In re The Roman Catholic Bishop of Oakland
- Jacquelyn Corley
- 3:24-cv-00711
- U.S. District Court · Northern District of California
- 6
In re Roman Catholic Bishop of Oakland: Judge Corley granted insurers’ unopposed motions to move a bankruptcy coverage case to district court.
The Roman Catholic Bishop of Oakland, the named insurer defendants, the California Insurance Guarantee Association, and the bankruptcy and district courts handling the coverage proceeding.
What happened
In re The Roman Catholic Bishop of Oakland concerns a bankruptcy-court lawsuit seeking declarations about insurers’ duties to defend the Bishop against more than 300 state-court actions and about the California Insurance Guarantee Association’s obligations. The defendants asked the district court to take the case from the bankruptcy court, and the Bishop did not oppose those requests.
The district court concluded that the coverage claims were non-core state-law claims and that the defendants’ jury demand meant the bankruptcy court could not conduct the trial without their consent. The court also found that moving the case would improve efficiency, reduce delay and costs, and avoid an extra layer of review.
Judge Jacqueline Scott Corley granted the motions to withdraw the reference, vacated the scheduled hearing, and set an initial case-management conference for April 18, 2024. The order transferred the proceeding for district-court handling but did not decide the underlying insurance-coverage dispute.
The detailed version
- In re The Roman Catholic Bishop of Oakland · No. 3:24-cv-00711
- Jacquelyn Corley
- Mar. 18, 2024
Background
The Roman Catholic Bishop of Oakland filed a voluntary Chapter 11 bankruptcy petition after facing more than 300 state-court actions alleging negligent supervision and negligent hiring of clerical and ministerial staff who committed sexual abuse against certain claimants. The Bishop then filed an adversary proceeding in the bankruptcy court against Pacific Indemnity; Travelers Casualty & Surety Company, formerly Aetna Casualty & Surety Company; Insurance Company of North America; United States Fire Insurance; Westport Insurance Corporation; Continental Casualty Company; Pacific Employers Insurance; Westchester Fire Insurance Company; the California Insurance Guarantee Association; and certain underwriters at Lloyd’s, London.
The adversary proceeding asserted state-law claims concerning the insurers’ obligation to provide coverage for the Bishop’s defense of the state-court actions and sought a declaratory judgment concerning the California Insurance Guarantee Association’s statutory obligations. The defendants had moved to dismiss and demanded a jury trial. The bankruptcy court had granted an earlier motion to dismiss, and briefing on another round of dismissal motions was pending when the defendants moved to withdraw the reference. The Bishop filed statements of non-opposition in both district-court actions.
Legal standard
Federal district courts have original but not exclusive jurisdiction over bankruptcy proceedings. Under 28 U.S.C. § 157(d), a district court may withdraw a case’s reference to the bankruptcy court either mandatorily or permissively. The defendants sought permissive withdrawal, which requires a showing of cause. Relevant factors include efficient use of judicial resources, delay and costs, uniformity of bankruptcy administration, prevention of forum shopping, and related considerations.
Court’s analysis
The court determined that the coverage claims were exclusively non-core proceedings because they were state-law contract and insurance-coverage disputes that did not depend on bankruptcy law for their existence. The court also noted that the defendants demanded a jury trial and did not consent to bankruptcy-court jurisdiction. Because the bankruptcy court could not conduct a jury trial on the non-core claims in those circumstances, leaving the case there would create an additional layer of judicial review and waste time and resources.
The court found that the remaining factors also favored withdrawal. Moving the case to the district court could prevent delay and added costs because the district court could enter a final judgment. The court found no forum-shopping concern because the district court would ultimately have to address the issues either initially or through review of proposed bankruptcy-court findings.
Disposition
The court vacated the March 21, 2024 hearing and granted the unopposed motions to withdraw the reference. It set an initial case-management conference for April 18, 2024, at 1:30 p.m. by Zoom, with a joint conference statement due April 11, 2024. The order transferred the proceeding from the bankruptcy court for district-court handling; it did not resolve the underlying insurance-coverage claims.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.