Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-01858/USCOURTS-caed-2_07-cv-01858-0/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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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

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In re: 

KET A. LAM, aka TONY LAM, NO. CIV. S-07-1858 WBS DAD

d/b/a/ LAM’S MANDARIN, f/d/b/a, 

GRAND MANDARIN,

Debtor, (Bankruptcy Court No. 

05-28088-C7) ----------------------------- (Adversary Proceeding No. 

06-02194)

FRANK’S QUALITY MEATS, INC.,

Plaintiff,

ORDER RE: MOTION FOR

v. WITHDRAWAL OF REFERENCE AND CONSOLIDATION OF RELATED CASES

KET A. LAM, aka TONY LAM,

Defendant.

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Plaintiff Frank’s Quality Meats, Inc., moves to

withdrawal the reference of the above-captioned adversary

proceeding to the bankruptcy court and for consolidation of this

matter with district court case No. 07-1858.

I. Factual and Procedural Background

Defendant Ket A. Lam was the owner and in possession of

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1 Because the U.S. Trustee declared that the allegations

against Calvin Lam entitled him to a jury trial under the Seventh

Amendment, this court withdrew the reference when Calvin Lam

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real property located at 3929 Berrendo Drive, Sacramento,

California (“the Property”). (Compl. ¶ 13.) Defendant

transferred the Property by grant deed to his brother, Calvin

Lam, on or about August 19, 2004. (Id. ¶ 14.) This deed was

recorded in the Sacramento Country Recorder’s Office on September

2, 2004. (Id. ¶ 15.) Thereafter, defendant commenced a

voluntary Chapter 11 bankruptcy proceeding in the bankruptcy

court on July 1, 2005. (Cooper Decl. ¶ 3.) On November 10,

2005, the proceeding was converted into a Chapter 7 proceeding.

(Id.)

Plaintiff, a purported creditor of defendant, contends

that defendant transferred the Property to his brother for less

than reasonable equivalent value so that plaintiff and other

creditors could not realize the equity in the property to pay off

defendant’s debts. (Compl. ¶¶ 68-69). On May 1, 2006, plaintiff

filed a complaint against defendant in bankruptcy court to

determine non-dischargeability of judgment and objecting to

discharge (“the Ket Lam action”). (Pls.’ Mem. Supp. Mot. to

Withdrawal 2.) 

On September 7, 2006, the U.S. Trustee filed a

complaint against Calvin Lam in bankruptcy court alleging that

the transfer was made with “intent to hinder, delay or defraud

all of [defendant’s] then or future creditors” (“the Calvin Lam

action”). (Compl. ¶ 17). On January 23, 2007, this court

withdrew the Calvin Lam action’s reference to bankruptcy court,1

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28 refused to agree to a jury trial before a bankruptcy court. 

(Jan. 23, 2007 Order.)

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and the case is now pending in district court. (Jan. 23, 2007

Order.) On June 29, 2007, the bankruptcy court authorized a sale

of “property” by the U.S. Trustee to plaintiff that included

“[a]ny and all claims, law suits, causes of action, or demands

asserted or assertable by the bankruptcy estate of Ket Lam

against Calvin Lam.” (Bankr. Case No. 05-28088 (Docket No.

194).) Pursuant to the sale, plaintiff was substituted “in place

of the Trustee as the Plaintiff in the [Calvin Lam action].” 

(Id.) Thus, plaintiff is now a party to the Calvin Lam action as

well as the Ket Lam action.

On September 10, 2007, plaintiff filed this motion for

withdrawal and consolidation in district court. Specifically,

plaintiff contends that because similar issues of law and fact

are present in both actions, the court should withdrawal the

reference of the Ket Lam action to the bankruptcy court and

therein consolidate it with the Calvin Lam action in district

court. 

II. Discussion

Under the Bankruptcy Amendments and Federal Judgeship

Act of 1984 (“the Act”), district courts have original

jurisdiction over all cases arising under Title 11 of the

Bankruptcy Code. In re Vicars Ins. Agency, Inc., 96 F.3d 949,

951 (7th Cir. 1996). However, the Act “allowed federal courts to

‘refer’ bankruptcy cases to the bankruptcy judges for the

district automatically.” Id. 

Pursuant to the Act, this court promulgated General

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Order No. 182, which automatically “refers to bankruptcy judges

of this district all cases under Title 11, and all proceedings

arising under Title 11 or arising in or related to cases under

Title 11.” Cal. R. of Ct. Fed., 273-75 (West Group ed., 2007). 

However, a district court “may withdraw, in whole or in part, any

case or proceeding referred [to bankruptcy court] . . . for cause

shown.” 28 U.S.C. § 157(d). To determine whether cause exists

for purposes of withdrawal, “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, Chauffeurs, Warehousemen & Helpers, 124

F.3d 999, 1008 (9th Cir. 1997). “The district court’s decision

whether cause justifies withdrawal is generally discretionary,”

In re Cinematronics, Inc. v. Elec. Sports Research, 916 F.2d

1444, 1451 (9th Cir. 1990) (citation omitted), and “the burden of

persuasion is on the party seeking withdrawal.” FTC v. First

Alliance Mortgage Co., 282 B.R. 894, 902 (C.D. Cal. 2001)

(citation omitted).

Plaintiff requests withdrawal of the reference based on

its general assertion that the Ket Lam Action and the Calvin Lam

action both involve the same nucleus of facts relating to the

transfer of the Property by defendant to Calvin Lam. However,

plaintiff overlooks the dissimilarity in legal issues associated

with each action. The Calvin Lam action resides in the district

court because it involves varied claims, at least one of which

mandates a jury trial. In contrast, the Ket Lam action is based

on claims for the determination of dischargability and objecting

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2 At oral argument, plaintiffs further acknowledged that

withdrawing the reference and therein consolidating the

respective actions would probably save the court just one day

during trial. 

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to discharge--i.e., claims that Congress has unequivocally

established are within the expertise of bankruptcy courts. See

S. Rep. No. 91-1173, at 9 (1970); H.R. Rep. No. 91-1502, at 8

(1970) (“[A] single court, to wit, the bankruptcy court, will be

able to pass upon the question of dischargeability of a

particular claim and it will be able to develop an expertise in

resolving the problem in particular cases.”). 

Significantly, plaintiffs suggest only one issue--the

purported fraudulent transfer of the Property--that would be

unnecessarily duplicated should the Ket Lam action remain

separate from the Calvin Lam action.2

 As a tradeoff, all of the

other extraneous bankruptcy issues related solely to the Ket Lam

action would be needlessly channeled into the district court. 

Because the Ket Lam action has been pending in the bankruptcy

court since May 1, 2006 (Bankr. Case No. 05-28088 (Docket No.

1).), the bankruptcy court is better equipped to dispose of the

Ket Lam action and is far more knowledgeable about the parties’

particular assertions than is this court. See CoreStates Bank,

N.A. v. Huls America, Inc., 176 F.3d 187, 198 (3rd Cir. 1999) (“A

bankruptcy judge is perfectly capable of recommending . . .

judgment based on any theory, remedy, or relief, just as if the

claim had been brought originally before a district court.”); In

re Pac. Gas & Elec. Co., 279 B.R. 561, 567 (Bankr. N.D. Cal.

2002) (finding that the debtor provided no compelling reason for

the district court to “inject itself into the administration of

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3 Because the court denies plaintiff’s motion to withdraw

the reference, the motion for consolidation is also denied. 

Further, plaintiff’s argument in support of consolidation suffers

from the same defects inherent in its motion for withdrawal of

the reference--namely that efficient use of judicial resources

and the delay and costs to parties weigh in favor of defendant. 

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this case . . . when the bankruptcy court is perfectly capable

and better equipped to do so”) (quoting In re Dreis & Krump

Manufacturing Co., 1995 U.S. Dist. LEXIS 1099 at *11-*12 (N.D.

Ill. 1995)). 

Indeed, the factors that the court should consider for

permissive withdrawal, such as the efficient use of judicial

resources and the delay and costs to the parties, additionally

counsel against granting plaintiff’s motion. Sec. Farms, 124

F.3d at 1008. If the reference is withdrawn, defendant would be

required to observe and comply with new discovery deadlines and

repeat all of his efforts to litigate the current proceeding. 

Such duplicative efforts would undoubtedly increase

administrative expenses and thereby risk the possibility of

depleting existing estate resources, resulting in a reduced or

delayed recovery by unsecured creditors. Accordingly, the court

will not exercise its discretion to grant permissive withdrawal

under 28 U.S.C. § 157(d).3

IT IS THEREFORE ORDERED that plaintiff’s motions for

withdrawal of reference and for consolidation of proceedings be,

and the same hereby are, DENIED.

DATED: November 2, 2007

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