United States District Court, M.D. Florida, Tampa Division
IN RE UNIVERSAL HEALTH CARE GROUP, INC., AMERICAN MANAGED CARE, LLC, Debtors.
FIDELITY & DEPOSIT COMPANY OF MARYLAND, Defendant. SONEET KAPILA, as Liquidating Agent for the Estates of UNIVERSAL HEALTH CARE GROUP, INC., and AMERICAN MANAGED CARE, LLC, Plaintiff, Adv. Pro. No. 8:17-ap-217-KRM
VIRGINIA M. HERNANDEZ COVINGTON UNITED STATES DISTRICT JUDGE
matter comes before the Court pursuant to Defendant Fidelity
and Deposit Company of Maryland's Motion to Withdraw
Reference of the Adversary Complaint, filed on April 24,
2017. (Doc. # 1). Upon consideration, the Court determines
that the Motion should be denied without prejudice.
an adversary proceeding currently pending in the United
States Bankruptcy Court for the Middle District of Florida.
See Kapila v. Fidelity and Deposit Company of
Maryland, Case No. 8:17-ap-217-KRM. Prior to the
adversary proceeding, debtor Universal Health Care Group
filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code on February 6, 2013. (Doc. # 1
at 2). Plaintiff Soneet R. Kapila was appointed as the
Chapter 11 Trustee for Universal Health Care Group, then
became Liquidating Agent for its estate. (Id.).
“On May 3, 2013, in his capacity as Chapter 11 Trustee
for [Universal Health Care Group], Kapila filed a Chapter 11
Liquidating Plan for [debtor American Managed Care,
LLC].” (Id.). Based on the Liquidating Plan,
“Kapila alleges he became the Liquidating agent
for” American Managed Care. (Id.). Then, on
May 30, 2013, the Bankruptcy Court ordered the joint
administration of the Universal Health Care Group and
American Managed Care bankruptcy cases. (Id.).
March 14, 2017, Kapila initiated this adversary proceeding in
the Bankruptcy Court against Fidelity. (Doc. # 1-2 at 2-3).
The Complaint alleges Fidelity wrongfully denied Kapila's
claim for coverage under financial institution bonds Fidelity
issued to Universal Health Care Group and American Managed
Care, and seeks declaratory relief regarding coverage,
damages for breach of contract, and attorney's fees.
fees. (Doc. # 1 at 3-5). On April 24, 2017, Fidelity filed
the instant motion for withdrawal of reference, which has
been fully briefed. (Doc. ## 1, 2, 3). On May 11, 2017, the
Bankruptcy Court entered an order agreed upon by the parties,
holding that all four counts of the adversary complaint are
non-core. (Doc. # 6-1).
United States Code grants bankruptcy jurisdiction to Article
III district courts. Specifically, 28 U.S.C. § 1334(b)
1334(b) states that “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.” Congress provided in 28
U.S.C. § 157(a) that each district court may refer all
cases “arising under, ” “arising in,
” or “related to” Title 11 proceedings to
the bankruptcy judges for the district. “This Court has
a standing order referring all bankruptcy matters to the
bankruptcy courts.” In re Fields, No.
8:15-cv-1521-T-24, 2015 WL 5316944, 5316944, at *1 (M.D. Fla.
Sept. 11, 2015). A finding that a matter is “related
to” a bankruptcy case confers subject matter
jurisdiction to the bankruptcy court and empowers it to hear
the non-core matter. In re Happy Hocker Pawn Shop,
Inc., 212 Fed. App'x 811, 817 (11th Cir. 2006).
under § 157(c), the bankruptcy court's power to
determine a non-core matter is limited, as compared to its
power to hear and determine core matters under §
157(b)(1). Specifically, the bankruptcy court has the power
to determine matters properly before it under Title 11, but
with respect to “related to” or non-core matters,
an Article III court must render final judgment unless the
parties consent to allow the bankruptcy court to handle the
matter. 28 U.S.C. § 157(b) and (c).
Permissive Withdrawal of Reference Standard
standard for permissive withdrawal is stated in 28 U.S.C.
§ 157(d): “The district court may withdraw, in
whole or in part, any case or proceeding referred under
[§ 157], on its own motion or on timely motion of any
party, for cause shown.” Congress has not given a
definition or explanation of the “cause” required
for permissive withdrawal, but the Eleventh Circuit has
stated that cause “is not an empty requirement.”
In re Parklane/Atlanta Joint Venture, 927 F.2d 532,
536 (11th Cir. 1991).
determining whether the movant has established sufficient
cause to withdraw the reference, “a district court
should consider such goals as advancing uniformity in
bankruptcy administration, decreasing forum shopping and
confusion, promoting the economical use of the parties'
resources, and facilitating the bankruptcy process.” In
re Advanced Telecomm. Network, Inc., No. 6:13-cv-700-Orl-28,
2014 WL 2528844, at *1 (M.D. Fla. June 4, 2014)(quoting In re
Simmons, 200 F.3d 738, 742 (11th Cir. 2000)). Additional
factors to consider include: (1) whether the claim is core or
non-core; (2) efficient use of judicial resources; (3) a jury
demand; and (4) prevention of delay. Control Ctr., L.L.C.
v. Lauer, 288 B.R. 269, 274 (M.D. Fla. 2002)(citations
omitted). “The moving party bears the burden of
demonstrating cause for withdrawal of the reference.”
In re Advanced Telecomm. Network, Inc., 2014 WL
2528844, at *1.
Eleventh Circuit has noted that “the cause prerequisite
should not be used to prevent the district court from
properly withdrawing reference either to ensure that the
judicial power of the United States is exercised by an
Article III court or in order to fulfill its supervisory
function over the bankruptcy courts.” In re
Parklane/Atlanta Joint Venture, 927 F.2d at 538. The
determination of whether to grant a motion for permissive
withdrawal is within the court's discretion. See In
re Fundamental Long Term Care, Inc., 8:14-cv-1800-EAK,
2014 WL 4452711, at *1 (M.D. Fla. Sept. 9, 2014)(citing In re
TPI lnt'l Airways, 222 B.R. 663, 668 (S.D. Ga. 1998)).
Motion to Withdraw Reference
argues the reference should be withdrawn immediately because
the adversary proceeding is non-core, Fidelity has a right to
a jury trial, and withdrawal would conserve judicial
resources. (Doc. # 1 at 6-7, 10). Indeed, the Bankruptcy
Court recently ruled that the complaint's claims are
non-core. (Doc. # 6-1). Fidelity intends to demand a jury
trial, and “does not consent to the ...