CASE NO. 01-36710-SAF-7, ADVERSARY NO. 03-3630, (CIV. ACTION #03:CV-2125-G)United States Bankruptcy Court, N.D. Texas.
October 21, 2003
REPORT TO DISTRICT ON MOTION TO WITHDRAW THE REFERENCE
STEVEN FELSENTHAL, Bankruptcy Judge
Lori Vining, one of the defendants in the above-styled adversary proceeding, filed a motion on September 12, 2003, to withdraw the reference of the complaint as it pertains to her. On October 14, 2003, the United States Bankruptcy Court conducted a status conference concerning the motion. 11 U.S.C. § 105(d); L.B.R. 5011.1. The bankruptcy court submits the following report to the United States District Court.
1. Scott M. Seidel, the plaintiff and the Chapter 7 trustee of the bankruptcy estate of Western Natural Gas, L.L.C., opposes the motion. But, in the alternative, should the motion be granted, Seidel requests that pretrial matters remain with the bankruptcy court.
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2. The adversary proceeding has not been stayed pending a determination of the motion to withdraw the reference. Bankruptcy Rule 5011. A motion to stay the adversary proceeding is not pending. The parties do request, however, that discovery be deferred for one month to provide an opportunity to attempt to settle the litigation prior to incurring litigation expenses. The bankruptcy court has entered an amended scheduling order incorporating a thirty day discovery hiatus.
3. The adversary proceeding involves non-core matters. Vining is one of several defendants in the litigation. The complaint alleges that Vining and the other defendants are liable to the trustee for certain errors and/or omissions in their actions as officers and/or directors of the debtor. The complaint alleges four counts: (1) breach of trust fund duties; (2) breach of fiduciary duties; (3) negligence and gross negligence; and (4) exemplary damages. The trustee also seeks to recover his attorney’s fees.
The trustee argued at the status conference that, under Delaware law, the trust fund and fiduciary duty counts should be considered core matters. The trustee is mistaken. The claims would exist under state law in the absence of a bankruptcy case. In the background portion of the complaint, the trustee discusses transfers that the trustee characterizes as preferences or fraudulent conveyances. But the trustee does not allege any
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counts to avoid any transfer under 11 U.S.C. § 544, 547 or 548. Avoidance claims would be core matters.
Vining does not consent to the entry of a final judgment or order by the bankruptcy court. 28 U.S.C. § 157(c)(2).
4. A jury trial has been timely requested by Vining. While Seidel would consent to the bankruptcy judge conducting the jury trial, the defendant does not consent. 28 U.S.C. § 157 (e). Without the defendant’s consent, the district court must conduct the jury trial.
The trustee argues that, under Delaware law, the trust fund and fiduciary claims sound in equity. From that premise, the trustee contends that Vining does not have a right to a jury trial. The district court does not have to address that argument. The trustee concedes that Vining has a right to a jury trial on the negligence claim. Vining has not filed a proof of claim in the underlying bankruptcy case, and, consequently, has not waived the right to a jury trial.
5. The parties are not ready for trial. As a result of the request for a thirty day discovery hiatus, the bankruptcy court has entered an amended scheduling order pursuant to which the parties should be ready for trial by May 10, 2004. A copy of the scheduling order is attached. The parties agree that pretrial matters can be heard by the bankruptcy judge.
6. The other defendants have not filed motions to withdraw
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the reference. However, motions to withdraw the reference may be timely filed. In the interest of judicial economy, the bankruptcy court recommends that the complaint not be severed. Because of the interrelationship of the parties and issues, the case should be decided before one court. At this stage of the proceeding, pretrial matters should therefore remain in the bankruptcy court. That will allow the bankruptcy court to coordinate management of the litigation as to all the parties.
7. The bankruptcy court recommends that the district court grant the motion to withdraw the reference upon certification by the bankruptcy court that the parties are ready for trial. At the time of the certification, the bankruptcy court will advise the district court of the status of the litigation as to all the defendants, and make a recommendation regarding withdrawing the reference of the entire adversary proceeding.
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SCHEDULING ORDER
The court conducted a status conference on October 14, 2003, as to defendant Lori Vining. Attorney J. Adams appeared for the plaintiff, and attorney H. Spector appeared for the defendant.
Based on the conference,
IT IS ORDERED:
1. The parties shall be prepared for trial by May 10, 2004, and appear at a pretrial conference on May 10, 2004. at 2:30 p.m.
2. Summary judgment motions shall be served and filed by April 15, 2004. Discovery shall begin on December 1, 2003, and be completed by April 1, 2004.
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3. The parties, must confer for the purpose of arriving at all possible stipulations and the exchange and marking of exhibits (except those for impeachment only) which will be offered in evidence at the trial. These conferences must be held prior to the preparation of the pretrial order so that the parties can furnish each other a statement of the actual issues on which each party will offer supporting evidence, eliminating any issues which might appear in the pleadings about which there is no real controversy and including in the statement issues of law and ultimate issues of fact from the stand point of each party.
4. A pretrial order in compliance with Local District Rule 16.4 shall be served and filed by May 10, 2004. All counsel are responsible for preparing the pretrial order, which shall contain the following:
(1) a summary of the claims and defenses of each party;
(2) a statement of stipulated facts;
(3) a list of the contested issues of facts;
(4) a list of contested issues of law;
(5) an estimate of the length of trial;
(6) a list of exhibits (except documents of impeachment);
(7) a list of all trial witnesses, with the time each party estimates for examination (direct and cross of each witness);
(8) a list of expert witnesses, with a summary of their qualifications and testimony;
(9) a statement that a settlement conference had been conducted;
(10) the signature of each attorney; and
(11) a place for the date and signature of the court.
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5. All pending motions shall be called to the court’s. attention at the pretrial conference on May 10, 2004.
6. On May 10, 2004, the parties shall submit to the court any questions they would like the court to ask during the process of jury selection, any requested special issues, and the parties1 proposed jury instructions. The parties must strictly adhere to this time schedule.
7. All trial exhibits are to be exchanged by May 10, 2004.
8. During the entire pendency of this action, through and including the end of the trial, the parties shall vigorously pursue the possibility of settlement.
9. On May 10, 2004, the parties and their counsel must certify to full compliance with this order. The court will consider the imposition of appropriate sanctions in the event of noncompliance. In the event of withdrawal of the reference, this scheduling order will assure that the parties are fully and promptly prepared for trial.
10. Amendments of this order, including requests for continuances, may be obtained for cause shown by written motion. The motion must contain a statement establishing cause and shall be served on opposing counsel, who may file a response to the motion within 7 days of service. Unless ordered otherwise, the court will rule on the motion based on the written filings without a hearing.
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11. This scheduling order supersedes prior scheduling orders.
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