* District Judge of the Eastern District of Texas, sitting by designation.

1 IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 02-20053

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In The Matter Of: BISSONNET INVESTMENTS LLC,

Debtor

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BISSONNET INVESTMENTS LLC; LAVA CORPORATION; ALFRED J ANTONINI,

Trustee; ALFRED J ANTONINI,

Appellants,

v.

JOHN QUINLAN, Substitute Trustee; JOHN QUINLAN; THE IRELAND FAMIL Y LIMITED

PARTNERSHIP; GARY W. GATES; MELISSA V. GATES; GATESC O INC; NHAPT LLC;

APTNH LP,

Appellees.

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Appeal from the United States District Court

for the Southern District of Texas

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February 4, 2003

Before EMILIO M. GARZA and CLEMENT, Circuit Judges, and DAVIS, * District Judge.

CLEMENT, Circuit Judge:2

A debtor brought suit in state court for breach of contract, fraudulent inducement, tortious

interference, and civil conspiracy against the purchaser of the d ebtor’s bankruptcy estate’s assets.

The purchaser removed the lawsuit to federal court pursuant to 28 U.S.C. § 1452 (1994), and the

district court referred the case to bankruptcy court. The debtor unsuccessfully challenged the federal

courts’ subject matter jurisdiction in th e bankruptcy and district courts, and now appeals to this

Court. The purchaser, citing S ykes v. Texas Air Corp.

, 834 F.2d 488 (5th Cir. 1987), argues § 1452

deprives this Court of appellate jurisdiction over all decisions not to remand a bankruptcy case to

state court, even if the district court allegedly lacks sub ject matter jurisdiction under 28 U.S.C. §

1334 (1993). Because Sykes ’ analysis of § 1452 applies only to district court decisions to remand,

and not to decisions not to remand, and because § 1447 only precludes appellate review of decisions

to remand in the face of an alleged lack of jurisdiction (and not decisions to retain a case), we find

appellate jurisdiction. We affirm the district court’s finding of subject matter jurisdiction.

I. BACKGROUND

Alfred J. Antonini, Bissonnet Investments, and others (collectively “Antonini”) brought this

suit against John Quinlan, and others (collectively “Quinlan”) in the 113th judicial district court of

Harris County, Texas. The suit attacks Quinlan’s actions before and after Antonini filed in

bankruptcy court a contract between Antonini and Quinlan regarding the sale of various bankruptcy

estate assets. Antonini alleged breach of contract, fraudulent inducement, tortious interference, and

civil conspiracy. Quinlan removed the suit to the southern district of Texas pursuant to 28 U.S.C.

§ 1452 (1994), the bankruptcy removal statute. Antonini filed a motion to remand the suit, alleging

lack of subject matter jurisdic t ion under 28 U.S.C. § 1334(b) (1993), which the bankruptcy court

denied. Antonini took an interlocutory appeal of the bankruptcy court’s denial of remand to the3

district court, and the district court affirmed the bankruptcy court’s denial of remand. On the merits,

the bankruptcy court granted partial summary judgment to Quinlan and, after a bench trial, issued a

take nothing judgment. Antonini appealed the merits to the district court and re-appealed the subject

matter jurisdiction decision. The district court affirmed on both issues. Antonini appeals the subject

matter jurisdiction decision to this Court.

II. STANDARD OF REVIEW

We review questions of subject matt er jurisdiction d e novo

. L undeen v. Mineta

, 291 F.3d

300, 303 (5th Cir. 2002).

As an init ial matter, we must determine whether we have appellate jurisdiction

. G iles v.

NYLCare Health Plans, Inc.

, 172 F.3 d 332, 336 (5t h Cir. 1999). Several cases from this Court

discuss the limit s of this Court’s abilit y to review district court decisions to remand, or not to remand,

bankruptcy cases that have been removed to federal district or federal bankruptcy court. S ee Sykes

v. Tex. Air Corp.

, 834 F.2d 488, 490 (5th Cir. 1987); In re Rayburn Enters.

, 781 F.2d 501, 502 (5th

Cir. 1986); Browning v. Navarro

, 743 F.2d 1069, 1076 n.21 (5th Cir. 1984); In re Compton , 711

F.2d 626, 627 (5th Cir. 1983). These cases implicitly analyze the interplay of the two restrictions on

appellate review of remand decisions, 28 U.S.C. §§ 1447 and 1452(b).

Section 1447 instructs federal district courts to remand cases that have been removed from

s t at e co urt if it appears that the district court lacks subject matter jurisdiction, and paragraph (d)

expressly strips this Court of appellate review of a district court’s decision to remand:

(a) In any case removed from a State court, the district court may issue all necessary

orders and process to bring before it all proper parties whether served by process

issued by the State court or otherwise.

. . . .4

(c) A motion to remand the case on the basis of any defect other than lack of subject

matter jurisdiction must be made within 30 day s aft er t he filing of the notice of

removal under section 1446(a). I f at any time before final judgment it appears that

the case was removed improvidently and without jurisdiction, the district court shall

remand the case

. . . .

(d) An order remanding a case to the State court from which it was removed i s not

review able on appeal or otherwise . . . .

28 U.S.C. § 1447 (1994) (emphasis adde d). Section 1452 limits appellate review of decisions to

remand or not to remand that are removed to federal district court under i t s § 1334 bankruptcy

jurisdiction:

(a) A party may remove any claim or cause of action in a civil action

. . . to the district

court for the district where such civil a ct io n is pending, if such district court has

jurisdiction of such claim or cause of action under section 1334 of this title.

(b) The court to which such cl aim o r cause of action is removed may remand such

claim or cause of action on any equitable ground. A n order entered under this

subsection remanding a claim or cause of action, or a decision to not remand, is not

reviewable by appeal or otherwise by the court of appeals u nder section 158(d),

1291, or 1292 of this title or by the Supreme Court . . . .

28 U.S.C. § 1452(b) (1994) (emphasis added).

In In re Com

pton

, the federal bankruptcy court found subject matt er jurisdiction over a

divorce case filed in state court. 711 F.2d at 626. On appeal, the federal district court disagreed that

the bankruptcy court had subject matter jurisdiction and remanded the divorce case to state court.

The debtor appealed the district court’s decision to remand to this Court. We dismissed the appeal

for lack of appellate jurisdiction: “Whether the remand order be viewed as one of abstention or as

one grounded in a perceived want of jurisdiction, we are not empowered to review it.” Id. at 627.

The Court s uppo rt ed this statement by citing two sections dealing with abstention, § 1471

(superceded in 1984 by § 1334) and § 1478 (superceded in 1984 by § 1452), but not § 1447, dealing5

with the perceived want of jurisdiction.

The Court next discussed its appellate review of remand decisions in bankruptcy cases in

Browning v. Navarro

. 743 F.2d at 1076 n.21. With reference to § 1478 (presently § 1452), the

Court wrote: “Nonreviewability extends only to the discretionary decisio n to remand or not to

remand a properly removed action, not to whether the bankruptcy court originally had jurisdiction

over the matter.” 743 F.2d at 1076 n.21. While not discussing how § 1447 and § 1478 (presently

§ 1452) interrelate, Browning analogizes the two statutes: “The statute plainly prohibits our review

of a bankruptcy court’s remand order on direct appeal. This comport s wit h t he extensive

jurisprudence under 28 U.S.C. § 1447(d), an analogous rule co nt ained in the general remand

provisions establishing that remand orders of a district court are unreviewable on direct appeal.” I d.

at 1077.

In re Rayburn

dealt with a fact pattern similar to that in Com pton : a debtor was involved in

a state court lawsuit; the action was removed to federal court; a federal bankruptcy court found it had

subject matter jurisdiction under the bankruptcy removal statute; an appeal was taken to the federal

dist rict court; and the district court remanded the lawsuit to state court. 781 F.2d at 502. This

Court was asked to hear an appeal of the district court’s decision in favor of remanding to state court.

We started by noting that “[t]o a far greater degree than in most cases, appellate jurisdiction is by no

means assured in bankruptcy matters.” I d. R ayburn then cited § 1452(b) as an example of restricted

appellate r eview, but slightly mis-characterized C om pton as discussing only review of remand

decisions based on abstention. “We . . . reaffirm the C om pton ruling and follow it. Because §

1452(b) therefore bars a consideration of this case’s merits, the appeal is DISMISSED.” I d. at 503.

The Court’s longest scrutiny of its appellate jurisdiction is Sykes v. Texas Air, Inc.

, 834 F.2d6

at 488. Sykes brought suit in state court and Texas Air removed the suit to federal district court,

claiming Sykes’ suit was related to the bankruptcy of Texas Air’s subsidiary. I d. ; see § 1334(b). The

district court disagreed, finding no subject matter jurisdiction and remanding to state court. Texas

Air appealed the district court’s decision to remand. Texas Air buttressed its argument in support

of appellate jurisdiction with Pacor, Inc. v. Higgins

, 743 F.2d 984, 990-93 (3rd Cir. 1984). Pacor

found appellate jurisdiction for remand orders where the district court based its remand decision on

a perceived lack of jurisdiction. To reach this conclusion, P acor held that: (1) § 1447(c)-(d), which

preclude review of remand decisions to state cou rt s, does not apply to bankruptcy cases removed

pursuant to § 1452(a); and (2) that § 1452(b ) precludes review of remand decisions based on

equitable grounds, but does not preclude review of remand decisions based on a perceived lack of

jurisdiction. I d. S ykes bluntly rejected Pacor ’s reasoning and results: “The Pacor analysis turns on

a sort of semantic crack in the statute rather than a sound appreciation of the strong congressional

policy against review of remand orders.” 834 F.2d at 490. The Court continued:

Both § 1441 and § 1452 literally apply to every case removed from state court by the

defendant because of a related ban kruptcy; what we may term “direct” removal

jurisdiction exists under § 1452 and its companion jurisdictional bankruptcy statute

§ 1334, and “indirect” bankruptcy removal jurisdiction exists under § 1441, wh i ch

permits removal of any civil action of which the federal district courts woul d have

or iginal jurisdiction, including bankruptcy actions under § 1334. In other words,

t here is in every bankruptcy case the potential for both “direct” § 1452/§ 1334

removal and “indirect” § 1441/§ 1334 removal. This inherent overlap led the court

in Pacor to conclude that only § 1452 should apply when jurisdiction is founded on

§ 1334 . That solution is a plausible way to avoid inconsistencies that could result

from the simultaneous application of the two removal statutes to bankruptcy cases,

but it is inadequate.

Id. at 491. S ykes concluded: “ By the rule of In re Com pton and In re Rayburn we lack jurisdiction

to hear this appeal. Those cases create an absolute bar against appeal from decisions to remand or1 Antonini claims this absolute bar prevented his interlocutory appeal of the district

court’s ruling in favor of subject matter jurisdiction. Quinlan rejoins that if these cases absolutely

barred interlocutory appeal, they equally bar appeal of a final judgment.

2 Some language in Sykes may have been misleading. Sykes ultimately adopted

Rayburn ’s mis-characterization of Com pton , that Com

pton only construed the abstention statute,

§ 1478 (presently § 1452), and not the jurisdiction statute, § 1447(d). Under this false premise,

Sykes included a footnote conjecturing the result where a district court decides to retain a case in

the face of arguments that it lacks jurisdiction: “[T]he decision itself is technically unreviewable;

but of course the appellate court reviewing any other aspect of the case must remand for dismissal

if the refusal to remand was wrong, i.e. , if there is no federal jurisdiction over the case.” 834 F.2d

at 492 n.16. Sykes ’ instinct in favor of review is correct–a district court’s decision not to remand

when it allegedly lacks subject matter jurisdiction is subject to appellate review. Its mischaracterization of Com

pton prevented it from drawing the logical result of its discussion that

bankruptcy decisions are subject to both direct and indirect removals under §§ 1441 and 1452,

namely, that reviewability of decisions regarding remands following removal is governed by §§

1447 and 1452.

7 not under § 1452(b).” Id. at 492.

Antonini and Quinlan dispute the holdings and the practical e ffect s of these cases. One

reading is that § 1452, alone, creates an absolute bar against appeal from decisions to remand or not

to remand, whether based on equitable or jurisdictional grounds. S ee Sykes , 834 F.2d at 492. 1 An

alternate reading is that this Court’s abilit y to review decisi o ns regarding remand decisions in

bankruptcy cases is governed by both § 1447 and § 1452(b), just as removal of bankruptcy cases is

governed by both § 1441 and § 1452(a). S ee Sykes

, 834 F.2d at 491. Under this reading, C om pton

,

B rowning

. , and S ykes anticipated the Supreme Court’s decision in Things Remembered, Inc., v.

Petrarca , 516 U.S. 124, 129 (1995) (“There is no reason §§ 1447(d) and 1452 cannot comfortably

co-exist in the bankruptcy context. We must, therefore, give effect to both.”). Thus, § 1447(d)

precludes all review of decisions to remand when based on a perceived lack of s ubject matter

jurisdiction, even if the district court erroneously believes it lacks jurisdiction. 2 S ee Thermatron

Prods., Inc. v. Hermansdorfer , 423 U.S. 336 (1976); but see Pacor , 743 F.2d at 991; In re Celotex8

Corp. , 124 F.3d 619, 625 (4th Cir. 1997) (premising its analysis on Pacor ’s holding that § 1447(d)

does not apply to bankruptcy cases). And § 1452(b) precludes all review of a decision for or against

remand of a properly removed case when the decision is based on equitable factors. S ee Celotex

, 124

F.3d at 625; Pacor , 743 F.2d at 992-93; In re Nat’l Developers, Inc. , 803 F.2d 616, 619 (11th Cir.

1986). But neither § 1447(d) nor § 1452(b) preclude appellate review of a district court decision not

to remand when the district court erroneously finds subject matter jurisdiction.

Because the district court decided not to remand for an alleged lack of jurisdiction, § 1447(d)

does not preclude this Court’s appellate jurisdiction. Because the district court decision was not

based on equitable grounds, § 1452(b) does not preclude appellate review. As nothing prevents this

Court fro m reviewing the district court’s decision finding subject matter jurisdiction, we therefore

review that decision de novo. Lundeen , 291 F.3d at 303.

III. DISCUSSION

All federal courts are courts of limit e d jurisdiction. A bankruptcy court’s jurisdiction is

especially circumscribed and wholly “groun ded in, and limited by, statute.” C elotex Corp. v.

Edwards

, 514 U.S. 300, 307 (1995). District co urt s, and their adjunct bankruptcy courts, have

jurisdiction “of all civil proceedings arising under title 11, or arising in or related to cases under title

11.” § 1334(b). For “related to” jurisdiction to attach to Antonini’s state lawsuit, t he anticipated

outcom e of the action must both (1) alter the rights, obligations, and choices of action of the debtor,

and (2) have an effect on the administration of the estate. See In re Walker

, 51 F.3d 562, 569 (5th

Cir. 1995). The existence of subject matter jurisdiction is determined at the time of removal. A rnold

v. Garlock , 278 F.3d 426, 434 (5th Cir. 2002).

Antonini controlled legal entities that held interests in the Nachez House Apartments and the3 Quinlan’s motion to strike documents and an issue on appeal is denied as moot.

9 Woodland Forest Apartments. At various times, Antonini was involved in four bankruptcy

proceedings–three for entities with interests in Woodland Forest (in Texas, California, and Nevada),

and one for an entity with interests in Nat chez Ho use (in Texas). At the time Quinlan removed

Antonini’s state-court suit, only one of these cases, In re Alnevco , Case No. 99-18806 (Bankr. D.

Nev.), had not been dismissed.

At the time of its bankruptcy, Alnevco, an unincorporated Nevada entity, held one asset: a

second lien on Woodland Forest. This lien had been released by the time Quinlan moved to remove

Antonini’s state-c o urt suit. Nevertheless, the outcome of Antonini’s state-court suit could have

altered the options and resources avail able t o Alnevco because Antonini’s state-court suit sought

specific performance of the Antonini-Quinlan contract, which included the sale of Woodland Forest.

Moreover, release of the lien was done without Bankruptcy Court approval and both parties agree

the release was avoidable under 11 U.S.C. § 549 (1993 & Supp. IX 2002) as an unauthorized postpetition transfer. Thus, Antonini’s lawsuit “related to” the then-open Alnevco bankruptcy case and

the district court correctly affirmed the bankruptcy court’s exercise of subject matter jurisdiction.

IV. CONCLUSION

For the r easo ns st ated, we affirm the district court’s decision finding subject matter

jurisdiction. 3

AFFIRMED.