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Cole v. Strauss

United States District Court, W.D. Missouri, Central Division

January 3, 2017

NANETTE COLE AND BRUCE COLE, Appellants,
v.
BRUCE E. STRAUSS, TRUSTEE, Appellee.

          ORDER

          NANETTE K. LAUGHREY United States District Judge

         Two matters are pending before the Court. One is a motion to reconsider filed by Bruce Cole and Nanette Cole, Doc. 53, with respect to an Order entered by the Court concerning a discovery dispute, Doc. 50. The Court has also entered an order to show cause, directing the parties to address whether the Court has subject matter jurisdiction to resolve the discovery dispute.

         For the reasons discussed below, the Court concludes that while it does have subject matter jurisdiction of the dispute, it also has the authority to refer the dispute to the Bankruptcy Court for further proceedings, and referral is appropriate here. Accordingly, the Court will refer the dispute to the Bankruptcy Court for further proceedings, and denies the Coles' motion to reconsider as moot.

         I. Background

         This case originally came before the Court in 2013, on Bruce and Nanette Coles' appeal of a Bankruptcy Court order entered against them in an adversary proceeding, concerning avoidance and recovery of fraudulent or preferential transfers. The Court treated the Bankruptcy Court's order as proposed findings of fact and conclusions of law, and granted partial summary judgment to Trustee Strauss. Docs. 26 and 28. The Eighth Circuit Court of Appeals affirmed. Doc. 32.

         After the mandate issued, the Trustee as judgment creditor served the Coles with written discovery in aid of execution, specifically, requests for production of documents captioned in the style of this District Court case. See Doc. 47-2.[1] The Coles asked the Trustee for additional time to respond. The Trustee did not consent to giving them additional time, but did tell the Coles that they could produce documents on a rolling basis or as documents became available to them.

         The Coles subsequently filed motions in this Court, requesting 60 additional days in which to respond, Doc. 36 (filed 6/3/2016) and Doc. 39 (filed 6/9/2016), which the Trustee opposed.[2] The Coles argued that the requests were extensive, they had objections to the requests, and it was difficult to respond to the requests in view of Bruce Cole's incarceration.

         The Trustee argued that the Coles had not identified good faith objections to the discovery. The Court denied the Coles' motions and further ordered:

On the Court's own motion, the Coles are granted 30 days from the date of this order -- until 7/8/2016 -- to produce the documents and tangible things requested in the Trustee's First Request for Production. The 30 days addresses any complications owing to Bruce Cole's incarceration. But the Coles' failure to timely respond to the Trustee's First Request for Production will be treated as a waiver of any objections they may have had to the First Request for Production. The Trustee has attempted to work with them, for example by agreeing to accept production on a rolling basis, but the Coles have not worked with the Trustee. Further, both Coles are trained attorneys.

Doc. 40 (Order of 6/8/2016).

         Bruce Cole moved for reconsideration. Doc. 41. Nanette Cole moved to join the request and asked for entry of a protective order. Doc. 42. They argued that notwithstanding their previously-filed motion for a 60-day extension, they had nonetheless timely served the Trustee with written responses and objections to the Trustee's requests for production. They also requested more time in which to produce the materials requested. The Trustee advised the Court that the Coles had timely served their written responses and objections, but opposed a further extension. The Trustee also stated that he had advised Nanette Cole that he would agree to entry of a protective order, but she had not communicated any proposed terms. Doc. 45. The Court granted the motion for reconsideration in part and set aside the portion of its prior order about waiver of objections to the requests for production, but denied the request for additional time to respond. Doc. 50. The Court also ordered the parties to submit proposed language for a protective order. Id.

         The Court subsequently entered an order on its own motion, directing the parties to show cause why it should not deny all further relief related to discovery disputes, for lack of subject matter jurisdiction:

Upon further reflection, the Court is concerned about its subject matter jurisdiction to resolve the discovery issues the Coles are presenting to the Court. Because federal courts are courts of limited jurisdiction, this Court may raise sua sponte issues of subject matter jurisdiction, even if the parties concede the issues. Thomas v. Basham, 931 F.2d 521, 523 (8th Cir. 1991). A district court has jurisdiction to hear appeals from final orders of a bankruptcy court, pursuant to 28 U.S.C. § 158(a)(1), and from interlocutory orders with leave of the court, pursuant to 28 U.S.C. § 158(a)(3). See In re M & S Grading, Inc., 526 F.3d 363, 368 (8th Cir. 2008). Further, an appeal from a bankruptcy court order does not divest the bankruptcy court of jurisdiction with respect to matters not raised and decided in the order appealed from. See In re J. M. Fields, Inc., 8 B.R. 638, 641 (Bankr. S.D.N.Y. 1981) (and citations therein) and In re Brown, 2007 WL 3326684, at *1 (M.D. Fla. Nov. 6, 2007) (and citations therein). Bruce Cole and Nanette Cole's discovery disputes with ...

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