Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00462/USCOURTS-caed-2_05-cv-00462-0/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 28:0157 Motion for Withdrawal of Reference

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

In re: SERGUEY SARKISOV,

NO. CIV. S-05-462 FCD

Debtor,

In re: BLUSAR MANUFACTURING,

LLC, 

Debtor,

THOMAS ACEITUNO, Chapter 7

Trustee, and STEPHEN REYNOLDS,

Chapter 7 Trustee,

Plaintiffs,

v.

KBI NORCAL, INC., a California

Corporation, THOMAS BELSER,

an individual, and DAVID MOON,

an individual,

Defendants.

_____________________________/

----oo0oo----

This matter comes before the court on defendants’ KBI

Norcal, Inc., Thomas Belser, and David Moon (“defendants”),

motion to withdraw the reference of the adversarial proceeding

from the United States Bankruptcy Court to the United States

Case 2:05-cv-00462-FCD Document 3 Filed 04/28/05 Page 1 of 4
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1 Because oral argument will not be of material

assistance, the court orders the matter submitted on the briefs. 

E.D. Cal. Local Rule 78-230.

2

District Court for the Eastern District of California.1 This

motion is in response to plaintiffs’ Stephen Reynolds, and Thomas

Aceituno (“plaintiffs”), complaint filed in the United States

Bankruptcy Court for the Eastern District of California, which

alleges various causes of action pursuant to both state and

bankruptcy law. Specifically, the complaint alleges that

defendants conspired together to force Serguey Sarkisov to sell

the assets of Bulsar Manufacturing LLC to KBI at prices below

their actual value. Plaintiff Reynolds was appointed Chapter 7

Trustee by the bankruptcy court following Serguey and Irina

Sarkisov’s filing for Chapter 7 relief under the United States

Bankruptcy Code on November 23, 2002. Plaintiff Aceituno was

similarly appointed Chapter 7 Trustee after Blusar Manufacturing

LLC filed for Chapter 7 relief on November 27, 2002. 

STANDARD 

The District Court, pursuant to 28 U.S.C. § 157(d), may

withdraw any case or proceeding, in whole or in part, for cause

shown. The moving party bears the burden of demonstrating cause

for a discretionary withdrawal of reference. In re Envisionet

Computer Services, Inc., 276 B.R. 7, 9 (D. Me. 2002). To

determine whether cause exists, courts consider various factors

such as “the efficient use of judicial resources, delay and costs

to the parties, uniformity of bankruptcy administration, the

prevention of forum shopping, and other related factors.” 

Security Farms v. Int'l Bhd. of Teamsters, Chauffers,

Case 2:05-cv-00462-FCD Document 3 Filed 04/28/05 Page 2 of 4
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3

Warehousemen, & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997); see

also In re Kenai Corp., 136 B.R. 59, 61 (S.D.N.Y. 1992) (stating

that the factors to be evaluated include, among others, the core

versus non-core nature of the claims, judicial economy and

efficiency, uniformity of bankruptcy administration, reduction of

forum shopping, and the presence of a jury demand). 

ANALYSIS

After evaluation of the relevant factors, the court finds

that defendants’ motion to withdraw the reference to the

bankruptcy court is premature for several reasons.

First, the bankruptcy court has not yet made a determination

whether this is a core or non-core proceeding. In re Envisionet

Computer Services, Inc., 276 B.R. at 11 (“The bankruptcy court is

the appropriate tribunal for deciding the core/noncore status of

claims”). From the complaint, it appears that plaintiffs’

complaint asserts both core and non-core claims, though parties

dispute the nature of some of the claims. The bankruptcy court

is in a better position to address which claims are core and noncore, and which type of claims will predominate in the

proceeding. In re Coe-Truman Technologies, Inc., 214 B.R. 183,

187 (N.D. Ill. 1997); Orion, 4 F.3d at 1101 (“[H]earing core

matters in a district court could be an inefficient allocation of

judicial resources given that the bankruptcy court generally will

be more familiar with the facts and issues.”). 

Second, even if defendants are entitled to a jury trial on

some or all of the claims in the complaint, the court will not

withdraw the reference until the case is trial-ready. “The

appropriateness of removal of the case to a district court for

Case 2:05-cv-00462-FCD Document 3 Filed 04/28/05 Page 3 of 4
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trial by jury, on asserted Seventh Amendment grounds, will become

a question ripe for determination if and when the case becomes

trial-ready.” Business Communications, Inc. v. Freeman, 129 B.R.

165, 166 (N.D. Ill. 1991) (quotation and citation omitted). “A

rule that would require a district court to withdraw a reference

simply because a party is entitled to a jury trial, regardless of

how far along toward trial a case may be, runs counter to the

policy of favoring judicial economy that underlies the statutory

bankruptcy scheme.” In re Kenai Corp., 136 B.R. 59, 61 (S.D.N.Y.

1992). Defendants may renew their motion to withdraw the

reference if and when this case advances closer to trial.

Finally, judicial economy weighs against withdrawing

reference from the bankruptcy court at this time. The bankruptcy

court has presided over the underlying bankruptcy cases since

their inception, and thus has developed a familiarity with the

facts and issues presented. Therefore, the bankruptcy court is

in a better position to handle discovery and other pretrial

matters. In re Enron Corp., 317 B.R. 232, 235 (S.D.N.Y. 2004).

CONCLUSION 

Because the court concludes that the motion is premature,

the motion to withdraw the reference is DENIED without prejudice. 

As stated above, defendants may renew the motion if and when this

case is ready for trial.

 IT IS SO ORDERED.

DATED: April 27, 2005

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

Case 2:05-cv-00462-FCD Document 3 Filed 04/28/05 Page 4 of 4