california lands commission and we have mr rosenthal mr reese on one side and mr harris on the other mr rosenthal the st question we've expanded the time from this from fifteen minutes to twenty minutes for o argument how much of that time do you wish to allocate to you for the commission's argument and how much time mr race for the state of california argument there would be ten minutes opening i'm sorry fifteen minutes of opening mr vote and i'm speaking on behalf of the california state lands commission let me to begin with so let me just get get some facts out of the way your so in seventeen april seventeen there was a bankruptcy filing yet and there was a temporary services agreement with both the on and off shore facilities and then later replaced by a few months later by a and once the plan was confirmed and i guess when effective in october of eighteen when mr davis came in as a liquidating trustee there was nonpayment he claimed before hand and therefore you filed a suit almost that the very next day and you're saying somehow that under counts you know half you still have sovereign immunity is that correct no your hon only to events that began on october th after the gap agreement was terminated that's a very important point understood so what you're proposed to us for whether a proceeding is ancillary to the bankruptcy confirmation where we're proposing to use basically the same test that this court used in resorts international which was there has to be a close nexus proceeding or plan it's not just sufficient as you said in resorts international that there be a potential increase in the essence of the trust it has to be intimately t one of the three central elements of a bankruptcy that's intimately tied to the gathering of assets to the resolution of the various who gets what and to the and to the rd aspect the the i'm getting a release and this claim is not intimately tied to any of those three this is a claim entirely for events that are post confirmation and i would remind the court that in resorts international that that demarcation is of critical counter to what this court said in resorts international let me quote what you sad at the most literal level it is impossible for the bankruptcy debtors estate be affected by  confirmation dispute because the debtor is a state ceases to exist once the confirmation has occurred this is exactly what happened in resorts international whatever language may be in the plant that can expand the jurisdiction of the court and this court made clear plan language doesn't give the court any jurisdiction over the claim you now are in post confirmation lampposts liquidation land and completely different tests of plot but are there not are there not cases that have considered that the the state assets have continued to circuit but but your honor i think i think there is a very clear demarcation here between pre contemplation and his confirmation moreover that want an element one leg of our plan but the other point b other reason we intend that there is an enormous difference in this case from other cases is that this is a claim for monetary rel and that type of client put to one side some claim which like was involved in caps which was a preference deal and with preferences it claimed for in the recent supreme court decision and allen and resorts we talked about there is certain related to jurisdiction post confirmation as to whether there's a close nexus to the plan or proceeding sufficient to uphold bankruptcy court jurisdiction over the matter the plan's liquidation analysis explicitly discusses the on shore e o f facility and it me then you go to alan and you look at what alan says is that bankruptcy is the cause no longer we're looking at particular provisions of the code like one of six the bankruptcy cause itself means in the constitutions that states gave up sovereign immunity in connection with bankruptcy matters and you can say it's dicta but this says  bankruptcy we decided sovereign immunity has no plates and i could read a bunch of other quotes from chief justice kagan in that case and so it seems at least as to the commission that you're fighting over an inverse condemnation action which arguably is seeking money as opposed to anything else but it relates to something that the play and deals with how do i get around  plan requirement it is simply a description of the gap agreement the plan doesn't provide for anything other than the transfer  authority to dispose without any further court approval there is not to your honor and i would emphasize that to the court there is not this intimate connection half of your question which i did not want to ignore the the statements are quite the statements are and judge kagan's decision but we we contend you have to go back and actually read cats and what cats said this is the is that the waiver the abrogation is limited it's limited to matters which will have a which are ancillary to one of the three components of the bankruptcy and we contend your honor that this is not a to the gathering up of assets to the determination of various claims or to the fresh start this is a separate and distinct map and how how do i get around the statements as a nine to nothing realize yes it's related to another nother matter entirely but it says in bankruptcy we decided sovereign immunity has no place i've mentioned that everything a cat is about and limited to the bankruptcy clause the opinion reflects what convention not to assert any sovereign immunity defense in bankruptcy proceedings you're right upstairs on a different plane how do we get how how do you get around that i don't think you have to get around it to be very frank our position is that bankruptcy court said in end caps just because the word bankruptcy is attached to doesn't make it bankruptcy within the meaning of the clause and i didn't cause it that judge kagan or at least i'm would contend the judge kagan didn't have it in mind all of the nuances of what was constitute what constitute a bankruptcy matter and basically this almost becomes and you see dick said that if the bankruptcy court says i'm going to rule on it it becomes within the cost the c follows a proof a claim you're waiving sovereign immunity well if there is no waiver would you have your cake needed to you can assert claims against but not go for plugging in decommissioning activities but pay nothing for your claim let's say you get paid on that and yet if somebody has a claim against you then there's no offset well there there won't be any offset here in any of them and this is not my plan will not offset the claim they're making it's for real dollars our claim will only be paid in bankruptcy dollars this claim that the answer is that they say that they don't have the requisite overlap but more importantly one six speed you're on the statute said is that the claim not has to be a claim of the bankruptcy estate whatever you think about my argument otherwise but one thing that this don't apply the effect of the bankruptcy estate so literally as to entirely bar post confirmation bankruptcy jurisdiction that's correct and the way you implemented that was saying that there is a different test this court threw a line and this this claim by statute is not there was no waiver by statute i put to one side the whole issue of the claims the substance of the claims our claim was for the cap and abandonment their claim was for use of the property used of the o o f they don't overlap  you don't have to decide one to decide the uk and in any event that claim doesn't have the intimacy the intimate connection that is choir under under  the test in resorts international we're not trying to have her cake you needed to we filed a claim this claim we contend is entirely separate and distinct from what we were claiming about remember the test and i would point out to your honest that the test for relinquish meant of a constitutional right is clear and unmistakable and a lot of this is kind of catch you on the part of the state it's one thing to say that our claim will be adjudicated within the context of the proceeding and that anything that flows from that claim quite a different thing for the state to have consented to an inverse condemnation claim in bankruptcy court there is no example and i underscore that there is no example of bankruptcy court even during a bankruptcy court proceeding hearing any number of condemnation claim much less after confirmation therefore if you were to decide this case and the p deputy attorney general for the a time state of california if this court finds the state lands commission is immune from suit under the th amendment and the court inquire no further however even if this court finds that the commission has waived or is otherwise not entitled to the can't the commission wage sovereign immunity for you because the commission in this instance was acting pursuant to its statutory grant of authority under the public resources code in which the commission granted exclusive jurisdiction to manage public trust lands and it exercised its authority pursuant to that grant of authority and and under the controlling authority that waivers are to be narrowly construed the waiver only extended to the commission's actions in this case so that would have all for the state in the commission to share in unity that is that the commission governmental unit of this of the state that is correct your honor but it's no nevertheless exercised in this instance it's exclusive jurisdiction i would note that in this case that  it is our position that the that any waiver would extend only to those actions and only by that agency and my colleagues have any other questions for those california counsel i'd that it's simply what one there's two defendants here they each there were and there is no i if there is a waiver it that's the test that set out in cabs is whether the proceeding relates to one of those functions and here the trustee used adversary proceeding meets at least two of those functions turning st to the nd function which is the equitable distribution of that property among the debtors creditors pursuing members condemnation claims necessary to have an ethical distribution of the assets among the creditors who are now the beneficiaries of the trust in the property the adversary proceeding here is the bankruptcy court in the exercise of the exclusive jurisdiction over property the trustees thinks compensation for an important dinner asset which is the e o f it's now in the hands of one creditor the commission and he purpose of the abba story proceeding is for him a creditor from taking the valuable asset of the estate without providing any compensation this wouldn't just when brits one creditor to the detriment of other creditors and in disregard of the plan and as a result the bankruptcy court needs to retain jurisdiction over the left which is property of the estate in the hands of the trustee to administer the plan so for those reasons from what's your response to the argument however that with regard to the st feature that we are in a post confirmation probably the most effective date situation and therefore the property is no international case the case does talk about the state terminating but points out very clear st that the courts don't apply that cessation literally if you applied it literally then there could plan or the liquidating trust agreement or the order provides for continuing jurisdiction the risk continue your stiction and that is the case here although it's the general rule that the bankruptcy state basis to exist upon confirmation there is date but said a couple of things st that that isn't applied literally because if it were there would never be any host confirmation jurisdiction of the district court and that can't be right there has to be host conformation jurisdiction in some not that the cessation of the estate is not to be applied literally and one thousand one hundred and forty one dollars b allows the plan a confirmation order to continue the bankruptcy court jurisdiction which has been done in this case if you look at the confirmation or the is there any case law that inverse condemnations actions actions are squarely in ram mean that the cases you cite a condemnation actions which are mentally different and this seems to be your suit is really for money damages right your honor to the st part of that we haven't found anything that specifically talks about an inverse condemnation case being per se and renounce why we cited the court the condemnation cases that was the closeness of forty that we were able to find the the inverse condemnation claim to seeking just compensation for the property and for special use of the property but that still makes it insularity to the bankruptcy court in rim jurisdiction and as the supreme court said in caps that needn't decide whether the claim is actually in ri m r ancillary to as long as it meets the ancillary to jurisdiction test that is all that it needs and here it does the in room jurisdiction of the bankruptcy court is over the estate and there is a close nexus between the condemnation claim in the estate because the proceeds from the inverse condemnation claim will be used by the trustee to distribute to the creditors and or the liquidating trust one part of it says so i mean a defense is waived in proceedings brought pursuant to laws on the subject of bankruptcy does this limit katz to only statutes in the code or it is that is the interest combination claim here based on think of the law or rather on state law it is a state law claim your honor but i don't believe there's anything in caps that would limit it that would limit ancillary jurisdiction to just statutory claims that there's nothing to not die reading caps that would limit i think caps would be broader than is the inverse condemnation claim here only for post effective date use of the unsure facility it's for the just compensation of the use of the facility it was obviously filed two weeks after the effect date but i don't believe it would be limited to only claims going forward your honor of course the commission was using the e o f under agreements under initially the reimbursement agreement and and there was a large sum of money under those agreements that wasn't paid and been be commission indicated it would pay no further monies for its use of the e o f that's why  to had to terminate the gap agreement because that just converted it to a taking it as a when that was what when they stop paying was it four amounts that were present effective date of the confirmation of the plan yes your honor mostly it would have only been to two weeks that would have been a political post effective date all the rest of the monies would have been pretty effective  instrument to effect a transfer of property dealt with by a can for implant and to perform any other act that is necessary for confirmation consummation of the plan that's seems to be at least to me to be more on point because this is a liquidating plan your honor let me make one point under the state law sovereign immunity of course we believe that the argument is that way because it wasn't raised in the district court the turning to the merits of that argument the appellants arguments on state law munity of really shifted sense or opening brief in their opening brief they were arguing a new unity from liability and now they're arguing and unity from suit and there can't be state law there would be no immunity from suit and i just wanted to point that out since that was raised in the report were cooperate and we've not had a chance to address so that that argument relates in some way to why you believe that even the state of california cannot posit sovereign immunity that that argument relates to the allegations of state is there anything that can be done quickly if not go on ahead i'm sorry judge i'm not that can do i will let lisa now once we're done with this case ok thank you i'm sorry your honor that you can't see me  but i hope you can hear me i can very well thank you your honor i'm going to make several points number one on clarify something about the proof of climb proof a client the bigger point is we the precisely dispute the notion that this claim is tied to any of the three elements that's core to a bankruptcy a state that has already taken place and it's already been distributed it's not ancillary to that it's also not ancillary to the distribution of bad assets that has already taken place the assets have been distributed but if more money is owed free effective date of the confirmation that has not been paid and that money is brought in by the liquidating trustee a liquidating plan means seeing be a state is not an adequate connection to the to the to the to justify jurisdiction that's all we're talking about here your hon this is not intimately tied to any of the three elements it just isn't what i asked the court i would ask the court because my pony keeps asserting that the that this claim is somehow distributed and might include even the proceeds from a lawsuit but it is not it is not an intimate part of the plan the plan conformation plan interpretation all of the elements of the plan are completely independent but it's but my point is it is i guess fairly simple if the debtor owned property yes and that property was debtors the state and then the debtor had an agreement and it believed that in connection with that particular property it was owed x amount of money and the plan when effective and the liquidating trustee mr davis is saying wait a minute let me look back here with respect to that property there is an inverse condemnation claim and you owe us money and if i can get that money i dentistry beat it to creditors which is one of the essential purposes of bankruptcy i'm kind of lost as to why katz supplemented by the understanding in alan doesn't cover that situation something that happened in connection while that property was the property of the estate but ok ok let me let me question the basic premise here the doing about it was not i but if you if your honor st of all we disagree with mr harris it's not true but your honor this court can satisfy get solved by simply looking at the complaint that was filed there is nothing there's not a word in that complaint about seeking money that preceded october  period beginning with trepidation of the agreement and that's a fundamental fact that we disagree with them on and which they are just plainly incorrect and therefore operating on the assumption operating on that premise this claim does not relate d to anything that occurred prior to or during the course the bankruptcy proceeding it is entirely post bankruptcy and the problem with their position and the problem with this position is that it would extend bankruptcy jurisdiction and most importantly even more important than jurisdiction are waiver of sovereign immunity indefinitely i would point out your honor that in the supreme court has directly addressed the issue of jurisdiction and sovereignty is not in case we but since it's been brought up in black for being no attack which is five four of one us seven hundred and seventy five dollars the court hallow that simply because congress grants jurisdiction to hear a claim it does not suffice to abrogate all defenses to that claim they are analytical the contributing debtors to states there's other lichens like that doesn't that provide a basis for saying that in fact after the confirmation of the plan that the trust assets going to need to be part of the bankruptcy estate i don't read it that way but to the extent you do read it that way it still is insufficient to waive our aggregation of sovereign immunity we are applying a constitutional standard here and constitutional standard is it has to be ancillary to one of the three criteria so even if you're correct your honor as a matter of the that test which is the controlling test is is this ancillary to one of the three aspects and we contend clearly this lawsuit which is all that matters is not an to gathering up assets to the distribution which has already taken place or to the fresh start it is simply not intimately tied to one of the three elements that if it if you're if you're centrally done i was when i asked mr harris to come back and ask him a follow up question one can i respond on one issue which is a state law munity since i did not touch your good will go one  more ok thank you i appreciate the indulgence here no problem on california state law immunity from liability which is what determines includes its right to be free from suit other than in state courts and that is all subsumed within the same process we do not believe  but that the key to lumbar though is we treated immunity from liability as a defense and not a jurisdictional bar well but but your honor let me point out in footnote seven this held that the issue could be raised at any time and therefore this is a claim that can be resolved at this time that's in footnote seven in the last have just a follow up question for you if we if we could yes or the question is the that mr rosen some salt states that not a dime of pretty effective date money in connection with the inverse condemnation is is so and it's all for post effective date claims is and you say you've said previously that's incorrect and if so how do you back that up i believe that is incorrect your honor the the letter continued to be outstanding because this is the time whenever the commission had said that it was going to quit payment so that is my understanding of the record and what the complaint that was filed on october th specifically seek t before the debtors file bankruptcy it has references the bath in the prayer is general your honor the prayers were just compensation for the taking so i don't think it breaks out if there were some pretty october th verses i was knocked over fifteen claims but it is clear that it was tracing back to the dispute back to the to the the time around the petition message a one hundred and seventeen and then the the gap agreement j a one  five the parties that also recognize there was dispute over the use of the property in the payments and that is my understanding correct thank you what's that like to hear what is your opinion on whether or not post play and if it is still provided in the thank you again and will take the matter under advisement