United States District Court, N.D. California, San Jose Division
ORDER DENYING MOTION TO WITHDRAW REFERENCE FROM STATE
COURT Re: Dkt. No. 1
H. KOH, United States District Judge
Theodore Wade, Jr. (“Debtor”) initiated voluntary
Chapter 11 bankruptcy proceedings on January 22, 2013. Bankr.
Case No. 13-50376 (“Bankr. Case”) ECF No. 1.
Before the Court is Debtor Theodore Wade, Jr.'s
(“Debtor's”) Motion to Withdraw Reference
From State Court. ECF No. 1.
instant motion concerns two actions brought against Debtor in
California Superior Court for the County of Santa Clara by
Arlene Stevens before Debtor initiated bankruptcy
proceedings, Arlene Stevens v. Booker T. Wade, Jr.,
Case No. 1-07-CV-090284, and Arlene Stevens v. Booker T.
Wade, Jr., Case No. CIV 4656463 (“State Court
Actions”). On January 21, 2009, the parties, Arlene
Stevens and Debtor, reached a settlement agreement in the
State Court Actions. See Bankr. Case ECF No. 73 at 2
(summarizing the factual and procedural background of the
has made several attempts to set aside the settlement
agreement in state court, all of which have failed. On May 7,
2009, the California Superior Court granted a motion to
enforce the settlement agreement against Debtor. Id.
at 3. On August 26, 2009, Debtor moved to vacate the
settlement agreement in California Superior Court, and the
motion was denied. Id. On April 19, 2010, Debtor
moved to vacate the settlement agreement again in California
Superior Court, and on September 17, 2010, the motion was
January 22, 2013, Debtor initiated voluntary Chapter 11
bankruptcy proceedings, which, pursuant to 11 U.S.C. §
362, triggered an automatic stay of the State Court Actions.
See 11 U.S.C. § 362 (stating that the
initiation of bankruptcy proceedings triggers an automatic
stay of the continuation of any “judicial,
administrative, or other action or proceeding” against
the debtor). On June 6, 2013, Debtor filed in Bankruptcy
Court a motion to reject the settlement agreement as a debt
of the bankruptcy estate because it is an executory contract.
Id. ECF No. 52 (citing 11 U.S.C. § 365
(allowing bankruptcy trustee to reject executory contracts)).
On July 9, 2013, Arlene Stevens filed in Bankruptcy Court a
motion for relief from the automatic stay to seek a judgment
in the State Court Actions pursuant to the terms of the
settlement agreement. Id. ECF No. 59.
September 5, 2013, the Bankruptcy Court issued an order on
Debtor's motion to reject the settlement agreement and
Arlene Stevens' motion for relief from the automatic
stay. Id. ECF No. 73. The Bankruptcy Court found
that the settlement agreement is not an executory contract
that can be rejected and denied Debtor's motion to reject
the settlement agreement. Id. Moreover, the
Bankruptcy Court granted Arlene Stevens' motion for
relief from the automatic stay to seek a judgment in the
State Court Actions. Id.
28, 2014, Debtor filed in Bankruptcy Court the instant Motion
to Withdraw Reference From State Court. Id. ECF No.
139. Debtor requested that the Bankruptcy Court either (1)
“withdraw  the reference to the Santa Clara County
Superior Court and thereafter hear and resolve any and all
disputes if any of the Debtor and Arlene Stevens arising
under the Settlement Agreement, ” or (2) “in the
event the state court acts on the reference and enters a
judgment against Debtor, to treat this motion as one to
reject the judgement for all the reasons stated
herein.” Id. at 25. On May 29, 2014, the
Bankruptcy Court Clerk's Office transferred this motion
to the District Court. Id. ECF No. 142; ECF No.
An interested party, Campeau Goodsell Smith, filed an
opposition to the instant motion in Bankruptcy Court, but not
in District Court, on June 3, 2014. Bankr. Case ECF No. 144.
Judgment was entered against Debtor in the State Court
Actions on June 13, 2014. Id. ECF No. 217 at 1-2.
motion to withdraw reference is denied for two reasons.
First, although Debtor moves for the Bankruptcy Court to
withdraw its reference to state court, no such reference was
ever made. Instead, the Bankruptcy Court granted Arlene
Stevens' motion for relief from the automatic stay to
obtain a judgment in the State Court Actions. Id.
ECF No. 73. The State Court Actions had settled on January
21, 2009, and thus the issues in the State Court Actions had
long-preceded Debtor's bankruptcy, which was initially
filed on January 22, 2013. The Bankruptcy Court's
decision to lift the automatic stay was thus not a referral
of bankruptcy issues to state court, but a decision to allow
issues that had already been litigated in state court to
become finalized through the entry of a judgment. Therefore,
the Bankruptcy Court's decision to lift the automatic
stay was not a “reference” of Bankruptcy Court
matters to the state court that can now be withdrawn.
Debtor's motion is now moot or cannot be granted. As
noted above, Defendant requests that the Bankruptcy Court
“withdraw  the reference” to the State Court
Actions, or alternatively, if judgment has been entered in
the State Court Actions, reject the state court judgment.
Id. ECF No. 139 at 25. The first requested form of
relief cannot be granted because the issue is moot: judgment
was entered against Defendant in the State Court Actions on
June 13, 2014. Id. ECF No. 217 at 1-2. Indeed,
Debtor specifically requests to “withdraw  the
reference” only if judgment has not yet been entered in
the State Court Actions. Id. ECF No. 139 at 25.
the second form of relief, neither the Bankruptcy Court nor
the District Court has jurisdiction to “reject” a
judgment entered in state court under the
Rooker-Feldman doctrine. The Rooker-Feldman
doctrine is named after two United States Supreme Court
cases: Rooker v. Fidelity Trust Co., 263 U.S. 413
(1923), and District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462 (1983). In an appeal of an order
in the same bankruptcy case at issue here, this Court has
previously held that the Rooker-Feldman doctrine
precludes this Court and the Bankruptcy Court from reviewing
the June 13, 2014 judgment that was entered in the State
Court Actions. See Wade v. Office of the U.S.
Trustee, Case No. 5:14-CV-02795-LHK, ECF No. 4. This
Court provided the following reasoning:
“Rooker-Feldman prohibits a federal district
court from exercising subject matter jurisdiction over a suit
that is a de facto appeal from a state court judgment.”
Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th
Cir. 2004). “If a plaintiff brings a de facto appeal
from a state court judgment, Rooker-Feldman requires
that the district court dismiss the suit for lack of subject
matter jurisdiction.” Id. “It is a
forbidden de facto appeal under Rooker-Feldman when
the plaintiff in federal district court complains of a legal
wrong allegedly committed by the state court, and seeks
relief from the judgment of that court.” Noel v.
Hall, 341 F.3d 1148, 1163 (9th Cir. 2003).
In the instant case, Appellant seeks to stay the effect of
the state court's June 13, 2014 judgment . . . . This
Rooker-Feldman doctrine precludes this Court from
reviewing the state court's judgment. Appellant's
contention that the fact that the claims resolved by the
state court's judgment should have been arbitrated is
unavailing. To the extent that Appellant believes the matter
should have been arbitrated rather than resolved by the state
court, that contention should have been made in a motion to
compel arbitration before the state court and in appeals of
the state court's order to the state appellate courts to
the extent the state trial court committed any error in
ruling upon such a motion. This Court is not the appropriate
forum in which to litigate that issue. See Brown &
Root, Inc. v. Breckenridge, 211 F.3d 194, 202 (4th Cir.
2000) (“Brown & Root took its best shot on its
motion to compel arbitration in the state courts. It lost in
that effort and now seeks to avoid the
Rooker-Feldman bar by attempting to recast in
various ways what occurred in the state trial court. But no
matter how many ways Brown & Root tries to renovate its
claim, the result is the same: Brown & Root cannot obtain
what amounts to appellate review of a state court decision in
federal district court.”); Brown v. Gen. Steel
Domestic Sales, LLC, No. 08-779, 2008 WL 2128057, at *5
n.37 (CD. Cal. May 19, 2008) (collecting authorities for the
proposition that “[f]ederal courts in other circuits
have applied the Rooker-Feldman doctrine to state
court orders granting or denying motions to compel
Id. at 5-6; see also Bankr. Case ECF No.
264 (adopting this Court's rationale in December 10, 2014
order on a separate motion for relief from the judgment in
the State Court Actions). Just as in this Court's prior
order, this Court has no subject matter jurisdiction to
review the judgment in the State Court Actions, and thus has
no jurisdiction to “reject” that judgment.
because no reference has occurred, a judgment was entered in
the State Court Actions, and this Court has no jurisdiction
to review the judgment in the State Court Actions,