that the bankruptcy judge may conduct pretrial proceedings up through the lodging of the pretrial order. LR 2100-8(a).

         Under 28 U.S.C. § 157, a reference to the bankruptcy court is subject to mandatory or permissive withdrawal, depending on the circumstances. The statute provides:

The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.

28 U.S.C. § 157(d).

         For permissive withdrawal, courts have identified several factors to consider in determining whether “cause” exists, including: (1) the efficient use of judicial resources; (2) delay and costs to the parties; (3) uniformity of bankruptcy administration; (4) the prevention of forum shopping; and (5) other related factors. Sec. Farms, 124 F.3d at 1008. “Other related factors” might include whether the issues are core or non-core proceedings, as well as the right to a jury trial. See Rosenberg v. Harvey A. Brookstein, 479 B.R. 584, 587 (D. Nev. 2012). The party moving for withdrawal of the reference “has the burden to show that withdrawal of the reference is warranted.” Budsberg v. Spice, 2017 WL 3895701, at *2 (W.D. Wash. Sept. 6, 2017); see also In re Ponce Marine Farm, Inc., 172 B.R. 722, 725 (D. P.R. 1994).

         BACKGROUND

         On August 16, 2016, Plaintiff filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. This commenced Bankruptcy No. 16-bk-33185-pcm11 (the “Main Bankruptcy Case”). On September 21, 2016, Plaintiff filed a complaint against Defendants, commencing No. 16-ap-3114 (the “Adversary Proceeding”), the case that is the subject of this pending motion. Plaintiff expressly consented to the entry of a final judgment by the Bankruptcy Court.

         The parties engaged in discovery and litigated discovery disputes in the Adversary Proceeding. The parties filed cross motions for summary judgment in the Adversary Proceeding. Defendants moved against all of Plaintiff's claims and for judgment on one of their counterclaims. Plaintiff moved against one of Defendants' counterclaims. Plaintiff also filed motions to exclude certain evidence from the Bankruptcy Court's consideration while deciding the motions for summary judgment. The Bankruptcy Court denied one such evidentiary motion and reserved ruling on the other. Plaintiff filed a notice of appeal of those two orders of the Bankruptcy Court.

         On September 6, 2017, Plaintiff filed a document purporting to withdraw his consent to the entry of final judgment by the Bankruptcy Court. On September 15, 2017, the Bankruptcy Court issued a letter notifying the parties that because Plaintiff did not file a motion or request any relief, the court would take no action in response to Plaintiff's filing. On April 16, 2018, Plaintiff filed another document purporting to elect to have the U.S. District Court enter final judgment. On April 25, 2018, the Bankruptcy Court denied Plaintiff's request to withdraw his consent to the entry of final judgment by the Bankruptcy Court. The Bankruptcy Court explained that Plaintiff could not withdraw consent because Plaintiff had previously given express consent, had waived any objection pursuant to Local Bankruptcy Rule 7008-1, had demonstrated a willingness to proceed at length with his litigation in the bankruptcy court, and had shown a lack of any other compelling basis to allow a withdrawal of consent.

         On May 17, 2018, the Bankruptcy Court denied Plaintiff's cross motion for summary judgment against one of Defendants' counterclaims. The Bankruptcy Court granted Defendants' motion for summary judgment against all of Plaintiff's claims and denied Defendants' motion on their second counterclaim. The Bankruptcy Court dismissed Plaintiff's claims against Defendants and found issues fact on Defendants' counterclaims against Plaintiff, leaving ...


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