United States District Court, D. Colorado
In re IRA E. KELLEY, and ROSE M. KELLY, Debtors.
METRO COLLECTION SERVICE, INC., Defendant/Third-Party Plaintiff, IRA E. KELLEY, ROSE M. KELLEY, STEVEN D. KILGORE, SHERRON R. KILGORE, SAMUEL J. SMITH, and NANETTE M. LAFRANCE, Plaintiffs,
THE ESTATE OF MARCUS DEAN GROSSENBACH, Third-Party Defendant.
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART MOTION TO WITHDRAW REFERENCE
S. Krieger Chief United States District Judge
MATTER comes before the Court on the Defendant/Third-Party
Plaintiff Metro Collection Service, Inc.’s Motion to
Withdraw Reference and Request for Trial by Jury (#1). The
Plaintiffs filed a Response to the motion, which can be found
at Docket #111 in Bankruptcy Case No. 14-01501-EEB. No
response or opposition has been filed by the Estate of Marcus
Dean Grossenbach (Mr. Grossenbach).
2013, the Debtors filed a voluntary petition for bankruptcy
protection under Chapter 7 of the United States Bankruptcy
Code. In October 2013, the Debtors were granted a discharge
under 11 U.S.C. § 727, and the case was closed.
Thereafter, the Debtors, along with other named Plaintiffs,
initiated this adversary proceeding against Metro Collection
Service, Inc. (Metro), Marcus Grossenbach, and John
The adversary proceeding complaint alleges the following
the named Plaintiffs hired the Law Offices of Sharon
Grossenbach to file a Chapter 7 bankruptcy case. They each
entered into a fee agreement with Ms. Grossenbach. The fee
agreement provided that a portion of the fee was to be paid
before the bankruptcy petition was filed and that the
remainder of the fee was to be paid after the bankruptcy
petition was filed. Sharon Grossenbach passed away in
Gossenbach, Sharon Grossenbach’s son worked at her Law
Office as office administrator. After his mother’s
death, Mr. Grossenbach (who is not an attorney) and John Doe
formed a “bankruptcy petition preparer company”
known as Grossenbach and Tree, which they claimed was the
successor company to the Law Offices of Sharon Grossenbach.
Mr. Grossenbach began to “aggressively” pursue
the Plaintiffs for payment of fees owed to Ms. Grossenbach.
Mr. Grossenbach and John Doe hired Metro to collect on the
Plaintiffs allege that Metro knew or should have known that
they were attempting to collect on pre-petition debts that
were subject to automatic stay and/or discharge injunctions.
The Plaintiffs assert claims that the Defendants’
actions in collecting and attempting to collect on the
pre-petition debts violated the automatic stay and/or the
discharge injunction issued in each of their respective
the pendency of this adversary proceeding, Mr. Grossenbach
passed away. The Plaintiffs then withdrew their claims
against Mr. Grossenbach and John Doe, leaving only claims
against Metro. The Plaintiffs seek to enjoin Metro from
collecting on the debts, and request an award of actual
damages, including disgorgement of all fees paid
post-petition, as well as punitive damages.
filed a Third-Party Complaint against the Estate of Mr.
Grossenbach asserting claims based upon Colorado law. The
Third-Party Complaint alleges that when Ms. Grossenbach died,
Mr. Grossenbach was appointed the personal representative of
her estate. Mr. Grossenbach, doing business as Grossenbach
and Tree, assigned 64 accounts involving unpaid attorney fees
owed to Sharon Grossenbach to Metro. It alleges that Mr.
Grossenbach represented to Metro that he had the right to
collect on the debts, that he was assigning his rights and
interests in the accounts, and that at no time did he advise
Metro that the assigned debts may have been subject to
bankruptcy or discharge. Metro asserts claims for (1)
negligent misrepresentation in that Mr. Grossenbach knowingly
misrepresented that he had the right to collect on the debts
and that Metro detrimentally relied on his
misrepresentations; and (2) fraud in the inducement in that
Metro relied on Mr. Grossenbach’s misrepresentations
when accepting the assignment of the 64 accounts. Metro
demands a jury trial on its claims and seeks actual damages
and attorney fees.
Third-Party Complaint also alleges that Metro filed a claim
in the probate action administering Mr. Grossenbach’s
estate and that it has received a Notice of Disallowance of
Claims, pursuant to Colo. Rev. Stat. 15-12-806. It is not
clear whether Metro has sought any reconsideration of the
denial of its claim.
to 28 U.S.C. § 157(d), Metro moves to withdraw
(#1) the automatic reference of this matter
to the Bankruptcy Court.
the Bankruptcy Amendments and Federal Judgeship Act of 1984,
district courts have original jurisdiction over bankruptcy
cases and related proceedings. 28 U.S.C. § 1334(a), (b);
see also Wellness Intern. Network, Ltd. V. Sharif,
135 S.Ct. 1932, 1939-40 (2015). But “[e]ach district
court may provide that any or all” bankruptcy cases and
related proceedings “shall be referred to the
bankruptcy judges for the district.” § 157(a).
This Court has generally referred bankruptcy cases and
related proceedings to the Bankruptcy Court.
district court refers a case to a bankruptcy judge, that
judge’s statutory authority depends on the
classification of the matter as a “core
proceeding” or a “non-core proceeding.”
§§ 157(b)(2), (4). Congress has identified as
“core” a nonexclusive list of 16 types of
proceedings, § 157(b)(2), in which bankruptcy courts can
enter judgment. § 157(b)(1). In non-core proceedings,
bankruptcy courts may “hear and determine” such
proceedings, and “enter appropriate orders and
judgements, ” only “with the consent of
all the parties to the proceeding.” § 157(c)(2).