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In re Shoot Moon, LLC

United States District Court, D. Montana, Great Falls Division

July 2, 2019

In re SHOOT THE MOON, LLC, Debtor
v.
DENNIS CONNER, an individual, and JOHN DOES 1010, Defendants. JEREMIAH FOSTER, as Trustee for chapter 11 estate of SHOOT THE MOON, LLC. Plaintiff,

          ORDER

          BRIAN MORRIS UNITED STATES DISTRICT COURT FUDGE.

         Plaintiff Jeremiah J. Foster (“Foster”) filed an action in bankruptcy court against defendant Dennis Conner (“Conner”) on October 19, 2017. (Doc. 3 at 1.) Conner filed a Motion to withdraw the Reference of the Adversary Proceeding from bankruptcy court on June 15, 2018. (Doc. 1.) Foster opposes the motion. (Doc. 4.)

         FACTUAL BACKGROUND

         Conner at one point maintained membership of fifteen LLCs including Shoot the Moon III, LLC (“STM III”), and Shoot the Moon X Realty, LLC (“STMXR”). Conner made loans to STM III while a member of STM III that were consolidated into a single promissory note from STM III to Conner.

         Conner's membership interest in the entities ended pursuant to the terms of a Redemption Agreement executed on January 1, 2014. Conner received a building at 1401 Market Place Drive, Great Falls, Montana, in exchange for his membership interest. STMXR transferred The Market Place Property by Warranty Deed from STMXR to Conner on August 6, 2014.

         Nineteen individual and stand-alone LLCs were merged into Shoot the Moon, LLC (“STM”) on October 20, 2015. STM filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Montana the following day. Conner filed a proof of claim as a creditor against Debtor's Bankruptcy Estate in the amount of $923, 351.12, on January 19, 2016. Conner amended his proof of claim against Debtor's Bankruptcy Estate to increase his claim to $955, 745.14 on May 31, 2016.

         The parties agreed to attempt to resolve potential claims through mediation. The parties negotiated and executed a “Tolling Agreement” on October 12, 2017. (Doc. 5.) The Tolling Agreement extended the deadline on all claims and defenses until December 8, 2017. Id.

         Foster commenced a preference and fraudulent transfers proceeding against Conner in bankruptcy court on October 19, 2017. The parties failed to resolve the matter through mediation. Conner filed a Notice to withdraw his proof of claim with the bankruptcy court while the Tolling Agreement was still in effect on November 27, 2017. Conner then moved for this Court to withdraw the reference from bankruptcy court on June 15, 2018. (Doc. 1.) Foster opposes the motion. (Doc. 4.)

         The Court conducted a status conference on November 19, 2018. (Doc. 8.) The parties and the Court agreed that the Court's order on Conner's motion to withdraw the reference would follow the bankruptcy court's order on Conner's Motion to withdraw the proof of claim. Id. The bankruptcy court granted Conner's Motion to withdraw his Proof of Claim on January 9, 2019. This Order addresses Conner's Motion to withdraw the reference from bankruptcy court. (Doc. 1.)

         LEGAL STANDARDS

         A motion requesting withdrawal of the reference from the bankruptcy court must be heard by the district court judge. Fed. R. Bank. P. 5011(a). Once the motion for withdrawal comes before the district court, it must make appropriate findings supporting withdrawal, or deny the motion.

         Article III of the United States Constitution vests the judicial power of the United States in the United States Supreme Court and such inferior courts as Congress may occasionally ordain and establish. U.S. Const. art III, § 1. District courts possess original jurisdiction over bankruptcy cases and related proceedings. A district court may refer a proceeding arising under title 11, or related to a case under title 11, to the bankruptcy judge for the district. 28 U.S.C. § 157(a).

         A party that files a proof of claim voluntarily brings itself into the bankruptcy court. See In re Global Technovations, 694 F.3d 705, 722 (6th Cir. 2012). The party's triggering of the bankruptcy court's jurisdiction provides the bankruptcy court with jurisdiction to hear the entire case. See Sec. ...


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