UNITED STATES BANKRUPTCY COURT 

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA 

In re: : Chapter 13 

 : 

Anna McHenry, : Case No. 4:23-00255-MJC 

 Debtor. : 

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 

Anna McHenry, : 

 Plaintiff, : 

 : 

v. : Adversary Proceeding 

 : No. 4:24-00036-MJC 

Wilmington Savings Fund Society, : 

FSB, d/b/a Christiana Trust as Trustee : 

for PNPMS Trust III, : 

Statebridge Company, LLC : 

 Defendants. : 

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BANKRUPTCY COURT REPORT AND RECOMMENDATION 

 This is a Report and Recommendation submitted to the United States District Court for 

the Middle District of Pennsylvania (“District Court”) pursuant to 28 U.S.C. §157(d) and Local 

Bankruptcy Rule for the United States Bankruptcy Court for the Middle District of Pennsylvania 

(“L.B.R.”) 5011-1(e). 

I. Procedural History 

The debtor, Anna McHenry (“Debtor”), filed a voluntary Chapter 13 bankruptcy petition 

on February 6, 2023 (“Petition Date”). On the same day, she filed her schedules, statements, and 

other required documents. See BK Dkt. # 1.1

 Based on her schedules, it appears that Debtor filed 

this bankruptcy case to address Wilmington Savings Fund Society, FSB’s (“WSFS”) mortgage 

1

 Docket entries referenced in the main bankruptcy case are designated as “BK Dkt.” and in this adversary proceeding 

as “Dkt.” 

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loan, which is secured by her residence, located in Lopez, Pennsylvania. 

On the Petition Date, Debtor also filed her initial Chapter 13 plan. BK Dkt. # 5. After 

WSFS objected to the plan because it did not propose to pay its secured claim in full, Debtor filed 

an amended plan (“Amended Plan”). The Amended Plan increased the amount payable to 

Statebridge Company, the servicer for WSFS, to the amount provided for in its proof of claim, 

$27,026.98. The Court confirmed the Amended Plan on June 2, 2023. See BK Dkt. # 26. 

On May 28, 2024, Debtor filed a Motion to Determine Mortgage Fees, Expenses and 

Charges pursuant to Rule 3002.1. BK Dkt. # 27. In the motion, Debtor objected to $1,750 of fees 

claimed in the Notice of Postpetition Mortgage Fees, Expenses, and Charges filed by WSFS on 

June 1, 2023. WSFS filed an objection to the motion. BK Dkt. # 30. 

Debtor then filed the above-captioned adversary proceeding on June 25, 2024, against 

WSFS and Statebridge (“Defendants”). Dkt. # 1.2

 Defendants filed an answer on July 25, 2024. 

Dkt. # 8. Debtor then filed an Amended Complaint on August 15, 2024. Dkt. # 12. Defendants 

filed their answer (“Answer”) on September 4, 2024. Dkt. # 19. Shortly thereafter, on September 

10, 2024, Debtor filed her Motion to Withdraw the Reference (“Motion”) and supporting brief. 

See Dkt. # 21. Defendants responded to the Motion with a brief opposing the relief sought in part. 

See Dkt. # 31. 

Also pending, is Debtor’s Motion to Strike the Answer and affirmative defenses. Dkt. # 

24. Defendants’ response is due on October 16, 2024 and a hearing is scheduled for November 7, 

2024. See Dkt. # 25. 

2

 Relevant to this matter, Debtor indicated in her Amended Complaint: “At an appropriate time, Plaintiff will file a 

motion to withdraw the reference.” Id. at ¶ 6. 

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II. Factual Background 

According to the Amended Complaint, in 2006, Debtor borrowed approximately $16,600 

against her home in order to purchase an accessible van for her disabled adult son. In 2022, 

Defendants filed a Complaint in Foreclosure in state court alleging Debtor was delinquent on the 

mortgage. Defendants obtained a judgment and a sheriff’s sale was scheduled for February 16, 

2023. Debtor filed the instant bankruptcy petition, which stayed the sale of her home. 

Debtor brought this adversary proceeding to contest $1,750 in post-petition fees that 

Defendants incurred in reviewing Debtor’s plan, filing an objection to confirmation, and filing a 

proof of claim. Debtor also asserts that Defendants retroactively imposed unlawful interest in 

connection with the loan. Debtor seeks damages under various consumer protection statutes for 

Defendants’ alleged violations in connection with the servicing of Debtor’s mortgage. 

The Amended Complaint contains seven counts: 

x Count I – Declaratory Judgment 

x Count II – Pennsylvania’s Loan Interest and Protection Law 

x Count III – Fair Debt Collections Practices Act 

x Count IV – Real Estate Settlement Procedures Act 

x Count V – Truth in Lending Act 

x Count VI – Pennsylvania’s Unfair Trade Practices and Consumer Protection Law 

x Count VII – Motion to Determine Postpetition Mortgage Fees 

The parties agree that Counts I through VI assert non-core claims. They further agree that 

Count VII is likely a core matter. Both parties have not consented to the entry of final orders or 

judgment by the bankruptcy court. See Dkt. # 10, 12. Furthermore, Debtor has requested a jury 

trial on “all triable issues.” 

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III. Legal Standard 

Pursuant to 28 U.S.C. §157(d), the District Court has discretion to “withdraw, in whole or 

in part, any case or proceeding ... for cause shown.” 28 U.SC. §157(d). Section 157(d) further 

provides: 

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 organizations or activities 

affecting interstate commerce. 

The Third Circuit Court of Appeals in In re Pruitt, 910 F.2d 1160 (3d. Cir. 1990), listed 

several considerations in determining whether cause has been established: “the goals of promoting 

uniformity in bankruptcy administration, reducing forum shopping and confusion, fostering the 

economical use of the debtors’ and creditors’ resources, and expediting the bankruptcy process.” 

Pruitt, 910 F.2d at 1168. Other factors should also be considered, such as, whether the bankruptcy 

court has jurisdiction over the claims, whether the claims are core or non-core, and whether a party 

has demanded a jury trial. See e.g., In re Disen Colon, 2022 WL 1786803, at *7 (Bankr. M.D. Pa. 

2022); In re Wilton Armetale, Inc., 2021 WL 609055, at *3 (Bankr. E.D. Pa. 2021); In re Brown 

Med. Ctr., Inc., 578 B.R. 590, 595 (Bankr. S.D. Tex. 2016). 

“The party seeking the withdrawal of the reference has the burden of going forward to 

show the grounds for withdrawal and bears the ultimate risk of non-persuasion.” In re Camden 

Ordnance Mfg. Co. of Ark., Inc., 245 B.R. 794, 805 (E.D. Pa. 2000) (citations omitted). The 

moving party faces a scale “heavily weighted against withdrawal.” Feldman v. ABN AMBRO 

Mortg. Grp., Inc., 2020 WL 618604, at *7 (E.D. Pa. 2020). 

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IV. The Bankruptcy Court Recommends that the District Court Defer Withdrawing the 

Reference Until the Adversary Proceeding is Ready for Trial 

In assessing the factors stated above, this Court believes they weigh in favor of 

withdrawing the reference but defer withdrawal until the matter is ready for trial. 

Debtor advocates that the withdrawal of the reference of this adversary proceeding is 

warranted as either mandatory or permissive. “Mandatory withdrawal is appropriate only where 

resolution of the claims will require substantial and material consideration of non-code federal 

statutes that have more than a de minimis impact on interstate commerce.” In re Eagle Enterprises, 

Inc., 259 B.R. 83, 87 (Bankr. E.D. Pa. 2001) (internal quotations and citation omitted); accord 

Seitz v. Rothermel, 638 B.R. 846, 849 (E.D. Pa. 2022). Debtor contends that all of her claims, 

exclusive of the Rule 3002.1 claim, are non Bankruptcy Code federal and state claims. She further 

argues that most of her claims are non-core and could have been brought in either state or federal 

court. Because this proceeding involves mostly federal and state statutes that are unrelated to any 

bankruptcy considerations, Debtor argues that she has met the requirements for mandatory 

withdrawal. 

Alternatively, Debtor contends that her Motion should be granted under the permissive 

withdrawal provisions of §157(d). Because Debtor has asserted a right to a jury trial and does not 

consent to the Bankruptcy Court conducting a jury trial, she argues that the District Court should 

permissively withdraw the reference. See Transcontinental Refrigerated Lines, Inc. ex rel. Young 

v. New Prime, Inc., 2013 WL 5937963, at *2 (M.D. Pa. 2013) (citing Uni Marts, LLC v. NRC 

Realty Advisors, LLC, 2009 WL 1631821 (D. Del. 2009)). 

Defendants dispute that mandatory withdrawal has been established. They argue that 

withdrawal is mandatory only when non-bankruptcy laws “require the interpretation, as opposed 

to mere application, of the non-title 11 statute, or when the court must undertake analysis of 

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significant open and unresolved issues regarding the non-title 11 law.” In re Vicars Ins. Agency, 

Inc., 96 F.3d 949, 953 (7th Cir. 1996). As to permissive withdrawal, Defendants agree that 

ultimately, if and when a trial is necessary, the District Court will have to conduct the jury trial as 

both parties have not consented to the Bankruptcy Court conducting a jury trial. However, 

Defendants argue that the Bankruptcy Court should retain the adversary proceeding for the pretrial 

phase. 

The Court agrees with the parties’ assessment regarding the core and non-core claims. 

Count VII, which is the Motion to Determine Postpetition Mortgage Fees, is likely a core claim as 

it arises solely under Fed. R. Bankr. P. 3002.1, and this Court has jurisdiction to hear and decide 

it. Counts I though VI are non-core. See 28 U.S.C. §157(b)(2). Those claims do not invoke rights 

under Title 11 and do not only arise in the context of a bankruptcy case. They are claims that 

Debtor could have brought in either state or federal court. The Court believes there could be 

“related to” jurisdiction3

 over Counts I through VI because determination of one or more those 

claims could potentially reduce the amount Debtor owes on her mortgage to WSFS and/or could 

3

 Bankruptcy Courts are courts of limited jurisdiction, comprising of just four types of matters: “(1) cases under title 

11, (2) proceedings arising under title 11, (3) proceedings arising in a case under title 11, and (4) proceedings related 

to a case under title 11.” Stoe v. Flaherty, 436 F.3d 209, 216 (3rd Cir. 2006); In re Resorts International, Inc., 372 

F.3d 154, 162 (3d Cir. 2004) (citing Torkelsen v. Maggio (In re Guild & Gallery Plus), 72 F.3d 1171, 1175 (3d Cir. 

1996)). 

 Bankruptcy proceedings “arising under” title 11 are those in which the Bankruptcy Code itself creates a 

statutory cause of action. Gupta v. Quincy Med. Ctr., 858 F.3d 657, 662 (1st Cir. 2017) (citation omitted). 

Proceedings “arising in” cases under title 11 are “those that are not based on any right expressly created by title 11, 

but nevertheless, would have no existence outside of the bankruptcy.” In re Middlesex Power Equip. & Marine, Inc., 

292 F.3d 61, 68 (1st Cir. 2002); see also Gupta, 858 F.3d at 663 (citing Stoe, 436 F.3d at 218 (“[C]laims that ‘arise 

in’ a bankruptcy case are claims that by their nature, not their particular factual circumstance, could only arise in the 

context of a bankruptcy case.”)). 

 A Bankruptcy Court has “related to” jurisdiction when the outcome of a civil proceeding “could conceivably 

have any effect on the estate being administered in bankruptcy.” Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 

1984). In the post-confirmation context, the test is slightly different: “where there is a close nexus to the bankruptcy 

plan or proceeding, as when a matter affects the interpretation, implementation, consummation, execution, or 

administration of a confirmed plan ... retention of post-confirmation bankruptcy court jurisdiction is normally 

appropriate.” Resorts, 372 F.3d at 168-69; In re Shuman, 277 B.R. 638, 649 (Bankr. E.D. Pa. 2001) (“If . . . events 

occur during a bankruptcy case which would give rise to a cause of action, and if the outcome of that litigation could 

affect the administration of the bankruptcy case by, for example, either increasing the assets to be distributed to 

creditors or by reducing the amount to be paid to a creditor, then such litigation is related to the bankruptcy case.”). 

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fund payments under her plan, therefore, it affects the confirmed plan.4 However, this Court is 

able to make only findings of fact and conclusions of law with respect to these non-core claims. 

See 28 U.S.C. §157(c)(1). 

The Court also believes that Debtor has not established that withdrawal of the reference is 

mandatory. Based on the Amended Complaint, it appears that Debtor presents a straightforward 

factual scenario where only application of settled non-bankruptcy law is involved. See Vicars Ins. 

Agency, 96 F.3d at 953. Debtor has not identified any aspect of her claims that requires substantial 

interpretation of non-Title 11 law. 

This Court does conclude that permissive withdrawal has been established since Debtor 

has asserted a right to a jury trial and neither party consents to the Bankruptcy Court conducting 

it. See Transcontinental Refrigerated Lines, 2013 WL 5937963, at *2. However, it is well-settled 

that “assertion of a Seventh Amendment right to a jury trial, coupled with a refusal to consent to 

such a trial before the Bankruptcy Court, is not of itself sufficient cause for discretionary 

withdrawal.” In re Midnight Madness Distilling, LLC, 2024 WL 1538465, at *3 (E.D. Pa. 2024) 

(quoting Pa. Academy of Music v. Regitz, 2010 WL 4909952, at *2 (E.D. Pa. 2010)). In order to 

promote judicial economy and efficiency, the District Court has the discretion to deny a motion to 

withdraw until the case is ready for trial. Midnight Madness, 2024 WL 1538465 at *4; Bonarrigo 

v. LexisNexis Risk Solutions FL, Inc., 2014 WL 65290, at *4 (M.D. Pa. 2014). 

The Pruitt factors, i.e., uniformity in bankruptcy administration, forum shopping, fostering 

economical use of the parties’ resources, and expediting the bankruptcy process, do appear to be 

4

 See In re Resorts International, Inc., 372 F.3d 154, 168-69 (3d Cir. 2004) (holding that bankruptcy court has related 

to jurisdiction in post-confirmation context where there is close nexus to bankruptcy plan or proceeding); see also 

Gruver v. Firetech, 2024 WL 4357225, at *2 (3d Cir. 2024) (non precedential) (proceeds from adversary proceeding 

could be used to make payments under confirmed chapter 13 plan, which qualifies as an “integral aspect” of 

bankruptcy process and supports “related to” jurisdiction). 

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neutral here. The parties have not presented strong arguments regarding these factors. This Court 

has had the main bankruptcy case since February 2023 and is familiar with the underlying factual 

bases relating to the main case, as well as the facts asserted in the adversary proceeding (especially 

the Bankruptcy Rule 3002.1 claim). 

This Court recognizes that withdrawal of the reference is solely within the District Court’s 

discretion and may find it advisable to immediately withdraw the reference. But, because this 

proceeding is in its early stages, there is a pending motion outstanding, and it is unclear whether a 

trial will even be necessary, this Court recommends that it retain the adversary proceeding for 

disposition of all pre-trial matters. 5 See Seitz, 638 B.R. at 852 (citing cases). 

V. CONCLUSION 

For the reasons set forth above, the Court recommends that Plaintiff’s Motion to Withdraw 

Reference be denied or deferred without prejudice and that this Court shall retain the adversary 

proceeding for disposition of all pre-trial matters. 

 

5

 The Court also recognizes that the District Court could withdraw the reference and allow a Magistrate Judge to also 

administer the pre-trial matters in this proceeding if it deems it more economical and/or efficient. 

By the Court,

_____________________________

Mark J. Conway, Bankruptcy Judge

Dated: October 8, 2024

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