United States District Court, C.D. California
Present: The Honorable Fernando M. Olguin, United States
CIVIL MINUTES - GENERAL
(In Chambers) Order Re: Motion to Withdraw Reference
Having reviewed and considered all the briefing filed with
respect to the Motion to Withdraw Reference of Adversary
Proceeding (Dkt. 16, “Motion”), the court
concludes that oral argument is not necessary to resolve the
Motion. See Fed.R.Civ.P. 78; Local Rule 7-15;
Willis v. Pac. Mar. Ass'n, 244 F.3d 675, 684 n.
2 (9th Cir. 2001).
August 3, 2017, the relevant bankruptcy proceeding was
initiated as an involuntary petition under Chapter 7, but
later converted to a Chapter 11 proceeding. (See
Dkt. 16, Motion at 2). The debtor in that action is Layfield
& Barrett, APC (“LB” or
“debtor”). (See id.).
February 15, 2017 to February 15, 2018, Evanston Insurance
Company (“Evanston”) provided professional
liability insurance to LB. (See Dkt. 16, Motion at
2). On August 22, 2017, Evanston filed a complaint in the
bankruptcy court, against LB, Philip J. Layfield
(“Layfield”), Joseph Barrett, Todd D. Wakefield,
and Terry Bailey, asserting claims for: (1) rescission of the
policy, based on a materially false application that failed
to disclose facts, circumstances, situations, and client
complaints regarding Layfield's alleged wrongful
withholding and misappropriation of client funds; and (2) a
declaration that the policy does not provide coverage for
another matter. (See Dkt. 16, Motion at 2-3).
district court may broadly refer matters to the bankruptcy
court, including “any or all cases under title 11[,
]” “any or all proceedings arising under title 11
or arising in or related to a case under title 11[.]”
28 U.S.C. §157(a). The bankruptcy court's
jurisdiction depends on whether the referenced matters are
“core, ” “Stern claims,
” or “non-core” to the
non-exhaustive list of “core proceedings” are
enumerated in 28 U.S.C. § 157(b)(2). A bankruptcy judge
may “hear and determine” core proceedings, and
subject to district court review, “enter appropriate
orders and judgments[.]” 28 U.S.C. §157(b)(1).
“In Stern v. Marshall, 131 S.Ct. 2594 (2011),
th[e Supreme] Court held that even though bankruptcy courts
are statutorily authorized to enter final judgment on [core]
claims, Article III of the Constitution prohibits bankruptcy
courts from finally adjudicating certain of those [core]
claims.” Exec. Benefits Ins. Agency v.
Arkison, 134 S.Ct. 2165, 2168 (2014). “[W]hen a
bankruptcy court is presented with such a [Stern]
claim, the proper course is to issue proposed findings of
fact and conclusions of law.” Id. at 2170.
“The district court will then review the claim de
novo and enter judgment.” Id.
proceedings” are those which “do not depend on
bankruptcy law for their existence and that could proceed in
another court[.]” Security Farms v. Int'l Bhd.
of Teamsters, Chauffeurs, Warehousemen & Helpers,
124 F.3d 999, 1008 (9th Cir. 1997). A “bankruptcy judge
may hear a [non-core] proceeding” and “submit
proposed findings of fact and conclusions of law to the
district court[.]” 28 U.S.C. § 157(c)(1).
“[A]ny 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.” Id.
district court may also withdraw some or all of its reference
of matters to the bankruptcy court. See 28 U.S.C.
§ 157(d); Fed. R. Bankr. Proc. 5011(a) (“A motion
for withdrawal of a case or proceeding shall be heard by a
district judge.”). Section 157(d) “contains two
distinct provisions: the first sentence allows permissive
withdrawal, while the second sentence requires mandatory
withdrawal in certain situations.” In re Temecula
Valley Bancorp, Inc., 523 B.R. 210, 214 (C.D. Cal. 2014)
(internal quotation marks omitted). Whether mandatory or
permissive, the burden of persuasion is on the party seeking
withdrawal, which in this case would be Evanston. See In
re First Alliance Mortg. Co., 282 B.R. 894, 902 (C.D.
determining whether cause exists, a district court should
consider the efficient use of judicial resources, delay and
costs to the parties, uniformity of bankruptcy
administration, the prevention of forum shopping, and other
related factors.” Security Farms, 124 F.3d at
contends that the court should withdraw reference of the
adversary proceeding because of its right to a jury trial.
(See Dkt. 16, Motion at ...