2008 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-19-2008

In Re: Exide Tech

Precedential or Non-Precedential: Precedential

Docket No. 07-2230

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Recommended Citation

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________

No. 07-2230

_________

IN RE: EXIDE TECHNOLOGIES,

 REORGANIZED DEBTOR

PACIFIC DUNLOP HOLDINGS (USA) INC.; 

PACIFIC DUNLOP HOLDINGS (EUROPE) LIMITED; 

PD INTERNATIONAL PTY LIMITED;

PACIFIC DUNLOP HOLDINGS (HONG KONG)

LIMITED; 

PACIFIC DUNLOP HOLDINGS (SINGAPORE) PTE

LIMITED,

 Appellants

 *(Amended in accordance with the Clerk's Order dated

07/30/07)

_________
2

On Appeal from the United States District Court

for the District of Delaware

(D.C. Civil No. 05-cv-00561)

District Judge: Honorable Sue L. Robinson

__________

Argued June 30, 2008

Before: RENDELL, SMITH, and FISHER, Circuit Judges

(Filed: September 19, 2008 )

 

Douglas N. Candeub, Esq. [ARGUED]

Brett D. Fallon, Esq.

Morris James

500 Delaware Avenue, Suite 1500

P. O. Box 2306

Wilmington, DE 19899

Counsel for Plaintiffs-Appellants

 Pacific Dunlop Holdings (Usa) Inc.; 

 Pacific Dunlop Holdings (Europe) Limited; 

 PD International PTY Limited;

 Pacific Dunlop Holdings (Hong Kong) Limited; 

 Pacific Dunlop Holdings (Singapore) PTE Limited
3

Benjamin G. Chew, Esq. [ARGUED]

Andrew Zimmitti, Esq.

Patton Boggs

2550 M Street, N.W.

Washington, DC 20037

Laura D.Jones, Esq.

James E. O’Neill, Esq.

Pachulski Stang Diehl & Jones

919 North Market Street, 17th floor

P. O. Box 8705

Wilmington, DE 19801

Counsel for Reorganized Debtor-Appellee

 Exide Technologies

__________

OPINION OF THE COURT

__________

RENDELL, Circuit Judge.

Appellants, Pacific Dunlop Holdings (USA), Inc. (“PDH

USA”), and four of its foreign affiliates, Pacific Dunlop

Holdings (Europe) Limited (“PDH Europe”), P.D. International

Pty Limited (“PD Int’l”), Pacific Dunlop Holdings (Hong Kong)

Limited (“PDH Hong Kong”), and Pacific Dunlop Holdings
4

(Singapore) Pte. Ltd. (“PDH Singapore”) (collectively, the

“PDH Foreign Entities”), appeal the Bankruptcy Court’s denial

of their motion to remand to state court, and/or abstain from,

their claims against three foreign subsidiaries of Exide

Technologies, f/k/a Exide Corporation (“Exide”) – namely,

Exide Holding Europe (“Exide Europe”), Exide Holding Asia

Pte. Limited (“Exide Asia”), and Exide Singapore Pte. Ltd.,

f/k/a Bluewall Pte. Ltd. (“Exide Singapore”) (collectively, the

“Exide Foreign Entities”) – and their motion for reconsideration.

The crux of the appeal is whether the Bankruptcy Court

properly decided that the state law cause of action between nondebtor parties, the PDH Foreign Entities and the Exide Foreign

Entities, was a “core” bankruptcy proceeding under 28 U.S.C.

§§ 157(b)(2)(B) and (C) over which exclusive bankruptcy

jurisdiction was appropriate. For the reasons that follow, we

conclude that the BankruptcyCourt erred and we will vacate and

remand for further proceedings.

I. Facts and Procedural History

PDH USA and PDH Foreign Entities, collectively, owned

the GNB Companies (“GNB”), a global automotive and

industrial battery business; each of the PDH entities owned

portions of GNB in designated territories around the world. In

May and June of 2000, PDH USA and the PDH Foreign Entities

entered into a series of sale agreements to sell their interests in

GNB to Exide and the Exide Foreign Entities. PDH USA sold
 PDH Singapore sold its interests to two Exide entities, 1

entering into the India Agreement with Exide Asia and the

Singapore Agreement with Exide Singapore. PDH Hong Kong

sold its interests to Exide Asia under the Hong Kong/PRC

Agreement. PDH Europe sold a portion of its GNB interests to

Exide Europe under the UK Agreement and sold the remainder

of its interests, jointly with PD Int’l, to Exide Europe under the

Europe Agreement.

5

its interests in GNB to Exide, and each of the four PDH Foreign

Entities sold its respective interests to the three Exide Foreign

Entities. Separate agreements were concluded between the 1

companies’ counterparts. Each agreement provided that

“Buyer’s sole and exclusive indemnification obligations under

this Agreement are set forth in the Coordinating Agreement.”

App. 257, 286, 344, 389, 434. On May 9, 2000, the

Coordinating Agreement was concluded and, inter alia, set forth

procedures to deal with potential disputes, including various

provisions addressing venue, submission to jurisdiction, and

governing law. App. 565. It included a forum selection clause,

pursuant to which any claims arising under the agreement were

to be filed in “a state or federal court located in the County of

Cook, State of Illinois.” App. 582.

According to the PDH entities, after the sale’s closing,

Exide and the foreign entities swept GNB’s cash accounts and

appropriated approximately $16.6 million of cash at hand that

was due to the sellers under the sales agreements. The PDH
 In December 2001, PDH USA filed a second complaint 2

solely against Exide claiming a breach of contract with respect

to certain letters of credit and seeking relief in the amount of

approximately $3.14 million. This was consolidated

administratively with the first action but did not raise the same

issues. It is not at issue here. 

6

entities reportedly asked that the cash be released to them, but

the Exide entities refused all such requests.

Thus, on July 21, 2001, the PDH entities filed suit against

the Exide entities in the Circuit Court of Cook County, Illinois,

alleging breach of contract, unjust enrichment, and conversion.2

The specific claims and amounts were as follows:

• PDH Singapore against Exide Asia in the

amount of $396,817 for breach of contract

(the India Agreement), conversion, and

unjust enrichment;

• PDH Singapore against Exide Singapore in

the amount of $278,446 for breach of

contract (the Singapore Agreement),

conversion, and unjust enrichment;

• PDH Hong Kong against Exide Asia in

the amount of $791,524 for breach of
 This last claim is undisputedly “core” and is not at issue on 3

appeal.

7

c o n tr a c t (th e Hon g Kon g /PR C

Agreement), conversion, and unjust

enrichment;

• PDH Europe against Exide Europe in the

amount of $6,665,051 for breach of

contract (the UK Agreement), conversion,

and unjust enrichment;

• PD Int’l and PDH Europe against Exide

Europe in the amount of $1,788,054 for

breach of contract (the European

Agreement), conversion, and unjust

enrichment; and

• PDH USA against Exide in the amount of

approximately $6,700,000 for breach of

contrac t (the USA Agreement),

conversion, and unjust enrichment.3

The complaint included a demand for a jury trial.

The Exide defendants moved to dismiss the complaint on

September 17, 2001 under Illinois Code of Civil Procedure

Section 2-615, arguing that plaintiffs failed to state a valid cause
8

of action. In their motion, they asserted, inter alia, that the

plaintiffs contractually agreed to waive the claims of breach of

contract, conversion, and unjust enrichment and were only

entitled to seek indemnification. Furthermore, they contended,

the plaintiffs had not alleged a breach of a covenant made by

“Exide,” defined as Exide and the Exide Foreign Entities. The

motion was subsequently denied by the Illinois trial judge

overseeing the case. Accordingly, the Exide defendants filed an

answer, affirmative defenses, and counterclaim on January 22,

2002. In their answer, the Exide Foreign Entities raised several

defenses but did not assert that they were not proper parties to

the litigation or that the exclusive remedy for breach was against

Exide alone.

Discovery had just begun in the state court action when

Exide and several of its domestic subsidiaries, who are not

parties here, filed petitions for Chapter 11 bankruptcy in the

United States Bankruptcy Court for the District of Delaware on

April 15, 2002. None of the Exide Foreign Entities filed for

bankruptcy, and Exide is the only defendant to the Illinois action

that is involved in bankruptcy proceedings. 

Recognizing that the automatic stay under 11 U.S.C.

§ 362(a) applied to its claims against Exide, PDH USA did not

pursue them further in Illinois state court. The PDH Foreign

Entities, however, continued to prosecute their claims against

the non-debtor defendants. The Exide Foreign Entities

consequently asked the state court to stay discovery on the
9

claims against them as well, which it initially did. After three

hearings, however, the judge lifted the stay on July 8, 2002,

holding that the stay did not apply to the non-debtor defendants

and ordering that the case move forward without Exide. 

The Exide Foreign Entities then filed a motion to dismiss

the claims against them for lack of necessary party. Rather than

wait for the state court’s ruling, however, on August 21, 2002,

the day before a hearing was to be held in state court on the

motion to dismiss, the Exide defendants removed the action to

the United States Bankruptcy Court for the Northern District of

Illinois. They also moved to transfer the action to the United

States Bankruptcy Court for the District of Delaware. 

The PDH Foreign Entities in turn moved for remand to

state court or, in the alternative, abstention. They argued that

removal was improper because the claims asserted against

Exide’s non-debtor subsidiaries did not “arise under” the

bankruptcy code or “arise in” Exide’s bankruptcy case and were

not “related to” the bankruptcy case as required for the court to

exercise jurisdiction under 28 U.S.C. § 1334. 

The Exide Foreign Entities argued that the claims were

at minimum “related to” Exide’s bankruptcy case and thus

subject matter jurisdiction should be found to exist. The crux of

their argument was that the Coordinating Agreement provided

that Exide was the “sole indemnitor” and, therefore, the
10

exclusive remedy available to the PDH Foreign Entities was a

direct claim against Exide, not the foreign subsidiaries. 

Exide’s arguments that only it had assumed

indemnification obligations turned on the meaning of the term

“Buyer” as used within the first phrase of Section 4.2(a) of the

Coordinating Agreement, which set forth remedies available

against the Exide entities under the sales agreements and

provided:

Indemnification by Buyer

(a) Subject to Sections 4.2(b), 4.2(c), and 4.2(d),

Buyer agrees to indemnify and hold Seller and the

International Sellers and their Affiliates harmless

from and against any and all Losses and Expenses

incurred by Seller or the International Sellers and

their Affiliates in connection with or arising from:

(i) any breach by Buyer of any of its

covenants or agreements in the Sale

Agreements or in this Agreement;

(ii) any breach of any warranty or the

inaccuracy of any representation by Buyer

contained in the Sale Agreements, . . .; or
11

(iii) any breach by Buyer of any covenant

contained in Section 11.1 or Section 12.2

of the U.S. Agreement or the

corresponding provisions in the other Sale

Agreements.

App. 578-79. Under the Coordinating Agreement, PDH USA

and its affiliates were “Seller” and “International Sellers,”

respectively. As to the buyers, the first page of the Coordinating

Agreement identified “Exide Corporation” as “Buyer” and the

Exide subsidiaries as “International Buyers.” Under the

definitional section of the Coordinating Agreement, however,

the term “Buyer,” as used in articles 1 and 3 to 7, inclusive, was

further defined to mean “Buyer and/or (as the context may

require) any International Buyer.” App. 565, 567. The

Coordinating Agreement used these terms throughout and was

meant to “provide a single avenue of recourse for

indemnification claims arising under the Sale Agreements.”

App. 565. 

The Exide Foreign Entities took the position before the

Bankruptcy Court that 4.2(a) fixed liability on Exide alone and

that the Exide Foreign Entities were not named indemnitors

under the agreement. According to this interpretation, the term

“Buyer” in the heading to 4.2 and the opening clause of 4.2(a)

means only Exide, rather than “Buyer and/or any International

Buyer.” More specifically, Exide claimed that Amendment

No. 1, one of three lengthy amendments to the Coordinating
12

Agreement, had altered this indemnification provision and made

unambiguous that it was the only proper defendant to the PDH

Foreign Entities’ claims. Amendment No.1 provided “Section

4.2(a)(i) is hereby amended to insert the words ‘or, for the sake

of clarification, any International Buyer’ after the word ‘Buyer’

in the first line of such section.” App. 745. With the new

language inserted, the relevant part of the section read: 

Buyer agrees to indemnify and hold Seller and the

International Sellers and their Affiliates harmless

from and against any and all Losses and Expenses

incurred by Seller or the International Sellers and

their Affiliatesin connection with or arising from:

(i) any breach by Buyer or, for the sake of

clarification, any International Buyer of

any of its covenants or agreements in the

Sale Agreements or in this Agreement

App. 579. Because Amendment No.1 added “or, for the sake of

clarification, any International Buyer” to only one subsection of

4.2(a), as the argument goes, “Buyer” in the remainder of the

section cannot include international buyers. 

On February 4, 2003, Judge Sonderby of the Bankruptcy

Court in Illinois ruled on the Exide defendants’ motion for

transfer. Although she observed that “[i]t appears, from a

review of the agreements and the parties’ contentions, that there
 Despite the transfer, the actual case files from the Illinois 4

state court were not received in Delaware until January 14,

2004, long after a decision on the motion to remand was issued.

13

may be an ambiguity on the indemnification issue,” she did not

resolve the issue. App. 660. Instead,she found “at least ‘related

to’ jurisdiction over the removed action,” App. 661, and,

accordingly, transferred the action, including PDH Foreign

Entities’ pending motion to remand or abstain, to the United

States Bankruptcy Court for the District of Delaware. I n th e

4

meantime, April 23, 2003 was set as the deadline for filing

proofs of claim in Exide’s bankruptcy case. PDH USA and each

of the PDH Foreign Entities filed proofs of claim. PDH USA’s

proof of claim, which is not at issue on appeal, was against

Exide directly. The PDH Foreign Entities’ proofs of claims, by

contrast, were contingent, indicating a right of recovery against

Exide only if they succeeded in their action against the nondebtor defendants and they proved unable to satisfy the

judgment. Typical of the PDH Foreign Entities’ proofs of claim

is PDH Europe’s proof of claim, which indicates that it claimed

“approximately $6,665,051.00, . . . from the Debtor’s subsidiary,

Exide Holding Europe, on the grounds set forth in a Complaint

filed in Cook County, Illinois . . . .” App. 500. The proof of

claim explains the background of litigation in the bankruptcy

courts in both Illinois and Delaware and then continues,

As set forth in the Memorandum Opinion [of the

United States Bankruptcy Court for the Northern
14

District of Illinois transferring the litigation], the

parties disagree regarding the liability of the

Debtor for any breaches of the sale agreements.

It is PDH (Europe)’s position that Exide Holding

Europe is primarily liable for its breaches, and

that the Debtor is secondarily liable to the extent

that Exide Holding Europe is unable to satisfy

PDH (Europe). The Debtor contends that it is the

sole indemnitor for breaches by it or its

subsidiaries under the related sales agreements.

Accordingly, if the appropriate court determines

that the Debtor is the sole indemnitor, PDH

(Europe) has a direct claim against the Debtor for

any breaches. Conversely, if the appropriate court

determines that Exide Holding Europe is

primarily liable for its breaches, PDH (Europe)

has a contingent claim against the Debtor, which

is dependent on Exide Holding Europe’s ability to

satisfy PDH (Europe)’s claims.

App. 500-01.

On October 3, 2003, PDH Foreign Entities filed a

renewed motion in the Delaware Bankruptcy Court for remand

or abstention. In their motion, the PDH Foreign Entities argued

that: (1) the forum selection clause in the parties’ Coordinating

Agreement compelled remand to Illinois state court; (2) the

Bankruptcy Court lacked subject matter jurisdiction; (3)
15

principles of equitable remand under 11 U.S.C. § 1452(b)

should be applied; and (4) mandatory abstention under

28 U.S.C. § 1334(c)(2) applied. 

The Exide entities filed a response to the motion to

remand arguing that, under the Coordinating Agreement, Exide

should be understood to be the “sole indemnitor” of all of the

PDH Foreign Entities’ claims, and therefore, the PDH Foreign

Entities were not entitled to any remedy against Exide Foreign

Entities. The Exide entities also argued that the automatic stay

under the Bankruptcy Code should be extended to PDH Foreign

Entities’ claims against the non-debtor Exide Foreign Entities.

Under the then-existing local bankruptcy rules, PDH had no

right to file a reply, unless ordered to do so by the court. Del.

U.S. Bankr. Ct. L.R. 9006-1(d) (2003).

On November 19, 2003, the Delaware Bankruptcy Court

held a hearing on the motion to remand. At the outset of the

hearing, the judge opined as to the key issue, noting that “it’s

clear to me that by virtue of the filing of the Proofs of Claim that

in large measure the matters before me are core.” App. 49. He

then continued,

it seems to me . . . that the mandatory abstention

part of the motion is one I’m going to deny for the

reason that these are, at least in large measure,

core, and secondly, by virtue of the filing of the

Proof of Claim you’ve – the forum selection falls
16

away, because, as some of the cases say, once

you’ve done that you’ve chosen your forum.

App. 50. 

Nonetheless, the parties made their arguments. Exide’s

counsel asserted that the language in the Coordinating

Agreement was unambiguous and clearly stated that any claims

could only proceed against Exide as the sole indemnitor and,

thus, should be litigated in Bankruptcy Court. In the alternative,

counsel argued that the claims against the non-debtor entities

and the claims against the debtor were “so inextricably

intertwined that it was impossible as a practical matter to

disentangle them,” and urged the Court to follow In re RBGSC

Inv. Corp., 253 B.R. 369 (E.D. Pa. 2000), and find that the

claims against the non-debtors were core. App. 87. PDH’s

counsel protested that the merits of the Coordinating Agreement

should not be determined on a motion for remand and that they

had had no opportunity to reply to Exide’s merits arguments.

Moreover, the claims against the non-debtor Exide entities, he

argued, should be deemed non-core and, consequently,

mandatory and/or discretionary abstention should apply.

At the conclusion of the hearing, the Court held:

While Judge Sonderby points out that there may

be ambiguity [in the language of the Coordinating
17

Agreement], I conclude as a matter of law that

there is none. And that Exide is the sole

[i]ndemnitor under § 4.2 and I reach this

conclusion, largely as a result of Amendment

number 1, where the parties specifically chose to

include language which addressed the very issue

of what the buyer should mean in that subsection

. . . . That’s why I make that conclusion. This

results in making Exide solely liable for the

asserted breaches . . . . 

App. 103. It, therefore, found the claims within its jurisdiction

under 28 U.S.C. §§ 157(b)(2)(B) and (b)(2)(C) and determined

that remand and abstention were not warranted. It requested that

counsel jointly draft an order memorializing its decision.

On December 11, 2003, the order was entered and

provided: 

For the reasons articulated on the record on

November 19, 2003, Plaintiffs’ Motion is

DENIED. The Court finds that Section 4.2(a) of

the Coordinating Agreement as modified by

Amendment No.1 of the Coordinating Agreement

is unambiguous, that Debtor Exide is the sole

indemnitor thereunder, and that consequently the

foreign Pacific Dunlop entities have no right of

recovery against the non-debtor Exide entities.
18

The Court also finds that all the claims asserted

by the Plaintiffs, including those of the foreign

Pacific Dunlop entities, are core proceedings to

which the automatic stay applies, that the Court

has jurisdiction over this matter pursuant to

28 U.S.C. §§ 157(b)(2)(B) and (C), that

mandatory abstention pursuant to 28 U.S.C.

§ 1334(c)(2) is inapplicable, and that neither

remand pursuant to 28 U.S.C. § 1452(b) nor

discretionary abstention pursuant to 28 U.S.C.

§ 1334(c)(1) is warranted. 

App. 23-24. The order also extended the automatic stay to the

claims against the Exide Foreign Entities.

The PDH Foreign Entities subsequently filed a motion

for reconsideration, urging the Court to allow them to adduce

evidence to counter this interpretation of the Coordinating

Agreement because they had not anticipated that the meaning of

this agreement would be decided as part of their motion to

remand or abstain. The Bankruptcy Court held a hearing on the

motion on February 26, 2004, but did not issue a decision for

approximately 18 months.

In the interim, Exide’s reorganization plan was confirmed

on April 20, 2004 and became effective two weeks later. Under

the plan, the reorganized Exide created a new foreign subsidiary

and merged Exide Europe and Exide Asia into it. PDH Foreign
19

Entities’ rights against Exide Foreign Entities were not impaired

by the reorganization plan. In fact, in providing for the

discharge of claims against Exide, the Confirmation Order

expressly stated: “excepting, however, that any claims of the

Pacific Dunlop Holdings Entities against non-debtor subsidiaries

of the debtors are not affected hereby.” App. 1711.

More than a year after the plan was confirmed, the

Bankruptcy Court denied PDH’s motion for reconsideration.

App. 25. The clerk’s docketing of the order characterizes it as

a dismissal of the PDH Foreign Entities’ claims against the

Exide Foreign Entities.

PDH appealed the denial of their motions to the United

States District Court for the District of Delaware. At oral

argument, the District Court focused largely on the PDH Foreign

Entities’ filing of proofs of claim and said “I think you have to

choose whether you are going to try to collect against the debtor

or you are going to choose to withdraw your proofs of claim and

do what you say you want to do, which is just proceed against

the nondebtor entity.” App. 146; see also App. 166, 150 (“I

don’t think the Bankruptcy Court would have jurisdiction at all

but for the [contingent] claim.”). When the hearing concluded,

it requested supplemental briefing on whether filing proofs of

claim when there is an indemnity relationship between debtor

and non-debtors gives the bankruptcy court core jurisdiction

over the underlying cause of action between non-debtors.
 The District Court’s memorandum order referred to three 5

PDH Foreign Entities and four total proofs of claim, including

PDH USA’s proof of claim. This appears to have been an

oversight as there are four PDH Foreign Entities and five proofs

of claim filed in total, inclusive of PDH USA’s proof of claim.

20

On March 22, 2007, the District Court issued a

memorandum order, denying the PDH Foreign Entities’ appeal

and affirming the orders of the Bankruptcy Court. First, it

decided that the PDH Foreign Entities’ four proofs of claim

against Exide invoked the claims allowance process and were

core proceedings. Second, it agreed with the Bankruptcy Court 5

that the Coordinating Agreement was unambiguous in its

designation of Exide as the sole indemnitor. It concluded that,

[o]nce Exide was identified as the sole indemnitor

for the state claims brought by the PDH Foreign

Entities against the Exide Foreign Entities, it

follows that the PDH Foreign Entities, through

their proofs of claim, have direct claims against

the debtor and its bankruptcy estate and that the

resolution of the claims through the claims

process is a core proceeding subject to the

jurisdiction of the bankruptcy court.
21

App. 11-12. In support of its conclusion, the Court cited Pacor

v. Higgins, 743 F.2d 984, 995 (3d Cir. 1984), as representing our

recognition that “a debtor’s agreement to indemnify a third party

gives rise to jurisdiction over nonbankrupt controversies with

that third party, especially where the third party has filed a claim

against the debtor.” App. 12. PDH USA and the PDH Foreign

Entities timely appealed the District Court’s order.

II. Jurisdiction and Standard of Review

The District Court had jurisdiction to hear the PDH

Foreign Entities’ appeal from the Bankruptcy Court’s denial of

their motion to remand and/or abstain and motion for

reconsideration, respectively, pursuant to 28 U.S.C. § 158(a)(1).

The District Court’s subsequent affirmance of the Bankruptcy

Court’s orders on March 22, 2007 gave rise to this appeal, over

which we have jurisdiction pursuant to 28 U.S.C. § 158(d)(1)

and 28 U.S.C. § 1291. We review the appeal of the ruling not

to exercise mandatory abstention under 28 U.S.C. § 1334(d).

Stoe v. Flaherty, 436 F.3d 209, 212 (3d Cir. 2006). The

consequent ruling not to remand, however, is “not reviewable by

appeal or otherwise by the court of appeals under section 158(d),

1291, or 1292 of [title 28].” 28 U.S.C. § 1452(b). 

Our review of the Bankruptcy Court’s orders is the same

as that exercised by the District Court. In re Zinchiak, 406 F.3d

214, 221-22 (3d Cir. 2005). We review its rulings as if we were

reviewing it in the first instance, and our review is plenary. See
22

Stonington Partners, Inc. v. Lernout & Hauspie Speech Prods.

N.V., 310 F.3d 118, 121 (3d Cir. 2002); Zinchiak, 406 F.3d at

221-22; In re Continental Airlines, 203 F.3d 203, 208 (3d Cir.

2000). We, therefore, exercise plenary review of the questions

of whether the claims at issue are core proceedings and whether

the mandatory abstention provision of § 1334(c)(2) applies to

this removed case. Stoe, 436 F.3d at 212. Because the District

Court acted as an appellate court, our review of its decision is

similarly plenary. In re Myers, 491 F.3d 120, 124 (3d Cir.

2007).

III. Discussion

Bankruptcy jurisdiction extends to four types of

proceedings: (1) cases “under” title 11, that is, the bankruptcy

petition; (2) proceedings “arising under title 11”; (3)

proceedings “arising in” a bankruptcy case; and (4) proceedings

“related to” a bankruptcy case. 28 U.S.C. § 1334(b); In re

Combustion Eng’g, Inc., 391 F.3d 190, 225 (3d Cir. 2005). The

first three categories are “core” proceedings in which the

bankruptcy court has power to hear, decide, and enter orders and

judgments. 28 U.S.C. § 157(b)(1). The fourth category,

“related to” proceedings, are “non-core” proceedings, which the

bankruptcy court can hear, but in which it can only submit

proposed findings of fact and conclusions of law to the district

court, not issue orders. Halper v. Halper, 164 F.3d 830, 836

(3d Cir. 1999). As we have said, “a ‘non-core’ proceeding

belongs to ‘the broader universe of all proceedings that are not
23

core proceedings but are nevertheless related to a bankruptcy

case.’” Id. at 837 (internal citations omitted). They, therefore,

“need not necessarily be against the debtor or against the

debtor’s property,” but, rather, need only be such that “the

outcome of that proceeding could conceivably have any effect

on the estate being administered in bankruptcy.” Pacor, 743

F.2d at 994; see also In re Federal-Mogul Global, Inc., 300 F.3d

368, 381 (3d Cir. 2002).

Whether claims are considered core or non-core

proceedings dictates not only the bankruptcy court’s role and

powers but also the availability of mandatory abstention, see

28 U.S.C. § 157(b)(4), and the enforcement of forum selection

clauses, see In re Diaz Contracting, Inc., 817 F.2d 1047, 1051-

53 (3d Cir. 1987). If the claims of the PDH Foreign Entities

against the Exide Foreign Entities are merely “related to” the

debtor’s bankruptcy case, abstention and enforcement of the

forum selection clause of the Coordinating Agreement are

appropriate. The dispositive issue, therefore, is whether the

claims asserted by the PDH foreign entities against the Exide

foreign entities in state court are “core” bankruptcy claims

within the meaning of 28 U.S.C. § 157(b). We accordingly will

begin by examining the bases upon which the Bankruptcy Court

found that the claims at issue were “core.”
 Under § 157(b)(2), “core proceedings include, but are not 6

limited to”:

(continued...)

24

A. Core v. Non-Core Proceedings

In order to evaluate whether a claim is “core,” a court

must first look to the illustrative list of “core” proceedings found

in § 157(b)(2). It must then conduct this Court’s two-step test,

according to which a claim will be deemed core “if (1) it

invokes a substantive right provided by title 11 or (2) if it is a

proceeding, that by its nature, could arise only in the context of

a bankruptcy case.” Halper, 164 F.3d at 836 (citing In re Guild

& Gallery Plus, Inc., 72 F.3d 1171, 1178 (3d Cir. 1996)). Each

claim within the same cause of action must be analyzed claim by

claim and each alone must satisfy this test in order to be

considered a core proceeding. Halper, 164 F.3d at 836-37.

A single cause of action may include both core and non-core

claims. The mere fact that a non-core claim is filed with a core

claim will not mean the second claim becomes “core.” See In re

Best Reception Systems, Inc., 220 B.R. 932, 947 (Bankr. E.D.

Tenn. 1998). 

Here, the claims brought by the PDH Foreign Entities are

state law claims, respectively, breach of contract, conversion,

and unjust enrichment, asserted against non-debtor defendants.

None of the claims fall neatly into the list of core proceedings

under 28 U.S.C. § 157(b)(2).6
 (...continued) 6

(A) matters concerning the administration of the

estate;

(B) allowance or disallowance of claims against

the estate or exemptions from property of the

estate, and estimation of claims or interests for the

purposes of confirming a plan under chapter 11,

12, or 13 of title 11 but not the liquidation or

estimation of contingent or unliquidated personal

injury tort or wrongful death claims against the

estate for purposes of distribution in a case under

title 11;

(C) counterclaims by the estate against persons

filing claims against the estate;

(D) orders in respect to obtaining credit;

(E) orders to turn over property of the estate;

(F) proceedings to determine, avoid, or recover

preferences;

(G) motions to terminate, annul, or modify the

automatic stay;

(H) proceedings to determine, avoid, or recover

fraudulent conveyances;

(I) determinations as to the dischargeability of

particular debts;

(J) objections to discharges;

(K) determinations of the validity, extent, or

priority of liens;

(L) confirmations of plans;

(continued...)

25
 (...continued) 6

(M) orders approving the use or lease of property,

including the use of cash collateral;

(N) orders approving the sale of property other

than property resulting from claims brought by the

estate against persons who have not filed claims

against the estate;

(O) other proceedings affecting the liquidation of

the assets of the estate or the adjustment of the

debtor-creditor or the equity security holder

relationship, except personal injury tort or

wrongful death claims; and

(P) recognition of foreign proceedings and other

matters under chapter 15 of title 11.

26

Even assuming that the claims fall within the list, none –

on its face – invokes a substantive right under the Bankruptcy

Code. Each claim is a state law cause of action, sounding in

contract and tort. Each pre-dated the filing of the bankruptcy

petition and were filed in state court and, consequently, do not

appear to be proceedings that “could arise only in the context of

a bankruptcy case.” It is important, however, that a court “not

simply [] apply the terms of the statute but rather [] analyze the

nature of the underlying claim to determine whether, given

constitutional constraints on bankruptcy jurisdiction . . . , that

claim should be considered a core proceeding.” Meadowlands

Commc’n, Inc. v. Banker’s Trust Co., 79 B.R. 198 (D.N.J.

1987).
27

Here, the Bankruptcy Court determined that the PDH

Foreign Entities’ claims, although seemingly between

non-debtors, were actually claims against the debtor’s estate

and, therefore, core proceedings under §§ 157(b)(2)(B) and (C).

In reaching this conclusion, it adopted two alternative theories.

According to the first, the PDH Foreign Entities’ claims against

the Exide Foreign Entities were, in actuality, claims directly

against Exide, over which the Bankruptcy Court had exclusive

jurisdiction. As the argument goes, Article 4.2(a) of the

Coordinating Agreement – read correctly – limited the PDH

entities’ right of recovery to an action for indemnification

against Exide alone as the sole defendant. Their claims were,

therefore, against the debtor and core proceedings pursuant to

§ 157(b)(2)(B); the counterclaims asserted in the defendants’

complaint similarly became core proceedings under

§ 157(b)(2)(C). According to the second theory, the PDH

Foreign Entities voluntarily submitted to the jurisdiction of the

Bankruptcy Court by filing proofs of claim in Exide’s

bankruptcy case. Because the bankruptcy claims allowance

process can arise only in the context of a Title 11 bankruptcy

and the PDH Foreign Entities filed proofs of claims against the

debtor, their claims constituted core proceedings. 

On appeal, the PDH Foreign Entities challenge both

grounds. First, they assert that their claims in the state court

action are strictly between non-debtor plaintiffs and non-debtor

defendants and, therefore, non-core. Second, they say, their

filing contingent proofs of claim indicates only that the debtor
28

might be called upon if the Exide Foreign Entities are unable to

pay; it does not transform the claims into a core proceeding. The

Bankruptcy Court, therefore, either was required to abstain or to

enforce the forum selection clause and remand the action to state

court. The appellees, by contrast, contend that: 1) the

Coordinating Agreement designates the debtor Exide as the

“sole indemnitor” for claims arising under the sales agreements

and, consequently, the PDH Foreign Entities’ claims against the

Exide Foreign Entities are barred and actually claims against the

debtor directly; and 2) the PDH Foreign Entities’ filing proofs

of claim against the debtor subjects them irrevocably to the

jurisdiction of the Bankruptcy Court for the purposes of

deciding the cause of action originally filed in state court. The

appellees also assert that, even if these other two arguments

were unavailing, the claims should be deemed “core,” because

they are so intertwined with claims against the debtor in the

same cause of action.

We will examine each of the grounds for the Bankruptcy

Court’s decision in turn, as well as appellees’ contention that the

claims are core because they are “intertwined” with core claims.

As the discussion below will make clear, we disagree with each

of these bases for finding “core” jurisdiction. 
29

B. The Coordinating Agreement and the “Sole

Indemnitor” Theory

The Bankruptcy Court and the District Court each relied

heavily on Exide’s interpretation of the contractual language in

the Coordinating Agreement in finding core jurisdiction. Both

looked to the language of the Coordinating Agreement and the

merits of the Exide defendants’ contractual interpretation

argument and held that the claims, although ostensibly against

the non-debtor Exide Foreign Entities, were actually more

properly understood as leveled directly against the debtor,

Exide. In so concluding, they found the Coordinating

Agreement excludes all indemnification obligations of the Exide

Foreign Entities by clearly and unambiguously designating

Exide as the sole indemnitor, with the result that the PDH

Foreign Entities have no valid claim against the Exide Foreign

Entities. Because only the debtor is an appropriate defendant,

the PDH Foreign Entities’ claims become claims of non-debtors

against a debtor, the resolution of which must take place in

bankruptcy court. 

On appeal, the PDH Foreign Entities argue that they did

not have a fair opportunity to respond to this merits argument as

the extant court rules provided them no right of reply. Del. U.

S. Bankr. Ct. L.R. 9006-1(d)(2003). They also contend that,

because their motion to remand or abstain was a procedural and

jurisdictional motion which did not present the issue of contract

interpretation, the Bankruptcy Court’s decision on the merits of
 The appellees devote a large section of their brief to 7

procedural barriers they allege defeat the PDH Foreign Entities’

argument that the Bankruptcy Court’s decision on the merits

surprised them and improperly prevented them from presenting

defenses. They alternately contend that the appellants waived

the argument, endorsed the Bankruptcy Court’s order and are

estopped from challenging it, and are precluded from

challenging it because it did not dispose of their claims. 

We are not persuaded. As to waiver, the appellants

repeatedly objected to the Bankruptcy Court’s decision as

having ambushed and surprised them. They raised the argument

before the Bankruptcy Court on reconsideration and the District

Court on appeal and preserved it for our review. 

(continued...)

30

their claims against the Exide Foreign Entities took them by

surprise. According to the appellants, the Court erred in

considering the merits of Exide’s interpretation of the

Coordinating Agreement and should have confined itself to the

jurisdictional issues presented, instead of reaching any issues

regarding the claims and defenses of the parties. 

In response, the Exide Entities insist that the appellants

were not unfairly surprised by the Court’s order dismissing their

claims against the Exide Foreign Entities because they “had

every reason to expect that Exide would address the

interpretation of the Coordinating Agreement in its response to

the Remand Motion” and because they could have sought leave

of the Court to file a reply. They argue that the Court properly 7
 (...continued) 7

Equally lacking in merit is the Exide Foreign Entities’

theory that appellants should be estopped from challenging the

2003 Order because their counsel suggested the language used

therein and therefore endorsed it. The Bankruptcy Court issued

its ruling at the conclusion of the hearing on the motion to

remand or abstain and simply requested that counsel draft the

order to memorialize its decision. The fact that appellants’

counsel helped draft the order to reflect accurately the Court’s

ruling does not estop appellants from challenging the order. 

As to whether the order disposed of the PDH Foreign

Entities’ claims, it states clearly that “the foreign Pacific Dunlop

entities have no right of recovery against the non-debtor Exide

entities.” App. 24. Although the Exide Foreign Entities’

argument that the order did not represent an allowance or

disallowance of the PDH Foreign Entities’ proofs of claim

against debtor Exide’s estate is technically correct, it is

irrelevant as to whether the order was dispositive as to the PDH

Foreign Entities’ claims against the Exide Foreign Entities.

31

reached the merits and correctly concluded the relevant contract

language was clear and unambiguous.

Given the requirement that a court carefully evaluate

every claim individually to determine if it is “core,” “non-core,”

or unrelated to the bankruptcy case, we agree with the Exide

appellees that both the Bankruptcy Court and the District Court

correctly decided that the issue of the Coordinating Agreement’s

interpretation had to be resolved in order to decide the motion
32

to abstain or remand. A determination as to whether the PDH

Foreign Entities’ claims had to proceed against the debtor alone

was necessary to the disposition of the motion. However, we

believe that both courts erred in concluding that the

Coordinating Agreement was unambiguous. 

Indeed, the contractual provision at issue is anything but

clear. Article 4.2(a), entitled “Indemnification by Buyer,”

delineates the obligations of “Buyer” to PDH USA and the PDH

Foreign Entities (“Seller” and “International Sellers,”

respectively) as follows: 

(a) Subject to Sections 4.2(b), 4.2(c), and 4.2(d),

Buyer agrees to indemnify and hold Seller and the

International Sellers and their Affiliates harmless

from and against any and all Losses and Expenses

incurred by Seller or the International Sellers and

their Affiliates in connection with or arising from:

(i) any breach by Buyer of any of its

covenants or agreements in the Sale

Agreements or in this Agreement;

(ii) any breach of any warranty or the

inaccuracy of any representation by Buyer

contained in the Sale Agreements, . . .; or
33

(iii) any breach by Buyer of any covenant

contained in Section 11.1 or Section 12.2

of the U.S. Agreement or the

corresponding provisions in the other Sale

Agreements.

App. 578-79. The provision does not define “Buyer” to mean

only Exide nor does it use the term “sole indemnitor” or

establish that Exide would be exclusively a proper party for any

claims. For the purposes of the Coordinating Agreement, the

term “Buyer” is in fact to mean “Buyer and/or (as the context

may require) any International Buyer.” App. 567. 

The Bankruptcy Court and the District Court, however,

reasoned that Amendment No.1 to the Coordinating Agreement

clarified the provision and unambiguously designated Exide as

the “sole indemnitor” and the only proper party for any breach

of the sales agreements. After the amendment, subsection (i)

read: “any breach by Buyer or, for the sake of clarification, any

International Buyer of any of its covenants or agreements in the

Sale Agreements or in this Agreement” (new inserted language

emphasized). The remaining language in 4.2(a) was

unchanged.

Based on the amendment, the Bankruptcy Court held

there was no ambiguity in 4.2(a) and Exide was unambiguously

“solely liable for the asserted breaches.” App. 103. It reasoned,
34

I reach this conclusion, largely as a result of

Amendment number 1, where the parties

specifically chose to include language which

addressed the very issue of what the buyer should

mean in that subsection, and it strikes me that

there’s no other reasonable inference to be drawn

from the making of that amendment other than the

parties intended to make that clarification with

respect to section 4.2(a) small Roman “i” . . . .

That’s why I make that conclusion. This results

in making Exide solely liable for the asserted

breaches . . . .

Id. Its order similarly provided: 

The Court finds that Section 4.2(a) of the

Coordinating Agreement as modified by

Amendment No.1 of the Coordinating Agreement

is unambiguous, that Debtor Exide is the sole

indemnitor thereunder, and that consequently the

foreign Pacific Dunlop entities have no right of

recovery against the non-debtor Exide entities.

App. 23-24. Faced with the PDH Foreign Entities’ motion for

reconsideration, the Bankruptcy Court further reasoned that:
35

By virtue of Amendment No. 1, the parties

specifically and deliberately carved out only one

clause of Section 4.2(a) to “clarify.” The other

parts of Section 4.2(a) remained unchanged.

Therefore, the only reasonable inference that

arises from Amendment No. 1[] is that the parties

intended that the term “Buyer,” as used in the

remainder of Section 4.2(a), means only Exide

Corporation.

App. 36. On appeal from the Bankruptcy Court’s order, the

District Court agreed with this conclusion. 

This was error. Amendment No.1 does not make clear

that Exide is the sole indemnitor under the Coordinating

Agreement. Even after the amendment, Article 4.2(a) does not

unambiguously state that only one of the numerous contracting

buyers assumed indemnification obligations. Nothing in the

agreement indicates that the sole recourse of the PDH Foreign

Entities is against Exide or provides a waiver of rights as against

the non-debtor Exide entities. No amendment provided that the

term in the heading or first phrase of 4.2(a) should no longer be

defined as “Buyer and/or . . . International Buyer.” 

We find illogical the Bankruptcy Court’s assertion that

the “only reasonable inference” from the amendment is that

“Buyer” means only Exide in the other subsections of the

provision. It simply does not follow that, because the
36

amendment clarified that the term “Buyer” in subsection

4.2(a)(i) meant Exide or one of the Exide Foreign Entities, it

also established that “Buyer” used elsewhere in 4.2(a)

unambiguously meant only Exide. In fact, “Buyer” as used in

other subsections of Article 4.2(a) is more reasonably read to

mean both Exide and the Exide Foreign Entities. Subsection

(iii), for instance, provides as an event for which the sellers will

be indemnified “any breach by Buyer of any covenant contained

in Section 11.1 or Section 12.2 of the U.S. Agreement or the

corresponding provisions in the other Sales Agreements.” App.

579. The reference to “Buyer” here could mean only both Exide

and the Exide Foreign Entities because Exide was not a party to

the “other Sales Agreements” and could not, therefore, have

breached any covenants therein. Thus, “Buyer” has to mean

Exide and the Exide Foreign Entities. The language of

subsection (ii) suggests a similar interpretation.

Accordingly, the Bankruptcy Court erred in concluding

that the Coordinating Agreement unambiguously designates the

debtor as the “sole indemnitor” and only proper party to the

PDH Foreign Entities’ claims.

This error was magnified by the Court’s somewhat

precipitous consideration of this important and dispositive issue.

The Court gave no notice to the parties that it would decide this

issue as to the meaning of the agreement at the hearing. The

PDH entities had no right to reply to Exide’s merits argument.

Yet, at the very outset of the hearing, the Court stated that it
37

considered the claims to be “core.” It, in essence, credited the

defendants’ argument before PDH’s counsel had even had an

opportunity to address the issue. 

In so doing, the Court failed to provide the PDH Foreign

Entities with adequate notice and opportunity to present

arguments regarding the proper interpretation of the contract

under Illinois law. Prior to the hearing, neither party had even

researched Illinois law applicable to the presentation of extrinsic

evidence or the interpretation of the contract. Counsel for PDH

protested that the Exide Foreign Entities had acknowledged that

they could be held liable under the Coordinating Agreement and

perhaps waived the “sole indemnitor” theory, saying, 

I should point out that there was in the State Court

in the first complaint an answer filed by the Exide

entities collectively. And in the answer, which I

have and can submit also - and I don’t think there

would [be] any dispute about that, it’s a document

– there’s no defense asserted. You can’t sue us,

the foreign entities; it’s not in there. They didn’t

raise that. They didn’t raise that for a good long

time . . . in the litigation in Illinois. Why not?

Because they understood that there was a right to

sue them there. So that’s another factor by way of

the behavior of the parties to show the

understanding and their intent. 
 At the hearing with respect to the motion for 8

reconsideration, counsel made this point again. He said, “it’s

not true that these issues were presented in the Illinois

proceedings. There was no – in fact, by Schaff and Weiss, the

predecessor’s counsel, there was no argument made in the

Illinois State Courts at any time by them that Pacific Dunlap

[sic] Entities could not go against the foreign entities. That was

an argument that was created later by later counsel, and that’s

another reason why it shows that they didn't intend it or they

would have raised that right at the start.” App. 120.

38

App. 73. He further noted that Exide’s counsel did not disagree

that the Exide defendants’ answer and counterclaim in state

court failed to raise the sole indemnitor theory asserted before

the Bankruptcy Court. The Bankruptcy Court had not yet 8

received the pleadings from Illinois state court and never even

addressed this argument. 

The PDH Foreign Entities should have had the

opportunity to pursue their contention that they were entitled to

sue their respective contracting Exide Foreign Entities based on

Illinois state law and the contracting parties’ understanding of

the Coordinating Agreement. In their motion for

reconsideration, the PDH Foreign Entities urged the Court “to

reconsider its decision not to consider any extrinsic evidence, its

apparent decision that there was not even a latent ambiguity in

the agreements at issue between the parties, and its narrow

interpretation of a portion of Amendment No. 1 to the
39

Coordinating Agreement . . . .” App. 1435. They argued that

Illinois law supported consideration of extrinsic evidence and

they raised the defenses of mutual mistake and latent ambiguity

as well. At the hearing on the motion, counsel for PDH urged

the Court to reconsider its decision because the motion for

remand had not presented the contractual interpretation issue on

which the Court based its decision and he had not been prepared

to argue the issue and fully develop defenses. Yet, in ultimately

denying reconsideration 18 months later, after Exide’s

bankruptcy plan had been confirmed, the Bankruptcy Court

dismissed this argument as “new legal theories that could have

been raised previously.” App. 37.

Because the Court acted precipitously, it failed to permit

the PDH Foreign Entities to challenge Exide’s proposed

interpretation of the Coordinating Agreement. Based on its

holding that the relevant provision was unambiguous, it also

refused to consider extrinsic evidence. Accordingly, although

we now reverse the Court’s determination that Exide is

unambiguously the sole indemnitor, we cannot evaluate the

contract interpretation on its merits because the record was not

developed in the Bankruptcy Court. While the Court correctly

determined that an analysis of the indemnification provision in

the Coordinating Agreement was necessary to determine

whether the PDH Foreign Entities’ claims were actually directed

against the debtor and therefore core, it erred in concluding that

the provision was unambiguous and failing to allow extrinsic

evidence to be introduced. See, e.g., Farm Credit Bank of St.
 For example, the PDH Foreign Entities have argued that, 9

even if Exide were the sole indemnitor for the breach of contract

claims subject to the contract remedy provisions of the

Coordinating Agreement, the conversion claims stand apart and

can be asserted against the Exide Foreign Entities according to

Illinois law. We do not comment on the merits of this

contention, but simply note that it may be necessary to address

it even if the Bankruptcy Court concludes that the breach of

contract and unjust enrichment claims are core proceedings.

40

Louis v. Whitlock, 144 Ill.2d 440, 447, 581 N.E.2d 664, 667 (Ill.

1991) (noting that when a contract “is capable of being

understood in more sense than one,” parol evidence is

admissible).

We will, therefore, remand in order to permit the

Bankruptcy Court to evaluate the issue more thoroughly. Upon

remand, the Court should allow the parties to brief the issue of

whether the Coordinating Agreement makes Exide solely liable

for all of the PDH Foreign Entities’ claims, to present extrinsic

evidence, and to develop the evidentiary record. In evaluating

whether the claims are core proceedings, the Court should also

exercise care to analyze each claim individually. We note that, 9

although, as the Exide Foreign Entities point out, the PDH

Foreign Entities did not specifically address this issue in

connection with their motion to remand or abstain, they had no

right to file a reply. They should be permitted to respond to it on

remand.
41

C. Proofs of Claim and Core Proceedings

Although we hold that the Bankruptcy Court erred and

should consider anew the meaning of the Coordinating

Agreement, we must also address the second, alternate and

potentially dispositive ground upon which the Bankruptcy Court

and District Court relied–namely, that the PDH Foreign Entities’

filing proofs of claims in Exide’s bankruptcy case rendered their

claims against the Exide Foreign Entities core proceedings. 

Section 157(b)(2)(B) provides that “core” proceedings

include “allowance or disallowance of claims against the estate.”

Both courts reasoned that, by filing a proof of claim in the

debtor’s bankruptcy case, the PDH Foreign Entities invoked the

allowance process and their claims became core. We could

accept this reasoning if it were premised upon the Coordinating

Agreement’s designation of Exide as the only proper party to the

PDH Foreign Entities’ claims so that the subject matter of the

proofs of claim is the same as that of the state law action.

However, the Bankruptcy Court suggested that, whenever a

proof of claim is filed by a claimant in the debtor’s bankruptcy

case, whatever claims are referenced therein become core

proceedings under 28 U.S.C. § 157(b)(2)(B). Even before

considering the “sole indemnitor” argument, the Bankruptcy

Court stated, “it’s clear to me that by virtue of the filing of the

Proofs of Claim that in large measure the matters before me are

core . . . .” App. 49. On appeal, the District Court similarly

expressed a belief that by filing proofs of claim against the
 We note that it is undisputed that, should the PDH Foreign 10

Entities secure a judgment against the Exide Foreign Entities

and these entities prove unable to pay, their contingent proofs of

claim against the debtor should be determined or estimated by

(continued...)

42

debtor, the PDH Foreign Entities were precluded from

proceeding against the non-debtor defendants. It stated, “it

seems to me that . . . if they hadn’t filed cont[ingent] proofs of

claim in bankruptcy, that, truly, the Bankruptcy Court would not

have had necessarily jurisdiction over this dispute so long as

there wasn’t any recourse to the debtor.” App. 150. It then

concluded that, “when the PDH Foreign Entities filed their

[four] proofs of claim against the Exide bankruptcy estate, they

irrevocably consented to have their claims heard and decided by

the bankruptcy court.” App. 20. It is this proposition that we

must now examine.

On appeal, the PDH Foreign Entities argue that their

filing of contingent proofs of claim in the debtor’s bankruptcy

case does not establish that claims against non-debtors constitute

“core” proceedings. The proofs of claim were for contribution

or indemnification from Exide, contingent on securing a

judgment against the Exide Foreign Entities and their not being

able to pay it, and, while they might have submitted the PDH

Foreign Entities to the jurisdiction of the Bankruptcy Court, they

did not render the claims against the non-debtor Exide

defendants “core.” 

10
 (...continued) 10

the Bankruptcy Court. See also Langenkamp v. Culp, 498 U.S.

42, 44 (1990) (holding that when a party submits a proof of

claim, it “trigger[s] the process of ‘allowance and disallowance

of claims,’” and thereby is consenting to jurisdiction of the

bankruptcy court to make a final decision as to its claim) (citing

Granfinanciera v. Nordberg, 492 U.S. 33 (1989)). The PDH

Foreign Entities acknowledge that the Bankruptcy Court has

core jurisdiction over its proofs of claim against Exide itself.

Appellant’s Br. 41; Reply Br. 17. The consent to jurisdiction,

however, is limited to claims against the debtor itself, not claims

against non-debtors. See 3 Collier on Bankruptcy ¶ 362.03[3][4]

(15th ed. 2005) (noting that when one defendant files a

bankruptcy petition, the suit may proceed against non-debtor codefendants).

43

In response, the Exide Foreign Entities urge us to affirm

the Bankruptcy Court’s decision, contending that the filing of

proofs of claims against the debtor rendered the PDH Foreign

Entities’ claims textbook “core” proceedings. The contingent

language within the proofs of claims, they say, has no bearing

on the Bankruptcy Court’s jurisdiction.

To address these arguments properly, we must first

clarify the effect the filing of a proof of claim in a debtor’s

bankruptcy has on the jurisdiction of the bankruptcy court over

claims against non-debtors. As the following explains, we

believe the case law is clear that the filing of a proof of claim

may cause claims against non-debtors to be deemed “related to”
44

proceedings, but will not result in their being considered “core”

proceedings.

We agree, as Exide observes, that “it is axiomatic that

filing a proof of claim triggers the claims allowance process

under 11 U.S.C. § 501 et seq., which, by its very nature, is a

“core” proceeding that can arise only in a title 11 case.”

Appellee’s Br. 21; see also In re Argus Group 1700, Inc., 206

B.R. 737, 747-48 (Bankr. E.D. Pa. 1996) (“Debtors’ proposition

that the filing of a proof of claim in bankruptcy transforms a

pre-petition state law claim which was filed in state court before

the bankruptcy into a core proceeding is sound.”). Indeed, it has

long been black letter law that 

The filing of the proof invokes the special rules of

bankruptcy concerning objections to the claim,

estimation of the claim for allowance purposes,

and the rights of the claimant to vote on the

proposed distribution. Understood in this sense,

a claim filed against the estate is a core

proceeding because it could arise only in the

context of bankruptcy. Of course, the state-law

right underlying the claim could be enforced in a

state court proceeding absent the bankruptcy, but

the nature of the state proceeding would be

different from the nature of the proceeding

following the filing of a proof of claim. 
45

Matter of Wood, 825 F.2d 90, 97 (5th Cir. 1987); see also In re

Continental Airlines, 125 F.3d 120, 131(3d Cir. 1999) (citing

and following Wood).

Nonetheless, the case law belies the assertion that, when

a plaintiff files a proof of claim in a debtor’s bankruptcy case,

it creates core bankruptcy jurisdiction over claims against nondebtor defendants as well. For example, in Holiday RV

Superstores, Inc., plaintiffs brought state law claims of fraud,

breach of fiduciary duty and successor liability against the

debtor’s principal and successor, but did not name the debtor.

362 B.R. 126 (D. Del. 2007). Although one of the plaintiffs

filed a proof of claim, which included a copy of the complaint,

the court held that it established only that the plaintiffs “may

have a claim against someone other than the estate for the same

claim” and did “not transform a non-core proceeding into a core

proceeding.” Id. at 129. Similarly, in CIT Communications

Financial Corp. v. Level 3 Communications, LLC, plaintiff’s

state court action against non-debtors, asserting breach of

contract, unjust enrichment, and conversion arising from an

equipment lease the defendants had purchased from the debtor,

was found to be “unrelated” to the bankruptcy case. 483 F.

Supp.2d 380 (D. Del. 2007). Despite the defendants’ assertions

that the debtor was the responsible party whom they would need

to implead and the plaintiff’s filing a proof of claim that

concerned the same lease, the court rejected the defendants’

jurisdictional argument because “plaintiffs are alleging two

separate contractual breaches, one attributable to the Debtors
46

(before they sold their assets), and the other for defendants’

subsequent, independent failure to make the Monthly Payments

to plaintiff after purchasing those assets.” Id. at 388. 

Exide, however, claims our decision in Travellers Int’l

AG. v. Robinson, 982 F.2d 96 (3d Cir. 1992), dictates that

because the PDH Foreign Entities filed proofs of claim, their

claims are “core” proceedings. We disagree. In Travellers, we

held that “[w]here . . . a creditor has filed a claim, even though

the claim is couched in protective language and is contingent,

that creditor has submitted to the bankruptcy court’s equitable

jurisdiction and waived any Seventh Amendment right to a jury

trial.” Id. at 100. Our decision, however, was limited to “[t]he

sole legal question . . . [of] whether a contingent proof of claim

filed against a bankrupt estate, arising from a judgment in favor

of a creditor . . ., subjects the creditor corporation to the

equitable jurisdiction of the bankruptcy court.” Id. at 97

(emphasis added). We did not purport to do away with our

traditional analysis, nor did we indicate that filing a proof of

claim renders claims between non-debtors “core.”

We can find no authority to support Exide’s broad

assertion as to the impact of filing proofs of claim. We agree

with the appellants that, as a general rule, “actions asserted by

those plaintiffs who filed actions against non-debtor parties

exclusively, regardless of whether they filed a proof of claim,”

are “presumptively non-core.” In re Best Reception Systems,

220 B.R. at 947; accord In re Harrah’s Entm’t, Inc. Sec. Litig.,
47

Civ. A. No. 95-3925, 1996 WL 684463, *3 (E.D. La. Nov. 26,

1996) (“While . . . [Langenkamp] might stand for the

proposition that plaintiffs have waived their jury trial right

against ... [the debtor] by submitting a proof of claim in the . . .

[debtor’s] bankruptcy proceedings, . . . [Langenkamp] do[es] not

stand for the broader proposition that plaintiffs have waived

their jury right in a non-core proceeding . . . against non-debtor

defendants simply by filing a proof of claim against a debtor in

a related bankruptcy case); In re Argus Group, 206 B.R. at 748

(rejecting debtors’ argument that the plaintiff’s proofs of claims

filed in their bankruptcy cases transformed his pre-petition state

law causes of action against the debtor’s operating entity which

was not in bankruptcy into a “core” proceeding).

The proposition that a contingent proof of claim against

a debtor for contribution or indemnification somehow changes

the analysis, rendering state court claims against non-debtors

“core,” similarly receives no support in the case law. See, e.g,

Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P’ship, No. 04

Civ 708(GEL), 2004 WL 1048239, *2 (S.D.N.Y. May 7, 2004)

(“Even if the proofs of claim filed by the . . . plaintiffs in the

Jones bankruptcy render their claims against Jones ‘core’ . . .,

they have no effect on the claims against the other defendants

[or] the many cross-claims among defendants other than Jones

. . ., all of which are clearly non-core.”); Hickox v. Leeward Isles

Resorts, Ltd., 224 B.R. 533, 538 (S.D.N.Y. 1998) (finding

related to jurisdiction where “plaintiff’s suit against defendant

over the promissory notes may ‘conceivably’ affect the
48

administration of the debtor’s estate” because debtor served as

guarantor of the defendant’s loan and proofs of claim had been

filed); I.G. Davis v. Merv Griffin Co., 128 B.R. 78 (Bankr.

D.N.J. 1991) (finding related to jurisdiction where a proof of

claim filed by non-debtor defendant claimed he was entited to

indemnification by debtor). In Davis v. Life Investors Insurance

Company of America, the court considered and rejected an

argument like the one Exide now advances. 282 B.R. 186 (S.D.

Miss. 2002). There, Life Investors, a non-debtor defendant in

a state court action, attempted to establish “core” bankruptcy

jurisdiction over the state court cause of action because it had an

alleged contractual right to indemnity from debtor for any

judgment the plaintiff might obtain against it and had filed a

proof of claim in the debtor’s bankruptcy case. Id. at 189. The

court was not persuaded and held that the case was “not a core

proceeding merely because the outcome of this case, if adverse

to Life Investors, will result in a claim (or support the existing

contingent claim) by Life Investors against [the debtor’s]

bankruptcy estate which in turn might affect the assets of the

estate.” Id. at 193. In sum, “there is no authority that a party

with a contingent claim for indemnification can bootstrap its

claim onto the Bankruptcy Court’s core jurisdiction.” In re

Amanat, 338 B.R. 574, 581 (Bankr. S.D.N.Y. 2005).

Yet, the District Court stated that our decision in Pacor

v. Higgins provides just such authority. In concluding that the

PDH Foreign Entities’ claims were “core,” it stated – incorrectly

– that Pacor stands for the proposition that “a debtor’s
49

agreement to indemnify a third party gives rise to jurisdiction

over nonbankruptcy controversies with that third party,

especially where [it] has filed a claim against the debtor.” App.

22 (citing Pacor, 743 F. 2d at 995). This is not accurate. Pacor

clearly holds that in the event of such an indemnification

obligation, “related to” jurisdiction might exist. To the extent

that the filing of a proof of claim against a debtor who has an

obligation to indemnify is relevant, it is so because it

“transforms the improbable into the conceivable,” thereby

rendering the underlying claims involving non-debtor

indemnitees related to the bankruptcy case – not core. In re

Salem Mills, Inc., 148 B.R. 505, 510 n.9 (N.D. Ill. 1992)

(observing that “[a]bsent the filing of a proof of claim involving

a third-party indemnification action, it is unknown whether the

original indemnitor will assert a claim if prevailing”); I.G.

Davis, 128 B.R. at 99 (“Without doubt, the filing of a proof of

claim [asserting a right to indemnification] and consequently the

demand to share in the pro rata share of distribution of the estate

in connection with [plaintiff’s] action has some effect on

debtor’s estate and its rights, liability and freedom of action.”).

Accordingly, claims between non-debtors may be related to a

bankruptcy case, but generally do not qualify as core

proceedings under 28 U.S.C. § 157(b). See, e.g., Pacor, 743

F.2d at 994-95; In G-I Holdings, Inc., 278 B.R. 376 (Bankr.

D.N.J. 2002); In re Federal-Mogul Global, supra; In re Athos

Steel and Aluminum, Inc., 71 B.R. 525 (Bankr. E.D. Pa. 1987).
 Although Exide argues that this case is not like the 11

indemnity cases and cites other cases, its citations are

unpersuasive: some involved state lawsuits and proofs of claim

where the debtor was the only defendant, In re S.G. Phillips

Constr., 45 F.3d 702 (2d Cir. 1995); others resulted in decisions

that the claims fell within the bankruptcy court’s purview

because they were “related” to a bankruptcy action, not because

they were “core” proceedings, In re Argus Group, supra, and

still others had a result that actually supports the PDH Foreign

Entities’ position. For instance, Exide cites In re Best Reception

Systems, as establishing that the PDH Foreign Entities’ became

core when the proofs of claim were filed, when in fact the court

in that case held that, although the claims against the debtor

were core given the filing of proofs of claim, the actions

“against non-debtor parties asserted by those plaintiffs who have

filed a proof of claim and named the Debtor as a defendant”

were non-core. 220 B.R. at 944.

50

 This case does not differ in any meaningful way from the

cases referenced above in which there were state court claims

against non-debtors, proofs of claim filed, and a duty of the

debtor to indemnify, and the claims were found to be non-core

proceedings. Here, the PDH Foreign Entities filed pre-petition 11

state law causes of action exclusively against the Exide Foreign

Entities, making the claims at issue strictly between non-debtors.

The proofs of claim submitted against Exide are separate from

the right to proceed against the non-debtor foreign entities and

were filed in light of an imminent claim bar date. The proofs of

claim do not assert the state law causes of action against Exide,
51

but rather assert a right to collect from Exide, should the PDH

Foreign Entities win a judgment that the Exide Foreign Entities

are unable to satisfy. They are essentially contribution or

indemnification claims where the claimants are looking to the

non-debtors for payment in the first instance and are clearly

different from the breach of contract, conversion, and unjust

enrichment claims asserted against the Exide Foreign Entities in

state court. The language of the proofs of claim filed make

apparent the distinction, noting their position that each of the

Exide Foreign Entities “is primarily liable for its breaches, and

that the Debtor is secondarily liable to the extent that [the

individual Exide Foreign Entity] is unable to satisfy” the

judgment against it. See, e.g., App. 500-01.

As the PDH entities note, only by erasing the distinction

between the PDH Foreign Entities’ state court claims against the

Exide Foreign Entities and their proofs of claim against the

Exide estate, is Exide able to argue that the PDH Foreign

Entities state law claims are core. To follow Exide’s argument

to its logical conclusion, whenever a plaintiff sues multiple

defendants and one files for bankruptcy, if that plaintiff files a

proof of claim against the debtor, his or her claims against the

remaining co-defendants would become “core” proceedings as

well. We know this is not the case. In the context of mass tort

or securities cases, involving large numbers of defendants and

indemnity relationships, courts routinely find that the remaining
 See In re Combustion Eng’g, 391 F.3d at 230-31 (finding 12

no related to jurisdiction over claims against debtor’s codefendants in large asbestoslitigation despite arguments that the

bankruptcy estate could be affected by future contribution or

indemnification claims); Transamerica Financial Life Ins. Co.

v. Merril Lynch & Co., Inc., 302 B.R. 620 (N.D. Iowa 2003)

(holding that, because Enron was not named as a defendant and

no third party complaint for indemnification had been filed,

claims against Enron bankers and underwriters were not related

to the bankruptcy but simply between non-debtors, despite the

plaintiffs’ filing proofs of claim); In re Federal-Mogul Global,

supra (holding that there was not even “related to” jurisdiction

over asbestos litigation between non-debtors, based upon

possibility that some defendants might assert indemnity claim

against debtors).

52

claims between non-debtors are non-core or even entirely

unrelated to the bankruptcy case.12

Therefore, we now hold that, by filing proofs of claim in

Exide’s bankruptcy proceeding, the PDH Foreign Entities have

not transformed their state law claims against non-debtor

defendants into core matters that the Bankruptcy Court must

resolve. The claims asserted in the PDH Foreign Entities’

proofs of claim are not the same as the claims against the nondebtor defendants in the state court action. See In re Argus

Group, 206 B.R. at 748. The PDH Foreign Entities’ filing of

contingent proofs of claim does not render the dispute between

non-debtor plaintiffs and defendants “core.” The proofs of
 Courts often have concluded that claims between non- 13

debtors were “related to” proceedings where there was a

contractual duty to indemnify and a claim for indemnification or

proof of claim for indemnification. See In re Resource

Technology Corp., No. 03 C 5785, 2004 WL 419918, *4 (N.D.

Ill. Feb. 13, 2004) (holding that a claim between non-debtors

was related to by virtue of the defendant’s having filed a proof

of claim expressing his intention to seek indemnification from

the debtor, which “ultimately may affect the allocation of

property among [the] creditors”); Life Investors Ins. Co., 282

B.R. at 190 (holding that in light of non-debtor defendant's

contractual right to indemnity from debtor for any judgment the

plaintiff might obtain and its filing of a proof of claim, the

claims between non-debtors were “related to” the bankruptcy);

In re Harrah’s Entm’t, 1996 WL 684463 at *2 (in a suit between

non-debtors, “the presence of an indemnification agreement

between several of the . . . defendants and debtor . . . means that

any adverse outcome in this suit against the . . . defendants could

conceivably have an effect on the administration of the

bankruptcy estate.”); Merv Griffin Co., 128 B.R. at 99 (finding

that contractual right to indemnification from debtor establishes

(continued...)

53

claim for indemnification against the debtor merely demonstrate

that the claims against the non-debtor Exide entities are “related

to” Exide’s bankruptcy case as they “could conceivably” have

an effect on the bankruptcy estate. Pacor, 743 F.2d at 994;

Halper, 164 F.3d at 837 (noting that “[c]ertainty or likelihood is

not a requirement”).13
 (...continued) 13

“related to” jurisdiction); Philippe v. Sharpe, 103 B.R. 355, 358

(D. Me. 1989) (deciding it had “related to” jurisdiction over

claims between non-debtors where “apparently unconditional

duty to indemnify” would result in automatic liability on the part

of the debtor). 

 In “non-core” proceedings, courts must abstain from 14

hearing a claim if (1) the proceeding is based upon state law

causes of action; (2) the causes of action are “related to” a case

under title 11, but do not “arise under” title 11 or “arise in” a

case under title 11; (3) federal courts would not have jurisdiction

absent its relation to a bankruptcy case; (4) an action is

“commenced” in a state forum of appropriate jurisdiction; and

(5) the action can be timely adjudicated in the state forum. Stoe,

436 F.3d at 213 (summarizing requirements under 28 U.S.C.

§ 1334(c)(2)). Here, there is no dispute as to the first four

factors. PDH Foreign Entities’ claims against the Exide Foreign

Entities constitute a state law cause of action commenced in a

state forum for which there is no independent basis for federal

(continued...)

54

Accordingly, if, after remand, the Bankruptcy Court

decides that, based on the Coordinating Agreement, Exide is the

only proper party against whom the PDH Foreign Entities may

seek a remedy, then the claims would be “core” proceedings. If,

however, the Court decides that the Coordinating Agreement

permits the PDH Foreign Entities to pursue their claims against

the non-debtor defendants, the claims will be not only non-core,

but also subject to mandatory abstention and enforcement of 14
 (...continued) 14

jurisdiction other than § 1334(b). As to the fifth factor, the

Exide defendants claim that the Illinois State Court will not

timely adjudicate the claims. The question is “not whether the

action would be more quickly adjudicated in [the bankruptcy

court] than in state court, but rather, whether the action can be

timely adjudicated in the state court.” In re Freehand H.J., Inc.,

2007 WL 1775368, *4 (Bankr. E.D. Pa. June 19, 2007) (quoting

In re Trans World Airlines, Inc., 278 B.R. 42, 51 (Bankr. D. Del.

2002) (emphasis in original)). Here, the state court action was

moving along expeditiously; the judge had made clear his intent

to move the case forward; and the action had been placed in the

docket of the Cook County Circuit Court, designed to facilitate

the adjudication of commercial disputes. Accordingly, we

believe that this action can be timely adjudicated in the state

court. 

 A forum-selection clause is presumptively valid and will be 15

enforced unless the party objecting to its enforcement

demonstrates that enforcement of the clause would violate a

strong public policy of the forum. Coastal Steel Corp. v.

Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir. 1983);

M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972).

Where the claims at issue are not “core” bankruptcy matters, this

rule applies equally to Chapter 11 debtors. See Diaz

Contracting, 817 F.2d at 1051-53; In re Kamine/Besicorp

Allegany, L.P., 214 B.R. 953, 972-74 (Bankr. D.N.J. 1997). 

(continued...)

55

the agreement’s forum selection clause and should accordingly 15
 (...continued) 15

Here, the Coordinating Agreement specifies that the

parties will file any suits arising out of the sales agreements to

a state or federal court in Cook County, Illinois. If the claims at

issue are non-core, this forum selection clause should be

enforced.

56

be returned to the Illinois state court for trial. 

D. “Intertwined” Claims and In re RBGSC Inv. Corp

Although appellees rely heavily on their sole indemnitor

theory, they aver there is yet another ground on which to base a

finding of core jurisdiction. They say, “assuming arguendo that

the PDH Foreign Entities had independent claims against the

Non-Debtor Affiliates . . . the Bankruptcy Court still has ‘core’

matter jurisdiction over the removed State Court Actions”

because of the close-knit indemnitor and subsidiary relationships

between the parties. Appellee’s Br. 27 n.30 (citing In re RBGSC

Inv. Corp., 253 B.R. at 379). Urging us to adopt the approach

of the district court in In re RBGSC Inv. Corp., they claim that

a state court action involving debtors and non-debtors becomes

core if the core and non-core claims are “‘so intertwined’ that

merely to ‘disentangle’ them would be ‘co-extensive with a

resolution of the merits of the disputes.’” Id. The Exide Entities
 The Bankruptcy Court also attached a great deal of 16

significance to the relative amounts in dispute between PDH

USA’s claims and the PDH Foreign Entities’ claims. It stated,

“the magnitude of the dispute is about $20 million, 16 million of

which is acknowledged to be sought against Exide alone.

Doesn’t that make the dispute as between non-debtor entities the

tail of the dog?” App. 54. The court suggested that “judicial

economy and efficiency” were appropriate factors to consider

with regard to the “core” determination. App. 53. This was not

correct. Pacor, 743 F.2d at 994 (observing that “[j]udicial

economy itself does not justify federal jurisdiction”). The test

for finding jurisdiction is not a mathematical one that relies on

weighing the value of total claims against non-debtors against

total claims against the debtor. 

The size of the claims, relative to the total bankruptcy

estate, may be a consideration in evaluating “related to”

jurisdiction. See, e.g., Phar-Mor, Inc. v. Coopers & Lybrand, 22

F.3d 1228, 1235 n.10 (3d Cir. 1994) (“It is essentially

undisputed that removal pursuant to § 1452 was appropriate

because the Phar-Mor/Coopers lawsuit will have a direct and

substantial impact on the size of Phar-Mor’s asset pool available

for distribution to creditors and therefore is ‘related to’ the

bankruptcy case pending in Ohio.”). However, here, the size of

the claims is relatively insignificant. In Exide’s bankruptcy

case, the over-6,100 proofs of claims filed in liquidated amounts

totaled approximately $4.4 billion (another approximately 1,100

(continued...)

57

made a similar argument to the Bankruptcy Court, which it

seemed to credit. 

16
 (...continued) 16

proofs of claim were filed as unliquidated); the contingent

proofs of claim filed by the PDH Foreign Entities are – at

approximately $9.9 million – the proverbial drop in the bucket.

58

Lest the Bankruptcy Court be persuaded by Exide’s

intertwinement argument on remand, we now consider and

reject it. 

In In re RBGSC Inv. Corp., the only case Exide cites for

the rule that intertwined claims become core, plaintiffs asserted

a variety of state court claims, including injunction, specific

performance, defamation, and breach of various agreements,

arising out of a series of complex business arrangements, against

the debtor RBGSC and non-debtor defendants jointly. After

RBGSC removed the state court action to bankruptcy court and

filed a motion for relief from orders the state court had entered

prior to removal, its co-defendants filed similar motions; in

response, the plaintiffs moved for abstention and remand.

253 B.R. at 372-73. The bankruptcy court denied the plaintiffs’

motion on the ground that their claims against the non-debtor

defendants were “core” and essentially claims against the

debtor. Id. at 373. 

The district court on appeal held that:

Where the links between and among the various

parties, including the state court plaintiffs and the
59

debtor and non-debtor defendants, are so

intertwined by virtue of the many agreements

defining these relationships, we cannot see how

Appellants’ state court claims could be viewed, in

the wake of the bankruptcy, as anything other than

a claim on the estate.

Id. at 379. Because plaintiffs had asserted state court claims

against RBGSC and the non-debtor defendants jointly, the court

concluded that “identifying claims from the state court

complaint that are not tied to RBGSC would in itself present a

daunting legal task” and, therefore, the claims against the nondebtors were core proceedings whose determination “would be

co-extensive with a resolution of the merits of the disputes.” Id.

at 380.

As an initial matter, it strikes us that In re RBGSC Inv.

Corp. is distingushable from the present case. Here, instead of

asserting claims directly against the debtor, jointly with other

defendants, each of the PDH Foreign Entities made discrete

claims against each of the non-debtors and did not assert those

claims against debtor or assert joint liability. Indeed, it is simple

to separate the PDH Foreign Entities’ claims against the Exide

Foreign Entities from the claims against the debtor, and from

one another, because they are stated separately. Each referenced

separate agreements and was filed against either one or two of

the Exide Foreign Entities.
60

Nonetheless, insofar as In re RBGSC Inv. Corp. holds

that non-core claims against non-debtors are rendered core

because of close business relationships between the debtor and

non-debtors or “intertwinement” with a claim against a debtor,

it is legally unsound and must be overruled. We reiterate that

courts must engage in a claim-by-claim analysis to determine

whether a proceeding is core. Halper, 164 F.3d at 836-37. Each

state court claim removed to bankruptcy court must be

considered individually; non-core claims do not become core

simply by virtue of being pursued in the same litigation as core

claims. Accordingly, the intertwinement theory cannot be

sustained. 

We note that the In re RBGSC Inv. Corp. decision has not

received subsequent support among district courts in this circuit

or others. See, e.g., Mirant Corp. v. Southern Co., 337 B.R.

107, 119 (N.D. Tex. 2006) (disagreeing with the bankruptcy

court that “non-core claims were so intertwined with the other

claims in the complaint” that core bankruptcy jurisdiction lay);

Davis, 282 B.R. at 193 (rejecting defendant’s argument that the

state court cause of action “is a core proceeding merely because

it is ‘intertwined with’ its indemnity claim”); In re Winstar

Commc’n, Inc., 284 B.R. 40, 50 (Bankr. D. Del. 2002)

(evaluating claims arising out of a contract between plaintiff and

three sellers, two chapter 11 debtors and wholly-owned

subsidiary non-debtor, and holding that “the mere fact that there

may be common issues of fact between a civil proceeding and
61

a controversy involving the bankruptcy estate does not bring the

matter within the scope of” section 1334(b)).

Accepting the rule that Exide urges would turn virtually

every claim contained in an action in which the debtor is one of

the defendants and which is later removed to bankruptcy court

into a core proceeding. The PDH Foreign Entities cannot be

required to have their rights against Exide’s non-debtor

subsidiaries be determined by the Bankruptcy Court solely

because Exide invoked its protection. Adoption of the

“intertwinement theory” would cause debtors to 

bring[] every wholly owned subsidiary into every

Bankruptcy case regardless of the circumstances

and without the safeguards afforded by schedules,

statements of financial affairs, notices to

creditors, or meetings of creditors . . . [and] could

result in debtors and others abusing the system by

withholding from Bankruptcy or bringing into

Bankruptcy subsidiaries in a revolving door

fashion.

In re Winstar Commc’n, 284 B.R. at 51. Moreover, permitting

core bankruptcy jurisdiction to stretch so far would present

serious constitutional questions. Mirant Corp., 337 B.R. at 119

(observing that “[t]he principles announced in Marathon would

be violated if such an intertwinement theory were to be given

effect”).
62

Thus, we now conclude that the “intertwinement” theory

espoused by In re RBGSC Inv. Corp has no place in our “core”

jurisprudence.

IV. Conclusion

As we set forth above, the Bankruptcy Court committed

several errors in reaching the conclusion that the claims at issue

here are “core” proceedings under 28 U.S.C. §§ 157(b)(2)(B)

and (C). The state of the record, however, does not permit us to

decide whether the claims can properly be deemed “core.” 

We, therefore, will VACATE the District Court’s

Memorandum Order entered on March 22, 2007, and REMAND

the case to the District Court with instructions to:

(1) VACATE the decisions of the Bankruptcy Court

dated December 11, 2003 (entered December 15, 2003), and

June 16, 2005 (entered June 20, 2005), and 

(2) REMAND this case to the Bankruptcy Court for

proceedings consistent with this Opinion. 

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