United States District Court, D. Idaho
In re CVAH, INC., Debtor.
U.S. BANK, N.A. and Does 1 -5, Defendants. NOAH G. HILLEN, solely in his capacity as Trustee of the bankruptcy estate of the above-reference Debtor, Plaintiff,
MEMORANDUM DECISION AND ORDER
Lynn Winmill Chief Judge
before the Court is Defendant U.S. Bank, N.A.'s Motion to
Withdraw the Reference (Dkt. 1). As explained further below,
the Court will grant the motion but will delay withdrawing
the reference until the bankruptcy court has prepared
proposed findings, conclusions of law, and/or a recommended
disposition of the matter.
2014, CVAH, Inc. filed a Chapter 7 bankruptcy petition. CVAH
has virtually no assets and its only creditors are state and
federal taxing authorities.
one year after CVAH filed its petition, the Trustee initiated
approximately 40 separate adversary proceedings seeking to
recover payments CVAH (or its principal) had previously made
to various entities. These payments, taken together, total
around $4 million. The Trustee alleges that these payments
were constructively fraudulent and thus seeks to recover the
monies for CVAH's bankruptcy estate.
complaint against U.S. Bank, the Trustee alleges three
fraudulent-transfer claims. In his first claim for relief,
the Trustee invokes 11 U.S.C. § 544(b)(1) as well as the
federal Fair Debt Collection Practices Act (FDCPA) in his
effort to recover the payments. In his second claim, the
Trustee invokes Idaho's fraudulent transfer statutes. In
a third claim for relief, the Trustee invokes 11 U.S.C.
2016, the bankruptcy court ordered U.S. Bank to either: (1)
consent to entry of judgment by the bankruptcy court; or (2)
move to withdraw the reference. U.S. Bank responded with the
pending motion to withdraw the reference.
October 2016, the bankruptcy court entered a procedural order
in various CVAH adversary proceedings, including this one.
See Bankr. Dkt. 25. That order establishes pretrial
deadlines, including deadlines for amending the pleadings,
adding parties, completing discovery, and filing pretrial
motions. Additionally, the bankruptcy court indicated that
after resolving pretrial motions, it anticipates following
two different tracks, depending on whether the various
adversary defendants had timely demanded a jury trial. For
those defendants who did not demand a jury trial, the
bankruptcy court “anticipates scheduling a status
conference to consider, among other things, selection of
dates for a prompt trial before this Court [i.e., before the
bankruptcy court].” Id. at 4. If, on the other
hand, a party had timely requested a jury trial, the
bankruptcy court anticipates “referral of this action
to the U.S. District Court for trial.” Id.
Bank has not demanded a jury trial and is mostly content with
the bankruptcy court's plan for handling the matter. But
there are two exceptions. First, U.S. Bank asks the Court to
withdraw the reference for “any dispositive motion
regarding the unsettled federal law question regarding the
scope of the FDCPA statute of limitations.”
Reply, Dkt. 3, at 5. Second, U.S. Bank asks the
Court to withdraw the reference before any bench trial is
district courts have original jurisdiction over cases arising
under the Bankruptcy Code. 28 U.S.C. § 1334(a). This
Court has exercised its authority under 28 U.S.C. §
157(a) to refer all bankruptcy matters to the district's
bankruptcy judges. See Apr. 24, 1995 Third
Amended General Order. Nevertheless, under 28 U.S.C.
§ 157(d), this reference is subject to mandatory or
permissive withdrawal, depending on the circumstances.
See 28 U.S.C. § 157(d). Section 157(d)
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 proceeding requires consideration of both title 11 and