United States District Court, D. Idaho
IN RE RYAN CLIFFORD BRADFORD and JUDY KAY BRADFORD, dba Pitchfork Cattle Co., Debtor.
BANK OF EASTERN OREGON, a National Banking Association, Defendant. RYAN CLIFFORD BRADFORD and JUDY KAY BRADFORD, Plaintiffs, Dist. Case No. 1:18-cv-00397-BLW
REPORT AND RECOMMENDATION TO THE DISTRICT COURT
REGARDING DISMISSAL OF ADVERSARY PROCEEDING AND DENIAL OF
MOTION TO TRANSFER VENUE
L. MYERS U.S. BANKRUPTCY JUDGE
August 16, 2018, Ryan and Judy Bradford
(“Plaintiffs”) filed a complaint and demand for
jury trial in this Bankruptcy Court commencing Adversary No.
18-06023-TLM. Adv. Doc. No. 1 (“Complaint”). The
Complaint pleaded causes of action for “Breach of
Contract - Negligence, ” “Breach of Contract -
Intentional, ” “Fraud, ” “Waiver,
” “Unjust Enrichment, ” “Breach of
Fiduciary Duty - Duty of Loyalty, ” “Intentional
Interference with Economic Relations, ”
“Negligence, ” “Accounting, ” and
“Defamation.” Id. The following day,
Plaintiffs filed a motion to withdraw reference under 28
U.S.C. § 157(d) and Fed.R.Bankr.P. 5011(a). Adv. Doc.
No. 7; Dist. Ct. Doc. No. 1. Subsequently, Plaintiffs filed,
in the District Court, a motion to transfer venue. Dist. Ct.
Doc. No. 4.
January 3, 2019, the District Court entered a Memorandum
Decision and Order, Dist. Ct. Doc. No. 13, that granted
Plaintiffs' request for withdrawal of reference once the
proceeding was ready for trial but denied it to the extent an
immediate withdrawal was sought. That Decision and Order
further instructed this Court to “preside over all
pretrial matters in this case, including discovery and
pretrial conferences, and resolve routine and dispositive
motions, including the pending Motion to Transfer Venue (Dkt.
4). If either party files a dispositive motion, the
bankruptcy court will entertain that motion and submit
proposed findings of fact, conclusions of law, and a
recommendation for disposition to this Court.”
Id. at 12.
January 9, 2019, this Court heard matters in Plaintiffs'
underlying chapter 12 case. Based on the record in that case,
and for the reasons stated orally, the Court dismissed the
chapter 12 case pursuant to 11 U.S.C. § 1208(c)(1) and
(c)(9). No. 17-01571-TLM at Doc. No. 346.
Ninth Circuit has established a four-part test to determine
whether a court should retain an adversary proceeding after
the underlying bankruptcy case has been dismissed.
Carraher v. Morgan Elecs., Inc. (In re Carraher),
971 F.2d 327, 328 (9th Cir. 1992). The standards that
“govern the bankruptcy court's discretion”
whether to retain the case are informed by the authority and
guidance given district courts when considering whether to
retain pendant state claims after federal claims have been
dismissed. The Carraher considerations are economy,
convenience, fairness and comity. Id. (citations
omitted). Those standards have been regularly used by the
Bankruptcy Appellate Panel when evaluating such matters.
Szanto v. Szanto (In re Szanto), 2016 WL 3209463,
*4-5 (9th Cir. BAP May 31, 2016); Zegzula v. JPMorgan
Chase Bank, N.A. (In re Zegzula), 2015 WL 5786572 (9th
Cir. BAP Oct. 2, 2015); Sanders v. United States Tr. (In
re Sanders), 2013 WL 1490971 (9th Cir. BAP Apr. 11,
2013); Linkway Inv. Co., v. Olsen (In re Casamont
Investors, Ltd.), 196 B.R. 517, 523 (9th Cir. BAP 1996).
of this adversary proceeding is based on 28 U.S.C. §
1334(b). Adv. Doc. No. 1 at 2. Under that grant, the district
court has jurisdiction over “all civil proceedings
arising under title 11, or arising in or related to cases
under title 11.” The terms “arising under”
and “arising in” are “terms of art.”
Eastport Assocs. v. City of Los Angeles (In re Eastport
Assocs.), 935 F.2d 1071, 1076 (9th Cir. 1991). As
explained in Battle Ground Plaza, LLC v. Ray (In re
Ray), 624 F.3d 1124 (9th Cir. 2010), a matter
“arises under” the Bankruptcy Code “if its
existence depends on a substantive provision of bankruptcy
law, that is, if it involves a cause of action created or
determined by a statutory provision of the Bankruptcy
Code.” Id. at 1131. Further, a proceeding
“arises in” a bankruptcy case “if it is an
administrative matter unique to the bankruptcy process that
has no independent existence outside of bankruptcy and could
not be brought in another forum, but whose cause of action is
not expressly rooted in the Bankruptcy Code.”
several causes of action in the Complaint are state law
claims. None “arise under” the Bankruptcy Code or
“arise in” the bankruptcy case within the ambit
of the authorities. Rather, the state law claims asserted by
Plaintiffs are “related to” the bankruptcy in the
sense that “the outcome of the proceeding could
conceivably have any effect on the estate being administered
in bankruptcy” or “if the outcome could alter the
debtor's rights, liabilities, options, or freedom of
action (either positively or negatively) and which in any way
impacts upon the handling and administration of the bankrupt
estate.” Marshall v. Stern (In re Marshall),
600 F.3d 1037, 1055 (9th Cir. 2010). As the District Court
noted in its Decision and Order, “[t]he Bradfords'
claims arise only under state law and . . . they seek to
augment the bankruptcy estate.” Dist. Ct. Doc. 13 at 7.
economy does not weigh in favor of retaining jurisdiction
over recently filed actions. Casamont Investors, 196
B.R. at 523-24 (“retention of jurisdiction . . . [is]
improper when the initiation of the dispute was
recent”); cf. Carraher, 971 F.2d at 328
(adversary proceeding pending six years at time of dismissal
of case weighed in favor of retention). The action here is,
relatively speaking, in its infancy.
does not weigh in favor of retention. As stated in
Sanders, “nothing prevented [plaintiff] from
pursuing his claims in state or, if applicable, federal
court. The inconvenience of having to re-file a complaint in
state court does not warrant retention of
jurisdiction.” 2013 WL 1490971, *9 (citing Casamont
Investors, 196 B.R. at 524).
relative youth of the action also informs the question of
whether “fairness” supports retention. Nothing
here suggests it would be unfair for Plaintiffs to assert
their claims in state court. And, finally, because all claims
are based on state law, the factor of comity weighs in favor
on the foregoing, this Court recommends to the District Court
that the instant adversary proceeding not be retained now
that the underlying chapter 12 case has been dismissed. This
action should be dismissed without prejudice.
before the Court is the Plaintiffs' Motion to Transfer
Venue. That motion addresses, in part, the unique
circumstances of Plaintiffs' Oregon bankruptcy case filed
in Malheur County, Oregon which-by reason of a long standing
agreement between the Districts of Idaho and Oregon-is heard
and administered by the Bankruptcy Court for the District of
Idaho. Should the District Court agree with this Court's
recommendation set forth above and dismiss Plaintiffs'
action without prejudice given the ...