Lowe v. Minns — Court keeps bankruptcy pretrial work there but reserves any jury trial for district court

Reported / Citable

Background

John Patrick Lowe, the Chapter 7 trustee for 3055 Hunter Rd Estate Corp., formerly known as Quantum Materials Corp., brought an adversary proceeding against Seth Kretzer, Michael Louis Minns PLC, Michael Louis Minns, and others in the debtor’s Western District of Texas bankruptcy case.

Kretzer moved under 28 U.S.C. § 157(d) to withdraw the reference from the Bankruptcy Court. The trustee opposed the motion. The adversary complaint includes core bankruptcy claims, including turnover under 11 U.S.C. § 542, as well as state-law claims for breach of contract, unjust enrichment, and breach of fiduciary duty. The parties requested a jury trial.

The Court’s Holding

The court granted the motion in part. It withdrew the reference only to the extent necessary for a jury trial in district court, while leaving the standing reference otherwise in effect.

Although the presence of predominantly non-core claims and the jury demand favored withdrawal, efficiency favored retaining the matter in Bankruptcy Court through pretrial proceedings. The Bankruptcy Court is already familiar with the bankruptcy, and it may handle discovery, disqualification and abatement motions, and other pretrial matters. It must submit proposed findings and conclusions on dispositive motions where applicable, or certify the matter as trial-ready before any district-court jury trial.

Key Takeaways

• Non-core state-law claims and a jury demand can support withdrawal of the bankruptcy reference.
• Those factors do not require immediate transfer when the Bankruptcy Court can more efficiently manage pretrial litigation.
• The district court may conditionally withdraw the reference for a future jury trial while keeping all pretrial matters in Bankruptcy Court.

Why It Matters

The order preserves a common division of labor in bankruptcy-related litigation: the Bankruptcy Court manages the case through dispositive motions and trial preparation, while the district court retains the case for any jury trial that cannot be conducted in Bankruptcy Court without consent.