Marshack v. Sunwize Technologies, Inc. (In re DRI Companies)

552 B.R. 195
CourtUnited States Bankruptcy Court, C.D. California
DecidedJune 30, 2016
DocketCase No. 8:13-bk-12153-SC (Jointly Administered with 8:13-bk-12154-SC, 8:13-bk-12156-SC); Adversary No. 8:15-ap-01421-SC
StatusPublished
Cited by1 cases

This text of 552 B.R. 195 (Marshack v. Sunwize Technologies, Inc. (In re DRI Companies)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marshack v. Sunwize Technologies, Inc. (In re DRI Companies), 552 B.R. 195 (Cal. 2016).

Opinion

ORDER DENYING MOTION TO TRANSFER, ALTERNATIVELY, MOTION TO STAY

Scott C. Clarkson, United States Bankruptcy Judge

I. Introduction

This matter is before the Court on a Motion to Transfer Venue, Alternatively, Motion to Stay [Dk. 25] (“Motion”), seeking to transfer the Marshack v. SunWize fraudulent transfer adversary proceeding .from the U.S. Bankruptcy Court for the Central District of California (“Bankruptcy Court”) to the U.S. District Court for the District of Arizona (“District Court”) pursuant to 28 U.S.C. § 1412 and Federal Rule of Bankruptcy Procedure (“Rule”) 1014(a). The Trustee filed an opposition [Dk. 31] (“Opposition”), and Movant filed a reply [Dk. 32] (“Reply”). This matter came on for hearing on June 29, 2016. Jeffrey L. Sklar, Esq. of Lewis Roca Ro-thgerber Christie LLP appeared on behalf of MCA Financial Group, Ltd, by and through Keith Bierman, as receiver for Eco Clean Solar, Inc. (“Receiver”); Judith Marshack, Esq. of Marshack & Hays, LLP appeared on behalf of the chapter 7 trustee, Richard Marshack (“Trustee”). Other appearances, if any, were as noted on the record. Based upon the Motion, Opposition, Reply, and the record as a whole, and for the reasons set forth on the record and as more fully discussed below, the Motion is DENIED.

II. Discussion

A. Transfer

Title 28 U.S.C. 1412 provides that “[a] district court may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the par[197]*197ties.” 28 U.S.C. § 1412(a). Rule 70871 provides, in pertinent part, that “[o]n motion and after a hearing, the court may transfer an adversary proceeding or- any part thereof to another district pursuant to 28 U.S.C. § 1412....” Fed. R. Bankr.P. 7087. Movant has the burden of showing by a preponderance of evidence that transfer is warranted. See In re Lebbos, 2007 WL 7540977, at *8 (9th Cir. BAP Nov. 14, 2007) (unpublished). The Court has broad discretion in deciding motions to transfer. Id.

The “interests of justice” prong requires the Court to consider the following factors:

the economics of estate administration, the presumption in favor of the “home court”, judicial efficiency, the ability to receive a fair trial, the state’s interest in having local controversies decided within its borders by those familiar with its laws, the enforceability of the judgment, and plaintiffs original choice of forum.

Senorx, Inc. v. Coudert Bros., LLP, 2007 WL 2470125, at *1 (N.D.Cal. Aug. 27, 2007) (citing In re Bruno’s, Inc., 227 B.R. at 324-25 (S.D.Ala.1998)). “[T]he most important consideration is whether the requested transfer would promote the economic and efficient administration of the estate." In re Commonwealth Oil Refining Co., Inc., 596 F.2d 1239, 1247 (5th Cir.1979). The “home court” is the bankruptcy court in which the debtor’s case is pending. See Irwin v. Beloit Corp. (In re Harnischfeger Indus.), 246 B.R. 421, 440 (Bankr.N.D.Ala.2000).

Here, all of these factors weigh against transfer. This Court is the “home court,” (as indelicate a term as that is) and this Court has a significant history with the DRI debtors, which weighs in favor of denying the transfer motion. See In re Lebbos, 600 Fed.Appx. 521, 525 (9th Cir. 2015) (unpublished) (upholding bankruptcy court’s denial of transfer motion where bankruptcy court had significant history with the case). The claims arise, at least partially, under California law. The Trustee, as plaintiff, has selected this bankrupt- ■ cy forum. Most importantly, keeping the adversary proceeding in bankruptcy court promotes the economic and efficient administration of both the bankruptcy and the receivership estate.by allowing the efficient liquidation of the Trustee’s claim against the receivership estate.

In addition to considering the “interests of justice,” courts consider the convenience of the parties. See Senorx, LLP, 2007 WL 2470125, at *1'(citing In re Bruno, 227 B.R. at 325). The convenience factors include: 1) location of the plaintiff and the defendant; 2) ease of access to necessary proof; 3) convenience of witnesses; 3) availability of subpoena power for the unwilling witnesses; and 4) expenses related to obtaining witnesses. Id.

Movant, the holder of the burden on a transfer motion, has not provided any evidence that the Arizona forum is more convenient. For example, Movant has not provided any evidence that witnesses are located in Arizona. Instead of providing evidence, Movant raises various legal arguments—none of which are persuasive. Movant has not met his burden.

Movant argues that its jury trial right would be impinged if the fraudulent transfer action were tried in bankruptcy court. However, “a Seventh Amendment jury trial right does not mean the bankruptcy court must instantly give up jurisdiction and that the case must be trans[198]*198ferred to the district court. Instead, the bankruptcy court is permitted to retain jurisdiction over the action for pre-trial matters.” In re Healthcentral.com, 504 F.3d 775, 787 (9th Cir.2007) (citations omitted). In addition, even absent consent, this Court may submit a report and recommendation to the District Court. In In re Bellingham Insurance Agency, Inc., the Ninth Circuit held that “fraudulent conveyance claims, because they do not fall within the public rights exception, cannot be adjudicated by non-Article III judges.” 702 F.3d 553, 561 (9th Cir.2012).2

However, the Ninth Circuit explained that “§ 157(b)(1) provides bankruptcy courts the power to hear fraudulent conveyance cases and to submit reports and recommendations to the district courts. Such cases remain in the core, and the § 157(b)(1) power to ‘hear and determine’ them authorizes the bankruptcy courts to issue proposed findings of fact and conclusions of law. Only the power to enter final judgment is abrogated.” Id. at 565-66 (emphasis added). Moreover, the Ninth Circuit noted that “§ 157(e) permits bankruptcy judges to conduct jury trials ‘with the express consent of all the parties.’ ” Id. at 569. At the very least, even without consent, this Court may hear this fraudulent transfer action and then submit a report and recommendation, along with proposed findings of fact and conclusions of law, to the U.S. District Court for the Central District of California. Movant’s rights to Article III adjudication and to a jury trial will be preserved and will not be impinged by denying the transfer.

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Cite This Page — Counsel Stack

Bluebook (online)
552 B.R. 195, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marshack-v-sunwize-technologies-inc-in-re-dri-companies-cacb-2016.