United States District Court, D. Massachusetts
IN RE THOMAS R. BATEMAN and KATHERINE E. BATEMAN, Debtors.
ROBERT E. BATEMAN, LESLIE A. BATEMAN, and TOWN OF SEBAGO, MAINE, Defendants. JOSEPH G. BUTLER, Trustee, Plaintiff,
7 No. 17-11217-FJB
MEMORANDUM OF DECISION
WILLIAM G. YOUNG, DISTRICT JUDGE.
are the life's blood of our third branch of
government." Marchan v. John Miller Farms,
Inc., 352 F.Supp.3d 938, 947 (D.N.D. 2018). Here, the
defendants in a bankruptcy adversary case, Robert E. and
Leslie A. Bateman (collectively, the "younger
Batemans") and the Town of Sebago, Maine rsebago"),
sought to withdraw the reference of that case to the
Bankruptcy Court. Mot. Withdraw Reference Bankruptcy Ct. 1-7
("Mot. Withdraw"), ECF No. I. Because this case
invokes quintessential jury questions and waiting to withdraw
the reference would slow the flow of the very
"life's blood of our third branch of
government," the Court GRANTED the younger Batemans and
Sebago's motion. See Marchan, 352 F.Supp.3d at
R. and Katherine E. Bateman (collectively, the "elder
Batemans," or, collectively with the younger Batemans,
the "Batemans") filed a Chapter 11 bankruptcy
petition in the United States Bankruptcy Court for the
District of Massachusetts (the "Bankruptcy Court")
on April 5, 2017. Chapter 11 Voluntary Pet. Individual,
In re Bateman, Ch. 7 No. 17-11217-FJB (Bankr. D.
Mass. Apr. 5, 2017) ("In re Bateman"), ECF
No. 1. Pursuant to the United States Trustee and the elder
Batemans' stipulation, the Bankruptcy Court converted the
case into a Chapter 7 proceeding on February 5, 2018,
Proceeding Mem./Order, In re Bateman (Feb. 5, 2018),
ECF No. 134, and appointed Joseph G. Butler
("Butler") as Chapter 7 Trustee the next day,
Certificate Appointment, In re Bateman (Feb. 6,
2018), ECF No. 135.
January 2, 2019, Butler filed a verified adversary complaint
against the younger Batemans and Sebago. Verified Adversary
Compl. Avoid & Recover Fraudulent Transfer & Inj.
Relief ("Adv. Compl."), In re Bateman
(Jan. 2, 2019), ECF No. 188, Butler v. Bateman (In re
Bateman) ("Adv. Proc"), Adv. Proc. No.
19-01001, ECF No. 1. The adversary complaint alleges that the
elder Batemans fraudulently transferred their Sebago vacation
home to the younger Batemans through Sebago after Sebago
enforced a real estate tax lien on the vacation home. Adv.
Compl. 1. The adversary complaint demands damages from the
allegedly fraudulent transfer or rescission of the
transaction. Adv. Compl. ¶¶ 62-63, 71-72, 79-80,
90-91. On January 31, 2019, the younger Batemans answered the
adversary complaint and demanded trial by jury. Answer &
Jury Demand Defs. Robert E. Bateman & Leslie A. Bateman,
Adv. Proc, ECF No. 34. On March 1, 2019, Sebago moved to
dismiss the adversary complaint, which Butler opposed.
Sebago's Mot. Dismiss Verified Compl. Avoid & Recover
Fraudulent Transfer & Inj. Relief Incorporated Mem. Law,
Adv. Proc, ECF No. 39; Pl.'s Opp'n Sebago's Mot.
Dismiss Verified Compl. Avoid & Recover Fraudulent
Transfer & Inj. Relief, Adv. Proc., ECF No.
March 8, 2019, the younger Batemans moved to withdraw the
reference to the Bankruptcy Court. Mot. Withdraw 1. The
younger Batemans and Butler fully briefed the motion, and the
Court heard argument on the motion on March 25, 2019.
See Opp'n Chapter 7 Trustee Defs. Robert E.
Bateman & Leslie A. Bateman's Mot. Order Withdrawing
Reference Bankruptcy Ct. 10-17 ("Butler's
Opp'n"), ECF No. 1; Reply Defs. Robert E. Bateman
& Leslie A. Bateman Opp'n Chapter 7 Trustee Mot.
Order Withdrawing Reference Bankruptcy Ct. 18-23
("Reply"), ECF No. 1. At the motion hearing, Sebago
orally joined the younger Batemans' motion. After hearing
argument, the Court GRANTED the younger Batemans' motion.
Electronic Clerk's Notes, ECF No. 8. This memorandum
explains the Court's reasoning.
Court granted the motion for an order withdrawing the
reference because the Seventh Amendment to the United States
Constitution entitles the younger Batemans and Sebago to a
jury trial. See Granfinanciera, S.A. v. Nordberg,
492 U.S. 33, 40-42 (1989); Riley v. Wolverine, Proctor
& Schwartz Ltd. (In re Wolverine, Proctor & Schwartz,
LLC), 404 B.R. 1, 2-3 (D. Mass. 2009) (O'Toole, J.).
Withdrawal of the reference at this stage of the litigation
also avoids this Court's de novo review of the
Bankruptcy Court's findings of fact and conclusions of
law on Sebago's motion to dismiss, an efficient use of
limited judicial resources. See DeGiacomo v. Holland
& Knight, LLP (In re Inofin, Inc.), Chapter 7 No.
11-11010-JNF, Civ. A. No. 14-10483, 2014 WL 1795575, at *2-3
(D. Mass. May 2, 2014) (Gorton, J.) ("Inofin
Standard of Review
adversary complaint alleged bankruptcy court jurisdiction
with citation to sections 157(b) and 1334(b) of chapter 28 of
the United States Code, which authorize the bankruptcy courts
to hear cases arising out of chapter 11 of the United States
Code. Adv. Compl. ¶ 4. This Court's Local Rule 201
provides that any such cases "shall be referred" to
the Bankruptcy Court, thereby implementing sections 157(b)
so, section 157(d) allows the Court to withdraw the reference
"on timely motion of any party, for cause shown."
Congress intended for district courts to withdraw the
reference to bankruptcy courts only where "essential to
preserve a higher interest." Agin v. Sam Hill,
LLC, No. 14-CV-12885, 2014 WL 6773727, at *2 (D. Mass.
Dec. 2, 2014) (Casper, J.) (quoting Weiss v.
Lockwood, 499 B.R. 392, 393 (D. Mass. 2013) (Gorton,
section 157(d) does not define "cause," courts hold
that cause to withdraw the reference obtains where withdrawal
would further the "goals of  promoting uniformity in
bankruptcy administration,  reducing forum shopping and
confusion,  fostering the economical use of the
debtors' and creditors' resources, and  expediting
the bankruptcy process." Federal Trade Common v.
American Inst. for Research & Dev., 219 B.R. 639,
647 (D. Mass. 1998) (Ponsor, J.) (quoting Gray v. Solvay
Polymers, Inc. (In re Dooley Plastic Co., Inc.), 182
B.R. 73, 80 (D. Mass. 1994) (Lindsay, J.)); see also
Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992,
999 (5th Cir. 1985)). Other sessions of this Court have thus
ruled that "[c]ause to withdraw a reference exists where
a party has a right to a trial by jury and does not consent
to having that trial in the bankruptcy ...