United States District Court, D. South Carolina, Florence Division
In re DOZIER FINANCIAL, INC., Debtor.
MICHAEL A. DOZIER; SEQUENCE FINANCIAL SPECIALISTS LLC; WEBSTERROGERS, LLP; WEBSTERROGERS FINANCIAL ADVISORS, LLC; SHILSON, GOLDBERG, CHEUNG & ASSOCIATES; and WILLCOX, BUYCK, AND WILLIAMS, P.A., Defendants. JANET B. HAIGLER, Trustee, Debtor,
ORDER ADOPTING THE REPORT AND RECOMMENDATION AND
GRANTING THE CORPORATE DEFENDANTS' MOTION TO WITHDRAW
REFERENCE OF ADVERSARY PROCEEDING
GEIGER LEWIS, UNITED STATES DISTRICT JUDGE.
matter arises out of the July 29, 2014 involuntary petition
for relief under Chapter 7 of the Bankruptcy Code, 11 U.S.C.
§§ 101 et seq., filed against Dozier Financial,
Inc. (Debtor), in the United States Bankruptcy Court for the
District of South Carolina (Bankruptcy Court) styled as
In re: Dozier Financial, Inc., Bankruptcy No.
14-04262-HB (bankruptcy case). On December 27, 2017,
Janet B. Haigler, the Chapter 7 Trustee (Trustee), filed
Adversary Proceeding No. 17-80113-HB in the Bankruptcy Court
against Michael A. Dozier (Dozier), as well as corporate
defendants Sequence Financial Specialists LLC (Sequence);
WebsterRogers, LLP and WebsterRogers Financial Advisors, LLC
(collectively WebsterRogers); Shilson, Goldberg, Cheung &
Associates (SGC); and Willcox, Buyck & Williams, P.A.
(Willcox) (collectively Corporate Defendants). The Corporate
Defendants filed the instant matter in this Court on July 10,
2018 as a motion to withdraw the refence of the adversary
proceeding. ECF No. 1. The Court has jurisdiction under 28
U.S.C. § 1331.
matter is before the Court for review of the Report and
Recommendation (Report) of the United States Magistrate Judge
suggesting to the Court the Corporate Defendants' motion
to withdraw the reference be granted. The Report was made in
accordance with 28 U.S.C. § 636 and Local Civil Rule
73.02 for the District of South Carolina.
Standard of Review
Magistrate Judge makes only a recommendation to this Court.
The recommendation has no presumptive weight. The
responsibility to make a final determination remains with the
Court. Mathews v. Weber, 423 U.S. 261, 270 (1976).
The Court is charged with making a de novo determination of
those portions of the Report to which specific objection is
made, and the Court may accept, reject, or modify, in whole
or in part, the recommendation of the Magistrate Judge or
recommit the matter with instructions. 28 U.S.C. §
Magistrate Judge filed the Report on September 6, 2018. ECF
No. 12. The Trustee filed objections to the Report on
September 19, 2018. ECF No. 15. The Corporate Defendants
replied to the Trustee's objections on October 8, 2018.
ECF No. 17. Dozier failed to respond to the Report but he
advised the Magistrate Judge he did not take a position on
the pending motion. ECF No. 12 at 2.
Discussion and Analysis
Report recommends this Court grant the Corporate
Defendants' motion to withdraw the reference and direct
the underlying adversary proceeding to be filed as a separate
case in this Court. The Trustee objects to the Magistrate
Judge's recommendation and insists the adversary
proceeding is properly filed in the Bankruptcy Court and
therefore the Corporate Defendant's motion to withdraw
the reference should be denied. Specifically, the Trustee
asserts in her objections: (1) the Magistrate Judge erred in
assessing the timeliness of the Corporate Defendants'
motion; (2) the Magistrate Judge erred in finding mandatory
withdrawal appropriate; and (3) the Magistrate Judge erred in
finding permissive withdrawal appropriate. ECF No. 15 at 2.
The Court will address each of the Trustee's objections
preliminary matter, the local rules for this District
automatically refer “to the bankruptcy judges for this
district all cases under Title 11 [the Bankruptcy Code] and
all proceedings arising under Title 11 or arising in or
related to a case under Title 11.” Local Civ. R.
83.IX.01 (D.S.C.) However, Title 28, 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). The first sentence of §157(d)
is commonly referred to as “permissive
withdrawal”; the second sentence is referred to as
“mandatory withdrawal” of proceedings referred to
the Bankruptcy Court. See Houck v. Substitute Tr. Servs.,
Inc., 791 F.3d 473 (4th Cir. 2015). The Magistrate Judge
suggested the Corporate Defendants meet the requirements for
both mandatory and permissive withdrawal in this case.
Court will first consider the Trustee's objection to the
Magistrate Judge's recommendation the Corporate
Defendants' motion to withdraw the reference was timely.
The Trustee objects to the Magistrate Judge's conclusion
the Corporate Defendants did not impliedly consent to the
jurisdiction of the Bankruptcy Court when they filed motions
to dismiss for improper venue, alternative motions to
transfer venue, and motions to dismiss under Fed.R.Civ.P.
12(b)(6) in the Bankruptcy Court. The Trustee acknowledges
the Corporate Defendants explicitly withheld consent to
jurisdiction by the Bankruptcy Court by including language to
that effect in their motion to dismiss filed in the
Bankruptcy Court, but the Trustee asserts this attempt to
withhold consent to jurisdiction is ineffective because the
Corporate Defendants still sought the Bankruptcy Court's
dismissal of the Complaint. In response, the Corporate
Defendants assert courts in other jurisdictions have
routinely granted motions to withdraw in similar situations
where the motion to withdraw was filed in district court
prior to, or simultaneously with, the filing of an answer in
Bankruptcy Court and before the parties exchanged any
bankruptcy judge may enter appropriate orders and judgments
in all core proceedings arising under Title 11. See
28 U.S.C.A. § 157(b)(1). A bankruptcy judge may also
enter dispositive orders in non-core proceedings otherwise
related to a case under Title 11 as long as the parties
consent to such jurisdiction. Canal Corp. v. Finnman (In
re Johnson), 960 F.2d 396, 402 (4th Cir. 1992). The
consent of the parties may be implied from the conduct of the
parties. Id. at 403-04. The Court agrees with the
Magistrate Judge's conclusion the Corporate
Defendants' motion to withdraw the reference is timely.
Not only did the Corporate Defendants file their motion to
withdraw the reference before all responsive pleadings were
due in the Bankruptcy Court, but they also filed the motion
prior to filing their Answer and prior to the exchange of any
discovery. The only activity that occurred since the Trustee
filed the Complaint in Bankruptcy Court were motions on the
pleadings. In addition, the Corporate Defendants explicitly
withheld their consent ...