United States District Court, W.D. Washington, Tacoma
ORDER DENYING MOTION TO WITHDRAW THE
J. BRYAN UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant Ted Spice's
Motion for Withdrawal of the Reference of Adversary
Proceeding. Dkt. 1. The Court has considered the pleadings
filed regarding the motion and the remaining record.
case is an adversarial proceeding arising from a bankruptcy
case filed on September 26, 2013 by Mark L. Dubois and Donna
Dubois relating to interests in real property located in
Pierce and Kitsap Counties. Dkt. 1-1. The properties at issue
here may have belonged, at least in part, to Donna
Dubois's mother, who is now deceased. Id.
Defendant Spice now moves for withdrawal of the reference to
U.S. Bankruptcy Court. Dkt. 1-1. For the reasons provided
below, the motion should be denied.
case is an adversarial proceeding filed on January 27, 2017
by Brian L. Budsberg, the bankruptcy Trustee for the
bankruptcy Estate of Mark L. Dubois and Donna Dubois, and
asserts claims against Defendant Spice “for a
determination as to the extent and validity of his interest
in real property of the Estate as well as for approval, under
11 U.S.C. § 363(h), of a sale [of] the co-owner's
[interest] in real property which is part of the bankruptcy
estate . . .” Dkt. 1-1, at 27-35. On January 31, 2017,
Defendant Spice filed a “Declaration of Ted Spice
Claiming Homestead Exemption and Notice Regarding Third Party
Conflicting Property States and Pending State Court Appeals
Cases.” Dkt. 1-1, at 3. Counsel appeared for Defendant
Spice on March 20, 2017. Id. Defendant Spice
answered and asserted counter claims against Mark and Donna
Dubois for breach of contract, conversion, unjust enrichment,
fraudulent inducement, tortious interference with existing
business contracts, tortious interference with existing
business relationships, violations of Washington's
Consumer Protection Act, embezzlement, “alienated
property of the deceased, ” negligent
misrepresentation, breach of fiduciary duty, violations of
Washington's Fraudulent Transfers Act, and
“non-compliance with 11 U.S.C. § 363 (h)(4)”
related to the Dubois' alleged attempts to transfer,
assign or sell the properties at issue. Dkt. 1-1, at 4 and
37-54. The bankruptcy court has held status hearings in the
case, the last of which was on July 11, 2017; the next status
hearing is set for September 20, 2017. Dkt. 1-1, at 4.
parties' dispute over real properties, including the ones
at issue here, began shortly after Donna Dubois filed a case
in 2010 to probate her mother's estate Estate of
Doris E. Mathews, Pierce County, Washington Superior
Court case number 10-4-00037-5. Dkt. 1-1, at 8. Lengthy state
court proceedings in various cases ensued. Id.
Donna and Mark Dubois declared bankruptcy in 2013, Defendant
Spice filed a proof of claim against them in December of 2015
and again in June of 2016, related, in part, to the real
property at issue here. Dkt. 1-1, at 11.
February of 2017, (just after this adversarial proceeding was
filed) Defendant Spice filed a case in a state court against
the Estate of Doris Mathews, Donna Dubois, Mark Dubois, and
the Doris Elaine Mathew Living Trust. Spice v. Estate of
Doris E. Mathews, Pierce County, Washington Superior
Court case number 17-2-06511-6. The amended complaint in that
case asserts claims for fraud, “agent acting without
authority, ” violation of “RCW 11.76, ”
“failure to provide funds for litigation and
development costs, ” waste, and violation of
Washington's Consumer Protections Act all related to the
real property in Pierce County at issue here. Dkt. 1-1, at
118-137; Spice v. Estate of Doris E. Mathews, Pierce
County, Washington Superior Court case number 17-2-06511-6.
status conference with the Bankruptcy Court on July 11, 2017,
Defendant Spice filed this motion to withdraw the reference
on July 21, 2017. Dkt. 1-1, at 7-18. The Trustee has
responded and opposes the motion. Dkt. 1-1, at 67-69.
Defendant Spice replied (Dkt. 1-1, at 93-97) and the motion
is ripe for decision.
case was referred to the U.S. Bankruptcy Court for the
Western District of Washington pursuant to 28 U.S.C. §
157 (a). Under Local Rule W.D. Wash. 87 (a), all bankruptcy
cases are automatically referred to the bankruptcy judges of
this district. Pursuant to Local Rule W.D. Wash. Bankr.
5011-1, a party may move to withdraw the reference. Rule
5011-1 further provides that, “[t]he district court may
in its discretion grant or deny the motion in whole or in
part, and may make such orders as it deems appropriate for
the orderly disposition of the case or proceeding.”
Section 157 (d) governs when a district court
must withdraw the reference of a case to the
bankruptcy court and when it may withdraw the reference.
Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers,
Warehousemen & Helpers, 124 F.3d 999, 1008
(9th Cir. 1997)(citing 28 U.S.C. § 157(d)). As
the moving party, Defendant Spice has the burden to show that
withdrawal of the reference is warranted. See In re Ponce
Marine Farm, Inc., 172 B.R. 722 (D. Puerto Rico 1994).
mandatory withdrawal of the reference provision in 28 U.S.C.
§ 157 (d), provides in part, “[t]he district court
shall, on timely motion of a party, so withdraw a proceeding
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.” Defendant Spice makes
no showing that the mandatory withdrawal provision of §
157 (d) applies. The claims raised here are state law claims
or are claims under title 11. There is no showing that
resolution of the proceeding will require consideration of
federal laws aside from the bankruptcy provisions.
permissive withdrawal of the reference provision in §
157 (d) provides, “[t]he 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.” 28 U.S.C. § 157 (d).
Accordingly, a motion to withdraw must be timely: that is it
must be “made as promptly as possible in light of the
developments in the bankruptcy proceeding.” Sec.
Farms, at 1007, n. 3. Further, “[i]n 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.” Sec. Farms, at 1008.
Spice's motion to withdraw the reference was not timely
filed. His motion was filed six months after this adversarial
case was filed. See Laine v. Gross, 128 B.R. 588,
589 (D. Me. 1991) (motion to withdraw the reference was
untimely when filed over six months after the need for
withdrawal became apparent). The subject matter of the
adversarial case was not new to Defendant Spice; legal
wrangling over the subject properties between Defendant Spice
and the debtors (and ...