United States District Court, N.D. Texas, Fort Worth Division
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
RAY, JR. UNITED STATES MAGISTRATE JUDGE
foreclosure-related case was automatically referred to the
undersigned for pretrial management pursuant to Special Order
3 on December 31, 2018. (ECF No. 5). Before the Court is
Freedom Mortgage Corporation's (“Freedom”)
Motion to Invoke the Bankruptcy Reference (ECF No. 43) filed
on May 21, 2019. By Order dated May 22, 2019 (ECF No. 44),
the Court ordered Plaintiff William Paul Burch
(“Burch”) to file any response to the Motion on
or before June 3, 2019. Burch has not done so.
the case constitutes a core proceeding arising under title 11
or arising in a case under title 11, it should be referred to
the appropriate bankruptcy judge in this district.
Accordingly, the undersigned RECOMMENDS that
United States District Judge Reed O'Connor withdraw the
case from the undersigned and refer it to United States
Bankruptcy Judge Mark X. Mullin pursuant to this Court's
Miscellaneous Order No. 33.
2006, Burch obtained a mortgage loan from Freedom on a
property located at 203 Hemlock in Arlington, Texas
(“the Hemlock Property”). (ECF No. 17 at 2). On
December 1, 2008, he filed for Chapter 11 bankruptcy to
prevent foreclosure on multiple properties that he owned,
including the Hemlock Property. (Id.). See
also Cause No. 08-45761-rfn11. Burch alleges that at the
time of his 2008 bankruptcy, “Chase Bank or Chase
Properties (now JPMorgan Chase Bank[, ] N.A.)”
(“Chase”) was the mortgagee on the loan.
(Id. at 3). On December 9, 2009, the bankruptcy
court approved a plan that allegedly voided the terms of the
original mortgage loan. (Id.; see also ECF
No. 43 at 1-2). The plan also set out new terms for the
mortgage loan, which are disputed by the parties. (ECF No. 17
at 3). Also, in dispute is whether Chase or one of the other
Defendants still has a valid lien on the Hemlock Property.
(Id. at 4). The 2008 bankruptcy case was closed on
September 11, 2012. (ECF No. 43 at 2).
December 28, 2012, Burch filed for Chapter 13 bankruptcy.
(Id.). See Cause No. 12-46959-mxm7. The
case converted to Chapter 11 in 2013. (Id.).
See Cause No. 12-46959-mxm7, ECF No. 100. Freedom,
the mortgage servicer, filed a proof of claim concerning the
Hemlock Property. (ECF No. 43 at 2). On February 1, 2016, the
bankruptcy court entered an order confirming Burch's plan
of reorganization (“the Plan”). (Id.).
The order states as follows:
regarding the Class 9 Allowed Secured Claim of Seterus, Inc.,
as the Authorized Subservicer for . . . (‘Fannie
Mae'), Creditor c/o Seterus, Inc[.], on the Effective
Date . . . (the ‘Hemlock Property') shall be
surrendered to the holder of the Allowed Class 9 Claim and
the claim shall be deemed paid in full. Upon the Effective
Date[, ] the automatic stay shall lift without further order
of this Court to allow the Class 9 claimant, or its assigns
or successors in interest, to take . . . all steps necessary
to exercise any and all rights it may have in the Hemlock
Property . . . .
No. 43-2 at 10).
order further provided “that the [bankruptcy court]
shall retain jurisdiction to the maximum extent possible to
enforce the Plan, interpret the Plan, and provide for all
proceedings and matters for which jurisdiction is preserved
by the Plan, and otherwise . . . .” (Id.).
case then converted to Chapter 7 on January 30, 2018.
See Cause No. 12-46959-mxm7, ECF No. 354. In August
2018, the bankruptcy court entered an order allowing the
trustee to abandon the Hemlock Property based on the
trustee's assertion that offers received for its sale
were insufficient to pay the outstanding principal balance of
the mortgage and closing costs. Id. at ECF No. 466.
The bankruptcy court's order also stated that it retained
jurisdiction to hear and determine all matters “arising
from or related to the implementation, interpretation and/or
enforcement of this Order.” Id. at ECF No.
514. Burch's bankruptcy case, originally filed in 2012,
is still open. (ECF No. 43 at 3). Freedom now moves the Court
to refer the case to Judge Mullin, presiding judge in Cause
No. 12-46959-mxm7. (Id. at 6). Freedom has informed
the Court that its Co-Defendants do not oppose the Motion.
(Id. at 9).
28 U.S.C. § 157(a), “each district court may
provide that proceedings arising under title 11 as core
proceedings or arising in or related to a case under title
11, shall be referred to the bankruptcy judges for the
district.” The Fifth Circuit has held that a proceeding
is “core” if “it invokes a substantive
right provided by title 11 or if it is a proceeding that, by
its nature, could arise only in the context of a bankruptcy
case.” Wood v. Wood (In re Wood), 825 F.2d 90,
97 (5th Cir. 1987). The district court may also refer a case
to the bankruptcy judge if the case is related to a
bankruptcy case. In re Wood, 825 F.2d at
93. A case is “related” to a bankruptcy
proceeding if “the outcome of [the non-bankruptcy]
proceeding could conceivably have any effect on the estate
being administered in bankruptcy.” Id.
(quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994
(3rd Cir. 1984)).
should refer a case to the bankruptcy court if two conditions
are met: (1) the court normally would refer the case to the
bankruptcy court under Miscellaneous Order No. 33 for the
Northern District of Texas; and (2) the court would be
unlikely to withdraw the reference under 28 U.S.C. §
157(d). Texas United Hous. Program, Inc. v. Wolverine
Mortg. Partner Ret., No. 3:17-CV-977-L, 2017 WL 3822754,
at *3 (N.D. Tex. July 18, 2017). A court may permissively
withdraw the reference from the bankruptcy court for cause
shown. 28. U.S.C. § 157(d). Withdrawal to the district
court is mandatory, however, if on a timely motion by a party
the court determines “resolution of the proceeding
requires consideration of both title 11 and other laws of the
United States regulating organizations or activities
affecting interstate commerce.” Id.