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In re Farmers Grain, LLC

United States District Court, D. Idaho

November 4, 2019

In re FARMERS GRAIN, LLC, Debtor.
v.
DAVID R. UNRUH TRUST and DAVID R. UNRUH as Trustee, Defendants. NOAH G. HILLEN, Trustee, Plaintiff,

          MEMORANDUM DECISION AND ORDER

          B. LYNN WINMILL U.S. DISTRICT COURT JUDGE

         INTRODUCTION

         Before the Court are two motions filed by Defendants David R. Unruh Trust and David Unruh: (1) an unopposed motion to withdraw the reference; and (2) a motion in support of a demand for a jury trial. See Dkts. 1, 2. The Court will grant the motion to withdraw the reference but will delay doing so until the matter is ready for trial. Because the Court is delaying withdrawal of the reference, the bankruptcy court will decide the pending motion in support of the jury trial demand. To be clear, an Article III judge will ultimately preside over any trial in this proceeding (be it bench or jury) and issue the final judgment, but the bankruptcy court will decide pretrial issues, including the threshold issue of whether defendants waived their right to a jury trial.

         BACKGROUND

         In April 2017, Farmers Grain, LLC filed a chapter 11 bankruptcy petition. Roughly two years later (after the bankruptcy was converted to a chapter 7), the Trustee filed this adversary proceeding. The Trustee alleges that Farmers Grain transferred $300, 000 to the defendants, which the Trustee now seeks to avoid.

         Defendants answered the Trustee's complaint on June 20, 2019. The answer did not include a demand for jury trial. On August 7, 2019 (the same date as the first pretrial conference conducted in the proceeding), the Trustee filed a notice of consent to final judgment by the bankruptcy court. Shortly afterward, Defendants filed both pending motions. The Trustee does not oppose the motion to withdraw the reference but says Defendants have waived their right to a jury trial.

         ANALYSIS

         1. The Motion to Withdraw the Reference

         Defendants acknowledge that the Court need not withdraw the reference immediately. Accordingly, as has been its practice with fraudulent transfer claims in the wake of Stern v. Marshall, 564 U.S. 462 (2011), the Court will grant the unopposed motion to withdraw the reference but will delay doing so until the bankruptcy court certifies that the matter is ready for trial.

         Under 11 U.S.C. § 157(c), the bankruptcy court may “hear” the Trustee's claims, and submit proposed findings of fact and conclusions of law to the district court. See, e.g., Executive Benefits Ins. Agency v. Arkison, 573 U.S. 25 (2014). If either party files a dispositive motion, the bankruptcy court may entertain that motion and submit proposed findings of fact, conclusions of law, and a recommended disposition of the case to this Court. See Id. When the bankruptcy court certifies that the case is ready for trial, the Court will withdraw the reference and set the matter for trial.

         2. The Motion in Support of Jury Trial Demand

         Because the Court is delaying withdrawal of the reference until the proceeding is ready for trial, the bankruptcy court will take up defendant's motion in support of its jury trial demand and will thus decide whether defendants waived their right to a jury. Regardless of how the issue is decided, the parties should be aware of two rules not mentioned in the briefing:

         First, Federal Rule of Civil Procedure 6(b).

         Under this rule, a court may extend the time “[w]hen an act may or must be done within a specific time: . . . (B) on motion made after the time has expired if the party failed to act because of excusable neglect.” Fed.R.Civ.P. 6(b)(1)(B). Rule 6(b) thus provides a potential avenue of relief if the bankruptcy court determines defendants failed to timely demand a jury. Accordingly, ...


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