UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No.: 19-cv-63127-SINGHAL

In re: American Resource Management Group, Case No.: 19-14605-JKO

LLC (DE), et al., EIN: 35-2620379, CHAPTER 11

Jointly Administered

Debtors.

_____________________________________/

BARRY E. MUKAMAL, Chapter 11 Trustee for 

American Resource Management Group, LLC,

Adversary Proceeding No.:

Plaintiff, 19-01782-JKO

v.

SCOTTSDALE INSURANCE COMPANY,

Defendant.

_____________________________________/

OPINION AND ORDER

THIS CAUSE is before the Court on Defendant’s Motion to Withdraw the 

Reference of Adversary Proceeding (“Motion”) (DE [1]). Plaintiff has filed a response in 

opposition (DE [1-1]). The Court has considered both filings and is otherwise fully advised 

in the premises. This order follows.

BACKGROUND

This case dates back to August 2018, when Wyndham Vacation-related entities 

filed suit against American Resource Management Group, LLC (“ARMG”) in this district 

for damages and injunctive relief. The suit alleged false and misleading advertising to 

solicit Wyndham’s timeshare owners to purchase “cancellation” or “transfer” services from 

ARMG. This caused the timeshare owners to breach their contracts with Wyndham. 

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Bluegreen Vacation-related entities filed an identical suit against ARMG in December 

2018.

Defendant Scottsdale Insurance Company (“Scottsdale”), issuer of several 

commercial general liability insurance policies to ARMG, denied coverage to ARMG for 

the two lawsuits based on the underlying complaints’ allegations. ARMG has since filed 

for Chapter 11 bankruptcy and the two suits are automatically stayed pursuant to 11 

U.S.C. § 362(a).

On October 18, 2019, Plaintiff Barry Mukamal (“Trustee”), as trustee of ARMG’s 

Chapter 11 bankruptcy, filed a complaint for declaratory judgment against Scottsdale as 

an adversary proceeding in the bankruptcy case (“Adversary Proceeding”). Trustee 

seeks a declaration that Scottsdale has a duty to defend ARMG in both the Wyndham 

and Bluegreen lawsuits. Scottsdale now moves here to withdraw the reference of the

Adversary Proceeding before the bankruptcy court and return the matter to this district. 

DISCUSSION

I. LEGAL STANDARD 

“A district court has original and exclusive jurisdiction of all cases brought under 

Title 11.” Gould v. Furr, 2015 WL 846416, at *1 (S.D. Fla. Feb. 26, 2015) (citing 28 U.S.C. 

§ 1334(a)). However, under Local Rule 87.2, all cases under Title 11 and all proceedings

arising or relating to such cases are automatically referred to the bankruptcy court of this 

district. Parties to such cases may move the district court to withdraw the reference and 

relieve the bankruptcy court of jurisdiction. See 28 U.S.C. 157(d). 

Withdrawal of a reference is either mandatory or permissive. See id. “[I]f the court 

determines that resolution of the proceeding requires consideration of both title 11 and 

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other laws of the United States regulating organizations or activities affecting interstate 

commerce,” then the court shall withdraw the reference of the proceeding. Id. However, 

“when only a simple application of well-settled law is required, withdrawal is not 

mandatory.” In re Camden Ordnance Mfg. Co. of Arkansas, Inc., 245 B.R. 794, 806 (E.D. 

Pa. 2000).

Where mandatory withdrawal is not required, the moving party bears the burden 

of demonstrating cause for the district court to grant a permissive withdrawal. To make 

such a determination, the Eleventh Circuit has instructed district courts to consider: (1) 

the advancement of uniformity in bankruptcy administration; (2) decreasing forum 

shopping and confusion; (3) promoting economical use of the parties’ resources; (4) 

facilitating the bankruptcy process; (5) whether the claim is core or non-core; (6) efficient 

use of judicial resources; (7) the existence of a jury demand; and (8) prevention of delay. 

See In re Simmons, 200 F.3d 738, 742 (11th Cir. 2000); see also Holmes v. Grubman, 

315 F. Supp. 2d 1376, 1381 (M.D. Ga. 2004); Control Ctr., L.L.C. v. Lauer, 288 B.R. 269, 

274 (M.D. Fla. 2002).

Scottsdale raises two reasons to withdraw the reference to the bankruptcy court: 

(1) the proceeding is not a core proceeding; and (2) judicial economy demonstrates that 

this insurance coverage related action is better suited for the district court. In other words, 

Scottsdale argues on only two of the foregoing eight factors. The two factors under which 

Scottsdale argues will be addressed in turn.

II. CORE PROCEEDING OR NON-CORE PROCEEDING 

Proceedings referred to the bankruptcy court are designated as either “core” or 

“non-core.” Core proceedings are “fundamentally related” to the bankruptcy proceeding. 

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See In re Neves, 500 B.R. 651, 661 (Bankr. S.D. Fla. 2013). Stated otherwise, core 

proceedings include those “arising under” Title 11 or “arising in” a case under Title 11, 

whereas non-core proceedings are those which are merely “related to” a case under Title 

11. Matter of Celotex Corp., 152 B.R. 667, 672 (Bankr. M.D. Fla. 1993). Core 

proceedings, because of their fundamental relationship to the bankruptcy proceeding, 

belong before the bankruptcy court.

First, Scottsdale argues this is a non-core proceeding because it is an insurancecoverage dispute. It cites to three bankruptcy cases for support. See In re Dayton Title 

Agency, Inc., 264 B.R. 880 (Bankr. S.D. Ohio 2000); In re Lawrence Grp., Inc., 285 B.R. 

784 (N.D.N.Y. 2002); In re Nat'l Century Fin. Enterprises, 312 B.R. 344 (Bankr. S.D. Ohio 

2004). However, this is not an absolute rule. For instance, in Matter of Celotex Corp., 

152 B.R. at 673, the bankruptcy court in the Middle District of Florida held that insurance 

policies of the debtor are property of the estate, and “[i]t must be presumed that any 

proceeding pertaining to the property of the estate is a core proceeding.” Thus, according 

to the Celotex court, a determination of debtor’s rights under the insurance policy was 

said to be property of the estate. Id.

Here, Trustee seeks just that: a declaration of Scottsdale’s duty to defend under 

an insurance policy of the debtor. Accordingly, this is presumptively a core proceeding. 

See also In re TOUSA, 2010 WL 11647659, at *4 (Bankr. S.D. Fla. Dec. 6, 2010) (finding 

a declaration of rights to be a core matter because it “will have an enormous impact on 

this bankruptcy estate”).

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III. JUDICIAL ECONOMY

Scottsdale’s second argument in favor of withdrawing the reference to the 

bankruptcy court is that it would serve the interest of judicial economy to litigate the case 

before a district court. It argues that, because this case is an insurance-coverage case, 

the determination of whether Scottsdale owes a duty to defend ARMG in the Wyndham 

and Bluegreen Lawsuits will require a detailed examination of insurance issues. Further, 

according to Scottsdale, if the bankruptcy court were permitted to preside over any part 

of this proceeding, then the district court would likely review the bankruptcy court’s 

proposed decision, essentially re-litigating the case. See 28 U.S.C. § 157(c)(1) (“In such 

proceeding, the bankruptcy judge shall submit proposed findings of fact and conclusions 

of law to the district court, and any final order or judgment shall be entered by the district 

judge after considering the bankruptcy judge's proposed findings and conclusions and 

after reviewing de novo those matters to which any party has timely and specifically 

objected.”).

As to its first point, the Court refuses to believe the well-abled bankruptcy judges 

of this district are not able to examine “detailed insurance issues.” In fact, the Court has 

all the confidence in the world that the bankruptcy judges of this district are equally 

qualified and able to do so. As to its second point, while the statute does, indeed, provide 

for appellate-type review of the bankruptcy courts’ determinations in such matters, this 

should not be disqualifying of the bankruptcy courts’ opportunity to take such cases. In 

fact, there is no better indication of Congress’s intent for the bankruptcy courts to handle

such matters than the language of the statute itself; it put the provision directly in the 

statute. To take this matter from the bankruptcy court solely for the reason that the district 

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court could later be called on in an appellate-review manner would render the entire 

statute superfluous. See Ct. Nat’l Bank v. Germain, 503 U.S. 249, 253 (1992) (“[C]ourts 

should disfavor interpretations of statutes that render language superfluous . . . .”).

Taking all considerations into account, the interest of judicial economy is actually 

best served leaving this case where it currently is: in the bankruptcy court. The 

bankruptcy court has gained considerable knowledge relevant to this matter by presiding 

over the related cases for more than a year. 

CONCLUSION

For the foregoing reasons, the Motion (DE [1]) is DENIED. The Clerk of Court is 

directed to CLOSE this case.

DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 23rd day of 

July 2020.

Copies to counsel via CM/ECF

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