United States District Court, E.D. Michigan, Southern Division
IN RE EDGAR J. DIETRICH, Debtor/Appellant,
BASIL T. SIMON, Trustee/Apellee. Bankr. No 13-57297
ORDER DENYING MOTION TO WITHDRAW REFERENCE TO THE
M. LAWSON United States District Judge.
matter is before the Court on Edgar J. Dietrich's motion
to withdraw the reference to the bankruptcy court. Dietrich
filed a petition for relief under Chapter 7 of the United
States Bankruptcy Code on October 21, 2013. His case was
referred to a bankruptcy judge in the Eastern District of
Michigan pursuant to 28 U.S.C. § 157(a) and E.D. Mich.
LR 83.50(a). Dietrich is now requesting that this Court
withdraw the reference to the bankruptcy court.
federal district court has original jurisdiction over
bankruptcy cases and “all civil proceedings arising
under title 11, or arising in or related to cases under title
11.” 28 U.S.C. § 1334(b). However, “[e]ach
district court may provide that any or all cases under title
11 and any or all proceedings arising under title 11 or
arising in or related to a case under title 11 shall be
referred to the bankruptcy judges for the district.” 28
U.S.C. § 157(a). In this district, all
bankruptcy-related proceedings are automatically referred to
the bankruptcy court for this district. See E.D.
Mich. LR 83.50(a).
argues that this Court is required to withdraw the reference
to the bankruptcy court, or in the alternative should
exercise its discretion to withdraw the reference. A district
court must withdraw a proceeding from the bankruptcy court
“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.” 28 U.S.C.
§ 157(d). But “there is little reason to assume
that withdrawal is required by the mere presence of a
non-title 11 issue, even if that issue is outcome
determinative.” Matter of Vicars Ins. Agency,
Inc., 96 F.3d 949, 953 (7th Cir. 1996). The mandatory
withdrawal provision is generally read narrowly to discourage
“delaying tactics (perhaps further draining the
resources of the debtor), forum shopping, and generally
unnecessary litigation.” Id. at 952. In other
words, the mandatory provision is not an “‘escape
hatch' by which bankruptcy matters c[an] easily be
removed to the district court.” Ibid. (citing
130 Cong. Rec. H1849-50).
argues that his bankruptcy case must be withdrawn because the
bankruptcy trustee seized his social security pension, which
necessarily implicates the Social Security Protection Act.
Dietrich does not explain the circumstances of the alleged
seizure or any actions the bankruptcy court has taken to
resolve this matter. As other courts in this circuit have
recognized, “[m]ere incidental reference to
non-bankruptcy federal law is insufficient . . . to trigger
mandatory withdrawal.” In re Federated Dep't
Stores, Inc., 189 B.R. 142, 144 (S.D. Ohio 1995). The
issue must be “[a] substantial and material
consideration involv[ing] more than mere rote application of
the provisions of a federal law.” Ibid.
Dietrich argues that 42 U.S.C. § 407(a) protects his
Social Security funds in a bankruptcy proceeding. That may be
so. However, merely invoking a federal statute and failing to
explain how its application would require anything other than
a rote application in the bankruptcy court is insufficient to
warrant mandatory withdrawal in this case. Furthermore,
should it become necessary, the bankruptcy judge can file
proposed findings of fact and conclusions of law on any
non-core proceedings. E.D. Mich. LR 83.50(a)(3).
also asks the court to exercise its discretion to withdraw
the reference. A district court retains the discretion to
withdraw the reference of a bankruptcy case for cause shown.
28 U.S.C. § 157(d). Dietrich argues that because the
bankruptcy court has fallen short of the mandate to foster
economical use of the debtor's and creditor's
resources by allowing the trustee to charge exorbitant fees,
the Court should exercise its discretion in this case.
Additionally, Dietrich argues that the trustee has seized
real and personal property belonging to third parties.
is no statutory definition of what constitutes the
“cause shown” sufficient to withdraw a reference
to the bankruptcy court; nor does it appear that the Sixth
Circuit has addressed the meaning of the term in this
context. Courts in this district generally consider the
following six factors to determine whether cause has been
shown: “‘(1) whether the claim is core or
non-core, (2) what is the most efficient use of judicial
resources, (3) what is the delay and what are the costs to
the parties, (4) what will promote uniformity of bankruptcy
administration, (5) what will prevent forum shopping, and (6)
other related factors.'” In re Skyline Concrete
Floor Corp., 410 B.R. 564, 566 (E.D. Mich. 2008)
(quoting In re Burger Boys, 94 F.3d 755, 762 (2d
Cir. 1996); see also In re Burgess, 2008 WL 4388270,
at *2 (E.D. Mich. Sept. 25, 2008) (same). “Of these
factors, the first is the most important.” In re
Skyline, 410 B.R. at 567 (citing In re Burger
Boys, 94 F.3d at 762).
asks the Court to withdraw the bankruptcy reference
essentially because he is frustrated with the bankruptcy
proceedings and the manner in which the trustee is
discharging his duties. Those concerns, however, do not go to
whether a claim is core or non-core. Furthermore, withdrawing
the reference more than three years after the bankruptcy case
was commenced is not the most efficient use of judicial
resources and would likely delay the proceedings. The
bankruptcy court is also in a better position to promote
uniformity of bankruptcy administration because it falls
within the bankruptcy court's expertise. Finally, courts
are cautious not to encourage forum shopping. Allowing a
debtor to escape to the district court whenever the
bankruptcy case is not proceeding to the debtor's
satisfaction would encourage forum shopping.
the Court finds that Dietrich has not offered sufficient
reasons to require mandatory withdrawal from the bankruptcy
court, and has not shown cause why the Court should ...