Riley et al v. Alpert

1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.

OCR transcription for search; preserved printed pages are authoritative

Case 4:26-cv-05107 Documenti1- Filed 06/25/26 in TXSD Page 1of17

UnliteiteStStese3 dnishniptey @oturt
Southem District of Texas
ENTERED
IN THE UNITED STATES BANKRUPTCY COURT June 29, 2026
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION
IN RE: §
§ CASE NO: 26-32219
MARK R RILEY, §
§ CHAPTER 11
Debtor. §
§
MARK R RILEY, §
§
Plaintiff, §
§
VS. § ADVERSARY NO. 26-3096
§
ROMAN MERKER ALPERT and DANIEL §
JAMES ALPERT, §
§
Defendants. §

REPORT AND RECOMMENDATION
To THE UNITED STATES DISTRICT COURT
THAT DEFENDANT’S MOTION TO WITHDRAW THE REFERENCE BE DENIED
Resolving ECF No. 5

To THE HONORABLE UNITED STATES DISTRICT JUDGE

This Court respectfully submits this Report and Recommendation to the United States
District Court for the Southern District of Texas regarding the Defendants’ Motion for Withdrawal
of the Reference filed on May 7, 2026.! For the reasons set forth herein, this Court recommends
that the Motion be DENIED and that the reference of this adversary proceeding remain with the
bankruptcy court.” The issue is straightforward: whether the Defendants have established cause
for permissive withdrawal of a core bankruptcy proceeding under 28 U.S.C. § 157(d), applying
the six-factor test established by the Fifth Circuit in Holland America Insurance Company v.

Succession of Roy.’ The answer is unequivocally no.

' ECF No. 5.
2 See 28 U.S.C. § 157(d); Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992, 999 (Sth Cir. 1985).
3-777 F.2d 992, 999 (5th Cir. 1985).

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

This adversary proceeding involves a single, purely bankruptcy question: whether a
judgment debt is dischargeable under 11 U.S.C. § 727, and is not excepted from discharge under 11
U.S.C. § 523(a)(2) and (4).4 When the six Holland America factors are carefully applied to the facts
of this case, each factor weighs decisively against withdrawal. The proceeding is core; the
bankruptcy court’s prior involvement promotes uniformity and consistency; forum shopping
concerns are implicated; the bankruptcy court’s specialized expertise and existing familiarity support
economical use of resources; prompt resolution is more likely in the bankruptcy forum; and jury-
trial considerations do not support withdrawal. The Defendants have failed to carry their burden of
establishing cause for permissive withdrawal, and the reference should remain with this Court. For
the reasons set forth infra, and as required by Federal Rule of Bankruptcy 5011 and Bankruptcy
Local Rule 5011-1, this Court recommends that the reference remain with the Bankruptcy Court.5 If
the Honorable United States District Court disagrees, this Court recommends that the District Court
withdraw the reference immediately, but that the District Court then refer the instant adversary
proceeding to the undersigned judge for adjudication of the remaining pretrial matters, with the
undersigned judge thereafter notifying the Honorable United States District Court when the dispute
is ready to be tried.6
I. BACKGROUND
A. The underlying judgment and litigation history
The judgment debt at issue in this adversary proceeding arises from litigation spanning
more than two decades.7 The father of Roman Merker Alpert and Daniel James Alpert (the
“Defendants”) established the Roman Alpert Trust and the Daniel Alpert Trust (collectively, the
4 11 U.S.C. §§ 523(a)(2), (4), 727; ECF No. 1.
5 FED. R. BANKR. P. 5011(a); Bankruptcy Local Rule 5011-1.
6 28 U.S.C. § 157(d).
7 See Alpert v. Riley, No. 4:04-cv-3774 (S.D. Tex. filed Sept. 28, 2004).
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 2 of 17

“Trusts”).8 Mark R. Riley (“Debtor”), a lawyer and an accountant, worked for the Defendants’ father
and later as a trustee for the Trusts.9 Defendants specifically allege that the Debtor was employed
both with the Defendants’ father and the Trusts in a capacity as a lawyer and a financial advisor.10
Debtor came to believe that the Defendants’ father had sold his own stocks to trigger a tax loss
and then caused the Trusts to buy those same stocks, which resulted in the overpayment of taxes
by the Trusts.11 Debtor approached the Internal Revenue Service with information and records
relating to those transactions and became an informant against the Defendants’ father and the
Trusts.12 On September 28, 2004, the Defendants filed a lawsuit against the Debtor in the United
States District Court for the Southern District of Texas for disclosing confidential financial and
tax return information.13 On February 23, 2011, following a jury trial, the district court entered
judgment against the Debtor in favor of the Defendants in the following amounts: Roman Alpert:
$567,509.14 in damages for breaches of fiduciary duties owed to the Roman Alpert Trust; Daniel
Alpert: $213,952.63 in damages for breaches of fiduciary duties owed to the Daniel Alpert Trust;
Roman Alpert and Daniel Alpert (jointly): $50,365.00 in damages for breaches of fiduciary duties
owed to the Robert Alpert 1996 Children’s Trust (the “Judgment”).14 The Judgment also included
prejudgment interest at the rate of 5% per annum from November 24, 2009, until the date of
judgment, and post-judgment interest at the rate of 0.11% per annum from the date of judgment
until paid.15 The total Judgment debt, including accrued interest, exceeds $831,826.77.16
8 ECF No. 1, at 4, ¶ 10; ECF No. 5, at 2, ¶ 4.
9 ECF No. 1, at 4, ¶ 10; ECF No. 5, at 2, ¶ 5.
10 ECF No. 5, at 2, ¶ 5.
11 ECF No. 1, at 4–5, ¶ 11; ECF No. 13, at 4, ¶ 11.
12 ECF No. 1, at 4–5, ¶ 11; ECF No. 13, at 4, ¶ 11.
13 ECF No. 1, at 5-6, ¶ 15; ECF No. 5, at 3, ¶ 10; Alpert, No. 4:04-cv-3774.
14 Bankr. ECF No. 34-1, at 46; Bankr. ECF No. 50-1; Alpert, No. 4:04-cv-3774, ECF Nos. 455-62. “Bankr. ECF”
refers to docket entries made in the Debtor’s bankruptcy case, No. 26-32219. Entries made in Plaintiff’s Case No. 26-
03096 shall take the format of ECF No.__.
15 Bankr. ECF No. 50-1.
16 Id.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 3 of 17

Following entry of the judgment, the Defendants filed a Motion for Turnover Order on
January 29, 2013.17 After a hearing, the district court ordered the parties to continue working
together to resolve issues relating to the appointment of a receiver.18 The Defendants’ Motion was
subsequently granted, and a receiver was ultimately appointed.19 The receiver filed motions in the
case, which are now sealed.20 The presiding Judge, Judge Rosenthal, entered orders on the
receiver’s motions, which are also sealed.21
B. The Debtor’s first bankruptcy case and related adversary proceeding
On May 30, 2024, the Debtor filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code under Case No. 24-32473 (the “First Bankruptcy Case”).22 On September
3, 2024, the Defendants filed an adversary proceeding in the First Bankruptcy Case (Case No. 24-
03179) seeking a determination that their judgment debt was not dischargeable.23 This Court
carefully reviewed the Defendants’ adversary complaint and, on September 13, 2024, issued a sua
sponte order finding that the Defendants’ pleading was a shotgun pleading that failed to meet the
pleading standards of Federal Rule of Civil Procedure 8(a) and 9(b).24 This Court directed the
Defendants to amend their complaint to contain a more definite statement under Federal Rule of
Civil Procedure 12(e).25 On September 27, 2024, the Defendants filed a First Amended
Complaint.26 On October 22, 2024, the Defendants filed a motion for entry of default judgment.27
This Court considered the motion and denied it because the Defendants failed to serve a summons
17 Bankr. ECF No. 34-1, at 51; Alpert, No. 4:04-cv-3774, ECF No. 526.
18 Bankr. ECF No. 34-1, at 52; Alpert, No. 4:04-cv-3774, ECF Nos. 530, 534.
19 Bankr. ECF No. 34-1, at 54–55; Alpert, No. 4:04-cv-3774, ECF No. 570.
20 Bankr. ECF No. 34-1, at 56; No. 4:04-cv-3774, ECF Nos. 594, 597.
21 Bankr. ECF No. 34-1, at 56, 57; No. 4:04-cv-3774, ECF Nos. 595, 600, 604.
22 In re Riley, No. 24-32473 (Bankr. S.D. Tex. Nov. 4, 2024).
23 Alpert, No. 24-03179.
24 Alpert, No. 24-03179, at ECF No. 6.
25 Id.
26 Alpert, No. 24-03179, at ECF No. 9.
27 Alpert, No. 24-03179, at ECF No. 10.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 4 of 17

with the First Amended Complaint.28 The Debtor filed his Original Answer to the Defendants’
First Amended Complaint before the parties dismissed the adversary proceeding by agreement.29
On November 4, 2024, the First Bankruptcy Case was dismissed with prejudice for 180 days.30
C. The current bankruptcy case and adversary proceeding
On April 2, 2026, the Debtor filed this instant bankruptcy Case No. 26-32219.31 On April
6, 2026, the Debtor filed the present adversary proceeding, seeking a declaratory judgment that the
judgment debt is dischargeable under 11 U.S.C. § 727 and is not subject to any exceptions to
discharge under 11 U.S.C. § 523(a).32 On May 7, 2026, the Defendants filed the Motion for
Withdrawal of the Reference, which was filed within thirty days of the Debtor’s complaint and
before any substantive filings beyond the complaint.33 On May 27, 2026, Plaintiff filed his
Response to the Motion to Withdraw.34 The Answer to the complaint, along with counterclaims,
were filed on June 11, 2026.35
II. ANALYSIS
The United States District Courts in the Southern District of Texas are authorized by 28
U.S.C. § 157(a) to automatically refer “cases and proceedings arising under Title 11 or arising in or
related to a case under Title 11 of the United States Code” to the United States Bankruptcy Courts.36
Pursuant to § 157(d), the District Court may withdraw any case or proceeding referred under § 157
on its own motion or on timely motion of any party for cause shown.37
28 Alpert, No. 24-03179, at ECF No. 12.
29 Alpert, No. 24-03179, at ECF Nos. 11, 17, 18.
30 In re Riley, No. 24-32473, at ECF No. 59.
31 Bankr. ECF No. 1.
32 ECF No. 1, at 16; 11 U.S.C. §§ 523(a), 727.
33 ECF No. 5.
34 ECF No. 9.
35 ECF Nos. 13; 14.
36 In re: Order of Reference to Bankruptcy Judges, Gen. Order 2012–6 (S.D. Tex. May 24, 2012); 28 U.S.C. §
157(a).
37 28 U.S.C. § 157(d).
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 5 of 17

The District Court shall withdraw any case or proceeding if the court determines either that
(1) there is a valid, timely jury demand pending, or (2) resolution of the proceeding requires
consideration of both Title 11 and other laws of the United States that regulate organizations or
activities that affect interstate commerce.38
Furthermore, even if withdrawal of the reference is not mandatory, the District Court is
empowered to permissively withdraw any case or proceeding “on [the court’s] own motion or on
timely motion of any party, for cause shown.”39 The Fifth Circuit in Holland provides a list of six
factors for a district court to consider in determining whether cause is shown for permissive
withdrawal: whether “(1) the underlying lawsuit is a non-core proceeding; (2) uniformity in
bankruptcy administration will be promoted; (3) forum shopping and confusion will be reduced; (4)
economical use of debtors’ and creditors’ resources will be fostered; (5) the bankruptcy process will
be expedited; and (6) a party has demanded a jury trial.”40 The party moving for withdrawal of the
reference bear the burden of establishing grounds for permissive withdrawal.41
A. Withdrawal of the reference is not mandatory
Defendants do not address mandatory withdrawal in their motion.42 Defendants do not
assert, nor does this Court find, that this proceeding involves a substantial and material question
of non-bankruptcy law.43 Additionally, Defendants do not have a Seventh Amendment right to a
jury trial on the claims asserted against them.44
38 Id.; In re Clay, 35 F.3d 190, 198 (5th Cir. 1994).
39 28 U.S.C. § 157(d).
40 Compton v. GL Noble Denton (In re MPF Holding US LLC), Nos. 08-36084-H4-11, 10-03464, 2013 Bankr.
LEXIS 5772, at *3 (Bankr. S.D. Tex. Apr. 26, 2013) (citing Holland Am. Ins. Co., 777 F.2d at 999).
41 Holland Am. Ins. Co., 777 F.2d at 998; In re Morrison, 409 B.R. 384, 389 (S.D. Tex. 2009). Moreover, cause “can
exist only if premised upon a ‘sound articulated foundation.’” Vela v. Enron Oil & Gas Co., No. 02–5010, 2007 WL
1564562, at *6 (S.D. Tex. May 29, 2007) (quoting Holland Am. Ins. Co., 777 F.2d at 998)).
42 ECF No. 5.
43 Id.
44 See Tow v. Park Lake Cmtys., LP (In re Royce Homes, LP), 578 B.R. 748, 763 (Bankr. S.D. Tex. 2017); In re
Clay, 35 F.3d at 198.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 6 of 17

All claims asserted against Defendant in this adversary involve core matters.45 In his
Complaint, Debtor brings a Declaratory Judgment Action seeking a determination by this Court
that a certain underlying judgment debt is dischargeable under 11 U.S.C. § 727 and is not subject
to an exception to discharge under 11 U.S.C. § 523(a)(2) or (4).46 Obtaining a determination of the
dischargeability in bankruptcy of a particular debt – here the judgment debt owed by the Debtor to
the Defendants – can only occur in a bankruptcy court.47 Defendants’ motion does not articulate a
specific non-bankruptcy federal or state statute that must be materially interpreted to resolve the
adversary proceeding.48
Similarly, Defendants do not demand a jury trial and, in any case, would not be entitled to
one on the claims asserted against them.49 “Proceedings concerning the nondischargeability of
debts are equitable in nature and therefore ‘[b]ankruptcy litigants . . . have no Seventh Amendment
right to a jury trial in dischargeability proceedings.’”50 Additionally, the Declaratory Judgment
Act does not independently create a right to a jury trial.51 Instead, the right depends on the nature
of the underlying issues.52 If the issues are equitable, as they are in dischargeability determinations,
no jury trial right exists.53
Thus, withdrawal is not mandatory under section 157(d) and the analysis thus turns to
whether a permissive withdrawal is warranted in the case at bar.54
B. Defendants fail to show cause for permissive withdrawal under 28 U.S.C. § 157(d)
45 See 28 U.S.C. § 157(b)(1), (2)(b)(I); ECF No. 1 at 9.
46 ECF No. 1 at 16.
47 See 28 U.S.C. 157(b)(2)(I); In re Riedel, No. 10-51106-KMS, 2011 Bankr. LEXIS 4085, at *2 (Bankr. S.D. Miss.
Oct. 21, 2011); 11 U.S.C. § 727.
48 ECF No. 5.
49 Id; see United States v. Stanley, 595 F. App’x 314, 320 (5th Cir. 2014).
50 Stanley, 595 F. App'x at 320.
51 Dunn v. Fontenot, No. 6:21-CV-01535, 2026 U.S. Dist. LEXIS 101935, at *5 (W.D. La. May 7, 2026).
52 Id.
53 Stanley, 595 F. App’x at 320; Terrell v. De Conna, 877 F.2d 1267, 1268 (5th Cir. 1989).
54 28 U.S.C. § 157(d).
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 7 of 17

The Defendants have failed to establish cause for permissive withdrawal of the reference
under 28 U.S.C. § 157(d).55 Applying the six-factor test established by the Fifth Circuit in Holland,
all factors weigh against withdrawal.56
1. Core issues predominate the complaint, weighing against withdrawal of the reference.
The instant adversary proceeding is a core matter and this factor militates heavily against
withdrawal.57 Bankruptcy courts have the power to enter final orders and judgments if a matter is
deemed to be a “core” proceeding.58 A proceeding is “core” if it involves substantive rights provided
by the Code or could arise only in the context of bankruptcy.59 Conversely, a “non-core” proceeding
is one that could “conceivably have any effect on the estate being administered in bankruptcy.”60
Notably, the core versus non-core factor is important within the permissive withdrawal analysis, but
is not alone determinative.61 Specifically, “[w]here core issues predominate and the objectives of
the Bankruptcy Code will potentially be impaired, a district court should generally deny a motion
to withdraw the reference and permit the bankruptcy court to retain jurisdiction.”62
Dischargeability determinations constitute core bankruptcy proceedings under 28 U.S.C. §
157(b)(2)(I), and can arise only within the bankruptcy context.63 Here, Defendants have conceded
the core nature of this proceeding.64 While the Defendants correctly note that this factor alone is
55 See ECF No. 5; 28 U.S.C. § 157(d); Holland Am. Ins. Co., 777 F.2d at 999.
56 Holland Am. Ins. Co., 777 F.2d at 999.
57 See id.
58 28 U.S.C. § 157(b).
59 Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir. 1987).
60 Id. at 93.
61 In re Morrison, 409 B.R. at 392.
62 Rodriguez v. Countrywide Home Loans, Inc., 421 B.R. 341, 350 (S.D. Tex. 2009).
63 28 U.S.C. § 157(b)(2)(I).
64 ECF No. 5, at 6, ¶ 24.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 8 of 17

not determinative, it is nonetheless an important consideration that must be weighed against the
other factors.65 Thus, this factor weighs against withdrawal of the reference.66
2. Uniformity in the bankruptcy administration is neutral
Allowing a bankruptcy court familiar with the facts to “adjudicate the proceeding will
promote uniformity in the bankruptcy administration.”67 Significantly, it is important to determine
whether the bankruptcy court has become intimately familiar with the underlying facts, the parties,
and the remaining issues.68 If the bankruptcy court maintains an intimate familiarity with the case
and has dedicated a large amount of time and resources to the adversary proceeding, this factor
“weighs heavily in favor of denying” the withdrawal of the reference.69 Conversely, this factor
favors withdrawal when a motion to withdraw the reference is filed shortly after a complaint and
the court has not reached a significant level of familiarity with the case.70
Here, Plaintiff filed his Complaint on April 6, 2026.71 Defendants now file this Motion to
Withdraw the Reference within thirty days of Plaintiff’s complaint.72 Defendants characterize this
adversary as being in its infancy to suggest that the bankruptcy court has minimal involvement and
that withdrawal would cause no disruption.73 This characterization ignores the bankruptcy court’s
substantial prior engagement with the nondischargeability claims in the first bankruptcy case.74 In
adversary proceeding 24-03179, the bankruptcy court issued a sua sponte order requiring Movants to
65 ECF No. 5, at 6, ¶ 24; Curtis v. L. Off. of Rogelio Solis PLLC (In re Josiahs Trucking, LLC), Nos. 21-70009, 21-
7002, 2021 LX 41936, at *13 (Bankr. S.D. Tex. May 13, 2021).
66 See Holland Am. Ins. Co., 777 F.2d at 999.
67 In re Brit. Am. Props. III, Ltd., 369 B.R. 322, 327 (Bankr. S.D. Tex. 2007).
68 Veldekens v. GE HFS Holdings, Inc. (In re Drs. Hosp. 1997, L.P.), 351 B.R. 813, 868 (Bankr. S.D. Tex. 2006).
69 Id.
70 Waldon v. Nat'l Fire Ins. Co. (In re EbaseOne Corp.), Nos. 01-31527-H4-7 (Chapter 7), 06-3197, 2006 Bankr.
LEXIS 1861, at *14 (Bankr. S.D. Tex. June 14, 2006).
71 ECF No. 1.
72 ECF No. 5.
73 ECF No. 5, at 7, ¶ 25.
74 In re Riley, No. 24-32473.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 9 of 17

replead their allegations due to deficient shotgun pleadings under Federal Rules of Civil Procedure
8(a) and 9(b).75 Subsequently, the bankruptcy court denied Movants’ motion for default judgment on
the ground that service was defective.76 These rulings reflect meaningful judicial involvement and
familiarity with the legal and factual contours of Movants’ nondischargeability theory.77
Retention of the reference in the current proceeding promotes uniformity and consistency
in the administration of Movants’ dischargeability claims.78 The bankruptcy court’s prior rulings
on pleading standards and service requirements establish a continuity of judicial oversight that
would be disrupted by withdrawal.79 Transferring the matter to the Honorable District Court would
fragment the litigation history, potentially requiring the District Court to revisit issues already
addressed by the bankruptcy court and creating the risk of inconsistent treatment of related
claims.80 The uniformity factor thus favors retention of the reference.81
3. Forum shopping and potential for confusion
The timing and context of Defendants’ withdrawal motion warrant careful scrutiny under
the forum-shopping prong of the Holland America analysis.82 A major consideration for the
purposes of this factor is whether there is an “appearance of forum shopping” by the party.83
Defendants filed the withdrawal motion shortly after the complaint was filed in the current
adversary proceeding.84 This timing is significant because it follows the bankruptcy court’s
75 In re Riley, No. 24-03179, at ECF No. 6.
76 In re Riley, No. 24-03179, at ECF No. 12.
77 In re Riley, No. 24-03179.
78 See Compton, 2013 Bankr. LEXIS 5772, at *4 (“If a bankruptcy court is already familiar with the facts of the
underlying action, then allowing that court to adjudicate the proceeding will promote uniformity in the bankruptcy
administration.”).
79 In re EbaseOne Corp., 2006 Bankr. LEXIS 1861, at *14.
80 See Veldekens, 351 B.R. at 867.
81 See id.
82 See id. at 868 (scrutinizing the matter for forum shopping where there was a prior adverse ruling against the movant
by the same court); Holland Am. Ins. Co., 777 F.2d at 999.
83 Levine v. Blake (In re Blake), 400 B.R. 200, 206 (Bankr. S.D. Tex. 2008).
84 ECF Nos. 1, 5.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 10 of 17

adverse rulings in the prior adversary—specifically, the sua sponte repleading order and the denial
of the default-judgment motion.85 While Defendants argue that no adverse rulings occurred in this
adversary, the related-proceeding history is directly relevant to the forum-shopping inquiry. The
pattern of seeking withdrawal after encountering unfavorable rulings in the bankruptcy court
suggests an attempt to obtain a more favorable forum rather than a genuine concern about the
appropriateness of bankruptcy court jurisdiction.86 Movants’ reliance on Judge Rosenthal’s
familiarity with the underlying civil litigation does not cure this concern.87 Judge Rosenthal’s
involvement in the civil case does not provide a principled basis for withdrawing a core bankruptcy
proceeding; rather, it may reflect Movants’ preference for a judge perceived as more favorable to
their position.88 The forum-shopping factor thus weighs against withdrawal.89
4. Economical use of resources
“Bankruptcy aims to maximize the efficient use of resources to administer the debtor’s
estate and resolve related litigation.”90 Thus, “the bankruptcy court is typically in the best position
to efficiently dispose of cases because of its specialty, experience, and familiarity with the
underlying facts.”91 The bankruptcy court is well-positioned to resolve this dischargeability
dispute efficiently.92 First, the bankruptcy court possesses specialized expertise in section 523
litigation and the nuances of dischargeability determinations.93 This specialized knowledge
enables the bankruptcy court to resolve complex questions of law and fact more expeditiously than
85 In re Riley, No. 24-03179, at ECF Nos. 6, 12.
86 See Veldekens, 351 B.R. at 868.
87 See ECF No. 5, at 8, ¶ 28.
88 See Veldekens, 351 B.R. at 868.
89 See id.; Holland Am. Ins. Co., 777 F.2d at 999.
90 Compton, 2013 Bankr. LEXIS 5772, at *3.
91 Cirillo v. Valley Baptist Health Sys. (In re Cirillo), Nos. 09-10324, 13-01002, 2014 Bankr. LEXIS 1353, at *9
(Bankr. S.D. Tex. Apr. 3, 2014).
92 See id.; Holland Am. Ins. Co., 777 F.2d at 999.
93 11 U.S.C. §§ 523, 727.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 11 of 17

a district court judge who may lack comparable familiarity with bankruptcy discharge
exceptions.94 Second, the bankruptcy court’s existing familiarity with the prior adversary
proceeding (24-03179) and the underlying facts eliminates the need for duplicative fact-finding
and legal analysis.95 The court has already reviewed Defendants’ allegations, considered pleading
deficiencies, and evaluated service issues.96 Retention of the reference avoids the inefficiency of
requiring the district court to become acquainted with the same factual and legal landscape. Third,
Defendants’ argument regarding sealed materials does not justify withdrawal.97 Sealed materials
from the underlying civil litigation can be managed through appropriate access procedures and
protective orders without transferring the entire proceeding to district court.98 The bankruptcy
court has the authority and experience to implement procedures that protect confidentiality while
allowing the parties and the court to access necessary materials.99 Accordingly, the economical-
use-of-resources factor favors retention of the reference.100
5. Expedition and prompt resolution
This factor considers whether withdrawal would unduly delay administration of the
bankruptcy case.101 “A district court should consider the importance of the proceeding to the
bankruptcy case and refuse to withdraw the reference if the withdrawal would unduly delay the
administration of the bankruptcy case.”102 Withdrawal of the reference would likely delay Chapter
11 administration and plan confirmation.103 Dischargeability determinations are critical to the
94 11 U.S.C. §§ 523, 727.
95 In re Riley, No. 24-03179.
96 See In re Riley, No. 24-03179, ECF Nos. 1, 6, 12, 18.
97 ECF No. 5, at 8, ¶ 28.
98 See, e.g., FED. R. CIV. P. 26(c)(1).
99 See, e.g., FED. R. BANKR. P. 7026.
100 See Holland Am. Ins. Co., 777 F.2d at 999.
101 Lopez v. Portfolio Recovery Assocs., LLC (In re Lopez), Nos. 09-70659, 13-7019, 2017 Bankr. LEXIS 2221, at *41
(Bankr. S.D. Tex. Mar. 20, 2017).
102 Id.
103 See id.; 11 U.S.C. § 1129.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 12 of 17

debtor’s fresh start and to the feasibility of any reorganization plan.104 Transferring the matter to
the District Court would introduce additional delay as the district court becomes familiar with the
case, schedules proceedings, and addresses the merits.105 The bankruptcy court, by contrast, is
positioned to resolve the dischargeability question promptly, thereby facilitating timely plan
confirmation and administration of the estate. Again, Defendants argue that Judge Rosenthal’s
familiarity with the underlying civil litigation will expedite resolution.106 However, this argument
conflates efficiency in the civil context with efficiency in the bankruptcy context.107 Judge
Rosenthal’s knowledge of the civil judgment does not translate into expedited resolution of the
bankruptcy dischargeability question, which requires application of bankruptcy law and policy.
Moreover, transferring the matter to district court would necessitate duplicative briefing,
argument, and decision-making, offsetting any marginal benefit from Judge Rosenthal’s prior
involvement in the civil case. Dischargeability is a bankruptcy-centric determination that the
bankruptcy court is uniquely positioned to resolve promptly. The expedition factor thus weighs
against withdrawal.108
6. Jury trial considerations
The sixth Holland factor considers whether a timely jury demand is pending.109 The right
to a jury trial in adversary proceedings does not turn on whether, as a jurisdictional matter, the
proceeding is core or non-core.110 Instead, the analysis generally turns on whether the cause of
action (1) is legal or equitable in nature; and (2) involves public or private rights.111 Simply put,
104 See 11 U.S.C. § 1129(a)(11).
105 See Lopez, 2017 Bankr. LEXIS 2221, at *41.
106 ECF No. 5, at 8, ¶ 28.
107 See id.
108 See Holland Am. Ins. Co., 777 F.2d at 999.
109 Id.
110 Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989).
111 See id. at 53-54; Allison v. Citgo Petroleum Corp., 151 F.3d 402, 422–23 (5th Cir. 1998) (the Seventh Amendment
preserves the right to a jury trial in “all actions in which legal rights are to be determined.”).
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 13 of 17

if the plaintiff seeks a legal remedy, the defendant has a right to a jury trial, even if Congress has
assigned the cause of action to the bankruptcy courts as a “core” proceeding.112 Actions for
damages or money judgments are legal in nature, and a jury right attaches.113 A jury right attaches
even where a case involves both equitable and legal causes of action, regardless of whether
equitable claims dominate.114 “It would make no difference if the equitable causes of action clearly
outweighed the legal causes of action so that the basic issue of the case taken as a whole is
equitable. As long as any legal cause is involved the jury rights it creates control.”115
In his Complaint, Plaintiff brings a Declaratory Judgment Action seeking a determination
by this Court that a certain underlying judgment debt is dischargeable under 11 U.S.C. § 727 and
is not subject to an exception to discharge under 11 U.S.C. § 523(a)(2) or (4).116 Litigants are not
entitled to a jury trial in a declaratory judgment action seeking a determination that a judgment
debt is dischargeable under 11 U.S.C. § 727, and is not subject to an exception to discharge under
11 U.S.C. § 523.117 Under the Seventh Amendment, the right to a jury trial applies to “suits at
common law,” which are actions involving legal rights, as opposed to equitable rights.118
Dischargeability proceedings under the Bankruptcy Code, including those under 11 USC § 523,
are inherently equitable in nature.119 Courts have consistently held that there is no Seventh
Amendment right to a jury trial in such proceedings.120 Additionally, the Declaratory Judgment
Act does not independently create a right to a jury trial.121 Instead, the right depends on the nature
112 See Granfinanciera, S.A., 492 U.S. at 41; Allison, 151 F.3d at 422-23.
113 Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477 (1962); see also Feltner v. Columbia Pictures Television, Inc., 523
U.S. 340, 346 (1998) (“awards of actual damages and profits . . . generally are thought to constitute legal relief.”).
114 See Duncan v. First Nat’l Bank of Cartersville Ga., 597 F.2d 51, 56 (5th Cir. 1979).
115 Id. (citation omitted).
116 ECF No. 1, at 9; 11 U.S.C. §§ 523(a)(2), (4), 727.
117 See Stanley, 595 F. App’x at 320 (5th Cir. 2014).
118 Hosseini-Browder v. Hosseini, No. 25-50190, 2026 U.S. App. LEXIS 5487, at *4 (5th Cir. Feb. 24, 2026).
119 Stanley, 595 F. App’x at 320.
120 See, e.g., id.; In re Country Junction, Inc., 41 B.R. 425, 430 (W.D. Tex. 1984); In re Choi, 135 B.R. 649, 651 (Bankr.
N.D. Cal. 1991).
121 Dunn, 2026 U.S. Dist. LEXIS 101935, at *5.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 14 of 17

of the underlying issues.122 If the issues are equitable, as they are in dischargeability
determinations, no jury trial right exists.123
In this context, dischargeability determinations are equitable because they involve the
administration of bankruptcy law and the equitable distribution of the debtor’s estate.124 Since
dischargeability proceedings are equitable, there is no jury trial in this context.125 Here, Defendants
concede that they did not make a jury demand.126 This concession is significant because it
undermines any rationale for withdrawal based on jury trial considerations. Defendants’
suggestion that withdrawal might facilitate a single jury trial is inconsistent with their concession
that no jury demand has been made and with the equitable character of dischargeability
litigation.127 The jury-trial factor thus weighs against withdrawal.128
III. CONCLUSION
For the reasons stated supra, when the six Holland America factors are carefully applied to
the facts of this case, each factor weighs decisively against withdrawal. The proceeding is core; the
bankruptcy court’s prior involvement promotes uniformity and consistency; forum shopping
concerns are implicated; the bankruptcy court’s specialized expertise and existing familiarity support
economical use of resources; prompt resolution is more likely in the bankruptcy forum; and jury-
trial considerations do not support withdrawal. The Defendants have failed to carry their burden of
establishing cause for permissive withdrawal, and the reference should remain with this Court. For
the reasons set forth supra, and as required by Federal Rule of Bankruptcy 5011 and Bankruptcy
122 Id.
123 Stanley, 595 F. App’x at 320; Terrell, 877 F.2d at 1268.
124 Stanley, 595 F. App’x at 320.; In re Country Junction, Inc., 41 B.R. at 429.
125 See Stanley, 595 F. App’x. at 320.; In re Country Junction, Inc., 41 B.R. at 429.
126 ECF No. 5, at 8, ¶ 29.
127 See ECF No. 5, at 8, ¶ 28; Stanley, 595 F. App’x at 320.
128 Holland Am. Ins. Co., 777 F.2d at 999.
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 15 of 17

Local Rule 5011-1, this Court recommends that the reference remain with the Bankruptcy Court.129
If the Honorable United States District Court disagrees, this Court recommends that the District
Court withdraw the reference immediately, but that the District Court then refer the instant adversary
proceeding to the undersigned judge for adjudication of the remaining pretrial matters, with the
undersigned judge thereafter notifying the Honorable United States District Court when the dispute
is ready to be tried.130
SIGNED Thursday, June 25, 2026
________________________________
Eduardo V. Rodriguez
Chief United States Bankruptcy Judge
129 FED. R. BANKR. P. 5011(a); Bankruptcy Local Rule 5011-1.
130 28 U.S.C. § 157(d).
Case 4:26-cv-05107 Document 1 Filed 06/25/26 in TXSD Page 16 of 17

Case 4:26-cv-05107
Document 1 Filed 06/25/26 in TXSD Page 17 of 17