Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_06-mc-03317/USCOURTS-almd-2_06-mc-03317-1/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

---

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

IN RE: )

)

STEPHEN L. PRICE, )

)

Debtor. )

)

SUSAN S. DePAOLA, )

Trustee, )

)

Plaintiff, )

) CIVIL ACTION NO.

v. ) 2:06mc3317-MHT

) (WO) 

STEPHEN L. PRICE and )

STARLA WATSON PRICE )

FRAZER, )

)

Defendants. )

)

v. )

)

BADDLEY & AURO, LLC, )

and THOMAS E. BADDLEY, )

)

Counter-Defendants. )

OPINION AND ORDER

This case is before the court on defendant Starla

Watson Price Frazer’s motion and amended motion to

withdraw reference and transfer to district court. For

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 1 of 15
*The dates for the bankruptcy court filings are taken

from the bankruptcy court’s docket sheet provided in

Exhibit D, pp. 92 to 104, of Frazer’s appendix to her

amended motion to withdraw reference and transfer to

district court and memorandum in support thereof (Doc.

No. 8).

2

the reasons detailed below, the motions are denied as

untimely.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The underlying dispute is an adversary proceeding in

bankruptcy court. Because timeliness is at issue here,

a timeline of the relevant events taking place in the

bankruptcy court is provided below:*

August 12, 2005: Plaintiff Susan DePaola, trustee

for the estate of Stephen Price, filed a complaint in

bankruptcy court against Price and Frazer (Price’s former

wife) to recover a residence and stocks provided by Price

to Frazer pursuant to their previously litigated divorce

decree. The complaint seeks: (1) a declaratory judgment

that the stocks and residence are the property of Price’s

bankruptcy estate and (2) turnover of said property. 

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 2 of 15
3

September 14: Frazer filed a motion to dismiss.

October 14: The bankruptcy court denied Frazer’s

dismissal motion.

November 8: Frazer filed her answer, which included

a jury demand. She also filed a crossclaim and a

counterclaim. 

December 28: Frazer filed a motion for summary

judgment.

February 13, 2006: The bankruptcy court denied

Frazer’s December 28 summary-judgment motion.

March 13: Trustee DePaola amended her complaint to

include a fraud claim. 

April 6: The bankruptcy court set trial for August

21. 

April 11: The bankruptcy court ordered Frazer to

identify any issues triable by jury. 

April 14: Frazer filed an amended answer restating

her jury demand. 

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 3 of 15
4

May 1: Frazer filed her second motion for summary

judgment. 

May 11: Frazer responded to the bankruptcy judge’s

April 11 order and simultaneously filed a motion to

withdraw reference with the bankruptcy court. The motion

to withdraw was received by this court on May 15. 

May 30: Frazer filed her amended motion to withdraw

with this court.

June 28: The bankruptcy court continued generally

the August 21 trial day.

June 30: The bankruptcy court struck Frazer’s jury

demand.

July 17: The bankruptcy court denied Frazer’s May 1

summary-judgment motion.

II. DISCUSSION 

A. Withdrawal-of-Reference Definition

The district court has original bankruptcy

jurisdiction over “all civil proceedings arising under

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 4 of 15
5

title 11, or arising in or related to cases under title

11”. 28 U.S.C. § 1334(a). District courts may refer

these bankruptcy cases to specialized bankruptcy courts.

28 U.S.C. § 157(a). The Middle District of Alabama has

adopted a General Order of Reference that refers all

cases arising under or related to Title 11 to the

bankruptcy courts in the Middle District. General Order

of Reference, April 25, 1985.

If a party believes her case should be heard in

district court, she may petition the district court to

withdraw the reference and relieve the bankruptcy court

of jurisdiction. 28 U.S.C. § 157(d) states:

“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

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 5 of 15
6

organizations or activities

affecting interstate commerce.”

The decision to grant or deny a motion to withdraw a

reference belongs solely to the district court judge.

Fed. R. Bankr. P. 5011. By granting district court

judges the discretion to refer Title 11 cases to the

bankruptcy courts and the authority to withdraw the

reference once made, Congress ensures that “the judicial

power of the United States will be ultimately exercised

by an Article III Court.” In re Parklane/Atlanta Joint

Venture, 927 F.2d 532, 538 (11th Cir. 1991).

B. Withdrawal-of-Reference Standard

A withdrawal may be mandatory or permissive.

According to 28 U.S.C. § 157(d), withdrawal is mandatory

if the case requires resolution of both Title 11 and nonbankruptcy code federal law. A minority of courts has

advocated a literal interpretation of § 157(d) such that

withdrawal is mandatory any time a non-bankruptcy code

federal law claim is pled, irrespective of the claim’s

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 6 of 15
7

substantiality. See, e.g., In re Keifer, 276 B.R. 196

(E.D. Mich. 2002). The majority has construed § 157(d)

to mean “that withdrawal is mandatory ‘only if the court

can make an affirmative determination that resolution of

the claims will require substantial and material

consideration of those non-Code statutes’ which have more

than a de minimis impact on interstate commerce.” In re

TPI Intern. Airways, 222 B.R. 663, 667 (S.D. Ga. 1998)

(quoting In re C-TC 9th Ave. Partnership, 177 B.R. 760,

762-64 (N.D. N.Y. 1995)). Courts employing the

“substantial and material” test have expressed concern

that parties could undermine Congress’s intent to give

district courts the discretion to refer Title 11 cases to

bankruptcy courts by alleging insubstantial claims

involving non-bankruptcy code federal law. In re

American Body Armor & Equipment, Inc., 155 B.R. 588, 591

(M.D. Fla. 1993); United States v. ILCO, Inc., 48 B.R.

1016, 1021 (N.D. Ala. 1985). Because the complaint at

issue here does not raise any non-bankruptcy code federal

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 7 of 15
8

law claims, the motion to withdraw must be considered a

permissive request.

Section 157(d) affords the district court discretion

to grant a permissive withdrawal for “cause.” Although

there is no statutory definition of the word “cause,” the

Eleventh Circuit has concluded that it is not “an empty

requirement.” In re Parklane/Atlanta Joint Venture, 927

F.2d 532, 536 (11th Cir. 1991). When determining if

there is sufficient cause for the withdrawal, district

courts consider: (1) the advancement of uniformity in

bankruptcy administration; (2) decreasing forum shopping

and confusion; (3) promoting the economical use of the

parties’ resources; and (4) facilitating the bankruptcy

process. Dionne v. Simmons (In re Simmons), 200 F.3d

738, 742 (11th Cir. 2000)(quoting Holland Am. Ins. Co. v.

Succession of Roy, 777 F.2d 992 (5th Cir. 1985)).

Additional factors that may be considered include: (1)

whether the claim is core or non-core; (2) efficient use

of judicial resources; (3) a jury demand; and (4)

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 8 of 15
9

prevention of delay. Holmes v. Grubman, 315 F. Supp. 2d

1376, 1382 (M.D. Ga. 2004); Control Center, LLC v. Lauer,

288 B.R. 269, 274 (M.D. Fla. 2002). Elucidating and

analyzing these factors ensures that the cause

requirement is not hollow; however, engaging in this

multifactorial cause analysis “should not be used to

prevent a district court from properly withdrawing

reference either to ensure that the judicial power of the

United States is exercised by an Article III court or in

order to fulfill its supervisor function over the

bankruptcy courts.” In re Parklane/ Atlanta Joint

Venture, 927 F.2d 532 at 538. 

Frazer’s argument for withdrawal is that she has a

Seventh Amendment right to a jury trial and she refuses

to consent to the trial taking place in bankruptcy court.

Federal bankruptcy courts have the power to hold a jury

trial only “if designated to exercise such jurisdiction

by the district court and with the express consent of all

the parties.” 28 U.S.C. § 157(e). Frazer’s argument was

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 9 of 15
10

recently addressed in this district in In re Childs, 342

B.R. 823 (M.D. Ala. 2006)(Albritton, J.). There, the

court made clear that, before it could reach the merits

of the withdrawal motion, it “must first deal with the

threshold issue of timeliness.” 342 B.R. at 827-828. 

C. Timeliness of Motion to Withdraw

Although § 157(d) does not provide a bright-line rule

on timeliness, the In re Childs court joined the general

consensus among courts “that a motion is timely if it was

made as promptly as possible in light of the developments

in the bankruptcy proceeding, or, more simply, if it was

made at the first reasonable opportunity.” Id. (quoting

United States v. Kaplan, 146 B.R. 500, 503 (D. Mass.

1992) (internal quotations omitted); see also 9 Am Jur 2d

Bankruptcy § 590 (“generally, [a motion to withdraw] will

be considered timely if it is done at the first

reasonable opportunity”). This timeliness requirement is

meant “to prevent parties from forum shopping, stalling,

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 10 of 15
11

or otherwise engaging in obstructionist tactics.” In re

Childs, 342 B.R. at 828 (citing In re Holcomb Health Care

Services, LLC 329 B.R. 622, 645 (M.D. Tenn. 2004); In re

Matter of Lissner Corp., 115 B.R. 604, 608-612 (N.D.

Ill.1990); In re Giorgio, 50 B.R. 327, 328-329

(D.R.I.1985)). Applying this reasoning, the court in In

re Childs denied a motion to withdraw as untimely when

the filing party did not file the motion in conjunction

with its answer containing a jury demand, but instead

vigorously participated in several years of pre-trial

litigation, including filing dispositive motions,

conducting discovery, and partaking in numerous

scheduling and pretrial conferences, and then waiting

until the eve of a longstanding trial date to file the

motion for withdrawal. 342 B.R. at 829-830. 

Similarly here, Frazer engaged in nine months of pretrial litigation in the bankruptcy court, including

filing two answers with jury demands, a cross-claim, a

counterclaim, two summary-judgment motions, and a

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 11 of 15
12

dismissal motion, all before filing a motion to withdraw.

The appropriate time for Frazer to have moved for

withdrawal (to extent her withdrawal rested on a right to

a jury trial) was on or about the time she made her first

jury demand and, giving her the benefit of the doubt,

definitely about the time she made her second jury

demand. See In re Childs, 342 B.R. at 830. This stands

to reason because Frazer must have been aware of the

ground for the withdrawal (her right to a jury trial) at

the time her jury demands were made. 

However, Frazer twice failed to make a timely

withdrawal motion. First, with regard to Trustee

DePaola’s original complaint, Frazer responded with a

dismissal motion, an answer with a jury demand, and a

summary-judgment motion. Second, after Trustee DePaola’s

amended complaint, the bankruptcy judge ordered Frazer to

identify any issues triable by jury. Frazer again

answered with a jury demand and then filed a second

summary-judgment motion before submitting either the

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 12 of 15
13

required response regarding the jury issue or the related

withdrawal motion. Frazer’s decision not to file a

motion to withdraw when she filed her jury demands, and,

worse yet, instead to file subsequent dispositive

motions, merely prolonged litigation in the very court

she was seeking to strip of jurisdiction. Because Frazer

did not file her motion to withdraw at the obligated

time--that is, when she filed her first jury demand and,

without question, when she filed her second jury

demand--and further filed dispositive motions before

moving for withdrawal, she cannot claim that she timely

sought to withdraw this matter at the first reasonable

opportunity. 

 

D. Consequences of an Untimely Motion 

As in In re Childs, this court finds that a party

waives her right to a jury trial in district court for a

matter referred to bankruptcy court if the party does not

timely move to withdraw the reference, in addition to

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 13 of 15
14

making a proper jury demand. See In re Childs, 342 B.R.

at 830; see also 9 Am Jur 2d Bankruptcy § 590 (explaining

that “failure to make the motion at the first opportunity

may constitute an implied waiver by all parties

involved”). 

III. CODA

It is also noteworthy that the bankruptcy court has

now determined that Frazer is, in fact, not entitled to

a jury trial. The court, however, need not, and does

not, rest its decision today on that result.

***

For the reasons discussed above, it is the ORDER,

JUDGMENT, and DECREE of the court that defendant Starla

Watson Price Frazer’s motion to withdraw reference and

transfer to district court (Doc. No. 2) and amended

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 14 of 15
motion to withdraw reference and transfer to district

court (Doc. No 7) are denied.

DONE, this the 13th day of August, 2007. 

 

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE

Case 2:06-mc-03317-MHT Document 19 Filed 08/13/07 Page 15 of 15