United States District Court, D. Idaho
In re: THOMAS MECHAM RICKS, Debtor.
JOHN WOOD, and individual; PARK HAMPTON LLC; and DOES I-X, Defendants. THOMAS MECHAM RICKS, an individual, Plaintiff,
MEMORANDUM DECISION AND ORDER
B. LYNN WINMILL, Chief District Judge.
Pending before the Court is debtor Thomas Ricks' Motion for Partial Withdrawal of Reference (Dkt. 1). For the reasons expressed below, the Court will deny the motion without prejudice.
1. Procedural History
Thomas Ricks, a chapter 11 debtor in possession, sued John Wood and Park Hampton LLC in an adversary proceeding. Park Hampton moved to dismiss, contending that the bankruptcy court lacked "authority and subject matter jurisdiction pursuant to Stern v. Marshall, 131 S.Ct. 2594 (2011)." The bankruptcy court determined that although it had subject matter jurisdiction over the entire proceeding under 28 U.S.C. § 1334, there was a potential issue as to its "constitutional authority to enter final orders and judgments concerning Park Hampton." See Jan. 16, 2014 Summary Order, Bk. Adv. Dkt. 13. The bankruptcy court stayed the adversary action until the parties either negotiated a solution or filed papers with this Court "asking for withdrawal of the reference of this adversary proceeding and/or for other appropriate relief." Id. Ricks then filed this withdrawal motion.
2. The Adversary Complaint
Ricks' motion focuses on one claim within the adversary complaint - the second claim for "Declaratory Relief and... Quiet Title" against Wood and Park Hampton. This claim relates to roughly five acres of land in Eagle, Idaho, which was previously owned by Gary and Sandra Hazen. Ricks claims he entered into an agreement with Wood to develop the Hazen property and, based on that agreement, spent roughly $106, 000 "toward the development and entitlement" of the property. Adversary Compl. ¶ 32. Ricks says he is entitled to 50 percent of the net profits from any sale of the Hazen property. Id. ¶ 49.
Ricks initially alleged that defendants were wrongfully attempting to sell the property. He sought a declaratory judgment that "Wood and Park Hampton are without any right to sell, transfer, convey, or develop the Hazen Property without the consent of Ricks." Id. ¶ 51. But by the time Ricks filed his adversary complaint, the Hazen property had already been sold. Based on this new information, Ricks contends that his second claim for relief "should be limited to a breach of contract claim against Wood and/or Park Hampton and a request for monetary damages in an amount to be proved at trial." Reply, Dkt. 5, at 2. He plans to file a motion to amend his complaint after the withdrawal motion is resolved.
1. This Court Has Jurisdiction over Ricks' State-Law Claim Against Park Hampton
The Court's first task in resolving this motion is to determine jurisdiction. Park Hampton asserts that there is no federal jurisdiction over the second claim - either in district court or in bankruptcy court - because it is a state-law claim and the parties are not diverse.
This argument is not persuasive because Ricks' claim against Park Hampton is related to his bankruptcy case. Jurisdiction thus exists under 28 U.S.C. § 1334(b).
Section 1334(b) section provides, with exceptions not relevant here, that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. " (emphasis added). Ricks' adversary proceeding against Park Hill is a "civil proceeding" under § 1334. See H.R. Rep. No. 595, 95th Cong., 1st Sess. 445 (1997) (the term "proceeding here is used in its broadest sense, and would encompass... adversary proceedings...."). And ...