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Parkview Adventist Medical Center v. Central Maine Healthcare Corporation

United States District Court, D. Maine

February 23, 2016

PARKVIEW ADVENTIST MEDICAL CENTER, Plaintiff,
v.
CENTRAL MAINE HEALTHCARE CORPORATION, et al., Defendants.

ORDER ON PLAINTIFF PARKVIEW ADVENTIST MEDICAL CENTER’S MOTION TO WITHDRAW THE REFERENCE

Jon D. Levy, U.S. District Judge

Plaintiff Parkview Adventist Medical Center (“Parkview”) moves to withdraw the reference of the adversary proceeding, Parkview Adventist Medical Center v. Central Maine Healthcare Corporation et al., (Bankruptcy Court, Case 15-02019), from the United States Bankruptcy Court. ECF No. 1.[1] Defendants Central Maine Healthcare Corporation, Central Maine Medical Center, and Bridgton Hospital (together, “CMHC”) object to the motion. ECF No. 8. A hearing was held on December 17, 2015. For the reasons discussed below, I deny the motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Parkview filed a voluntary petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C.A. § 1101 et seq. (2015), on June 16, 2015. Bankruptcy Court, Case 15-20442, ECF No. 1. Parkview initiated the adversary proceeding in question by filing a complaint against Central Maine Healthcare Corporation and related entities on July 22, 2015. Bankruptcy Court, Case 15-02019, ECF No. 1. Parkview filed an Amended Complaint, which included a jury demand, in the adversary proceeding on September 17, 2015. Bankruptcy Court, Case 15-02019, ECF No. 26. On the same day, Parkview filed a motion to withdraw the adversary proceeding from the Bankruptcy Court. Bankruptcy Court, Case 15-02019, ECF No. 27. A motion by CMHC to dismiss Counts I-IV, VII-XI, and XIII-XIV of Parkview’s Amended Complaint, filed on October 19, 2015, is currently pending in the Bankruptcy Court. See Bankruptcy Court, Case 15-02019, ECF Nos. 30 and 31 (CMHC’s partial motion to dismiss and memorandum of law in support), ECF No. 33 (Parkview’s response in objection), ECF No. 37 (CMHC’s reply).

In the Amended Complaint, Parkview seeks the avoidance of transfers to CMHC as fraudulent or preferential transfers under Maine law and the United States Bankruptcy Code (“Bankruptcy Code” or “Code”); the recharacterization or subordination of any debt obligation that Parkview may owe to CMHC; damages for negligence and breach of fiduciary duty by CMHC; a declaratory judgment declaring that CMHC is liable for certain debts that it claims are owed to it by Parkview and which were incurred in violation of Maine state law; a judgment that CMHC has violated applicable federal and state antitrust laws; and a judgment that CMHC benefited from expenses incurred by Parkview in marshaling and liquidating certain assets and that Parkview is entitled to surcharge CMHC for those expenses pursuant to the Bankruptcy Code. Bankruptcy Court, Case 15-02019, ECF No. 26 at 1-2. The Amended Complaint sets forth fifteen counts in total.

II. LEGAL ANALYSIS

Parkview seeks a withdrawal, under 28 U.S.C.A. § 157(d) (2015), of the adversary proceeding from the Bankruptcy Court to which it was referred pursuant to 28 U.S.C.A. § 157(a) and Local Rule 83.6(a). Section 157(d) states:

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.A. § 157(d). A motion for withdrawal of a case or proceeding is to be heard by a district judge in accordance with Federal Rule of Bankruptcy Procedure 5011(a).

Section 157(d) provides for two types of withdrawal, under a “federal law” prong or a “for cause” prong. In re Montreal Me. & Atl. Ry., Ltd., 2015 WL 3604335, at *3 (D. Me. June 8, 2015). These prongs are commonly referred to, respectively, as the “mandatory” and “discretionary” prongs; in some circumstances, however, the court may be required to withdraw a reference under the “for cause” prong for reasons related to constraints on the authority of bankruptcy judges to conduct jury trials. Id. at *3 n.5; Growe ex rel. Great N. Paper, Inc. v. Bilodard Inc., 325 B.R. 490, 492 (D. Me. 2005) (“a valid jury demand can have the effect of mandating withdrawal to the District Court for trial”).

Parkview argues that withdrawal is mandatory under the “federal law” prong of 28 U.S.C.A. § 157(d), or alternatively, that permissive withdrawal should be granted under the “for cause” prong of 28 U.S.C.A. § 157(d).

A. “Federal Law” Prong (“Mandatory Withdrawal”)

The threshold issue under the “federal law” prong is whether the court “can make an ‘affirmative determination’ that resolution of the claims hinges on non-Code federal law.” In re Montreal, 2015 WL 3604335, at *3 (citing In re White Motor Corp., 42 B.R. 693, 705 (N.D. Ohio 1984)). If the court determines that non-Bankruptcy Code federal law governs, withdrawal is required only if the court “can make an ‘affirmative determination’ that resolving the claims will require ‘substantial and material consideration’ of non-Code federal law.” Id. at *5 (emphasis in text) (citation omitted); see also Howard v. Canadian Nat’l Ry. Co., 2005 WL 758446, at *1 (D. Me. Feb. 23, 2005). This standard is met if “resolving the proceeding would require a court to make a ‘significant interpretation’ or ‘engage itself in the intricacies’ of non-Code federal law, ” and is not met “where resolving the case would require only ‘simple’ or ‘routine’ application of non-Code federal law” to new facts. In re Montreal, 2015 WL 3604335, at *5 (citations omitted). “Typically, the movant’s ‘burden . . . is more easily met’ where resolution of the proceeding will include ‘matters of first impression.’” Id. (citation omitted).

Parkview argues that withdrawal is mandatory because the Amended Complaint asserts in Count XIII a cause of action under the Sherman Act, which will require “‘substantial and material consideration’ by Article III judges of the District Court[.]” ECF No. 1 at 5-6. CMHC counters that Parkview “has failed to demonstrate that its claims require any ‘substantial and material’ consideration of novel issues of first impression relating to federal anti-trust law” and that ...


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