UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF NEW HAMPSHIRE

Leon and Linda DeVisser

and DeVisser Properties, LLC

v. Civil No. 03-cv-479-JD

Koji Goto, et al.

PROCEDURAL ORDER

The plaintiffs moved to lift the stay that was imposed in

response to notice that defendant Koji Goto had filed for relief

under the Bankruptcy Code. On January 11, 2006, the court

directed the plaintiffs to file a memorandum addressing the issue

of whether and in what manner this case might proceed against

defendant Daniel Muskat alone and addressing the status of

defendant Shaleen Cassily. The plaintiffs then filed a motion to

sever; Muskat filed a late objection to the plaintiff’s motion to

lift the stay; the plaintiffs filed a response to the court’s

order of January 11; Muskat objected to the plaintiffs’ motion to

sever, and Muskat filed a memorandum in response to the

plaintiff’s response to the court’s January 11 order. 

Muskat also filed a separate action in this court to address

his motion in the bankruptcy court to withdraw the reference of

that proceeding. The adversary proceeding was brought by Muskat

against Goto, seeking a ruling that Goto’s obligations to Muskat

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were not dischargeable in Goto’s bankruptcy case. No response

has been filed in Muskat’s separate action filed in this court.

Based on Muskat’s responsive memorandum and the supporting

record he filed from the bankruptcy court, Muskat filed a motion

in Goto’s bankruptcy case, asking the bankruptcy court to lift

the stay to allow him to litigate the factual issues in his

adversary proceeding and in his cross claims against Goto here. 

Muskat represented that he was not seeking relief from Goto, the

bankruptcy estate, or the trustee in either proceeding. In a

separate pleading, Muskat asked the bankruptcy court to withdraw

the reference of his adversary proceeding. The bankruptcy court

granted Muskat’s motion to lift the stay and, in a report and

recommendation, agreed that the reference of his adversary

proceeding should be withdrawn.

28 U.S.C. § 157(d) provides for both discretionary and

mandatory withdrawal: 

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. 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.

Muskat does not contend that “other laws of the United States

regulating organizations or activities affecting interstate

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commerce” are at issue in the adversary proceeding. Id.

Therefore, the reference may be withdrawn if the motion was

timely and if cause was shown for doing so. 

Muskat’s complaint in the bankruptcy adversary proceeding

alleges that Goto’s obligations to Muskat are not dischargeable

in bankruptcy due to fraud, conversion, and intentional

misrepresentation. 11 U.S.C. § 523(a)(2), (4), & (6). His cross

claim against Goto in this case alleges claims of fraud,

conversion, intentional and negligent misrepresentation, and

detrimental reliance against Goto and Epic NH and a claim of

fraudulent conveyance against Goto and Shaleen Cassily. The

bankruptcy court recommended that the reference of the adversary

proceeding be withdrawn because Muskat’s motion was timely filed

and withdrawal would serve the interests of judicial economy. 

After reviewing the record and the bankruptcy court’s report

and recommendation and in the absence of any objection filed by

the other parties in this case, the court agrees that the

reference of the adversary matter should be withdrawn. The

bankruptcy court’s report and recommendation is approved. The

adversary proceeding is withdrawn from the bankruptcy court and

is consolidated into this case. The separate action filed by

Muskat, Civil No. 06-019, is terminated, and the clerk of court

shall close the case.

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Given the changed circumstances in this case, the

plaintiffs’ motion to sever is terminated without prejudice. The

plaintiffs shall file a response on or before March 24, 2006, to

Muskat’s responsive memorandum regarding the stay, docket number

74, addressing the effect in this case of the bankruptcy court’s

decision granting a limited lift of the stay.

SO ORDERED.

Joseph A. DiClerico, Jr.

United States District Judge

March 16, 2006

cc: William S. Gannon, Esquire

Steven M. Gordon, Esquire

John Paul Kacavas, Esquire

Lucy J. Karl, Esquire

Arthur W. Perkins, Esquire

Gregory W. Swope, Esquire

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