afternoon everyone good morning to you judge all sir good morning to you and we have very young very young people bench if we if we are as young as you are will be in good shape the we have lazy days today and before we begin obviously this state court has issued an opinion here and we may give you a little more time you can tell us what you what you is that the court intends to make that a final judgment on june twenty seventh only post trial motions that i understand and i'm representing having talked to the floor to get people involved in the florida case  understanding is that i for his filed a motion to disqualify the judge after the after the judgment which motion i'm told has been denied i believe our side has filed some motion having to do with how the rent was paid during the period of the a strange parallelism almost in the sense that if your position is correct that the bankruptcy court had jurisdiction and it did not issue an advisory opinion  then that's not or a federal law and a state court can't take that away from the federal bankruptcy court is that is that your position or other plus i think once i think once if over case and the reason is you know we have this whole body of law on race to judgment in comedy and all this is because two courts can have jurisdiction at same time so at this moment i think both courts have jurisdiction as a matter of subject matter jurisdiction  judgment at least this stage doesn't mean all that much because the same same party is winning in each forum in terms of the substantive issue state courts have you know how do you say that they could have authority to make wrong decisions it's even been rumored th federal courts occasionally bent don't bet a thousand percent that is a different matter from example if the florida had a state statute or a rule of decisional law that purported to addressed what happened in a bankruptcy assignment you know that would be preempted if it were he if there were any different from what the federal law is this just happens to be a federal law issue that was presented in the course of state proceedings and the court decided that as this court sometimes reopen the case to interpret and force its own order here the issues for bankruptcy law question affect a section three sixty five f three on an assignment that is made as part of a reorganization plan to prevent travelers and then that he decides at the request that a former debtor who was a litigant in that state court is there any other precedent i'm not aware of that you know i'm  agree with you in this case we will be making some new law i think you will be applying subtle law on this in a factual situation that mean however it isn't in precisely this context whether it's i think i'm saying that because what we have here is it an issue of karma the hitter we have a judge a bankruptcy different concept from subject matter jurisdiction a comedy doesn't come into play really unless a court has subject matter of this just action of the client's exercising when what was the timing of when this this these seats happened this is not a situation where case was long pending in the state court and a litigant wasn't happy there and said he i'm going to run over and fight it better for all these suits happened hopefully simultaneously i thought instituted the state court action at about bankruptcy proceeding we then filed protecting our rights in action in the in the in the state court so that you know this is what lawyers do with the counseling clients you know nowhere for sure where it's going to be decided  you have to cover it's not a situation your honor where a state court had long edger stiction over case and then all of a sudden a federal court interfere in these proceedings were instituted virtually simultaneously involve this and i confess i don't totally understand that involve this public rights exception to when you don't have jurisdiction over state law claims which seem to go on and on and on a lot of metaphysics but the point is it doesn't arise unless first of all you're dealing with  state law claims this is not a state law issue this is the effect of a bankruptcy code provision on what happens to an assignment in the course of a bankruptcy and what it says it doesn't destroy the  is a conscious saying that in the florida case it was not decided on the basis of federal law i'm not saying that your hon this issue was decided on the basis of federal law in the florida case part of the florida the florida state court had an issue a federal law presented to it which it was all thiers all that in our favor was all that the same way that the bankruptcy court resolved litigating both cases and two for right i think that's why we have rules about comedy and why this issue arises a lot but we now we also have a whole body of law about race to judgment because this happens a lot but was there an effort to stay that florida is my understanding is that we requested the florida judge to wait with the bankruptcy court we do because it was purely an issue of bankruptcy law and in all sorry to say that again we requested lazy days requested the florida court to week for the bankruptcy court to decide this issue about the meaning of its own order a federal bankruptcy law and the florida state court declined to do so which whatever the comedy balance might have been the florida court decide no i'm not going to do that that was  this development but we were waiting until argument week so that we could give you the most up to date report but this is where it's the effort now you know basically it's a set the idea that this is a stern the marshal case i mean just the that you avoid these provisions parties can agree this provision of the bankruptcy code won't apply in this particular if you actually happen in this case there's another provision where you can agree where the bankruptcy law provides that the debtor will be a liable apply and my understanding wasn't their quarrel with the initial plan it was their sort of getting whipsawed that there was a side agreement or an agreement that occurred after words that the ass signy is getting penalized with in contravention of what all the parties to the agreement understood to be the deal isn't that really what they are i think i think there are arguments like that i think the the doesn't credit any of that so those are issues you could get into but the bankruptcy court said no and you know we think it's correct and it's got authority to interpret and force its own mor close nexus analysis close nexus analysis i believe applies when it's not a court jurisdictional matter but you're trying to decide if it's close enough to the bankruptcy court issue that the bankruptcy court you know properly exercise discretion here it's c you have this case not a month tayla where there's a sufficiently close nexus because a party claims that one deal worked was going to get preference from the state of montana and did ing that the state of montana was involving that he was not in that that was cited an in bankruptcy code does it say it emerges through bankruptcy without bein extinguished by any transfer that happens just part of the bankruptcy yes yeah ok first time well give you some time for that is ok once you hold off on the time certainly and thank you for allowing me to address it initially our view of the state court decision is that it is not relevant to this argument today and it was inappropriate to have been introduced because it is not a final judgment the substance of the opinion itself the centrally adopts the reasoning of the bankruptcy court and our view it's if it shows anything it shows the exact kind of prejudice and harm that we predicted would happen in the bankruptcy court and in the district court by the issuance of an advisory opinion and that's exactly what we fear now if you want in the district court i mean we did a florida judge of equally if followed what the district judge did certainly and the reason we filed our letter that we did in response to the twenty eight day letter that in the stressed open file is that in our view there was inappropriate use of the bankruptcy courts opinion and closing arguments and closing briefs we did not feel that that was appropriate twenty eight j material to submit into this record and made the decision not to submit it however if the court is going to consider the decision as that the florida state court entered it's our view that the courts have the full picture and that's why in that letter we asked for the opportunity for supplemental briefing in addition to how could how could the florida courts decision impact our review of this case maybe i'm not giving enough credence to our distinguish colleagues on the florida state court but i i'm at a loss to understand why i would credit a florida state court judge or any other state court judge's interpretation of the bankruptcy code provision yeah and i think that's why we're here yes when we do and when you asked your question about parallelism miss russell the note that i made them to myself is that this court's decision on federal law under the constitution in the privacy clause is binding on the florida court but the florida courts decision on the meaning of what happened in the bankruptcy court is not binding on this court precisely so so we should just focus on our case my view would be that you don't need to consider what happened in florida and you and you can focus on the briefs as submitted and the argument presented today however if that would be true if the florida court had ruled your way as well yes it has to be i mean logically it has to be  client might want me to say something differently to that question of how you may go out and they went on the piano right exactly exactly in our post trial issues that are going on that mr russell and touched on regarding the whether a new trial should be in front of a different judge i don't want to go into the substance of that unless the court wants to hear about it because it's we have enough here in this so looking at this case how can how can you argue that a bankruptcy courts interpretation of the application bankruptcy court can have that settlement agreement as approved by the court be binding or whether the bankruptcy court has jurisdiction to come back and revisit it later and the prepay it should make any difference whether this is a prepaid action i mean well you mentioned this but where he talks about where the court talks about a court that interprets a confirmation order after there's been a long hearing in a trial here we had thirty days in the bankruptcy case the confirmation hearing itself was eighteen minutes  so and i think some of the standard review issues that we raise also touch on the fact that when you have a lower court that interprets an order that's ambiguous looking at what was litigated in front of it and what it did ten what i intended when it entered that order that might be a different review by this court then essentially stipulated order which is which is what judge andrews found this confirmation order was more akin to the parties agreed on  showed up in the bankruptcy court so we've all agreed and we'd like for you to prove this and the judge approved it and i don't mean to minimize what the bankruptcy court does certainly there's nothing no suggestion that the bankruptcy court didn't review the material and and do its job and approved the confirmation order when more importantly if the parties had slaughtered the bankruptcy judge somehow the bankruptcy judge could've rectified that when the case was brought back before that judge that's a fair comment i don't i don't disagree with that but i think if you look at this record there is no reference of three sixty five f three anywhere in these proceedings my colleague mentioned that three sixty five k which is a provision of the bankruptcy code that says when a debtor assigns a contract it's no longer valid by the provisions of the contract if you look at para five paragraph twenty five of the confirmation order three sixty five k is not mention what is mention is that the settlement agreement is assumed and that the assigning debtor will remain liable on the signed lease so the parties didn't mention three sixty five k and yet the settlement agreement and the order as our opponents have conceded were contracted around we believe and submit to this court that under the same language under different language in the sudden agreement we simply contracted around section three sixty five the three there's nothing to suggest that the parties here can't do that and there's and there's nothing to suggest that that's not what they did and in fact it was hard when you asked a question that if if this tenant was now to assign the lease in violation of section thirteen point one with that extinguish the purchase option and the answer was yes so i think it's clear from this record that the lease and and all of the terms of the lease or a sign and so what does that mean that means when the the tenant elected to exercise the purchase option  it was well within the landlord's right to submit that there had not been a section thirteen point two signed and in the bankruptcy record there isn't there are no facts that suggest that thirteen point two was complied with if you look at this lease it's a little bit complicated because there's article thirty three point three which says and i think both the bankruptcy court in the district court did have a fair job of going through these provisions but thirty three point three says so long as there's  not an assignment provided there's been an assignment under thirteen point two and the parties are not in default then you can exercise the purchase option what the bankruptcy court did is say when i approve this least thirteen point one is written out of the contract we have a confirmation order that approves a settlement agreement a settlement agreement that says all terms survive that's where we leave it at confirmation but don't don't agreements  otherwise i mean the default position i i posit for your response the default position can't be that we put all these things in the document to the exclusion of federal bankruptcy law wouldn't the position be that they're all put in there subject to the bankruptcy law unless explicitly stated otherwise and approved by the federal bankruptcy i think that's a very good question and in my practice at least we oftentimes state what you just said in a contract for example if we have a bitter that wants to buy assets and we're representing a debtor will actually write into the contract with that better this contract has to be approved by the bankruptcy court or we really we retain our fiduciary obligations and if the higher bid comes along we're not going to be bound to not sell it to that already but i submit that if if your question if the answer to your question is yes then at least with respect to  prepackaged bankruptcy cases the policy implications are great namely where you have a very let me just stop you for a minute because i don't want to get to the policy argument until we deal with the legal argument or maybe maybe you're saying you only have a policy argument are you suggesting to us that for non prepackaged bankruptcy s they win but this case is different because it's a pre packaged bankruptcy and you want us to to plow some new ground in that regard i don't think i'm asking you to pass a new ground i think i was going to make a distinction between a prepackaged case and a non repackage yes but to be responsive to your question i'll set that  i want you to do that i just wanted right yet i want to answer your direct question which is isn't it always the case that in agreement if you don't expressively right that you're contradicting the bankruptcy code that the bankruptcy code always trumps the agreement and i would submit that that is not the case because the bankruptcy code while it has many provisions that governor self executing also requires court approval of various agreements so it's not unusual in bankruptcy practice which is what happened here to have two party settle a dispute or litigation or an event that occurs outside of the bankruptcy process but because one party to that agreement is in bankruptcy that they come to the bankruptcy court and they get it approved and i don't think that it's understood in the bankruptcy community or that is the substantive law that if you don't write in that contract we're expressively writing out of this agreement section x y and z of the bankruptcy code that you can't achieve that through the language that you actually write and in fact the three sixty five k example is the perfect example three sixty five k i've looked at the record three times and i can't even find it mentioned in the plan the confirmation order the settlement agreement so the language of the settlement agreement said all provisions will survive of the leaks that is directly contrary to three sixty five k the confirmation order says the lease is assumed and the lease remains binding that's directly in contradiction to three sixty five  also on the close to the nexus yes we argued jurisdiction from two different perspectives one is the statutory perspective one is the constitutional perspective as as judge all the certain mention has written in re resorts international which is one of the leading cases on post confirmation jurisdiction and it says that after confirmation of a bankruptcy plan jurisdiction narrows with respect to bankruptcy case but as i read that case the judge simply said that you still have to find that close nexus and that close nexus is not unlike the well known and well respected third circuit decision in pack or versus higgens which says there must be some type of  effect on the administration of the bankruptcy case it is our view here that since this case has been confirmed and all of the shares in the new reorganized entity have been distributed that the resolution of this dispute did not affect a creditor it did not affect the administration of the estate it had no bearing on any of the core type of administrative issues that typically arise in a bankruptcy case and in fact judge hardiman asked me at the beginning i didn't get a chance to answer if this was a court proceeding and i think my opponent suggested that it is a core proceeding and that leads me into stern versus marshall where chief justice roberts wrote a wonderful opinion on statutory bankruptcy jurisdiction and he talked about he found in that in that situation that under the statute as written the counterclaim that was filed was a core proceeding under the statute he then turned to the next section of his decision and said but congress didn't have the congressional didn't have the authority under the constitution to delegate the decision of that's to the bankruptcy court so i would submit that the jurisdictional issues here as properly analyze and as simply analyze are that under the facts of the record before us there simply is not a close nexus such that the resort's international case has been satisfied and i'm not i want to be clear that i'm not asking for some kind of per se rule or asking for something unique that that there could never be jurisdiction in a post conference that situation i'm simply asking the court to do what it's done in both resorts international armstrong world industries and the should i go cases and say that the jurisdictional now is as multifaceted it's one of degree it requires an understanding of the facts and circumstances and then under these facts and circumstances there was not just statutory jurisdiction and under the stern v marshall there was not constitutional jurisdiction that leads me to answer two questions that started to go ahead finish and i was just simply going to turn to the travellers the bailee decision because i think judge sirica you ask if that answers the question and the other argument and and i say that that does not answer the question because travellers either ailie deals with whether the discharge and injunctive provisions of a confirmed order whether the bankruptcy court could revisit those issues and as we analyzed in our briefing the thirty year history of the one nine hundred seventy eight bankruptcy code every time it's made up the united states supreme court the united states supreme court has reminded all of us that practice bankruptcy law that bankruptcy jurisdiction is not an ending and that it has limits and that it has the bankruptcy court can only deal with public rights discharge injunctions and related type issues that are courts are the heart of bankruptcy in this country now we have a chapter eleven case or chapter seven case you then do have the authority under thirteen thirty four to deal with cases that arise in arise under the bankruptcy code but i guess i submit that since this make a case had been closed for fifteen  months but it is not it did not arise in a bankruptcy case and that it did not arise under the bankruptcy code can it be argued that travelers is not really an interpretation of a discharge and the question there was whether the order precluded claims against the debtors insurer so it was not the typical kind of discharge case yes i and i'm i think that's a fair question the as i understand the record of that case there was a lot of argument and a lot of evidence taken at the at the bankruptcy court level about whether travelers really would have funded the bankruptcy plan with i think it was several hundred million dollars if it had not received the discharge and the bankruptcy court found that it wouldn't have been that therefore the discharge injunction was i think it was called the cornerstone of the bankruptcy of plan why can't it be said here that the bankruptcy court just shoe relating to the dispute before they were they were the court was acting under federal bankruptcy law not under state law circumstance right and i think my answer to that would be if that's what the bankruptcy court was doing and if it was using powers stowed upon it by traveling bailey that it needed the vela better record to determine whether this dispute was really the key to the plan the bankruptcy court's decision actually said that this was you know a key aspect of the bankruptcy plan but there were no there there was no testimony in front of the bankruptcy judge the second time we got back in front of the judge hardman's with a point you know we just got the decision with the statement that this was a key issue and the record reflects that the key issue was one hundred thirty eight million dollars worth of bond that they couldn't be paid on time and what's not in the record is whether the the parties would have still a sign lease had the purchase option been expressed that terminated or what would have happened and what would have been the economic impact on this debtor if the parties had had to litigate it three sixty five f three issue in front of the nexus in this particular case i guess the most direct way i can answer that is to remind your honor that the movement in the bankruptcy court is a separate and new legal entity the reorganized debtors are not the debtors the debtors and the landlord entered into a settlement agreement which the bankruptcy court approved fifteen months later a new party that succeeded to the lease decided that for whatever reason they wanted to exercise the purchase option and when we informed them that the way in which the settlement agreement and bankruptcy had occurred the purchase option was terminated having just like with that they rushed back to the bankruptcy court and asked the judge to clarify for two non debtors a dispute that resulted in the monies being distributed to creditors and had no impact upon the administration of the bankruptcy case and for that reason we submit there was no jurisdiction  my red light is on so i just had to keep going unless i was distracted want to make sure i understand your position fully you're saying that the the purchase option was extinguished in conjunction with the planned confirmation document the settlement agreement is that right i think what i would more clearly say is that the full lease was assigned with all its terms and that when this party east seeks to exercise the purchase option the way to decide that is to look at thirty three point three zero right there in the point one in thirteen point and that full assignment was blessed by order of the bankruptcy court the we  in the factual background of our briefing and i won't go through the time but there was actually a complicated structure of assignments and different corporate entities that were created and one of the conditions to closing was a tax opinion saying this was all going to work in a way that was beneficial to the new owners all of those documents are in what's called the plan supplement in the record but the final documents were never before the bankruptcy court so we don't know exactly how all of the transfers occurred but in general the answer to your question is yes the bankruptcy court approved the plan that set up this structure but there were multiple assignments and assumptions and the settlement agreement only deals with part of that and then fifteen months later or some period later question was raised as to whether or not section three sixty five three of the bankruptcy code altered that understanding in any way i think that's fair and the way i would then answer that is to say and then the bankruptcy court decided that when he approved that transaction initially he didn't really mean what he said and that although all provisions survived really section thirteen point one of the judges have the jurisdiction power to interpret their own orders is it not that's you know your job is to let me give you one analogy that might make it a little bit easier to understand my position this plan of disclosure statement also disclosed an exit financing facility between the reorganized debtors and bank of america is  if what you're asking me is that the court always has the power to interpret the confirmation order is the true answer to the question posed today that if next week this borrower has a dispute with the bank of america under that exodus realty the proper for i think the answer is if and only if that dispute arises under a provision of the bankruptcy code if that dispute involves the statue of limitations in new york if it involves new jersey consumer law it's has something to say about this dispute it seems that that means you're in in the court you're in the ballgame so to speak within the in the jurisdiction of the bankruptcy court doesn't mean the bankruptcy court acts correctly doesn't get it wrong etc but as a jurisdictional matter how are you not properly there i would concede your point for an order but remember here we have a settlement agreement that this this resolution this case starts with the need for this debtor to settle other litigation under the lease and entering into a settlement agreement that said certain things are going to unfold in the bankruptcy case so it's not that we just have an order here this is not an adversary proceeding where there was a an  judgment and interest was to compound annually but the judge forgot to put a compound in the can back and say did you really mean to say compound annually this is a complicated series of group of agreements that lead to a lease an interest in property that the parties are now have a dispute over which is a classic state law dispute what is a lease me there's plenty of cases that say a plan once confirmed is merely a contract between a debtor and its creditors and that state courts are fully competent to interpret those contracts so again a kind of returning to resorts international zone the questions that the surge was asking me there is a question of degree i'm not suggesting that the answer to your question is there's never a jurisdiction to interpret oppose confirmation order i'm suggesting that of these facts  until that very last statement council did not and that tends to identify a single state law issue that supposedly was presented to the bankruptcy court and in that response he sought to say that really what was at issue the bankruptcy court was interpretation of a contract under state law no what was at issue in the bankruptcy court was as a matter of federal bankruptcy law self executing provision in the assignments that occurred still there in still subject to conditions it exists the only issue is when we're in this bankruptcy and the assignments occur as part of this reorganization plan does the purchase does the landlord consent provision operate defeat the purchase option in that bankruptcy transaction that's the federal issue no one is there was no provision this just seems like it you have to concede counselor don't you that this should have been dealt with before confirmation i mean this i don't think anybody thought it was an issue before confirmation or during confirmation i don't think of anybody had a doubt that the effect of it i'm sorry on i don't hear what you well i just if you were not an issue it should have been said or weighed i think what we really have here no i don't think parties have to recycle and i think would be an extraordinary rule of federal drug screens that would soon be regretted to death three site in a conformational order unless otherwise stated here in all the provisions self executing provisions of the bankruptcy code apply i don't think parties ever said by the way section three sixty five three applies here nothing nothing in this bankruptcy plan or in the confirmation or in  says the assignments that occur pursuant to this reorganization plan the purchase option is extinguished there's nothing like that you have assignments taking place as part of and you have people in routing the reorganized letters and other federal the fact because all of a sudden exercising the purchase option would be beneficial to lazy days and not to not i for it's then that i threw comes up with this argument after the fact oh no because it was assigned during the bankruptcy therefore the purchase offer was extinguished no one thought of that before no one and no one thought that that this self executing provision the bankruptcy code is a metal or federal policy so that debtors have the ability to transfer exactly what they possess that the purpose of this provision that one would have thought that that didn't apply in the bankruptcy court had no problem dealing with it i also want to make a couple points first of all judge else that i have not forgotten your problem but i have at had a chance to look at the other decision that was referenced by depends on whether it was a pre pack or not my god what that will open up but the main point here that would it most go to the weight that you assign to the interpretation of the order it would not give the jurisdiction to reopen the case to consider and forces on the order and plan which the supreme court going on there but a significant development in that case we thought the court should be aware of a good understand your position things well we thank counsel for excellent argument here and excellent briefing as well will decide whether we want to