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In re Mojo Brands Media, LLC

United States District Court, M.D. Florida, Orlando Division

April 19, 2018

In Re Mojo Brands Media, LLC GENE T. CHAMBERS, Plaintiff,
v.
PERKINS COIE, LLP and NIXON PEABODY, LLP, Defendants. In Re Mojo Brands Media, LLC GENE T. CHAMBERS, Plaintiff,
v.
PERKINS COIE, LLP and NIXON PEABODY, LLP, Defendants.

          ORDER

          CARLOS E. MENDOZA UNITED STATES DISTRICT JUDGE.

         THIS CAUSE is before the Court on Defendant Nixon Peabody, LLP's Motion to Withdraw the Reference ("Motion, " Doc. 1). Plaintiff has not responded, and the time to do so has now passed. For the reasons stated herein, the Motion will be granted in part and denied in part.

         I. Background

         On May 1, 2015, Mojo Brands Media, LLC ("Mojo") filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Florida. (Compl., Doc. 5-2, ¶ 2). On April 28, 2017, Plaintiff, as Mojo's trustee, filed a Complaint for damages against Defendants, alleging legal malpractice, breach of fiduciary duty, and aiding and abetting the breach of fiduciary duty. (See generally id.). In response, Defendants each filed a motion to dismiss the Complaint. (See generally Doc. Nos. 5-3, 5-6). Now, Nixon Peabody seeks an order withdrawing the reference from the bankruptcy court so that this Court can exercise original jurisdiction over the legal malpractice action.[1]

         II. Legal Standard

         The 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 this section, on its own motion or on timely motion of any party, for cause shown."[2] Congress has not defined the "cause" required for permissive withdrawal, but the Eleventh Circuit has specified that cause "is not an empty requirement." Parklane Hosiery Co. v. Parklane/Atlanta Venture (In re Parklane/Atlanta Joint Venture), 927 F.2d 532, 536 (11th Cir. 1991). "[I]n determining whether cause exist[s] 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." Dionne v. Simmons (In re Simmons), 200 F.3d 738, 742 (11th Cir. 2000) (quotation omitted). 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., LLC v. Lauer, 288 B.R. 269, 274 (M.D. Fla. 2002). "Permissive withdrawal is within the discretion of the district court, and the burden of establishing cause for permissive withdrawal is on the movant-----" Scharrer v. Troutman Sanders, LLP (In re Fundamental Long Term Care, Inc.), No. 8:14-cv-01800-EAK, 2014 WL 4452711, at *1 (M.D. Fla. Sept. 9, 2014) (citation omitted).

         III. Analysis

         Nixon Peabody argues that the Motion should be granted because the above mentioned factors weigh in favor of withdrawing the reference from the bankruptcy court. Those factors will be addressed in turn.

         A. Core or Non-Core Status of the Proceedings

         "Whether a matter is core or non-core is a determination that should first be made by the Bankruptcy Court." Scharrer v. Quintairos, Prieto, Wood & Boyer, PA. (In re Fundamental Long Term Care, Inc.), No. 8:14-cv-1377-T-17, 2014 WL 2882522, at *2 (M.D. Fla. June 25, 2014); see also 28 U.S.C. § 157(b)(3) ("The bankruptcy judge shall determine, on the judge's own motion or on timely motion of a party, whether a proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title 11."). Here, the bankruptcy court entered an order granting the parties' joint stipulation that "[t]he claims asserted against Nixon Peabody are non-core claims" and that "the claims asserted against Perkins Coie... shall be treated in the same manner as non-core claims." (Aug. 15, 2017 Order, Doc. 5-10, ¶¶ 1-2). While such a determination weighs in favor of transferring the matter to the district court, the Court must also consider the parties' arguments regarding the remaining factors.

         B. Efficient Use of Judicial Resources

         Nixon Peabody asserts that withdrawing the reference now promotes the efficient use of economic and judicial resources and will prevent delay. Essentially, Nixon Peabody's argument is that adjudication of the matter by the district court would be more efficient because all orders by the bankruptcy court would be subject to de novo review by the district court, and therefore, this Court should bypass the bankruptcy court entirely. "If accepted, this kind of reductionist reasoning would result in the reference always being withdrawn from the Bankruptcy Court in the name of efficiency because of the omnipresent possibility of appeal." Tate v. Citimortgage, Inc. (In re Tate), No. 09-0039-WS-M, 2010 WL 320488, at * 10 (S.D. Ala. Jan. 19, 2010) (emphasis omitted). "Without more, this argument carries little, if any, weight in favor of withdrawal." Eide v. Haas (In re H& W Motor Express Co.), 343 B.R. 208, 215 (N.D. Iowa 2006).

         C. Jury Demand

         Nixon Peabody argues that Plaintiffs demand for a jury trial necessitates the withdrawal of the reference from the bankruptcy court. Jury trials are only permitted in bankruptcy court "with the express consent of all the parties." 28 U.S.C. § 157(e). Because Plaintiff has made a jury demand and Nixon Peabody does not consent to a jury trial before the bankruptcy court, the trial would have to be conducted in the district court. While "[a] demand for a jury trial in a non-core matter in itself may provide sufficient cause to withdraw the reference[J" "a court may wait until the case is ready to go to trial before withdrawing the reference." In re Fundamental Long Term Care, Inc., 2014 WL 4452711, at *3 (quotation omitted); see also Hvide Marine Towing, Inc. v. Kimbrell (In re Hvide Marine Towing, Inc.),248 B.R. 841, 845 ...


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