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Case Energy Services, LLC v. Padco Energy Services, LLC

United States District Court, W.D. Louisiana, Lafayette Division

October 11, 2017

CASE ENERGY SERVICES, LLC
v.
PADCO ENERGY SERVICES, LLC

          CAROL B. WHITEHURST MAG. JUDGE

          RULING

          ROBERT G. JAMES, UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant Case Energy Services, LLC's “Motion to Withdraw Reference Pursuant to 28 U.S.C. 1');">1');">1');">157(d).” [Doc. No. 1');">1');">1');">1]. Plaintiff Padco Energy Services, LLC opposes the motion. [Doc. No. 1');">1');">1');">12]. For reasons that follow, the motion is DENIED.

         I. FACTS AND PROCEDURAL HISTORY

         On October 4, 201');">1');">1');">16, Plaintiff Padco Energy Services, LLC (“PES”) filed for Chapter 1');">1');">1');">11');">1');">1');">1 bankruptcy in United States Bankruptcy Court, Western District of Louisiana. In re Padco Energy Servs., LLC, No. 1');">1');">1');">16-51');">1');">1');">1380 (Bankr. W.D. La. filed Oct. 4, 201');">1');">1');">16). On the same day and in the same court, Padco Pressure Control, LLC (“PPC”), an affiliate of PEC, filed for Chapter 1');">1');">1');">11');">1');">1');">1 bankruptcy. In re Padco Pressure Control, LLC, No. 1');">1');">1');">16-51');">1');">1');">1381');">1');">1');">1 (Bankr. W.D. La. filed Oct. 4, 201');">1');">1');">16).

         On January 26, 201');">1');">1');">17, PES filed an adversary case against Defendant Case Energy Services, LLC (“CES”), alleging that CES possesses its property and owes PES for both equipment it rented and for renting PES's equipment to a third party. Padco Energy Servs., LLC v. Case Energy Servs., LLC, et al. (In re Padco Energy Servs., LLC), No. 1');">1');">1');">16-51');">1');">1');">1380, Adv. No. 1');">1');">1');">17-05002 (Bankr. W.D. La. filed Jan. 26, 201');">1');">1');">17).

         On March 21');">1');">1');">1, 201');">1');">1');">17, PES filed a second adversary case against CES and Jason Farnell. Padco Energy Servs., LLC v. Case Energy Servs., LLC, et al. (In re Padco Energy Servs., LLC), No. 1');">1');">1');">16-51');">1');">1');">1380, Adv. No. 1');">1');">1');">17-05006 (Bankr. W.D. La. filed March 21');">1');">1');">1, 201');">1');">1');">17). PES alleges that CES engaged in fraudulent billing practices with respect to PES's affiliate, PPC. PES also alleges that CES placed oil and gas liens on several wells even though PES does not owe CES. PES does not allege that it owns the wells; rather, PES alleges that, as a result of the liens, it has lost business relationships, opportunities, and revenue. It seeks a judgment under the Louisiana Unfair Trade Practices Act declaring that the liens are “untimely, improperly taken, and wholly without any legal effect.” Id.

         PPC also filed an adversary case against CES on March 21');">1');">1');">1, 201');">1');">1');">17. Padco Pressure Control, LLC v. Case Energy Servs., LLC, et al. (In re Padco Pressure Control, LLC), No. 1');">1');">1');">16-51');">1');">1');">1381');">1');">1');">1, Adv. No. 1');">1');">1');">17-05007 (filed March 21');">1');">1');">1, 201');">1');">1');">17). PPC's allegations mirror the allegations in PES's two adversary cases.[1');">1');">1');">1" name="FN1');">1');">1');">1" id= "FN1');">1');">1');">1">1');">1');">1');">1]

         On August 1');">1');">1');">15, 201');">1');">1');">17, CES filed the instant Motion to Withdraw Reference, seeking to withdraw the consolidated adversary cases from the bankruptcy court and adjudicate the disputes in this Court. [Doc. No. 1');">1');">1');">1]. PES and PPC (collectively, “Padco”) responded to the motion on September 20, 201');">1');">1');">17 [Doc. No. 1');">1');">1');">12], and CES replied on September 28, 201');">1');">1');">17 [Doc. No. 1');">1');">1');">13].

         II. LAW AND ANALYSIS

         A. Mandatory Withdrawal

         CES first moves for mandatory withdrawal. Under 28 U.S.C. § 1');">1');">1');">157(d), “The district court shall, on timely motion of a party, [] withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both title 1');">1');">1');">11');">1');">1');">1 and other laws of the United States regulating organizations or activities affecting interstate commerce.”

         Withdrawal is mandatory when: (1');">1');">1');">1) the proceeding involves a “substantial and material question of both title 1');">1');">1');">11');">1');">1');">1 and non-Bankruptcy Code federal law”; (2) “the non-Bankruptcy Code federal law has more than a de minimis effect on interstate commerce”; and (3) “the motion for withdrawal has been timely filed.” Jones v. Walter Mortgage Co., 2009 WL 29991');">1');">1');">195, at *2 (N.D. Miss. Sept. 1');">1');">1');">16, 2009); see Rodriguez v. Countrywide Home Loans, Inc., 1');">1');">1');">1 B.R. 341');">1');">1');">1');">421');">1');">1');">1 B.R. 341');">1');">1');">1, 347 (S.D. Tex. 2009).

         It is undisputed that CES timely filed the motion. However, Padco argues that the consolidated cases do not involve substantial and material consideration of non-bankruptcy federal law.

         “To find that a claim involves ‘substantial and material consideration' of non-bankruptcy federal law, the court must find the claim will involve an interpretation of the federal law rather than the mere application of well-settled law.”[2] Rodriguez, 421');">1');">1');">1 B.R. at 348. Here, CES argues that the case requires the Court to consider non-bankruptcy federal laws because Padco seeks “extensive injunctive relief under Federal Rule of Civil Procedure 65.” [Doc. No. 1');">1');">1');">1-1');">1');">1');">1, p. 9]. CES does not elaborate and offers no argument that the adversary cases involve questions concerning the interpretation of Rule 65. Given that, the Court finds that the consolidated cases do ...


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