Schmidt v. FCCI Insurance Company

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
IN RE:
GARCIA GRAIN TRADING CORP.,
Debtor.
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CASE NO: 23-70028
CHAPTER 11
RICHARD S. SCHMIDT,
Plaintiff,
VS. ADVERSARY NO. 24-7009
FCCI INSURANCE COMPANY,
Defendant.
REPORT AND RECOMMENDATION
TO THE UNITED STATES DISTRICT COURT THAT
DEFENDANT’S MOTION TO WITHDRAW THE REFERENCE BE DENIED
Resolving ECF No. 32
Pending before the Court is a single pleading filed by FCCI Insurance Company,
(“Defendant”) self-styled as “Motion to Withdraw.”1 For the reasons set forth infra, and as required
by Federal Rule of Bankruptcy Procedure 5011 (“Bankruptcy Rule”) and Bankruptcy Local Rule
5011-1, this Court recommends that Defendant’s Motion to Withdraw be denied because the
Defendant waived its jury trial right and consented to entry of a final judgment by this Bankruptcy
Court.2 If the Honorable U.S. District Court (“District Court”) finds that the Defendant did not
waive its jury trial right, this Court requests that it be permitted to retain the case and proceed with
the jury trial. But if the District Court finds that the jury trial should not take place in the
Bankruptcy Court, this Court asks that the District Court withdraw the reference immediately but
1 ECF No. 32.
2 See infra, II.A.4(a)-(b).
United States Bankruptcy Court
Southern District of Texas
ENTERED
November 20, 2025
Nathan Ochsner, Clerk
United States District Court
Southern District of Texas
ENTERED
November 21, 2025
Nathan Ochsner, Clerk
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then refer the instant adversary proceeding to the undersigned judge for adjudication of all
remaining pretrial matters, with the undersigned judge thereafter notifying the District Court when
the dispute is ready for trial.
I. PROCEDURAL HISTORY
1. On December 30, 2024, Richard S. Schmidt, Trustee of the Garcia Grain Chapter 11 Trust,
(“Trustee or Plaintiff”) filed the “Plaintiff’s Original Complaint Regarding Insurance
Proceeds” (“Complaint”).3
2. On February 6, 2025, Defendant filed the “Defendant’s Original Answer And Defenses,”
(“Answer”) and made a jury demand therein.4
3. On March 5, 2025, the parties filed their “Joint Rule 26(f) Report.”5
4. On April 11, 2025, this Court entered its “Comprehensive Scheduling, Pre-Trial & Trial
Order.”6
5. On July 16, 2025, Defendant filed its “FCCI Insurance Company’s Motion for Partial
Summary Judgment And Brief In Support” (“Motion for Partial Summary Judgment”).7
6. On August 20, 2025, Plaintiff timely filed its “Plaintiff’s Response To Defendant’s Motion
For Partial Summary Judgment” (“Response to Motion for Summary Judgment”).8
7. On August 21, 2025, this Court issued its “Order Denying Defendant’s Motion for Partial
Summary Judgment.”9
8. On September 12, 2025, Defendant filed the instant “Motion To Withdraw.”10
9. On October 3, 2025, Plaintiff filed his “Response to Defendant’s Motion To Withdraw”
(“Response to Defendant’s Motion to Withdraw”).11
3 ECF No. 1.
4 ECF No. 9, at 10.
5 ECF No. 15.
6 ECF No. 17.
7 ECF No. 19.
8 ECF No. 26.
9 ECF No. 27.
10 ECF No. 32.
11 ECF No. 36.
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II. ANALYSIS
A. Jury demand and motion to withdraw the reference
As a preliminary matter, Defendant fails to undertake any analysis of the full set of factors
to be considered before a district court will withdraw a case from a bankruptcy court. Not a single
factor is discussed in Defendant’s Motion to Withdraw. Nevertheless, this Court will conduct its
own analysis of the factors, after deciding whether Defendant has made a valid and timely jury
demand.
1. Defendant made a timely jury demand
Bankruptcy Rule 9015 incorporates Federal Rule of Civil Procedure (“Rule”) 38 regarding
jury trials, “but a demand for a jury trial under Fed. R. Civ. P. 38(b) . . . must be filed in accordance
with Rule 5005.”12 Under Rule 38(b)(1), “a party may demand a jury trial by: (1) serving the other
parties with a written demand . . . no later than 14 days after the last pleading directed to the issue
is served.”13 Otherwise, a party waives the right to a jury trial.14 The last pleading directed to the
issue of Plaintiff’s claims was Defendant’s Answer, which was filed on February 6, 2025, and
included a jury demand.15 The jury demand in the Defendant’s Answer was therefore timely.
2. Defendant is entitled to a jury trial
Although Defendant is entitled to a jury trial, Defendant has waived that right because it
engaged in substantive litigation, requested a dispositive judgment, and failed to request
withdrawal of the reference in a timely manner.16 The right to a jury trial in an adversary
proceeding does not turn on whether, as a jurisdictional matter, the proceeding is core or non-
12 Fed. R. Bankr. P. 9015(a) (generally requiring filing papers with the court clerk).
13 Fed. R. Civ. P. 38(b)(1) (emphasis added).
14 Fed. R. Civ. P. 38(d).
15 ECF No. 9, at 10.
16 See infra, II.A.3.
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core.17 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.18 Simply put, 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.19 Actions for damages or money judgments are
legal in nature, and a jury right attaches.20 A jury right attaches even where a case involves both
equitable and legal causes of action, regardless of whether equitable claims dominate. “It would
make no difference if the equitable cause [of action] clearly outweighed the legal cause [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.”21 The reference should be withdrawn if the requesting
party can prove both: (i) a right to a jury trial; and (ii) the parties do not consent to a bankruptcy
court overseeing the jury trial.22 Defendant fails to meet either prong of that test.
In his Complaint, Trustee pled the following causes of action: (i) Count 1 – Violations of
Texas Insurance Code, Section 541; (ii) Count 2 – Violations of the Texas Insurance Code, Section
542; (iii) Count 3 – Breach of Contract; (iv) Count 4 – Statutory Interest; (v) Count 5 – Breach of
Duty of Good Faith & Fair Dealing; (vi) Count 6 – Punitive Damages for Bad Faith; and (vii)
Resulting Legal Damages.23 Nevertheless, actions at law, such as for the recovery of a money
17 See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989).
18 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”); In re Yazoo Pipeline Co.,
459 B.R. 636, 641–42 (Bankr. S.D. Tex. 2011).
19 See Allison, 151 F.3d at 422–23.
20 Dairy Queen v. Wood, 369 U.S. 469, 476 (1962); see also Feltner v. Columbia Pictures Television, Inc., 523 U.S.
340, 346 (1998) (“[A]wards of actual damages and profits . . . generally are thought to constitute legal relief.”).
21 Duncan v. First Nat’l Bank, 597 F.2d 51, 56 (5th Cir. 1979) (quoting Thermo-Stitch, Inc. v. Chemi-Cord Processing
Corp., 294 F.2d 486, 491 (5th Cir. 1961).
22 Mobley v. Quality Lease (In re Quality Lease), Nos. 14-60074, 14-6005, 2016 Bankr. LEXIS 297, at *16 (Bankr.
S.D. Tex. Feb. 1, 2016).
23 ECF No. 1, at 14-18.
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judgment, are entitled to a jury trial24 and Trustee seeks to recover $9.2 million plus attorneys’
fees.25
The Court finds that the Seventh Amendment right to a jury trial necessarily applies to
Trustee’s causes of action. Moreover, courts uniformly hold that a defendant in a fraudulent
conveyance action who has not filed a claim is entitled to a jury trial notwithstanding Congress’
characterization of the action as a core proceeding.26 Defendant has not filed a proof of claim in
this case. Because Trustee seeks to recover money and Defendant has not filed a proof of claim,
Defendant has a Seventh Amendment right to a jury trial of Trustee’s remaining claims.27 Finally,
it is well settled that bankruptcy courts lack the statutory authority to conduct jury trials without
the consent of all the parties.28 Defendant has not consented to a jury trial before this Bankruptcy
Court.
3. Defendant waived its jury trial rights
Although Defendant is entitled to a jury trial, it waived that right by engaging in substantive
litigation, requesting a dispositive judgment from this Court, and failing to request withdrawal of
the reference in a timely manner. “Once a jury has been demanded, and once at least one of the
parties refuses to consent to the conduct of the jury trial by the bankruptcy court, the bankruptcy
court can longer conduct the trial of the matter unless neither party timely seeks to withdraw the
24 Granfinanciera, 492 U.S. at 48.
25 See ECF No. 1 at 18, ¶¶ 99-100.
26 In re Clay, 35 F.3d 190, 194 (5th Cir.1994) (holding that defendants had Seventh Amendment right to jury trial on
preference and fraudulent transfer claims and stating that “[r]egardless of whether one characterizes a proceeding as
core or noncore, a case is not a public rights case if a litigant has a Seventh Amendment right to a trial by jury”);
Levine v. M & A Custom Home Builder & Dev., LLC, 400 B.R. 200, 205 (S.D. Tex. 2008) (withdrawing reference and
holding that defendants have a right to a jury trial on fraudulent transfer claims).
27 Levine v. Blake (In re Blake), 400 B.R. 200, 205-07 (Bankr. S.D. Tex. 2008); see also, e.g., Dairy Queen, 369 U.S.
at 476; Feltner, 523 U.S. at 353.
28 In re Blackwell, 279 B.R. 818, 821 (Bankr. W.D. Tex. 2002); In re Drs. Hosp. 1997, L.P., 351 B.R. 813, 834
(Bankr. S.D. Tex. 2006).
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reference.”29 If neither party timely moves to withdraw the reference, the bankruptcy court may
construe that failure as “a waiver of the party’s right to a jury trial.”30
Here, Defendant waived its right to a jury trial by engaging substantively in litigation—
including a request that this Court issue a dispositive judgment31—and delaying its request to
withdraw the reference until after Defendant lost on its motion for summary judgment and decided
to pursue (what it perceives to be) a more favorable venue. Defendant’s transparent “attempt[] to
resurrect a dormant demand for a jury trial for the sole purpose of forum shopping”32 is a clear
sign of gamesmanship that will not be tolerated by this Court. Here, the clear sign of gamesmanship
occurred where there was no evidence that Defendant intended to pursue its jury demand until
after it filed a dispositive motion33 that was denied by this Court. Because this is nothing more
than a forum-shopping exercise, Defendant waived its right to a jury trial.
4. Defendant has expressly and impliedly consented to the entry of a final judgment on all
non-core matters before the United States Bankruptcy Court
a. Express consent
In the Fifth Circuit, parties may consent to bankruptcy jurisdiction, and “[s]uch consent
may be either express or implied.”34 The analysis as to whether a party has consented requires “a
deeply fact bound analysis of the procedural history.”35 In Saenz v. Gomez, the Fifth Circuit upheld
29 In re Blackwell, 279 B.R. at 819.
30 Id. at 820.
31 ECF No. 19.
32 Veldekens v. GE HFS Holdings, Inc. (In re Doctors Hosp. 1997, L.P.), 351 B.R. 813, 852 (Bankr. S.D. Tex.
2006) (finding that months of litigation was “inconsistent” with a desire for a jury trial and that if the demanding
party “wanted to have a jury trial, they could have filed a Motion to Abstain immediately upon the filing of their
First Amended Complaint in November of 2005; their failure to do so requires a finding by this Court that they
have waived their right to a jury trial”). But courts are clear that time is not the dispositive factor in the analysis:
“[w]hen considering waiver, the passage of time is less relevant than the appearance of forum shopping.” In re
Blake, 400 B.R. at 206.
33 ECF No. 27.
34 Saenz v. Gomez (In re Saenz), 899 F.3d 384, 391 (5th Cir. 2018) (quoting Wellness Int'l Network, Ltd. v. Sharif,
575 U.S. 665, 685 (2015)).
35 Id.
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a bankruptcy court’s jurisdiction and finding of implied waiver where: (i) the party requesting
withdrawal had submitted “a pre-trial statement in which they listed no jurisdictional issues;” (ii)
the party was represented by bankruptcy counsel; and (iii) voluntarily participated in proceedings
“including seeking affirmative relief by filing Rule 12(b)(6) motions.”36 If a party consents to a
bankruptcy court’s jurisdiction, then the court has “both statutory and constitutional authority.”37
Here, Defendant expressly consented to this Court’s jurisdiction in two ways, to wit: (i) in
its Answer, Defendant stated “[Defendant] admits that this federal bankruptcy court has
jurisdiction to hear this matter”38 and “[Defendant] does not dispute that this adversary proceeding
is a dispute pursuant to 28 U.S. § 157(a) and (b)(2)(O) because it involves the administration of
property of the bankruptcy estate;”39 and (ii) in the parties’ joint Rule 26(f) report, Defendant and
Plaintiff both confirmed: “[t]his Adversary Proceeding is brought pursuant to Bankruptcy Rule
7001 and arises under 28 U.S. Code § 157 and 28 U.S. § 1332(a).
This Court has exclusive jurisdiction over this action pursuant to 28 U.S. §§ 157 and
1334, and Bankruptcy Rule 7001.”40 The parties further confirmed that neither party disagreed
with the jurisdictional allegations.41 Each of the above statements act as express consent to this
Bankruptcy Court’s jurisdiction. Defendant’s implied consent is also present here.42
b. Implied consent
In Excluded Lenders v. Serta Simmons Bedding, L.L.C., the Fifth Circuit found a party
“impliedly consented to [the bankruptcy court’s] authority by requesting that it enter summary
36 Id.
37 Van Deelen v. Dickson (In re McDermott Int'l, Inc.), No. 23-20436, 2024 U.S. App. LEXIS 21036, at *8 (5th Cir.
2024).
38 ECF No. 9, at 2, ¶ 5.
39 ECF No. 9, at 2, ¶ 6.
40 ECF No. 15, at 2, ¶ 3.
41 Id. ¶ 4.
42 See infra, II.A.4.b.
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judgment.”43 Additionally, in Ward v. Cross Keys Bank, the Fifth Circuit further upheld a District
Court’s finding of implied consent where a party was asked to provide “a statement giving a yes-
or-no answer to whether they consented to judgment by the bankruptcy court,” the party failed to
respond to the request on consent, but “they continued to file and amend pleadings and otherwise
participated in the adversary proceeding.”44 Here, the same implied consent exists as that
referenced in Excluded Lenders and in Ward.
First, as in Ward, this Court’s Comprehensive Scheduling Pre-Trial and Trial Order
dictates that no later than:
Monday, May 12, 2025, a Notice of Consent or Non-Consent, as required by BLR
7008-1 and 7012-1, to the entry of final orders by the United States Bankruptcy
Court on all non-core matters must be filed. Any Party who fails to file their
Notice of Consent or Non-Consent by the deadline imposed in Paragraph 3 of
this Order or Fed. R. Bankr. P. 9027(e)(3) if applicable, will have been deemed
to have Consented to the entry of final orders or judgments by the United
States Bankruptcy Court on all non-core matters.45
Thus, since Defendant did not file its Notice of Consent or Non-Consent as set forth in this
Court’s Order, it has impliedly consented to this Court’s entry of final judgment on all non-core
matters.
Additionally, Bankruptcy Local Rule 7012-1 requires that “if a responsive pleading contains
a statement that the proceeding or any part of it is core,” which Defendant’s Answer46 did, then “it
shall contain a statement that the pleader does or does not consent to the entry of final orders or
judgment by the bankruptcy judge if it is determined that the bankruptcy judge, absent consent of
the parties, cannot enter final orders or judgment consistent with Article III of the United States
43 Excluded Lenders v. Serta Simmons Bedding, L.L.C. (In re Serta Simmons Bedding, L.L.C.), 125 F.4th 555, 574 (5th
Cir. 2024).
44 Ward v. Cross Keys Bank (In re Karcredit, LLC), No. 21-30649, 2022 U.S. App. LEXIS 25116, at *10 (5th Cir.
2022).
45 ECF No. 17, at 1, ¶ 2.
46 ECF No. 9, at 2, ¶ 6.
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Constitution.”47 Defendant did not explicitly reference Bankruptcy Local Rule 7012-1 in its
Answer, but it did state that this Court “has exclusive jurisdiction over this action pursuant to 28
U.S. §§ 157 and 1334, and Bankruptcy Rule 7001” and that “this federal bankruptcy court has
jurisdiction to hear this matter.”48
Additionally, after Defendant submitted its Answer, the parties issued their Joint Rule 26(f)
Report, which included a question regarding Defendant’s consent to this Bankruptcy Court’s
jurisdiction. Rather than remaining silent as the challenging party in Ward did, Defendant
affirmatively confirmed the Bankruptcy Court’s exclusive jurisdiction.49
Last, but certainly not least, Defendant specifically asked this Court to enter a final
judgment by filing its Motion for Partial Summary Judgment.50 In its Motion for Partial Summary
Judgment, Defendant sought a final judgment from this Court “dismiss[ing] with prejudice the
following claims: (a) ‘business interruption’ breach of contract and extracontractual claims,
because the lease and/or operating agreement in question was entered after the date of loss in
question; (b) [a]ny breach of contract and/or extracontractual claims for loss rents, because the
insured did not procure loss rents coverage; (c) [c]laims for delay on the building payment(s).”51
Defendant could only ask the instant Bankruptcy Court to issue a final judgment by
impliedly consenting to the Bankruptcy Court’s ability to issue such a judgment. In other words,
if Defendant did not believe the instant Court could issue a final judgment in this matter, then
Defendant could not and should not have asked this Court for dispositive relief. As a result,
Defendant cannot now say that it never consented to this Court’s jurisdiction. So, even if Defendant
47 Bankruptcy Local Rule 7012-1.
48 ECF No. 9, at 2, ¶¶ 4-5.
49 ECF No. 15, at 2, ¶ 3 (“This Adversary Proceeding is brought pursuant to Bankruptcy Rule 7001 and arises under
28 U.S. Code § 157 and 28 U.S. § 1332(a). This Court has exclusive jurisdiction over this action pursuant to 28 U.S.
§§ 157 and 1334, and Bankruptcy Rule 7001.”).
50 ECF No. 19.
51 ECF No. 19, at 16.
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is entitled to a jury trial, Defendant has consented to the instant Bankruptcy Court overseeing that
jury trial.
c. Plaintiff has expressly consented to this Court’s jurisdiction
Defendant refers to Plaintiff’s refusal to consent to a jury trial as an independent reason
that the Bankruptcy Court should not oversee a jury trial in this case.52 But in its Response to
Defendant’s Motion to Withdraw, Plaintiff states “Plaintiff does expressly consent to the
jurisdiction of the Bankruptcy Court. And, if [Defendant] has a right to a jury trial, then Plaintiff
consents to the Bankruptcy Court overseeing that jury trial.”53
5. Defendant’s motion to withdraw the reference was untimely
A timely motion for withdrawal of the reference must be made in accordance with 28
U.S.C. § 157(d), which provides that the district court may withdraw a case or proceeding referred
to a bankruptcy court “on its own motion or on timely motion of any party, for cause shown.” The
timeliness of such a motion is determined by the specific circumstances of the case, including the
timing of the motion relative to the events necessitating withdrawal and whether the motion was
filed before significant proceedings occurred in the bankruptcy court.54 Courts in the Fifth Circuit
have emphasized that untimely motions may result in waiver of the right to seek withdrawal.55 The
statute does not define “timely,” but courts have interpreted this requirement to mean that the
motion should be filed promptly after the event or circumstances giving rise to the need for
withdrawal. For example, in In re Fresh Approach, Inc., the court held that a motion filed 16 days
after the court’s decision resolving legal questions requiring consideration of the Bankruptcy Code
52 ECF No. 32, at 2.
53 ECF No. 36, at 10, ¶ 26.
54 See In re Fresh Approach, Inc., 51 B.R. 412, 415 (Bankr. N.D. Tex. 1985).
55 In re Blackwell, 279 B.R. at 819; Lopez v. Portfolio Recovery Assocs., LLC (In re Lopez), Nos. 09-70659, 13-
7019, 2017 Bankr. LEXIS 2221, at *21 (Bankr. S.D. Tex. Mar. 20, 2017).
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and other federal laws was untimely because the debtor had not sought withdrawal at any point
prior to the decision.56
Here, Defendant’s withdrawal of the reference was not timely. Defendant timely requested
a jury trial in its Answer on February 6, 2025,57 but did not file its Motion to Withdraw until 218
days later, or September 12, 2025,58 and only after this Court denied its Motion for Partial
Summary Judgment.59
B. This Court recommends that the District Court deny Defendant’s Motion to
Withdraw under both the mandatory and permissive withdrawal provisions
The District Court is 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 Bankruptcy Court.60 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.61 Additionally, the District Court shall withdraw any case or proceeding if the District
Court determines that 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.
There are two provisions for withdrawing the reference of cases to a bankruptcy court: mandatory
and permissive withdrawals.62 Under either provision, this Court recommends that Defendant’s
Motion to Withdraw be denied.
1. Mandatory withdrawal of the reference is not warranted
56 In re Fresh Approach, Inc., 51 B.R. at 415 (debtor’s motion to withdraw reference was not timely, where debtor did
not file its motion until 16 days after court’s decision resolving legal questions requiring consideration of Bankruptcy
Code and law of the United States which arguably regulated activities affecting interstate commerce, and at no time
prior to that decision did debtor seek or even discuss withdrawal of reference); 28 U.S.C. § 157(d).
57 ECF No. 9, at 10.
58 ECF No. 32.
59 ECF No. 27.
60 See In re: Order of Reference to Bankruptcy Judges, Gen. Order 2012–6 (S.D. Tex. May 24, 2012).
61 28 U.S.C. § 157(d).
62 See id.
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Pursuant to the Southern District General Order No. 2012-6, in accordance with § 157(a),
bankruptcy cases and proceedings under Title 11 or arising in or related to a case under Title 11 of
the U.S. Code are automatically referred to a bankruptcy court.63 Generally, when a defendant has
a Seventh Amendment right to a jury trial and does not consent to a jury trial by a bankruptcy
court, withdrawal of the reference is mandatory.64
Defendant makes not a single argument in its pleading that mandatory withdrawal of the
reference is warranted under any circumstances. Additionally, Defendant had a duty to file a timely
Motion to Withdraw after making a jury demand and was under no duty to consent to a jury trial
in the Bankruptcy Court. However, Defendant did not file its Motion to Withdraw until 218 days
after its jury demand and after the Court denied its Motion for Partial Summary Judgment. Because
Defendant’s Motion for Withdraw was not timely, it waived its right to mandatory withdrawal and
nonconsent to a jury trial, and so this Court recommends denying Defendant’s Motion to
Withdraw.
2. Permissive withdrawal of the reference is not warranted
In addition to mandatory withdrawal, § 157(d) also provides for permissive withdrawal “on
[the court’s] own motion or on timely motion of any party, for cause shown.”65 The Fifth Circuit
in Holland provides a list of six factors for a district court to consider in determining whether cause
63 28 U.S.C. § 157(a).
64 See In re Clay, 35 F.3d at 197-98; Mirant Corp. v. The Southern Co., 337 B.R. 107, 122 (N.D. Tex. 2006) (“[In] In
re Clay the Fifth Circuit held that there must be a withdrawal of the reference as to claims to which the right to trial
by jury attach.”); Levine v. Blake (In re Blake), Adv. Pro. No. 07-03469, 2008 WL 5043318, *205 (Bankr. S.D. Tex.
Sept. 22, 2008) (recommending withdrawal of reference where party was entitled to jury trial, because “[t]he Fifth
Circuit holds that without consent of the parties, a bankruptcy judge lacks the authority to conduct a jury trial”);
Mobley v. Quality Leasing and Rental Holdings, LLC, (In re Quality Leasing and Rental Holdings, LLC), Adv. Pro.
No. 14-6005, 2016 WL 416961 at *16 (Bankr. S.D. Tex. Feb. 1, 2006) (recommending withdrawal of reference
involving both core and non-core claims because “[w]hen a party that is entitled to a jury trial properly requests a jury
and does not consent to a jury trial before the bankruptcy court, the bankruptcy court must recommend that the
adversary proceeding be withdrawn to the district court for the trial”).
65 28 U.S.C. § 157(d).
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is shown for permissive withdrawal: whether “(a) the underlying lawsuit is a non-core proceeding;
(b) uniformity in bankruptcy administration will be promoted; (c) forum shopping and confusion
will be reduced; (d) economical use of debtors’ and creditors’ resources will be fostered; (e) the
bankruptcy process will be expedited; and (f) a party has demanded a jury trial.”66 The party
moving for withdrawal of the reference—Defendant in this case—“[bears] the burden of
establishing [grounds] for permissive withdrawal.”67 Again, Defendant makes not a single
argument in its pleading that permissive withdrawal of the reference is warranted under any
circumstances.
a. Core issues predominate the Complaint, weighing against withdrawal of the
reference
First, this Court determines whether Plaintiff’s claims are core or non-core. This Court
holds jurisdiction pursuant to 28 U.S.C. § 1334, which provides that “the district courts shall have
original and exclusive jurisdiction of all cases under title 11.” Section 157 allows a district court
to “refer” all bankruptcy and related cases to a bankruptcy court, wherein the latter court will
appropriately preside over the matter.68 A bankruptcy court has power to enter final orders and
judgments if a matter is deemed to be a “core” proceeding.69 A proceeding is “core” if it involves
substantive rights provided by the Code or could arise only in the context of bankruptcy.70
66 In re MPF Holding US LLC, No. 10–03464, 2013 WL 12146958, at *1 (Bankr. S.D. Tex. Apr. 26, 2013) (quoting
Holland Am. Ins. Co. v. Roy, 777 F.2d 992, 999 (5th Cir. 1985)).
67 In re Morrison, 409 B.R. 384, 386 (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 *2 (S.D. Tex. May 29,
2007) (quoting Holland Am. Ins. Co., 777 F.2d at 998).
68 28 U.S.C. § 157(a); see also, e.g., In re: Order of Reference to Bankruptcy Judges, Gen. Order 2012–6 (S.D. Tex.
May 24, 2012) (granting a standing order of referring all bankruptcy cases to the bankruptcy court).
69 28 U.S.C. § 157(b).
70 Matter of Wood, 825 F.2d 90, 97 (5th Cir. 1987).
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Conversely, a “non-core” proceeding is one that could “conceivably have any effect on the estate
being administered in bankruptcy.”71
When analyzing this factor, the District Court must consider how “[a] bankruptcy judge’s
authority . . . differs depending on whether the subject matter is ‘core’ or ‘non-core.’”72 Although
non-core matters can be heard by a bankruptcy court, only a district court can enter “final order[s]
and judgment[s],” without consent of the parties.73 Notably, the core versus non-core factor is
important within the permissive withdrawal analysis, but is not determinative.74 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.”75
In its Motion to Withdraw, Defendant makes not a single argument in support of this factor.
Nevertheless, it is undisputed that this Adversary Proceeding involves primarily core proceedings,
which weighs in favor of denying Defendant’s Motion to Withdraw. In its Complaint, the Plaintiff
alleged “[t]his Adversary Proceeding is a core proceeding to the bankruptcy pursuant to 28 U.S. §
157(a) and (b)(2)(O) because it involves the administration of property of the bankruptcy estate.”76
Additionally Defendant, in its Answer, admitted that “this adversary proceeding is a dispute within
the bankruptcy pursuant to 28 U.S. § 157(a) and (b)(2)(O) because it involves the administration
of property of the bankruptcy estate.”77
71 Id. at 93.
72 28 U.S.C. § 157(b)–(c).
73 Id. § 157(c)(1); In re BP RE, L.P., 735 F.3d 279, 286 (5th Cir. 2013) (noting that in order to have constitutional
authority to enter final judgments this Court must also determine whether the underlying issue (1) “stems from the
bankruptcy itself,” or (2) it “would necessarily be resolved in the claims allowance process”).
74 In re Morrison, 409 B.R. at 392.
75 Rodriguez v. Countrywide Home Loans, Inc., 421 B.R. 341, 350 (S.D. Tex. 2009).
76 ECF No. 1, at 2, ¶ 6.
77 ECF No. 9, at 2, ¶ 6.
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Thus, this factor weighs against withdrawal of the reference because only core proceedings
remain.
b. Because of the timing of the Motion to Withdraw and this Court’s level of
involvement with the case, maintaining uniformity in the bankruptcy
administration weighs against withdrawal of the reference
Allowing a bankruptcy court familiar with the facts to “adjudicate the proceeding will
promote uniformity in the bankruptcy administration.”78 This factor hinges on whether a
bankruptcy court has become intimately familiar with the underlying facts, the parties, and the
remaining issues.79 If a bankruptcy court is familiar 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.80 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.81
The present adversary proceeding commenced on December 30, 2024, and this Court has
presided over this case from its inception. The Court has dedicated time and resources in
overseeing the pre-trial process in this case. Additionally, this Court has presided over the
underlying bankruptcy case since it was filed on February 17, 2023. Thus, this Court is intimately
familiar with the facts of this case and the underlying bankruptcy case. Maintaining the action in
this Court would promote uniformity because this Court approved filings related to Garcia Grain
Trading Corp.’s (“Debtor”) reorganization plan82 and an operating agreement83 between Debtor
and Elkins Grain. It is important to ensure this Court can evaluate a uniform adoption and
78 In re Brit. Am. Props. III, Ltd., 369 B.R. 322, 327 (Bankr. S.D. Tex. 2007).
79 In re Drs. Hosp. 1997, L.P., 351 B.R. 813, 849-50 (Bankr. S.D. Tex. 2006).
80 Id.
81 In re EbaseOne Corp., Nos. 01–31527–H4–7, 06–3197, 2006 WL 2405732, at *4 (Bankr. S.D. Tex. June 14, 2006).
82 Bankr. ECF No. 477. Citations to Bankruptcy Case 23-70028 will be cited as “Bankr. ECF No.__.”
83 Bankr. ECF No. 373, Ex. 2.
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interpretation of those filings as it relates to this dispute, which Defendant insists turn on the
language contained in an operating agreement84 governing the activities of the Debtor. Lastly, the
Motion to Withdraw was not filed near the beginning of this case.
Thus, this factor weighs against withdrawal of the reference.
c. There is an indication of forum shopping making this factor weigh heavily against
withdrawal of the reference
While a party may be entitled to a jury trial, “a party can not use the jury right as a tool for
forum shopping.”85 If a party does not attempt to enforce their jury right “through an appropriate
motion until after the parties and court have expended significant time and resources,” then the
party may render that right dormant.86 A major consideration is whether there is an “appearance
of forum shopping” by the party.87 Defendant bears the burden of demonstrating that this factor
weighs in favor of withdrawal of the reference.88
Here, Defendant’s attempt to forum shop weighs heavily in favor of maintaining the action
in this Bankruptcy Court. Defendant recently filed its Motion for Partial Summary Judgment89
after which this Court issued a clear denial, calling the Motion for Partial Summary Judgment “not
only inappropriate for summary judgment, but also borderline sanctionable.”90 Prior to that order,
Defendant never raised a question regarding this Court’s jurisdiction which indicates that the
Motion to Withdraw is motivated largely by an attempt to escape the Bankruptcy Court forum.
84 Bankr. ECF No. 373, Ex. 2.
85 In re Blake, 400 B.R. at 206.
86 Id.; In re Blackwell, 279 B.R. at 819–20 (“A party’s failure to follow through with the relatively simple procedural
steps required to assure that party that they will have their day in court before a jury of their peers ought similarly to
be treated as a waiver of that right.”).
87 In re Blake, 400 B.R. at 206.
88 In re Morrison, 409 B.R. at 394.
89 ECF No. 19.
90 ECF No. 27, at 3-4.
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d. This Court’s familiarity with the case is such that economical use of the parties’
resources and the judicial system’s resources weighs against withdrawal of the
reference
“Bankruptcy aims to maximize the efficient use of resources to administer the debtor’s
estate and resolve related litigation.”91 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.”92 Where a jury demand exists, however, courts have found that the “immediate
withdrawal of the reference will serve the interests of judicial economy” because it allows the
District Court to familiarize itself with the case.93 However, just because Congress designed the
report and recommendation process to withdraw the reference does not mean that the reference
should be withdrawn.94 If it did, “the district courts would be inundated with adversary proceedings
that raise both core and non-core claims.”95
Retaining this case in this Court makes the most economical sense. It is undisputed that
Defendant has a constitutional right to a jury trial,96 but this adversary proceeding involves only
core claims arising under the Bankruptcy Code. This Court became intimately familiar with this
case while it was pending in this Court for nearly a year before Defendant filed its Motion to
Withdraw, and the case is almost ready for trial. Given Defendant’s prior consent, its failure to file
a Motion to Withdraw for nearly a year, and this Court’s specialization in the issues to be tried,
the resources of the parties and the judicial system will best be conserved by permitting the jury
91 In re MPF Holding US LLC, 2013 WL 12146958, at *3.
92 In re Cirillo, 2014 WL 1347362, at *9.
93 In re MPF Holding, 2013 WL 12146958, at *3.
94 See In re Lopez, 2017 Bankr. LEXIS 2221, at *11 (citing Harris-Nutall v. Nationstar Mortg., LLC (In re Harris-
Nutall), 2016 Bankr. LEXIS 4623, at *24–25 (Bankr. N.D. Tex. May 19, 2016)).
95 Id.
96 Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 54–55, 64 (1989).
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trial to go forward in this Court. Accordingly, this factor weighs against withdrawal of the
reference.
e. The Debtor’s Chapter 11 Plan of Reorganization has been confirmed and the
underlying bankruptcy remains open and thus, expediting the bankruptcy process
weighs against withdrawal of the reference
This factor considers whether withdrawal would unduly delay administration of the
bankruptcy case.97 “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.”98 Even where withdrawal of the reference would hasten
the closure of the bankruptcy case, this factor does not weigh against withdrawal because
“[c]losure of a bankruptcy case is an administrative act without substantive consequence.”99 Here,
permitting the District Court to adjudicate the suit will delay administration of Debtor’s bankruptcy
case because an order confirming Debtor’s plan has already been entered in the underlying
bankruptcy case.100 The receipt of litigation proceeds from any favorable outcome will help pay
Debtor’s creditors.
Ultimately, this Court finds this factor weighing against withdrawal of the reference.
f. Despite Defendant’s timely jury demand, this factor weighs against withdrawal
because of Defendant’s prior consent to a jury trial in this Court
97 Johnson v. Williamson (In re Brit. Am. Props. III), 369 B.R. 322, 328 (Bankr. S.D. Tex. 2007) (citing In re Pruitt,
910 F.2d 1160, 1168 (3d Cir. 1990)).
98 Id.
99 In re Morrison, 409 B.R. at 393 (finding this factor to be neutral because “[e]ven if withdrawal hastened the closure
date, the substantive aspects of [the] bankruptcy cases would not be affected”).
100 Bankr. ECF No. 845.
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The sixth Holland factor considers whether a timely jury demand is pending.101 Here,
Defendant did timely file its jury demand.102 Nevertheless, this Court finds that this factor weighs
against withdrawal because Defendant’s sole argument is that it requested a jury trial and therefore
the case should be withdrawn.103 A case should be withdrawn if the requesting party can prove
both: (i) a right to a jury trial; and (ii) the parties do not consent to a bankruptcy court overseeing
the jury.104 Defendant has failed to demonstrate that it met either withdrawal factor.
Here, Defendant waived its right to a jury trial by engaging substantively in litigation—
including a request that this Court issue a dispositive judgment—and delaying its request to
withdraw until after Defendant decided to pursue (what it perceives to be) a more favorable venue.
Defendant’s transparent “attempt[] to resurrect a dormant demand for a jury trial for the sole
purpose of forum shopping”105 is a clear sign of gamesmanship that will not be tolerated by this
Court. Here, the clear sign of gamesmanship occurred where there was no evidence that Defendant
intended to pursue its jury demand until after it filed a dispositive motion that was denied by this
Court. Because this is nothing more than a forum-shopping exercise, Defendant waived its right
to a jury trial. Additionally, and as explained more thoroughly above,106 Defendant consented to
the entry of a final judgment by this Court.
101 Fed. R. Bankr. P. 9015 (incorporating Fed. R. Civ. P. 38). The existence of a jury demand weighs in favor of
withdrawal of the reference. Veldekens, 362 B.R. at 769; In re MPF Holding US LLC, 2013 WL 12146958, at *3
(finding that if there is a jury demand pending, this factor “weighs heavily in favor of withdrawal of the reference”).
102 ECF No. 9.
103 See generally ECF No. 32.
104 See MMA L. Firm, PLLC v. Hair & Shunnarah Trial Att’ys, LLC (In re MMA L. Firm, PLLC), Nos. 24-31596, 24-
3269, 2025 Bankr. LEXIS 693, at *3-4 (Bankr. S.D. Tex. 2025).
105 Veldekens v. GE HFS Holdings, Inc. (In re Drs. Hosp. 1997, L.P.), 351 B.R. 813, 852 (Bankr. S.D. Tex. 2006)
(finding that months of litigation was “inconsistent” with a desire for a jury trial and that if the demanding party
“wanted to have a jury trial, they could have filed a Motion to Abstain immediately upon the filing of their First
Amended Complaint in November of 2005; their failure to do so requires a finding by this Court that they have waived
their right to a jury trial”). But courts are clear that time is not the dispositive factor in the analysis: “[w]hen considering
waiver, the passage of time is less relevant than the appearance of forum shopping.” In re Blake, 400 B.R. at 206.
106 See supra, II.A.4, ¶¶ a-b.
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Accordingly, this Court finds that this factor weighs against withdrawal.107 Subject to
the District Court’s decision, this Court is ready, willing, and able to conduct a jury trial in this
matter.
III. CONCLUSION
For the reasons set forth above, and as required by Bankruptcy Rule 5011 and Bankruptcy
Local Rule 5011-1, this Court recommends that Defendant’s Motion to Withdraw be denied
because the Defendant waived its jury trial right and consented to entry of a final judgment by this
Bankruptcy Court.108 If the District Court finds that the Defendant did not waive its jury trial right,
this Court requests that it be permitted to retain the case and proceed with the jury trial. But if the
District Court finds that the jury trial should not take place in the Bankruptcy Court, this Court
asks that the District Court withdraw the reference immediately but then refer the instant adversary
proceeding to the undersigned judge for adjudication of all remaining pretrial matters, with the
undersigned judge thereafter notifying the District Court when the dispute is ready for trial.
SIGNED November 20, 2025
________________________________
Eduardo V. Rodriguez
Chief United States Bankruptcy Judge
107 See Veldekens, 351 B.R. at 875 (finding that the sixth Holland factor weighed against withdrawal, in part because
plaintiffs initially consented to the bankruptcy court conducting a jury trial and failed to file a motion to withdraw the
reference for seven months thereafter, allowing the bankruptcy court and the opposing party to believe that a jury trial
would be conducted in the bankruptcy court).
108 See supra, II.A.4(a)-(b).
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