United States District Court, S.D. West Virginia, Huntington Division
ANGELA L. LATTEA and GREGORY W. LATTEA, Plaintiffs,
VANDERBILT MORTGAGE & FINANCE, INC. and CMH HOMES, INC., d/b/a Oakwood Homes Nitro, WV, Defendants.
MEMORANDUM OPINION AND ORDER
C. CHAMBERS, UNITED STATES DISTRICT JUDGE.
pending before the Court are four motions that address a
variety of intertwined legal issues. The first motion, filed
by Defendants Vanderbilt Mortgage & Finance, Inc. and CMH
Homes, Inc., is styled a “Motion to Dismiss for
Plaintiffs' Lack of Standing.” Mot. to Dismiss, ECF
No. 6. The second motion is also filed by Defendants, and is
styled a “Motion to Compel Arbitration and Stay
Remaining Nonarbitrable Claims.” Mot. to Compel, ECF
No. 8. The third motion, again filed by Defendants, is a
“Motion to Refer Case to Bankruptcy Court.” Mot.
to Refer, ECF No. 29. The fourth and final motion is filed by
Plaintiffs Angela and Gregory Lattea, and is styled a
“Motion to Withdraw (or Dispense with)
Reference.” Mot. to Withdraw, ECF No. 43. For the
reasons set forth below, the Court GRANTS
the third motion, DENIES the fourth motion,
and REFERS this action to United States
Bankruptcy Court for the Southern District of West Virginia
and orders it REMOVED from the docket. The
remaining motions are accordingly DENIED AS
case originates in Plaintiffs Gregory and Angela Lattea's
decision to purchase a mobile home in summer 2018. Am.
Compl., ECF No. 17, at ¶¶ 2, 5. Upon visiting
the Oakwood Homes lot in Nitro, West Virginia, Plaintiffs
elected to purchase a used doublewide home. Id. at
¶ 6. A salesperson represented that he would sell the
home to Plaintiffs and “secure a loan for the purchase
of the lot upon which it would be situated for a total of
$63, 000.00” Id. at ¶ 8. Plaintiffs
consummated the purchase of the home and land on September 4,
2018, signing relevant financing documents with Defendant
Vanderbilt Mortgage & Finance, Inc. and executing a $10,
000 down payment. Id. at ¶¶ 13-14.
the course of the following months, Plaintiffs began
receiving documents related to the purchase of their home
that reflected differing loan amounts and sales prices.
Id. at ¶ 15. On October 24, 2018,
“Plaintiffs were directed to sign other loan documents
and [a] deed of trust, containing a multiplicity of costs
previously not disclosed to Plaintiffs.” Id.
at ¶ 16. After executing these documents, the
“total loan amount in the transaction was $109, 749.91,
which Vanderbilt financed at a 10.560% rate, producing a
monthly payment of $1, 043.46.” Id. at ¶
22. Despite these escalating costs, Plaintiffs took
possession of their home in November 2018. Id. at
¶ 23. They discovered a laundry list of safety and
cosmetic defects with the home at this point, including water
damage, a hole in the roof, and collapsing insulation.
Id. at ¶ 24.
April 8, 2019,  Plaintiffs initiated the instant action in
the Circuit Court of Putnam County and raised state law tort
claims for fraud, unconscionable inducement, illegal
transaction, and breach of warranty stemming from the
purchase of their home. See generally Id. Four days
before filing the instant suit, however, Plaintiffs initiated
a separate action in the United States Bankruptcy Court for
the Southern District of West Virginia by filing a voluntary
petition for relief under Chapter 7 of the Bankruptcy Code.
See In re Lattea, No. 3:19-bk-30130 (Bankr. S.D.
W.Va.) (filed Apr. 4, 2019). Plaintiffs listed five creditors
on their bankruptcy schedules, and the bankruptcy court
appointed a trustee to represent the Lattea estate. Mot.
to Refer, at 2. The largest asset listed as part of
their estate is a claim against Defendant Vanderbilt for
“unlawful lending”- the case that is currently
pending before this Court-to which they have assigned an
“unknown” value. See Ex. A, ECF No.
20-1, at 17. Of this unspecified value, Plaintiffs claim that
$51, 329 is exempt from their estate. Id.
simultaneous bankruptcy proceeding accounts for some (though
by no means all) of the procedural confusion surrounding this
case. On May 13, 2019, Defendants timely removed this action
from state court. Notice of Removal, ECF No. 1. On
June 6, 2019, Defendants filed two motions: a motion to
dismiss for lack of standing, and in the alternative, a
motion to compel arbitration on certain claims. Mot. to
Dismiss, at 1; Mot. to Compel, at 1. Before the
Court reviewed the completed briefing on either motion,
Defendants filed their motion to refer this case to the
bankruptcy court. Mot. to Refer, at 1. Defendants
argue that the instant dispute is “related to” to
Plaintiffs' bankruptcy proceedings, and should be
referred to the bankruptcy court pursuant to Local Rule of
Civil Procedure 83.13. Plaintiffs understandably disagree,
and contend that their tort claims are independent of their
petition for relief under Chapter 7. On August 21, 2019,
Plaintiffs filed a motion in this case and their bankruptcy
case seeking to withdraw or dispense with the automatic
reference “to the extent . . . necessary.”
See Mot. to Withdraw, at 1. These cross-cutting
issues have been fully briefed, and are ripe for resolution.
law provides that district courts “shall have original
but not exclusive jurisdiction of all civil proceedings
arising under Title 11, or arising in or related to
cases under Title 11.” 28 U.S.C. § 1334(b)
(emphasis added). “An action is related to bankruptcy
if the outcome could alter the debtor's rights,
liabilities, options or freedom of action (either positively
or negatively) and which in any way impacts upon the handling
and administration of the bankrupt estate.” A.H.
Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1002 n. 11
(4th Cir. 1986) (quoting Pacor, Inc. v. Higgins, 743
F.2d 984, 994 (3d Cir. 1984)). This relatively broad
definition of matters “related to” bankruptcy is
not boundless; abstract concerns about judicial economy and
shared facts “do not in and of themselves suffice to
make [an action] ‘related to' [a]
bankruptcy.” Wise v. Travelers Indem. Co., 192
F.Supp.2d 506, 516 (N.D. W.Va. 2002). Nevertheless, the
Supreme Court has observed that “Congress intended to
grant comprehensive jurisdiction to the bankruptcy courts so
that they might deal efficiently and expeditiously with all
matters connected with the bankruptcy estate.”
Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995).
As such, “the ‘related to' language of §
1334(b) must be read to give district courts (and bankruptcy
courts under § 157(a)) jurisdiction over more than
simple proceedings.” Id. The Fourth Circuit
Court of Appeals has since distilled this proposition
further, holding that “a civil case is related to
bankruptcy if the outcome of [the civil] proceeding could
conceivably have any effect on the estate being administered
in bankruptcy.” New Horizon of NY LLC v.
Jacobs, 231 F.3d 143, 151 (4th Cir. 2000).
to these standards, this District's Local Rule of Civil
Procedure 83.13 relies on 28 U.S.C. § 157(a) to provide
that “all cases under Title 11, and all proceedings
arising under Title 11 or arising in or related to a case
under Title 11, are referred to the Bankruptcy Court for
disposition.” Where a case is not automatically
referred to the bankruptcy court, the district court will
consider whether an action is “related to” an
ongoing bankruptcy proceeding. See, e.g.,
U.S. Bancorp Equip. Fin., Inc. v. Edward's Transp.,
Inc., No. 2:05-0137, 2005 WL 6083461, at *4 (S.D. W.Va.
Aug. 9, 2005). Where a case meets the “related
to” threshold, district courts have the discretion to
refer-or to decline to refer-that case to the bankruptcy
court. Id. (reasoning that “in view of . . .
finding” that case was “related to”
bankruptcy proceeding, “the court is vested with
discretion to refer this matter”).
made, a reference to bankruptcy court may be withdrawn
“for cause shown.” 28 U.S.C. § 157(a).
Though neither Congress nor the Fourth Circuit Court of
Appeals has yet clarified the “practical requirements
for that malleable two word phrase, ” In re
Johnson, No. 3:17-mc-180, 2018 WL 2033297, at *3 (S.D.
W.Va. May 1, 2018), guidance is found in the six-factor test
that courts in this District routinely employ in considering
whether to withdraw a reference to bankruptcy court that has
already been entered: “(1) whether the proceeding is
core or non-core; (2) the uniform administration of
bankruptcy law; (3) the promotion of judicial economy; (4)
the efficient use of the parties' resources; (5) the
reduction of forum shopping; and (6) the preservation of the
right to a jury trial.” In re Albertson, 535
B.R. 662, 667 (S.D. W.Va. 2015) (citation omitted). With this
legal framework in mind, the Court turns to a consideration
of the case sub judice.
in the Southern District of West Virginia have employed
different tests to determine whether to refer an action
to bankruptcy court and whether to withdraw an
action from bankruptcy court. As Defendants' and
Plaintiffs' motions implicate both categories, the Court
will undertake separate analyses to determine whether
referral is warranted and, if so, whether the tests courts
employ to determine if withdrawal is appropriate similarly
Motion to Refer ...