NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 13a0063n.06 Nos. 12-1406/12-1407 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT
I n re: TI MCO, L L C, Debtor

_______________ TI MCO, L L C, Appellant,
v. T AND M SAL ES AGENCY, I NC., Appellee
. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ON APPEALFROM THE U NI TED STATES DI STRI CT COURT FOR THE EASTERN DI STRI CT OF MI CHI GAN

Be fore : GUY, SUTTON a nd COOK, Circuit J udg es. SUTTON, Circuit J udg e. Timco a nd T& M could not ag ree how much Timco owe d T& M in sales commissions. The disag ree ment led t o an arbitration, which led to a $930,000 a rbitration
awa rd for T& M. T& M’s victory looked py rrhic when Timco promptly filed a bankruptc y petition. T& M’s victory beca

me less py

rrhic when the bankruptc y court lifted the a

utomatic stay to a llow a Michig an cour

t to confirm the aw ard, w hich it did.
Timco appea led t he bank ru p t cy court’s decisions (1) to rema nd the case t o state court and (2) to lift the automatic stay
. The district court conclude d that it lacke d jurisdiction to consider eitherNos. 12-1406/12-1407

In re Timco, LLC decision. We see a simil ar problem—an absenc e of statutory authority to consider the first decision and an a bsence of Article I I I authority to reviewthe sec ond one.

I
. Timco boug ht the assets of Riverfront, an insolvent company in rec eiver ship. Timco thought it made the purcha se fre e and clea r. But when T& M sued Timco in Oakland County Circuit Court for unpaid sales commissions, it lear ned that th i s m i g ht not be the case . The parties stipulated to binding a rbitration, and a

n arbitra tion panel awa

rded $930,000 to T& M.
Timco filed a Chapter 7 bankruptc y petition, which automatically stay ed the state court lawsuit and any others ag ainst Timco or its prop er t y . 11 U.S.C. § 362(a)
. T& M asked the bankruptc y court for relief from the stay to allow t h e state court to enter judgme nt and to confirm the arbitra tion awa

rd. T i m co o p p o s ed the motion and remove d the state court proce eding to the bankruptc y

court. T& M filed a motion to remand.
The bankruptc y court held a hear ing on both motions, afte r which it g rante d eac h of them. The court rema

nded the case to state court beca use it thought it lacke d jurisdiction over the state law claims. See 28 U.S.C. §§ 1334(c) (2), 1452(b). And it g rante d relief from the stay to allow T& M to confirm the arbitra tion awa rd in state court. Timco appea led both aspec ts of the bankruptc y court’s decision t o the di strict court. B ut it did not ask for a stay of either order pending the appe al to the district court.

- 2 -Nos. 12-1406/12-1407

In re Timco, LLC Whil e the appea ls lay pending in the di strict court, the s tate court approve d the arbitration
awa rd and enter ed a judgme nt to that eff ect. T& M then asked the district court to d i s m i s s the appea ls, arg uing tha t both were moot. The district court ag ree d.
I I
. Timco co n t i n ues to challeng e both of the bankruptc y court’s decisions—its decision to
rema nd the arbitra tion case to the state court and its decision to lift the automatic stay —and submits that the district court should not have de termined that they wer e moot.
The remand
. We lack authority to revie w the first decision, though for a differ ent jurisdictional rea son from the one the district court g ave. C o n gress g ave the fede ral courts “jurisdiction of all civil proce eding s . . . arising in or rela ted to case s under” the Ba nkruptcy Code. 28 U.S.C. § 1334(b). But ther e ar e ex ceptions, one of which say s: “[I ]f an action is commence d, and can be timely adjudicate d, in a State forum of appropr iate jurisdiction,” if the action is non-cor e and if no basis for jurisdiction other than § 1334(b) exis ts, the bankruptc y court “shall abstain from hear ing” it. 28 U.S.C
. § 1334(c) (2). I f the bankruptc y court abstains on this g round, that decision “i s not revie wable
. . . by the court of appea ls.” Id. § 1334(d); see Parmalat Capital Fi n . L t d

. v. Bank of Am. Corp. , 639 F.3d 572, 582 ( 2d Cir. 2011).
I n thi s instance, the bankruptc y court rea soned that the mandatory -abstention require ment compelled it to rema

nd the arbitra tion enfor ceme nt action to state court. T & M Sales Agenc y, Inc.

v. Timco, LLC , No. 11-4446, ECF No. 59 at 9 (B ankr. E.D. Mich. 2011). Section 1334(d) prec ludes - 3 -Nos. 12-1406/12-1407

In re Timco, LLC
us from second g uessing that decision. See also 28 U.S.C. § 1452(b); Boone Coal and Timber Co. v. Polan , 787 F.2d 1056, 1061 ( 6th Cir. 1986). That is all there is to it.
Automatic stay . The bankruptc y court also g rante d relief from the automatic stay
. No statute blocks our revie w of that issue, as the above provisions do not “limit the applicability of the stay .” 28 U.S.C. § 1334(d); see In re Conejo Enters. , 96 F.3d 346, 352 (9th Cir. 1996); Pursifull v. Eakin , 814 F.2d 1501, 1505 (10th Cir. 1987). But Article I I I does. I f events arising during an appea l “make [] it impossibl e for the court to g rant any eff ectua l relief

,” that spells the end of the case or controve rsy that Article I I I require s. Church of Scientology v. United States , 506 U.S. 9, 12 (1992). J ust that possibili ty happene d here
. Once the Michig an state court enter ed a valid order confirming the arbitra tion awa

rd, any debate about lifting the stay beca me purely aca demic. The confirma tion order eliminated any

ong oing pr ocee ding f

or the district cour

t, or for us, to stay
. Timco claims we co u l d er as e the state court’s order (or tell T& M not to rely on it, which
comes to the same end). We have no such power , howeve r. Yes, bankruptcy co u rt s may void actions taken by state courts that violate the automatic stay
. Chao v. Hosp. Staffing Servs., Inc. , 270 F.3d 374, 385 (6th Cir. 2001). But once the bankruptc y court lifted the stay , the state court was fre e to act. A l ater deter

mination by us that the bankruptcy court errone ously g rante d relief would not retra ct the express permission the state court rec eived at the time to g o forwa rd. Otherw ise, lifting
an automatic stay would be illusory whene ver an appeal fo l l o wed, since no sensible state court would waste its resour ces on litigation that the district court, the court of appea ls or even the Supreme Court later

could undo. When a state c ourt permissibly enter s an order in the absenc e of - 4 -Nos. 12-1406/12-1407

In re Timco, LLC
a stay , we must respe ct that order
. And when a state court finishes its proce eding s while an appea l challeng ing relief from t h e automatic stay is pending , that appea l become s moot. “[T] he district court,” in the words of the Fifth Circuit, “no longe r had jurisdiction to enter tain Debtors’ appea l from the Ba nkruptcy Court’s order [l ifting the stay ] once the [st ate court] judgme nt beca me final.” In re Scruggs , 392 F.3d 124, 129 (5th Cir. 2004). “To hold otherwise,” in the words of the Third Circuit, “ would allow the district court to nullify retroa ctively a validly enter ed state court judgme nt, there by
emasc ulating the fundame ntal doctrines of fede ralism and comity .” In re Highway Truck Drivers & Helpers Local Union #107 , 888 F.2d 293, 299 ( 3d Cir. 1989).
This approa ch does not leave Timco or any one else in its position without rec ourse. Timco
re mained fre e to seek a stay of the bankruptc y court’s ruling s during the appea l. Ba nkrupt cy l aw i n d ee d require s stay s pending appea l in many settings. I f, for example, a bankruptcy court gra n t s relief from an automatic stay so that a trustee can sell proper ty , and if the debtor does not g et a stay pending appea l, the sale may moot the appea l. 11 U.S.C. § 363(m); see In re Made in Detroit, Inc. , 4 1 4 F. 3 d 576, 581 (6th Cir. 2005); see also 11 U.S.C. § 364(e) (mooting appea ls from o rd er s approving post-petition financ ing in absenc e of stay ). Or if, for another example, a bankruptc y court confirms a reor g anization plan, an appea l may be trea ted as moot in the absenc e of a stay
. See In re United Producers, Inc. , 526 F.3d 942, 947–48 (6th Cir. 2008). Nor is bankruptc y law the only are a in which parties must seek a stay pending appea l to preve nt the case from becoming moot. See, e.g. , Brown v

. City of Upper Arlington , 637 F.3d 668, 673–74 ( 6th Cir. 2011) (holding that a challeng e

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In re Timco, LLC to a city ’s decisi o n to remove a tree beca me moot during appea l when the trial court’s decision allowed the c ity

to act and w hen the plaintiff did not see k, or obtain, a stay of the de cision).
Timco acknow ledg es as much. I t ag ree s that it could have asked for a stay pending appea l but insist s it had no such obligation. W hy , howeve r, is never explained.
The fea tured case cited in this section of Timco’s paper s is In re Fede rated Dep’ t Stores, Inc. , 44 F.3d 1310 (6th Cir. 1995). A bankrupt cy court appointed L ehman Br others to g ive the debtor financ ial advice even though L ehman, acc ording to the trustee, had a conflict of interest. Whil e the trustee’ s challeng e to the appointment was on appea l, L ehman did its job. L ehman soug ht f ees for the work, and the bankruptc y court g rante d them. On appea l, we reve rsed that awa rd, and in doing
so we determined that the bankruptcy court should not hav e ap p o i nted L ehman in the first place
. E v en though L ehman finished the job, and even though the trustee did not obtain a stay pendin g appea l, the appointment decision was not moot due to t h e “c o l l ateral conseque nces” for the compensa tion awar d. Id. at 1317.
The analog y to this c ase does not hold. Fede rated did not require us to vacate a state court judgme nt that violated no fede ral court order
. I t mere ly involved a direc t appea l of a bankruptc y court order , which in view of the pending fee s reque st rema ined an eminently live dispute. Nothing compar able ha

ppened he re.
I I I
.

- 6 -Nos. 12-1406/12-1407

In re Timco, LLC For these re asons, we a ffirm.

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