Supreme Court - Executive Benefits Case - Analyzed by a Ohio District Court (2014) - Granting a Motion to Withdraw the Reference

An Ohio District Court stayed a motion to withdraw the reference pending the decision by the Supreme Court in the Executive Benefits case.  The Ohio case had similar facts as to Executive Benefit in which the Trustee filed an adversary complaint to avoid a fraudulent transfer against a third party who was not a creditor....but....the third party made demand for a jury trial. 


The Ohio District Court determined that the case was a "Stern" claim and the bankruptcy court could submit proposed findings of act and conclusions of law.  The Court found that the Bankruptcy Court had jurisdiction to handle the pre-trial supervision of the case but granted the motion to withdraw the reference for permissive withdrawal under 157(d) ("for cause shown").  Although cause is not defined the court should look at  a variety of factors (1) core/non core; (2) legal/equitable claims; (3) efficient use of judicial resources and (4) effect of the ruling on uniformity in administering bankruptcy law. 


In this case, the Court noted that in any instance the Bankruptcy Court's decision would have to be reviewed de novo by the District Court; that the Defendant has exercised her right to a jury trial and that the defendant did not consent to the jurisdiction of the bankruptcy court.  Accordingly, the Court granted the motion for permissive withdrawal of the reference.


Query:  Will District Court's be forced to handle more bankruptcy related cases?

Emerson v. Order & Alan J. Treinish

United States District Court for the Northern District of Ohio, Eastern Division

June 20, 2014, Decided

CASE NO. 1:13-mc-52