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In Re: Shad's Hanna's East Inc. Charles O. Zebley, Jr v. Daniel S. Soom

August 28, 2012

IN RE: SHAD'S HANNA'S EAST INC. CHARLES O. ZEBLEY, JR, PLAINTIFF,
v.
DANIEL S. SOOM,
DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

Memorandum Order re: Motion to Withdraw the Reference (Doc. No. 1)

I. Introduction

Currently before the Court is Defendant Daniel S. Soom's Motion to Withdraw the Reference, and Plaintiff's response in opposition thereto. Doc. Nos. 1 and 3. On June 15, 2012, Charles O. Zebley, the trustee for Shad's Hanna's East, Inc., filed a Trustee's Complaint against four Defendants, including Soom, in the Bankruptcy Court for the Western District of Pennsylvania. Doc. No. 1-4. The Complaint alleges, five counts against Soom: (1) Negligence (Count III); (2) Breach of Fiduciary Duty (Count IV); (3) Assumpsit (Count V); (4) Racketeering Influenced and Corrupt Organizations Act ("RICO") (Count VI); and (5) Statutory Conversion of Instrument (Count VIII). Id. For the following reasons, the Motion to Withdraw the Reference (doc. no. 1) will be DENIED.

II. Standard of Review

The Bankruptcy Code states that:

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).

A. Mandatory Withdrawal

While the United States Court of Appeals for the Third Circuit has not directly considered the situation of when a withdrawal of the reference is mandatory, the United States Court of Appeals for the Second Circuit has stated that withdrawal is mandatory when the case requires "significant interpretation, as opposed to simple application of federal laws apart from the bankruptcy statutes." Falblaum v. Leslie Fay Cos., Inc., 182 F.3d 899 (2d Cir. 1999) (table) (quoting City of New York v. Exxon Corp., 932 F.2d 1020, 1026 (2d Cir.1991)).

B. Permissive Withdrawal

The United States Court of Appeals for the Third Circuit has held that five (5) factors should be considered when deciding if cause has been shown for permissive withdrawal of the reference: (1) promoting uniformity of bankruptcy administration; (2) reducing forum shopping and confusion; (3) fostering economical use of debtor/creditor resources; (4) expediting the bankruptcy process; and (5) timing of the request for withdrawal. In re Pruitt, 910 F.2d 1160, 1168 (3d Cir.1990).

III. Discussion

A.Withdrawal of the Reference Is ...


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