if you please the court good morning my name is katherine butts one with i'm the attorney for a so this appeal present fundamental questions of article three jurisdiction are rising in the context of a carefully balanced protections for debtors and creditors under the bankruptcy code and rules a firm the rulings of the bankruptcy court affirmed by the district court would deprive mr and mrs schulze of essential a their retirement more than a million dollars in legal that yes there's no question that that mr dunn in the underlying action against union bank did a good job and the referee peter smith  to construe an reform that agreement and those damages are crews for the purposes of legal malpractise he was aware he continuously through december of one nine hundred ninety seven so when we look at the court's ruling on the issue of settlements set off would apply  both the section three sixty two which is the automatic stay protections and notwithstanding the fact that at the time the bankruptcy court entered declaratory judgment to achieve standing under article three and i have cited to the court cases that impose told or own probably is the closest on similar at the time mr johns claimed was seen delilah's if no objection had been filed to it mr dunne was protected for the balance of the case there was a took that made that ruling was a declaratory judgment action that dealt with the priority of claims in the stream of payments that was due to mr szell's that issue was resolved by a settlement among all of parties with the ban pending cross motion of mr dunn was moved there was mr dunn did not have standing there was no opposition no opposition to his crying in that actions and that is the constitutional issue the bankruptcy court lacked case and controversy jurisdiction over the prince of claims of jack done at that time now i'd like to go back to the set off because it is of concern since to the extent that that this court may conclude that mr the bankruptcy court concluded that there was no sign off merely because the bankruptcy court looked at mr schultz's claim as an affirmative claim for relief in fact the pleadings are of the argument was really that was that it was an absence of a case or controversy there was both a case and a controversy in two respects one the union bank litigation created that case and it created the controversy the argument is that when we settled union bank's claim of recruitment that all of the issues one way and if you look at union bank's complaint and in particular  allegations of paragraphs forty six through forty nine that's e r that one twenty six and one twenty seven you will see that they were seeking additional relief in addition to the recruitment they asked for directions as to whom payments should be made after they were cooked i'm not going to go in and spend the time dealing with the specific allegations but those issues were specifically reserved in the settlement agreement and it was reserved in the settlement agreement five years all other issues were reserved to be determined by the bankruptcy court it specifically set forth all of the relief sought by the cross motion for summary judgment as to the remaining cross the fence other than the bank  retained and the court reserved jurisdiction to adjudicate those issues so not all of the issues that the bank brought in their complaint were resolved they were reserved and so we still had the cross claim and the cross what the validity of the lien was and whether or not there was an underlying claim which that means secured so the court determined to allow the claim as well this argument about this is a violation of three sixty two and it throws the entire bankruptcy process on its head again no authority for that there is a case which i would ask the court to take a close look at it was by this court in kennedy versus cowan i believe in right kennedy and there the jurisdictional issue was discussed i do i do and there are there was a and the due to this court determined because the jurisdictional argument was raised by the better that the bankruptcy court didn't have jurisdiction to determine not only the destructibility of the claim which is also a core perceiving and seven thousand one adversary proceeding that the court didn't have jurisdiction to also adjudicate the claim the underlying claim and they said th creditor should in essence take relief from stay or go back into state court liquidate the claim and then come to the bankruptcy court and the and this court said you know what that may be a proper procedure but it's not the only procedure and the court has jurisdiction in the context of a nonstarter ability granted slightly different nominal force but very close in the context of a declaratory really thought action for nonstarter ability the court could also determine the claim itself and so there are although there are  argument as to why that is not the case claims get adjudicated in bankruptcy in all sorts of contexts including nondestructively proceedings determination of a lily priority extent of liens all sorts of adversary proceedings  also the fact that when you have a an objection to a claim joined with a demand for relief which creates and have a certain proceeding that it all becomes an adversary proceeding it's clear that the rules regarding  the bankruptcy court or the bankruptcy rules there are other mechanisms and procedures for education of claims calderon is the heaviest corpus i mean it's completely an opposite it's not controlling and i quite frankly don't understand the relevance of it that what this was was transactional now practice and why they continue to rely upon a case which has been expressly overruled by the supreme court california supreme court and the subsequent jordache decision is beyond me but  it's a question of when the actual harm was incurred here clearly he knew knew about the purported failure to negotiate certain provisions in the settlement agreement which is referred to as the confidential settlement agreement it's really the settlement agreement now he knew about that and he incurred injury injury immediately when he started incurring attorneys fees and he sets up two subsequent pieces of litigation bankruptcy court litigation and state court litigation in which he lost on both counts and he was suffering injury all along so clearly the one year statute had expired on that there's another argument which we touch upon the briefs it wasn't discussed today about that the the contention that there was an alternative settlement offer that was that mr schultz was not made aware of we talk about that and i think that's discussed i'm not sure at what page but it's clear that the bankruptcy court made a specific finding that mr schultz knew or should have known in september of two complaint there is further argument so i think that it's clearly bart and that's a finding of fact which i think under under the standard for review of bankruptcy court findings is clearly erroneous i don't think the bankruptcy courts finding that mr  or should have known in september of two thousand of what the facts generally were comprised in the claims sufficient to put him on notice that that started the running of the statute hence it was barred by the time he filed this bankruptcy scheduled and it's in the right amount you don't need to file a claim for the better schedule that's being disputed clearly in the schedules and as amended schedules which by the way goes back to the fact that there was also a case of controversy at the inception of the bankruptcy case to support jurisdiction debtor decides whether or not to object to it and here they did they file the objection and they join the objection with a demand for relief i e the claims of malpractise which became an adversary proceeding but the fact that you finally proof of client it's not a proceeding it's not this quote affirmative action that's been taken by done against schultz the affirmative action was really taken by schultz against done as determined by the bankruptcy court judge have done is in the first adversary proceeding which is the subject of appeal zero four dash five five three four six when the issue of the claim of the lien the right to payment was raised that's where they should have come in and answered it and affirmatively so i set off but they didn't they said that they didn't do anything in the court should note again that connection with the first ever circuit sitting on the on the cross claiming the cross motion for summ result it again in response to the question it's not necessarily in the record but the bankruptcy chapter eleven there was a plan it was confirmed it provided for payment in accordance with the terms of the judgments and the orders which are now in effect and that state of the record right now payments are being made the bank has been making the payments yearly to the debtor in the dispersing agents on the other recoup portion three hundred less the one twenty they keep for five years the one eighty is being paid out and  because i don't think it was needed at the bankruptcy court or the district court that was a continuous adversary proceeding apart makes this argument repeatedly which is incorrect that when the bankruptcy court entered that august first zero three summary judgment it dismissed not only the complaint which is all it says but if this missed the objection in the complaint well you know the best person to know would be the person who made and entered the water and that was judge donovan and judge donovan determined that what he intended by the summary judgment order was only to dismiss the complaint against when we said we need a disposition of the order and essence claim a cause of action the exact we need to have a separate order and he agreed and he entered the second the subsequent order they they it was difficult and there was a lot going on but i think when you follow all the three appeals through and it hopefully makes more sense when you when you work at it is difficult on its face the first thank you thank  is on the issue of whether the august order was final the memorandum of decision by the bankruptcy court was it had twelve paragraph he handed on the of the  excerpts from the record the actual order the actual summary judgment is tab thirteen you won't see in the memorandum of decision that the judge defines complaint he defines complaint as the as both the objections and the complaint you'll see if they're sorry don't have the page number on this particular piece of paper but that's where you'll find them both your honor allowing altering the the tendered order it was perfectly clear that he did not intend to answer that second order which is the subject of a third of people in the adversary proceed the issues where argued before him and all of that is set out more fully in the district court briefs than in the briefs to this court which were so very limited in space quickly telling versus kennedy and smith bankruptcy courts rationale for its jurisdiction to enter the first order allowing mr dunn's claim on the declaratory relief action and the first the defense offered by mr dunn's births arises solely from thirteen thirty four and one fifty seven they merely argue that these are fact the document the document does say that the court reserves or on issues to be determined that doesn't mean that they were to be determined in fact case i assisted in the drafting of that document this is the settlement agreement the final settlement agreement with the union bank the issue is reserved to be determined would have been determined on m says so the resolution of litigation related to alleged malpractise may or may not mark the point at which a plaintiff first sustains actual injury under section three forty point s this in the very last paragraph of her decision that describes the facts of i t t that describes the facts of this  entirely possible that this court will conclude as the bankruptcy court concluded that mr scholtes was time vars i would like to go back and say that the objection to a claims that is deemed allowed under the bankruptcy code is not all sensitive but they've sent when a proof of claim is properly filed it is deemed allowed and it will be allowed if no objection is fraught doesn't matter that the lawyers are hitting each other over the heads doesn't matter that it was designated as a contested fineman the schedule it is protected by law from the date it's filed until the end of the case if no objection is filed the objection is defense and the defensive nature that the person claiming the set off can't recover any more than the amount of the debt due to that person from the off unsafe claim or having said that well but i of the summary judgment order in the declaratory judgment action for which there was no article three jurisdiction i would urge the court to overrule the district court and the bankruptcy court on the issue well the district court on the issue of finality and to reach if this court would the question of whether mr schultz's so that all rights as against mr