Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-02702/USCOURTS-azd-2_14-cv-02702-0/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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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Margaret A. Gillespie, 

Plaintiff, 

v. 

100% Natural Gourmet Incorporated, et al., 

Defendants.

No. CV-14-02702-PHX-GMS

ORDER 

 Pending before the Court is the Motion to Withdraw the Reference to Bankruptcy 

and Demand for Jury Trial of Third-Party Defendants Concast, Inc., Dominic Jones, 

Robert Fox, Moirbia Peoriare, LLC, Moirbia Peoria, LLC, Moirbia Scottsdale, LLC 

(collectively “Third-Party Defendants”). (Doc. 2.) For the following reasons, the Motion 

is denied without prejudice. 

BACKGROUND 

 On May 21, 2009, several years before Third-Party Defendants initiated the 

current action in this Court, Debtors Irish Pub-Arrowhead, LLC, and Irish PubArrowhead Land, LLC filed for Chapter 7 bankruptcy in the United States Bankruptcy 

Court for the District of Arizona (“Bankruptcy Court”). (Doc. 3 at 2.) The Trustee for the 

bankruptcy estate, Margaret A. Gillespie, filed an Adversary Complaint on April 1, 2011, 

and Third-Party Plaintiffs filed their Answer and Third-Party Complaint on June 29, 

2011. (Id. at 2–3.) Through five separate amendments, Third-Party Plaintiffs alleged in 

their Complaint, among other things, that Third-Party Defendant Concast, Inc. caused the 

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bankruptcy by interfering with the contractual relationships of other parties. (Doc. 2 at 3.) 

Third Party Plaintiffs also raised the issue in their Complaint of who owns some of the 

intellectual property. (Id.) 

 On August 21, 2012, the Bankruptcy Court granted the Trustee the right to sell 

personal property from the estate, including “all intellectual property” of the bankruptcy 

estate. (Doc. 3 at 3.) On November 4, 2014, Third-Party Plaintiff Steve Goumas filed a 

partial motion for summary judgment to determine whether liens filed by Third-Party 

Defendant Concast, Inc. constituted intentional interference with the contractual 

relationships between Goumas and Wells Fargo. (Id.) 

 Before responding to Goumas’ motion for summary judgment, Third-Party 

Defendants filed the current Motion, requesting withdrawal of the reference to 

Bankruptcy Court. (Id. at 3–4.) Third-Party Defendants contend that withdrawal is 

appropriate because the claims in the Third-Party Complaint are not core bankruptcy 

claims and judicial economy would best be served by immediate withdrawal because they 

request a jury trial. (Doc. 2.) 

DISCUSSION 

I. Legal Standard 

 28 U.S.C. § 157 states, “Each district court may provide that any or all cases under 

title 11 and any or all proceedings arising under title 11 or arising in or related to a case 

under title 11 shall be referred to the bankruptcy judges for the district.” 28 U.S.C. § 

157(a). This District refers all bankruptcy cases to the Bankruptcy Court. See General 

Order 01–15 (June 29, 2001). However, district courts “may withdraw, in whole or in 

part, any case or proceeding referred [to the bankruptcy court] under this section, on its 

own motion or on timely motion of any party, for cause shown.” 28 U.S.C. § 157(d). 

 When determining whether there is cause to withdraw, “a district court should 

consider 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.” Sec. Farms v. Int’l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers, 

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124 F.3d 999, 1008 (9th Cir. 1997) (citing In re Orion Pictures Corp., 4 F.3d 1095, 1101 

(2d Cir. 1993). 

II. Analysis 

A. Core vs. Non-Core 

In determining whether there is cause to withdraw, courts “should first evaluate 

whether the claim is core or non-core, since it is upon this issue that questions of 

efficiency and uniformity will turn.” In re Orion, 4 F.3d at 1101 (cited approvingly by the 

Ninth Circuit in Sec. Farms, 124 F.3d at 1008). “[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” and “may enter appropriate 

orders and judgments.” Id. (internal quotation and citation omitted). 

 However, a determination that a claim is non-core does not necessarily mandate 

withdrawal because a bankruptcy court may also hear “a proceeding that is not a core 

proceeding but that is otherwise related to a case under title 11.” 28 U.S.C. § 157(c)(1) 

(emphasis added). Where a bankruptcy court hears a case under its “related to” 

jurisdiction, the bankruptcy judge cannot issue a final decision on the case: 

A bankruptcy judge may hear a proceeding that is not a core proceeding but that is otherwise related to a case under title 

11. In such proceeding, the bankruptcy judge shall submit 

proposed findings of fact and conclusions of law to the 

district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge’s proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected. 

28 U.S.C. § 157(c)(1). “[A] civil proceeding is ‘related to’ the bankruptcy if its outcome 

could conceivably have any effect on the bankruptcy estate.” In re ACI–HDT Supply Co.

205 B.R. 231, 237 (B.A.P. 9th Cir. 1997). 

 To determine whether a proceeding is core or non-core, courts look to see if the 

proceeding “is created by title 11 or . . . depends upon resolution of a substantial question 

of bankruptcy law.” Hawaiian Airlines, Inc. v. Mesa Air Grp., Inc., 355 B.R. 214, 219 

(D. Haw. 2006) (citations omitted); see also In re Eastport Associates, 935 F.2d 1071, 

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1076–77 (9th Cir. 1991) (citations omitted) (quoting In re Wood, 825 F.2d 90, 96–97 (5th 

Cir. 1987)). (“If the proceeding does not invoke a substantive right created by the federal 

bankruptcy law and is one that could exist outside of bankruptcy it is not a core 

proceeding; it may be related to the bankruptcy because of its potential effect, but . . . it is 

an otherwise related or non-core proceeding.”). 

 In the present case, all of the claims in the Third-Party Complaint are state or 

federal law claims that raise issues surrounding the cause of the Debtors’ bankruptcy and 

the ownership of intellectual property claimed by several parties, including the 

bankruptcy estate. Even assuming that the determination of the assets that properly 

belong to the bankruptcy estate is not a core issue, these claims fall within the category of 

“related to” core proceedings because their “outcome could conceivably have any effect 

on the bankruptcy estate.” ACI–HDT Supply, 205 B.R. at 237. The ownership of the 

intellectual property could have a substantial effect on the size of the bankruptcy estate 

because the Bankruptcy Court granted the Trustee the right to sell personal property from 

the estate, including “all intellectual property.” The issue of who caused the bankruptcy 

may not have a direct effect on the bankruptcy estate, but it involves a “‘common nucleus 

of operative facts’ and would ordinarily be expected to be resolved in one judicial 

proceeding.” In re Pegasus Gold Corp., 394 F.3d 1189, 1195 (9th Cir. 2005) (holding 

that supplemental jurisdiction is proper in bankruptcy court). Further, the interference 

with contract claim may be more efficiently resolved by a court that already has 

experience with the parties and facts of this case. Thus, the Bankruptcy Court has 

jurisdiction to hear these claims. 

B. Request for Jury Trial 

 The request for a jury trial does not mandate immediate withdrawal of the case 

from bankruptcy in the interest of judicial economy. A bankruptcy judge may only 

conduct a jury trial if specially designated to do so by the district court and with the 

express consent of all the parties. See 28 U.S.C. § 157(e). Consequently, a demand for a 

trial by jury may have the effect of mandating withdrawal to the district court for trial. 

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See Growe ex rel. Great Northern Paper, Inc. v. Bilodard Inc., 325 B.R. 490, 492 (D. 

Me. 2005). “However, it does not follow that withdrawal must be granted as a matter of 

course at any point during a proceeding in which a jury demand is made.” Id. “Only by 

allowing the bankruptcy court to retain jurisdiction over the action until trial is actually 

ready do we ensure that our bankruptcy system is carried out.” In re Healthcentral.com, 

504 F.3d 775, 788 (9th Cir. 2007). “Thus, a court may deny a motion to withdraw on the 

basis of a jury demand while allowing the movant to renew the motion when the 

bankruptcy court certifies that the adversary proceeding is ready for trial.” Growe ex rel., 

325 B.R. at 492. 

 In the present case, the Bankruptcy Court already has experience with the issues 

and parties involved in this case, and there is still a pending, unresolved motion for 

summary judgment. Further, it is not apparent from the record before the Court that other 

pre-trial issues have been resolved. See In re Castlerock Properties, 781 F.2d 159, 161 

(9th Cir. 1986) (“In noncore matters, the bankruptcy court acts as an adjunct to the 

district court, in a fashion similar to that of a magistrate or special master.”); In re Baptist 

Found. of Arizona, No. CIV 00-557-PHX-ROS, 2000 WL 35575676, at *12 (D. Ariz. 

June 30, 2000) (quoting Barlow & Peek, Inc. v. Manke Truck Lines, Inc., 163 B.R. 177, 

179 (D. Nev. 1993)) (“Even though the Bankruptcy Judge may not be able to go as far as 

conducting a jury trial on a complaint, he can perform all other judicial acts and conduct 

all proceedings short of that and the entry of final judgment on a motion.”). Thus, 

although Third-Party Defendants will be accorded the opportunity of a jury trial when the 

case is sufficiently ripe, they have not shown that immediate removal is necessary. 

CONCLUSION 

 The issues raised in the Third-Party Complaint are related to core issues. Further, 

Third-Party Defendants’ request for a jury trial does not mandate withdrawal at this time. 

/ / / 

/ / / 

/ / / 

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IT IS ORDERED that the Motion to Withdraw the Reference to Bankruptcy and 

Demand for Jury Trial of Third-Party Defendants Concast, Inc., Dominic Jones, Robert 

Fox, Moirbia Peoriare, LLC, Moirbia Peoria, LLC, Moirbia Scottsdale, LLC (Doc. 2) is

denied without prejudice. 

IT IS FURTHER ORDERED directing the Clerk of Court to terminate this 

action. 

 Dated this 20th day of February, 2015. 

Honorable G. Murray Snow

United States District Judge

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