Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-akb-4_15-ap-90017/USCOURTS-akb-4_15-ap-90017-0/pdf.json

Parties Involved:
Kenneth W. Battley
Plaintiff
MPC, INC.
Defendant
Alaska Commercial Construction, Inc.
Defendant

Document Text:

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JUDGE HERB ROSS (Recalled)

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA

605 West 4th Avenue, Room 138, Anchorage, AK 99501-2253 — (Website: www.akb.uscourts.gov) Clerk’s Office: 907-271-2655 (1-800-859-8059 In-State) — Judge’s Fax: 907-271-2692

Case No. F14-00288-HAR

In re FAIRBANKS COMMUNITY

MENTAL HEALTH CENTER, INC., dba

FAIRBANKS COMMUNITY

BEHAVIORAL HEALTH CENTER,

Debtor(s)

In Chapter 7

KENNETH W. BATTLEY, TRUSTEE,

Plaintiff(s)

 v.

MPC, INC., an Alaska Corporation, and

ALASKA COMMERCIAL

CONSTRUCTION, INC., an Alaska

Corporation,

Defendant(s)

Adv Proc No F15-90017-HAR REPORT AND RECOMMENDATION FOR

WITHDRAWAL OF REFERENCE FROM

BANKRUPTCY TO DISTRICT COURT

[Alaska LBR 5011-1]

To: the Clerk of the Bankruptcy Court to forward to the United States District Court for the

District of Alaska

SUMMARY OF RECOMMENDATION- The district court must determine if the

reference of this adversary proceeding to the bankruptcy court should be withdrawn.1 

A jury trial has been requested and the parties have not consented to it being conducted by

the bankruptcy court. Consent is required to empower the bankruptcy court to enter a final

judgment. 28 USC §157(c).2

 There are no material bankruptcy issues to be decided and I

recommend that the reference be withdrawn and the pre-trial and trial be handled by the district

court.

1

Rule 5011, Fed.R Bankr.P.

2

11 USC §157(e) provides: “ If the right to a jury trial applies in a proceeding that may be heard under

this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if specially designated to

exercise such jurisdiction by the district court and with the express consent of all the parties.”

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FACTUAL BACKGROUND OF THE DISPUTE- This adversary proceeding is in a chapter

7 case. The assets are mainly in Fairbanks. The parcel of real estate in question is improved with

a structure. The trustee retained a real estate broker to market the property.

To protect the structure during the cold Fairbanks winter, the trustee orally directed the

real estate agent to have the pipes winterized. The allegation is that the real estate agent orally

engaged Alaska Commercial Construction, Inc. (ACC) to do the job and ACC orally subcontracted

the work to MPC, Inc. MPC invoiced ACC and was paid $1,215 for the job. The trustee claims

that the work was improperly done so that the pipes froze and now seeks damages from either

ACC or MPC. MPC’s insurer has denied coverage. The complaint seeks recovery on a contract

theory from MPC (as a third party beneficiary of the MPC subcontract) and/or due to ACC’s

alleged negligence in selecting MPC to do the job.3

ACC and MPC have denied liability.4

PROCEDURE- MPC and ACC have both demanded a jury trial.5 Not all parties have

consented to the jury trial being conducted by the bankruptcy court.6 At the first status

conference on February 12, 2016, the bankruptcy court suggested it would recommend that the

district court withdraw the reference pursuant to Alaska LBR 5011-1. All three parties stated

they did not oppose this suggestion.

LBR Rule 5011-1 is the local Alaska procedural device to accomplish this by

recommending to the district court whether or not to withdraw the reference. Although a

3

Complaint, filed November 13, 2015. ECF No. 1.

4

MCP’s answer was filed January 5, 2016 at ECF No. 7 and ACC’s answer and cross-claim was filed on

January 11, 2016 at ECF No. 10.

5

ECF No. 8, filed January 5, 2016 and ECF No. 11, filed January 11, 2016.

6

Rule 9015 of the Fed. R.Civil P. and Alaska LBR 9015-1.

REPORT AND RECOMMENDATION FOR 

WITHDRAWAL OF REFERENCE FROM BANKRUPTCY 

TO DISTRICT COURT [Alaska LBR 5011-1] Page 2 of 4

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motion to withdraw the reference usually triggers a 21 day period for a party to object,7 in this

adversary proceeding all parties in open court agreed to the withdrawal, thus waiving notice.

LBR Rule 5011-1(d), Determination of Motion, provides that “A motion for withdrawal of

the reference is governed by Rule 9033 of the Federal Rules of Bankruptcy Procedure.” Rule 9033

sets out the procedure for a bankruptcy court hearing and then reporting its finding and

recommendations in a non-core proceeding that is related to the bankruptcy case.8

 

ANALYSIS- This proceeding is a simple claim for damages to property. Although it is

brought by a bankruptcy trustee to enhance the amount available to pay creditors, it is really just

a state law tort and/or contract case based on property damage. It entails no special issues of

bankruptcy law.

The complaint should have contained a section addressing the bankruptcy court’s

jurisdiction, but doesn’t.9

 The compliant should have contained the following:

In an adversary proceeding before a bankruptcy court, the complaint, counterclaim,

cross-claim, or third-party complaint shall contain a statement that the pleader does

or does not consent to entry of final orders or judgment by the bankruptcy court.

The fundamental jurisdiction of the bankruptcy court is found in 28 USC §1334(a),(b):

(a) Except as provided in subsection (b) of this section, the district courts shall have

original and exclusive jurisdiction of all cases under title 11.

(b) Except as provided in subsection (e)(2), and notwithstanding any Act of

Congress that confers exclusive jurisdiction on a court or courts other than the

district courts, the district courts shall have original but not exclusive jurisdiction of

all civil proceedings arising under title 11, or arising in or related to cases under

title 11.

7

Alaska LBR 5011-1(c).

8

Rule 9033(a) of the Fed. R. Civil P., referring to non-core related proceedings under 28 USC

§157(c)(1).

9

ECF No. 1.

REPORT AND RECOMMENDATION FOR 

WITHDRAWAL OF REFERENCE FROM BANKRUPTCY 

TO DISTRICT COURT [Alaska LBR 5011-1] Page 3 of 4

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The complaint seems to state a matter “related” to the bankruptcy, but not a core

proceeding as defined by 28 USC §158(b). Although the outcome could affect how much the

trustee has to distribute to creditors, it is not a quintessential bankruptcy matter.10 It is basically a

damage claim which could just as well have occurred without a bankruptcy being involved. As a

“related matter” on which the bankruptcy court cannot make a final decision judicial economy

suggests withdrawal of the reference at this point.

Although district courts sometimes defer withdrawal of the reference until later in the

proceeding,11 I suggest immediate withdrawal. The facts and issues are straightforward. The

district court would be much better at directing its own pre-trial procedure than leaving it to a

bankruptcy judge who is not familiar with how the district court would wish pre-trial matters to

be handled.

The demand for a jury trial to which a litigant is entitled, where all parties do not consent

to one before a bankruptcy judge, requires that the trial be conducted by the district court.12

Withdrawal of the reference at this early stage of the proceeding is the most efficient way to

proceed.

DATED: February 12, 2016

 /s/ Herb Ross 

 HERB ROSS

 U.S. Bankruptcy Judge

Serve :

Clerk of the bankruptcy court

Cabot Christianson, Esq., for π

Robert Groseclose, Esq., for Δ MPC, Inc.

Laura Eakes, Esq., for Δ Alaska Commercial Construction, Inc. 329 F St., Ste. 200, Anchorage, AK 99501

Cheryl Rapp, Adv. Proc. Mgr.

10In re Fietz, 852 F.2d 455, 457 (9th Cir. 1988) (the outcome of the proceeding conceivably could affect

the administration of the bankruptcy estate).

11Barlow & Peek, Inc. v. Manke Truck Lines, Inc., 163 B.R. 177, 179 (D. Nev. 1993).

12One Longhorn Land I, L.P, v. Presley, 529 B.R. 755, 764 (C.D. Cal. 2015).

REPORT AND RECOMMENDATION FOR 

WITHDRAWAL OF REFERENCE FROM BANKRUPTCY 

TO DISTRICT COURT [Alaska LBR 5011-1] Page 4 of 4

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