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Horowitz v. Sulla

United States District Court, D. Hawaii

September 30, 2016

LEONARD G. HOROWITZ, and SHERRI KANE, Plaintiffs,
v.
PAUL J. SULLA, JR. et al., Defendants. U.S. Bankruptcy No. 16-00239 Adversary Proceeding No. 16-90015

          ORDER DENYING MOTION TO WITHDRAW THE REFERENCE

          Derrick K. Watson Judge.

         INTRODUCTION

         Plaintiffs Leonard G. Horowitz and Sherri Kane, proceeding pro se, seek withdrawal of the reference of Adversary Proceeding No. 16-90015. It is difficult, if not impossible, to discern any cognizable claims within Plaintiffs' Motion to Withdraw the Reference and underlying bankruptcy filings, and any mention of possible causes of action lack plausible, supporting factual allegations. Because the Motion to Withdraw the Reference is untimely and fails to establish that Plaintiffs are entitled to mandatory or permissive withdrawal under 28 U.S.C. § 157(d), the Motion is denied.

         BACKGROUND

         Horowitz is the debtor in the underlying Chapter 13 bankruptcy proceeding. Horowitz and Kane are Plaintiffs in the bankruptcy adversary proceeding that is the target of the instant Motion, Adv. Pro. No. 16-90015, as well as in numerous other federal and state cases involving several of the same parties.[1] In the adversary proceeding, Plaintiffs seek monetary and injunctive relief regarding real property located in the State of Hawaii. Several Defendants[2] moved in bankruptcy court for dismissal of the adversary proceeding pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6), and alternatively asked the bankruptcy court to abstain pursuant to 28 U.S.C.§ 1334(c). The bankruptcy court granted the motion to dismiss in a July 8, 2016 order, concluding that discretionary abstention was proper because Plaintiffs sought to overturn final judgments of Hawaii state courts. See Motion Ex. 8 at 6, 18-19 (7/8/16 Order; Bankr. Dkt. No. 104).

         In those state court proceedings, identified by Plaintiffs as Civ. No. 05-1-0196 (foreclosure) and Civ. No. 14-1-0304 (ejectment), the state courts approved Defendant Jason Hester's nonjudicial mortgage foreclosure of the property at issue in this adversary proceeding and issued a writ of ejectment against Plaintiffs. As noted in the bankruptcy court's Memorandum of Decision on Plaintiffs' Motion for Reconsideration of the bankruptcy court's dismissal of the adversary proceeding:

although the plaintiffs think there was a gross miscarriage of justice in the state court, I am not convinced. I see no reason for a federal court to intervene in a case where the state trial court has entered judgments after many years of extensive and hard-fought litigation. I remain convinced that this case belongs in the state appellate courts, rather than in this court.

         Motion Ex. 1 at 4 (7/26/16 Order; Bankr. Dkt. No. 115).

         After the bankruptcy judge denied their motion for reconsideration, Plaintiffs filed the instant Motion seeking withdrawal of the reference.

         STANDARD OF REVIEW

         In general, district courts have original and exclusive jurisdiction over all bankruptcy matters, 28 U.S.C. § 1334, and may refer all bankruptcy matters to a bankruptcy court. 28 U.S.C. § 157(a). Pursuant to Local Rule 1070.1(a), “all cases under Title 11 and all civil proceedings arising under Title 11 or arising in or related to a case under Title 11 are referred to the bankruptcy judges of this district.” A party who believes that a proceeding pending in the Bankruptcy Court should instead be litigated before the district court may move for mandatory or permissive withdrawal of that reference pursuant to 28 U.S.C. § 157(d). Section 157(d) provides:

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 other laws of the United States regulating organizations or activities affecting interstate commerce.

28 U.S.C. § 157(d). Motions to withdraw a reference are heard by the district court. Fed. R. Bankr. 5011(a). “The party moving for withdrawal of the reference has the burden of persuasion.” Hawaiian Airlines, Inc. v. Mesa Air Group, Inc., 355 B.R. 214, 218 (D. Haw. 2006); Field v. Levin, 2011 WL 3477101, at *2 (D. Haw. Aug. 8, 2011).

         DISCUSSION

         Plaintiffs seek withdrawal of the reference “pursuant to 28 U.S.C. § 157(d); 42 U.S.C. §§ 1981 and 1983, following service of the bankruptcy [] Court's filing of MEMORANDUM OF DECISION ON MOTION FOR RECONSIDERATION[.]” Motion at 2. Plaintiffs contend that withdrawal of the reference is required due to -

(a) conflicting final judgments in State cases 0196 and [0304] arguably violating res judicata doctrine and the Plaintiffs' civil rights; and (b) wrongful conversion of said commercial property (hereafter, “Property”) but for acts of Defendants detailed below and “presumptively correct” albeit prejudicial and erroneous “discretionary ...

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