RECOMMENDATION FOR WITHDRAWAL OF THE REFERENCE FOR THIS ADVERSARY PROCEEDING 16-01107 28 U.S.C. § 157(d) and (e) (Non-Core Proceedings and Demand for Jury Trial)

RONALD H. SARGIS, Chief Bankruptcy Judge.

The Clerk of the Bankruptcy Court shall transmit a copy of this Recommendation to the Hon. Lawrence J. O'Neill, Chief Judge of the Unites States District Court for the Eastern District of California as the recommendation for the withdrawal of the reference for the above captioned adversary proceeding by the undersigned Chief Judge of the Bankruptcy Court for the Eastern District of California.

On December 15, 2016, Salma Agha-Khan, M.D. ("Plaintiff-Debtor") filed a Complaint with the United States Bankruptcy Court for the Eastern District of California (Fresno Division), titled Salma Agha-Khan, M.D. v. Bank of America, et al., Bankr. E.D. Cal. No. 16-01107 ("Adv. Pro. 16-01107"). Plaintiff-Debtor is the bankruptcy debtor in Chapter 7 bankruptcy case number 10-16183 ("Bankruptcy Case"). That Bankruptcy Case was filed on May 30, 2010, with the Bankruptcy Court for the Eastern District of California (Fresno Division). The bankruptcy court's Docket reflects that Plaintiff-Debtor was granted a Chapter 7 discharge on September 23, 2010. The Docket further reflects that the bankruptcy case was closed on January 7, 2011 (Dckt.66);1 reopened on September 18, 2012 (Dckt. 70); re-closed on September 14, 2016 (Dckt. 260); and reopened on September 20, 2016 (Dckt. 263).

The Complaint has nineteen named Defendants and additional Doe Defendants 1 to 100. The fifty-two page Complaint (to which is attached 262 pages of exhibits) denominates fifteen causes of action in the title.2 Two of the named defendants are Bankruptcy Judge Richard Lee and Bankruptcy Judge Fredrick Clement, both who sit in the Eastern District of California (Fresno Division). Plaintiff-Debtor's bankruptcy case is currently assigned to Judge Lee, with Judge Clement having previously adjudicated issues in the Bankruptcy Case. Other named defendants include private attorneys and law firms, financial institutions, and loan servicers.

After review of the Complaint, consideration of the claims therein, and the proper exercise of federal judicial power by Article I bankruptcy judges, the undersigned respectfully recommends that the reference of this Adversary Proceeding to the bankruptcy judges in this District be withdrawn and the Adversary Proceeding adjudicated in the United States District Court before an Article III judge.

REFERRAL OF BANKRUPTCY CASES TO THE BANKRUPTCY JUDGES FOR THE EASTERN DISTRICT OF CALIFORNIA

Federal court jurisdiction for all bankruptcy cases arising under Title 11 of the United States Code and all matters arising in or relating to said bankruptcy cases is vested in the United States district courts. 28 U.S.C. § 1334. Pursuant to 28 U.S.C. § 157(a), the district court may refer any or all cases under Title 11, and any or all proceedings arising in or related to any case under Title 11, to the bankruptcy judges in that district. All cases under Title 11, and all proceedings arising in or related to any case under Title 11, have been referred to the bankruptcy judges in the Eastern District of California. E.D. Cal. Gen. Orders Nos. 182, 223.

PRIOR ADVERSARY PROCEEDING COMMENCED BY PLAINTIFF-DEBTOR FOR WHICH REFERENCE WAS WITHDRAWN BY DISTRICT COURT

As stated in the Complaint, Plaintiff-Debtor has been litigating another complaint against various persons, including the two above-named bankruptcy judges, in the Eastern District of California. In that prior adversary proceeding, Agha et al v. Clement et al, E.D. Cal. Case No. 1:15-cv-00042-DAD ("2015 Action"), the reference of that matter to the Bankruptcy Court was withdrawn,3 and the adversary proceeding was assigned to a District Court judge in the Eastern District of California.

The District Court's docket for the 2015 Action indicates that the defendants in that action have been dismissed with prejudice (2015 Action, Dckt. 134) and that the order of dismissal is on appeal before the Ninth Circuit Court of Appeals. An order of the Ninth Circuit Court of Appeals filed November 16, 2016, summarily affirming the dismissals of the two bankruptcy judges, members of the Office of the U.S. Trustee, and the United States is on the District Court Docket. 2015 Action, Dckt. 148.

SUMMARY OF CLAIMS ASSERTED IN COMPLAINT

A summary of the causes of action includes, but is not limited to, the following claims asserted in the Complaint:4

The monetary damages are stated to be in excess of $50,000,000.00, and punitive damages are requested in the amount of $22,000,000.00.

In the Complaint, Plaintiff-Debtor also makes demand for a jury trial. Though rarely conducted in the bankruptcy court, Congress provides in 28 U.S.C. § 157(e) that a bankruptcy judge may conduct a jury trial for non-core proceedings, but only with the consent of all parties. Here, there are at least nineteen Defendants and the Plaintiff who must first consent to an Article I bankruptcy judge conducting a jury trial to the extent Plaintiff is entitled to a jury trial.

Summary of Allegations Regarding Bankruptcy Judges

With respect to the judges, it is asserted that Judge Clement "deliberately, knowingly and intentionally allowed fraud, forged documents and filings to be presented to this [bankruptcy] Court in Plaintiff's bankruptcy" to assist a long time attorney friend, David Chandler and the Chandler law firm. Mr. Chandler represents clients asserting claims in Plaintiff's bankruptcy case, which claims Plaintiff asserts are fraudulent. In addition, Plaintiff asserts that Judge Clement improperly reopened Plaintiff's Bankruptcy Case so that fraudulent claims could be asserted in the bankruptcy case and assets of Plaintiff improperly pursued.

As to Judge Lee, Plaintiff asserts that when he replaced Judge Clement in Plaintiff's bankruptcy case, he allowed fraudulent evidence to be presented in Plaintiff's bankruptcy case. Further, Plaintiff alleges that Judge Lee refused to have the defaults entered against persons Plaintiff was litigating against and dismissed Plaintiff's complaint in that adversary proceeding, even as to those defendants who had failed to respond. Plaintiff also contends that Judge Lee continued as the judge in Plaintiff's bankruptcy case notwithstanding Plaintiff suing him in the 2015 Action.5

RECOMMENDATION FOR WITHDRAWAL OF REFERENCE BY DISTRICT COURT OF ADVERSARY PROCEEDING 16-01107

In making this recommendation, this bankruptcy judge does not express any opinion as to the merits of the Complaint or allegations therein. The recommendation, as discussed below, is based on the nature of the claims asserted and the exercise of federal judicial power by a United States district court judge (an Article III judge6) and a United States bankruptcy judge (an Article I judge).

An Article I bankruptcy judge exercises federal judicial power to enter final orders and judgments for all matters arising under Title 11 (the Bankruptcy Code) and in the bankruptcy case (which are commonly referred to as "core proceedings"). For related-to matters (commonly referred to as "non-core proceedings"), all parties must consent (express or implied) to the entry of final orders and judgment by the bankruptcy judge. See Wellness Int'l Network, Ltd. v. Sharif, ___ U.S. ___, 135 S.Ct. 1932 (2015); Exec. Benefits Ins. Agency v. Arkison, ___ U.S. ___, 134 S.Ct. 2165 (2014). If unanimous consent is not given for a non-core proceeding, the bankruptcy judge may conduct the judicial proceedings and thereafter make proposed findings, conclusions, orders, and judgment to an Article III district court judge, who will make the final determinations thereof after de novo review. 28 U.S.C. § 157(c)(1). "Non-core" proceedings are commonly the normal state and federal non-Bankruptcy Code rights and interests which would normally be adjudicated in actions filed in the state court or the district court, and are not adjudicated in proceedings arising under the Bankruptcy Code (such as an objection to claim).

For both core and non-core proceedings, the district court may elect to withdraw the reference to allow a United States district court judge, as an Article III judge, to exercise the federal judicial power for which federal court jurisdiction exists pursuant to 28 U.S.C. § 1334(a).

Allegation of Federal Court Jurisdiction

In the Complaint, Plaintiff-Debtor alleges federal jurisdiction arising under 28 U.S.C. § 1334, with that jurisdiction being vested in the district courts. Complaint ¶¶ 1, 4. Plaintiff-Debtor further alleges that this matter has been referred to the bankruptcy judges in this District and that this is a core proceeding (for which a bankruptcy judge may exercise federal judicial power without the consent of the parties). Plaintiff does not specifically address what grounds exist under 28 U.S.C. § 157(b)(2) for the various causes of action and matters therein to be a "core proceeding."

Recommendation

A review of the various claims asserted discloses that the matters are based on non-bankruptcy federal and state law. Some of the allegations relate to documents and arguments presented in the bankruptcy court and rulings of the bankruptcy judges, but those documents and proceedings relate to matters that did not arise in the bankruptcy case. While filed in bankruptcy court, the claims appear to be significantly comprised of matters which would be adjudicated in federal court (to the extent that non-bankruptcy § 1334 federal jurisdiction exists) or in the appropriate state court of general jurisdiction. The claims relating to "bankruptcy fraud" and "false oaths and claims" are stated in the context of the federal criminal statutes, not Bankruptcy Code provisions. There do not appear to be any allegations indicating that the adjudication of the claims asserted herein involve the ongoing administration of the bankruptcy estate.

The district court may withdraw, in whole or part, any referrals of bankruptcy matters made to bankruptcy judges. 28 U.S.C. § 157(d). The withdrawal may be made by the district court on its own motion or timely motion of any party for "cause shown." Id.

In light of the demands for relief relating to matters which occurred outside of the bankruptcy court proceedings and not arising under Title 11, it is submitted to the District Court that cause exists to withdrawal the referral of Adversary Proceeding 16-01107. The full exercise of the Article III federal judicial power will be required to adjudicate the various state law and federal non-bankruptcy law claims, rights, and interests asserted by Plaintiff-Debtor. Additionally, the exercise of the Article III federal judicial power will be required to make a determination of the ownership rights and interests for those related to matters which do not arise under the Bankruptcy Code nor arise in the Plaintiff-Debtor's Chapter 7 case.

It is therefore recommended that the referral of Salma Agha-Khan, M.D. v. Bank of America, et al., Bankr. E.D. Cal. No. 16-01107, to the bankruptcy judges in this District be withdrawn and the Adversary Proceeding be assigned to an Article III district court judge.

ADDENDUM A

[Insert Addendum A Complaint PDF in place of this page]

Instructions to Clerk of Court

Service List — Not Part of Order/Judgment

The Clerk of Court is instructed to send the Order/Judgment or other court generated document transmitted herewith to the parties below. The Clerk of Court will send the document via the BNC or, if checked X, via the U.S. mail.