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In re Wyman

United States District Court, E.D. Michigan, Southern Division

August 22, 2019




         I. BACKGROUND

         On May 24, 2012, Debtor Christopher D. Wyman (“Wyman”) filed a Voluntary Petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy Court”) (Bankruptcy No. 12-32264). (Doc # 3, Pg ID 12) Prior to the filing, Defendant Michael E. Tindall (“Tindall”), on behalf of Defendant Barbara Duggan (“Duggan”), obtained a judgment against Wyman. (Id.) A Notice of Judgment Lien was subsequently filed against real property located at 1011 Jones Road, Howell, Michigan 48855. (Id.) Shortly after the filing, Michael Mason (“Mason”) was appointed as the Chapter 7 Bankruptcy Trustee. (Id.) During the pendency of this case, Mason retired, and Plaintiff Samuel D. Sweet (“Sweet”) was appointed as the Trustee in this matter.

         On March 18, 2019, Sweet commenced an Adversary Proceeding against Defendants Tindall and Duggan (collectively, “Defendants”) to avoid the enforcement of Duggan's Judgment Lien against the real property. (Adversary No. 19-03018, Doc # 1) In the Adversary Proceeding, Sweet alleged that Duggan failed to renew her Judgment Lien five years from the original filing date pursuant to Mich. Comp. Laws § 600.2809. (Id.) On March 22, 2019, Defendants filed a Counter Complaint, which included three counterclaims, including: Declaratory Judgment (Claim I); Breach of Fiduciary Duty and Waste under 11 U.S.C. § 704 (Claim II);[1]and Abandonment under 11 U.S.C. § 554(b) (Claim III). (Adversary No. 19-03018, Doc # 11) Claims I and III are now moot because the real property has been sold. (Doc # 1, Pg ID 3)

         On June 13, 2019, Defendants filed a Motion to Withdraw Reference pursuant to 28 U.S.C. § 157(d). (Doc # 1) According to Defendants, the circumstances of this case “create both grounds for mandatory withdrawal of the reference, and, ‘cause' for permissive withdrawal of the reference.” (Id. at Pg ID 4) In addition to their request to withdraw the reference, Defendants request that the Court stay all further proceedings in the Bankruptcy Court and expedite the hearing on this Motion. (Id. at 5.) A Response was filed on June 17, 2019, and a Reply was filed on June 19, 2019. (Doc # 3; Doc # 5) A hearing was held on this matter on July 10, 2019.


         The Bankruptcy Rules provide that a motion for withdrawal of a case shall be heard by a district judge. Bankr.R. 5011(a). Motions for withdrawal must be filed pursuant to Rule 5005(a). The withdrawal statute, 28 U.S.C. § 157(d), provides discretionary and mandatory withdrawal of cases or proceedings referred to the bankruptcy court as follows:

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. The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceedings 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). The burden of withdrawal is on the movant. In re Anderson, 395 B.R. 7, 9 (E.D.Mich.2008).

         Local Rule 83.50 provides:

         (a) Matters Referred to the Bankruptcy Judges

(1) Unless withdrawn by a district judge, all cases under Title 11 of the United States Code and any or all proceedings arising under Title 11 or arising in or related to case under Title 11 are referred to bankruptcy judges. The court intends to give bankruptcy judges the broadest possible authority to administer cases and proceedings properly within their jurisdiction.

E.D. Mich. LR 83.50(a)(1). Based on the referral, this district court has referred “all cases under Title 11 … and any or all proceedings arising under Title 11” to the bankruptcy court. The term “proceeding” is generally referred to in connection with the terms “core” and “non-core” proceedings before the bankruptcy court. According to 28 U.S.C. § 157(b)(1), bankruptcy judges may hear and determine all cases under title 11 and all core proceedings. The term “core proceeding” has been noted as “the restructuring of debtor-creditor relations, the core of the federal bankruptcy power, ” which is distinguished from the adjudication of state-created private rights, which are “non-core” proceedings. See In re Depew, 51 B.R. 1010, 1013 (Bkrtcy.Tenn.1985). The term “arising under” has a well-defined and broad meaning which gives bankruptcy courts jurisdiction to hear any matter under which a “claim” is made under a provision of title 11, such as a claim of exemptions. Id.

         III. ...

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