Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-01295/USCOURTS-azd-2_14-cv-01295-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA

 Before the Court is Appellees Hunter, Humphrey & Yavitz, PLC, and Candess J. 

Hunter, Isabel M. Humphrey, and Randall S. Yavitz’s Motion for Status Hearing (Doc. 

5), and Appellant’s Motion to Strike (Doc. 8). 

 On January 26, 2010, Appellant filed a voluntary petition for Chapter 11 relief in 

the United States Bankruptcy Court for the District of Arizona (“Bankruptcy Court”), 

Case No. 2:10-bk-01885-MCW. Appellee Hunter, Humphrey & Yavitz, PLC filed a 

proof of claim on March 22, 2010, for approximately $95,000 in legal fees incurred while 

representing Appellant in litigation before the United States District Court for the Eastern 

District of Virginia. On January 24, 2014, Appellant filed a complaint and objection to 

the proof of claim in the Bankruptcy Court, Case No. 2:12-ap-00177-GBN, commencing 

adversarial proceedings against Appellees Hunter, Humphrey & Yavitz, PLC, and 

Joseph Charles Loomis, 

Debtor, 

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No. CV-14-01295-PHX-SPL

No. 2:10-bk-01885-MCW 

No. 2:12-ap-00177-GBN 

Joseph Charles Loomis, 

Appellant, 

vs. 

Hunter, Humphrey & Yavitz PLC, et 

al., 

Appellees.

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ORDER 

Case 2:14-cv-01295-SPL Document 12 Filed 07/23/14 Page 1 of 3
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Candess J. Hunter, Isabel M. Humphrey, and Randall S. Yavitz. Appellant asserted 

claims of professional negligence, breach of contract and breach of fiduciary duty. 

 On March 16, 2012, Appellees moved to withdraw the reference from Bankruptcy 

Court to the United States District Court for the District of Arizona, arguing that under 

Stern v. Marshall, the Bankruptcy Court lacked final adjudicatory authority over the 

adversarial proceeding. 564 U.S. ___, 131 S. Ct. 2594, 2620 (2011) (holding bankruptcy 

courts lack authority to “enter a final judgment on a state law counterclaim that is not 

resolved in the process of ruling on a creditor’s proof of claim.”). On July 27, 2012, the 

District Court denied the request finding that, 

Because the Adversary Proceeding involves private rights that will not be fully resolved by adjudication of the proof of claim, we conclude that the bankruptcy court does not have authority to enter final judgment over the counterclaim. 

Nevertheless, we are not persuaded that withdrawal of the 

reference is appropriate at this stage. Stern does not prohibit a bankruptcy court from issuing proposed findings of fact and conclusions of law on claims that ultimately must be decided by an Article III judge. Stern, 131 S. Ct. at 2604. Judicial 

economy is best served by allowing the bankruptcy judge, who is familiar with this case as well as the Virginia Action, to oversee pretrial matters, initially adjudicate dispositive 

motions, and issue a report and recommendation prior to 

withdrawal. Accordingly, we decline to withdraw the 

reference at this time. 

(Loomis v. Hunter, Humphrey & Yavitz PLC, CV-12-00586-PHX-FJM, Doc. 12 at 3.) 

 At the conclusion of the adversarial proceeding before the Bankruptcy Court, 

Appellees moved for summary judgment, and on May 20, 2014, judgment was entered in 

their favor. (Doc. 11-2 at 1-2.) The proof of claim was also “deemed allowed in its 

entirety, and [to] be paid consistent with, and pursuant to, the terms of the Plan of 

Reorganization and the Court’s June 12, 2012 Order confirming the modified plan.” (Id.) 

Plaintiff filed the instant Notice of Appeal on June 10, 2014. (Doc. 1.) 

 “If a matter is core, the statute empowers the bankruptcy judge to enter final 

judgment on the claim, subject to appellate review by the district court.” Executive 

Benefits Insurance Agency v. Arkison, 573 U.S. ___, 134 S.Ct. 2165, 2172 (2014). See 

Case 2:14-cv-01295-SPL Document 12 Filed 07/23/14 Page 2 of 3
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also 28 U.S.C. §§ 157(b), 158; Rule 8013, Fed. R. Bankr. P. On appeal, a bankruptcy 

court’s “findings of fact are reviewed under the clearly erroneous standard, and 

conclusions of law, de novo.” In re Lazar, 83 F.3d 306, 308 (9th Cir. 1996). “If a matter 

is non-core, and the parties have not consented to final adjudication by the bankruptcy 

court, the bankruptcy judge must propose findings of fact and conclusions of law. Then, 

the district court must review the proceeding de novo and enter final judgment.” Arkison, 

134 S.Ct. at 2172. See also 28 U.S.C. § 157(c). If a matter involves Stern claims, it 

proceeds in the same manner as a non-core matter. Arkison, 134 S.Ct. at 2167.

 Here, Appellees request that an initial status conference be held to resolve whether 

the Bankruptcy Court erred in entering judgment rather than issuing a report and 

recommendation. The Court finds that resolution of this dispute is premature at this 

juncture. The issue of whether the adversarial proceeding adjudicated Stern claims and 

what standard of review should be accorded to the Bankruptcy Court’s opinion should be 

addressed by the parties in their briefing on the merits. If the Court determines “that the 

Bankruptcy Court’s entry of judgment was invalid,” the Court will conduct a “de novo

review and [enter] its own valid final judgment” to cure such error. Arkison, 134 S.Ct. at 

2175. Likewise, if the Court determines that the Bankruptcy Court’s entry of judgment 

was valid, it will be subject to appellate review. The record of the Bankruptcy Court’s 

opinion is amply developed for either construction. Consequently, the parties’ briefs shall 

sufficiently address the adversarial claims at issue. 

 The time for briefing will be set forth by a scheduling order to issue in this action 

following the filing of the certificate of readiness. Accordingly, 

 IT IS ORDERED that the Motion for Status Hearing (Doc. 5), and the Motion to 

Strike (Doc. 8) are denied. 

 Dated this 22nd day of July, 2014.

Honorable Steven P. Logan

United States District Judge

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