Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00716/USCOURTS-azd-2_08-cv-00716-0/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

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

In re:

Global Grounds Greenery, LLC, et al.,

Debtors

 

Peter J. McQuaid, 

Plaintiff, 

vs.

OS-95, LLC, et al., 

Defendants. 

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No. CV-08-0716-PHX-FJM

ORDER

BK No. 2:06-1701-RJH

Jointly administered with:

BK No. 2:06-1702-RJH

BK No. 2:06-1718-RJH

BK No. 2:06-1741-RJH

BK No. 2:06-1743-RJH

BK No. 2:06-1744-RJH

BK No. 2:06-1758-RJH

The court has before it plaintiff’s motion to withdraw the reference of adversary

proceeding (doc. 2), defendants’ objection (doc. 8), and plaintiff’s reply (doc. 11).

Plaintiff Peter J. McQuaid and defendants, five Arizona limited liability companies,

are creditors of Global Grounds Greenery, LLC, et al., debtors in Chapter 11 proceedings in

the United States Bankruptcy Court for the District of Arizona. Plaintiff and defendants

were investors in debtors’ “concert promotion” operation, allegedly a Ponzi scheme. 

Case 2:08-cv-00716-FJM Document 13 Filed 06/19/08 Page 1 of 3
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- 2 -

In February 2008, plaintiff filed an amended complaint against defendants in the

Superior Court of Arizona in Maricopa County (doc. 2, Ex. E), alleging that defendants

participated in debtors’ fraudulent scheme in violation of A.R.S. § 44-1991(A). Pursuant to

28 U.S.C. § 1452, defendants removed the action to the United States District Court for the

District of Arizona. The action was then automatically referred to the bankruptcy court

pursuant to 28 U.S.C. § 157(a) and General Order 01-15 (June 29, 2001). Plaintiff now

moves to withdraw the reference.

Under 28 U.S.C. § 157(d), “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.” Plaintiff contends that there is cause shown because he demands

a jury trial and will not consent to its being presided over by a bankruptcy judge. See 28

U.S.C. § 157(e) (stating that a bankruptcy judge may preside over a jury trial only with the

consent of all the parties); In re Orion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993)

(stating that the presence of a jury demand is a factor in evaluating “cause” to withdraw the

reference). Also, the United States Court of Appeals for the Ninth Circuit has held that,

because of Seventh Amendment rights, “bankruptcy courts cannot conduct jury trials on

noncore matters, where the parties have not consented.” In re Cinematronics, Inc., 916 F.2d

1444, 1451 (9th Cir. 1990). 

We agree with plaintiff that this action is a “noncore matter,” which is defined as an

action that does not “depend on bankruptcy laws for [its] existence and that could proceed

in another court.” Security Farms v. Int’l Bhd. of Teamsters, 124 F.3d 999, 1008 (9th Cir.

1997). However, a jury demand on a noncore matter does not necessitate immediate

withdrawal of the reference when, as in this action, trial is a only a distant possibility;

the reference can be withdrawn later, if and when a jury trial becomes imminent. See In re

Orion Pictures Corp., 4 F.3d at 1101–02. On the present motion, we must consider factors

such as “efficient use of judicial resources, delay and costs to the parties, [and] uniformity

of bankruptcy administration.” Id. at 1101.

Case 2:08-cv-00716-FJM Document 13 Filed 06/19/08 Page 2 of 3
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Here, the bankruptcy court is already familiar with the parties and many of the

factual underpinnings of plaintiff’s claims. Indeed, it appears that contentions similar to

those in plaintiff’s complaint have already been presented to the bankruptcy court in plan

confirmation hearings. See Response, Ex. A. Even without determining what preclusive

effect, if any, the bankruptcy court’s previous orders would have on this action, we are

hesitant to consider claims that the bankruptcy court might have already addressed. 

For these reasons, we conclude that this action is best left in the bankruptcy court at

this time. Of course, this does not prejudice plaintiff’s right to exercise his Seventh

Amendment rights in the unlikely event that the action proceeds to trial. See In re Orion

Pictures Corp., 4 F.3d at 1102 (noting that unlikelihood of trial can support refusal to

withdraw the reference). 

Accordingly, IT IS HEREBY ORDERED DENYING plaintiff’s motion to

withdraw the reference to the bankruptcy court (doc. 2).

DATED this 19th day of June, 2008.

Case 2:08-cv-00716-FJM Document 13 Filed 06/19/08 Page 3 of 3