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. e du/thir dc ir c uit_1999/24Filed January 28, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-3670

UNITED STATES TRUSTEE

v.

GRYPHON AT THE STONE MANSION, INC., d/b/a Erik Lewis Global d/b/a Wanner Van Helden, Appellant

Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No. 97-CV-00345) Before: The Honorable Gary L. Lancaster

Argued Under Third Circuit LAR 34.1(a) November 18, 1998

Before: McKEE, RENDELL and WEIS, Circuit Judges

(Filed: January 28, 1999)

H. Thomas Byron, III, Esquire
(ARGUED) U.S. Department of Justice Civil Division, Appellate Staff 601 D Street, N.W. Washington, DC 20530-0001

Counsel for AppelleeDaniel J. Gates, Esquire

Haller & Gates 415 Northgate Drive Warrendale, PA 15086

Patricia L. Blais, Esquire (ARGUED)
Gates & Associates 415 Northgate Drive Warrendale, PA 15086

Counsel for Appellant

OPINION OF THE COURT

RENDELL, Circuit Judge.

We are asked to determine whether the BankruptcyCourt had jurisdiction to require payment of postconfirmation trustee's fees before closing the debt or's case. We also address the threshold issue of our jurisdic tion to consider this appeal in light of the District Court 's remand of the matter to the Bankruptcy Court. We conclude that we have appellate jurisdiction and that the Bankrup tcy Court did in fact have jurisdiction over the award of fees in question. Accordingly, we will affirm the District Court's order that so held. As discussed in detail below, t he Bankruptcy Court had jurisdiction pursuant to 28 U. S.C. S 157 and 28 U.S.C. S 1334, and we have jurisdictio n on appeal pursuant to 28 U.S.C. S 158(d). The District Court had jurisdiction to review the Bankruptcy Court's d ecision pursuant to 28 U.S.C. S 158(a).

Although the award of trustee's fees in bankruptcy cases has become a routine occurrence since S 1930 of Tit le 28 of the United States Code was first enacted in 1986, Congress's recent amendments to S 1930(a)(6) that i mposed post-confirmation trustee's fees in all pending cas es have created a controversy, with potential and actual le gal and practical implications. Historically, S 1930(a)(6) set forth a scheme to impose the costs of the United States Tru stee Program on its users. See H.R. Rep. No. 99-764, at 22 (1986), reprinted in 1986 U.S.C.C.A.N. 5227, 5234. The statute originally provided, in relevant part, that "a

2quarterly fee shall be paid to the United States tr ustee . . .

in each case under chapter 11 of title 11 . . . for each quarter (including any fraction thereof) until a pl an is confirmed or the case is converted or dismissed, wh ichever occurs first." Pub. L. No. 99-554, S 117, 100 Stat. 3088 (1986). On January 26, 1996, Congress amended the quarterly fee provision to require payment of fees postconfirmation, by striking out the language providin g that the fees would accrue until "a plan is confirmed," so that the statute now reads that the fees should be paid" until the case is converted or dismissed, whichever occur sfirst." Pub. L. No. 104-91, S 101(a), 110 Stat. 7 (1996) & Pub. L. No. 104-99, S 211, 110 Stat. 26 (1996).

After Congress passed the January 26, 1996 amendmen t,
there was some confusion as to whether the amendmen t applied to cases in which plans had been confirmed prior to the amendment. In response, Congress enacted a seco nd amendment to the quarterly fee provision on Septemb er 30, 1996, providing that "the fees under 28 U.S.C.S 193 0(a)(6) shall accrue and be payable from and after January 27, 1996, in all cases (including, without limitation, any cases pending as of that date), regardless of confirmatio n status of their plans." Pub. L. No. 104-208, S 109(d), 110 Stat. 3009 (1996). It is therefore clear that Congress ha s imposed a specific requirement that trustee's fees accrue a nd are payable after confirmation and up to closing of the case, which requirement applies to all cases pending as o f January 1996.1

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1. It is generally agreed, and the parties before u s do not argue otherwise, that the legislative scheme requiring pa yment of fees until the case is "converted or dismissed, whichever occursfi rst" should be read
so as to add "or closed." The Tenth Circuit recentl y decided this issue in United States Trustee v. CF&I Fabricators of Utah, Inc. (In re CF&I Fabricators of Utah, Inc.), 150 F.3d 1233 (10th Cir . 1998). Rejecting the argument that cases that are neither converted nor dismissed, but are successfully closed, are exempt from the fees, the court explained that the language of the statute providing that the fees were to be paid in "each" case under chapter 11 supported the conclusi on that the statute applied in all three cases. Id. at 1236. The court also noted that, even though the statute does not explicitly state that f ees would terminate upon "closure" of the case, it is unreasonable to a ssume otherwise,

3In the specific case before us, the debtor confirme d its

plan of reorganization in June of 1995. The plan pr ovides for payment of all priority and administrative clai ms, sets forth the treatment of several specific creditors, and provides that unsecured creditors will receive a pr o rata distribution of the remaining funds, to be paid in installments commencing 73 months from confirmation
, which would be in July of 2001.2 The debtor's plan is a liquidating plan; the debtor ceased its business an d sold all of its assets as part of the plan and is distributi ng proceeds to creditors. The plan "estimates" that the fund av ailable for unsecured creditors would be $83,042.40 and that

unsecured creditors should receive 25-33% on accoun t of
their claims.

The debtor moved for entry of a final order to clos e the case in April 1996, and the trustee objected on the basis that post-confirmation trustee's fees had not been paid.3 The Bankruptcy Court entered an order granting the debtor's motion but reserving the issue of what fee s were due. At oral argument before us, it was conceded th at the funds awaiting distribution to unsecured creditors are onhand with the debtor's agent and that the postconfirmation trustee's fees at issue are in the app roximate amount of $750.

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because once a case is closed it is no longer a cas e"under chapter 11" under the quarterly fee statute, and because there is no possibility of conversion or dismissal after closure. Id.; see als o In re A.H. Robins
Co., Inc., 219 B.R. 145, 149 (Bankr. E.D. Va. 1998). The Sixth Circuit came to a similar conclusion, albeit by different reason ing, in Vergos v. Gregg's Enters., Inc., 159 F.3d 989, 990-93 (6th Cir. 1998) (finding that, although S 1930(a)(6) is ambiguous, reading the sta tute to require termination of fees upon closure is consistent with Congressional intent).

2. The Bankruptcy Court decided this case en banc b ecause several dozen cases were impacted by the new requirement. H owever, we can only address the case before us on its own facts. T his is especially important as we determine our jurisdiction to hear this matter on appeal, which, as we note below, may turn on the un ique facts of the

case.

3. It is unclear whether the trustee actuallyfiled a claim for fees or otherwise sought enforcement, but the record indica tes that the debtor did file an objection to the trustee's claim.

4The en banc Bankruptcy Court ultimately determined

that the bankruptcy court lacks jurisdiction over p ostconfirmation claims and the trustee must go elsewhe re to pursue these claims. En route to reaching this conc lusion, however, the court entertained numerous difficult q uestions posed, and problems presented, by the legislative s cheme that, the court felt, created an obligation seeming ly inconsistent with the provisions of the Bankruptcy Code and the practical and legal implications of belated ly imposing such fees in the context of a confirmed pl an.4

Although neither of the parties on appeal argues th at the Bankruptcy Court's holding was broader than its jurisdictional pronouncement (nor does either seek a remand in order for the District Court to address o ther issues argued to the court), nonetheless, each of t he parties urges its own view as to whether the fees in questi on are to be paid in the context of a confirmed reorganizatio n plan. However, this issue has little bearing on our rulin g as to the Bankruptcy Court's jurisdiction. It may, howeve r, have some bearing on the question of our jurisdiction ov er this appeal, as becomes apparent in our discussion below

.

The Bankruptcy Court reviewed cases commenting on t he limited role of bankruptcy courts after confirmatio n, and drew from them the conclusion that its jurisdiction was limited to matters concerning the implementation or execution of a confirmed plan, and did not extend t o enforcement of the post-confirmation fee provision. 5 The Bankruptcy Court focused its analysis on 11 U.S.C. S 1142(b), which provides that, in order to impleme nt the plan, the bankruptcy court may direct the debtor to

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4. The court explored the enforceability of such a claim, its status as a priority or administrative claim, the debtor's abil ity to modify a plan,

who would be liable for such a fee, the potential for v iolation of the takings clause of the Constitution, and, finally, the possi ble result that by permitting collection, plan defaults would result, undermining both the bankruptcy and trustee's fee statutes.

5. The Bankruptcy Court suggested that it would hav e had jurisdiction if the confirmed plan reserved jurisdiction over th e post-confirmation fee issue. Of course, the confirmed plan did not addres s the postconfirmation fees, since they did not exist at the time the plan was
confirmed.

5perform such acts as are necessary for the consumma tion

of the confirmed plan. The District Court addressed the issue of the Bankruptcy Court's jurisdiction in the broad sense and determined that the Bankruptcy Court did in fact have jurisdiction over the award of the truste e's fees. The District Court accordingly remanded the case ba ck to the Bankruptcy Court for further proceedings.

Our review of the District Court's decision is gove rned by the principle that we are in as good a position to evaluate the Bankruptcy Court's findings as the District Cou rt was. We review the Bankruptcy Court's findings by the sa me standard that should have been employed by the Dist rict
Court to determine if the District Court erred in i ts review. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 102 (3d Cir. 1981). Thus, our review of the legal q uestions presented in this case is plenary. First Jersey Nat 'l Bank v. Brown (In re Brown), 951 F.2d 564, 567 (3d Cir. 199 1).

We will affirm the District Court's ruling and adop t its reasoning. The District Court correctly concluded t hat an analysis of the Bankruptcy Court's jurisdiction beg ins with 28 U.S.C. S 1334, not with 11 U.S.C. S 1142. See Be lcufine v. Aloe, 112 F.3d 633, 636 (3d Cir. 1997). Section 1334 provides that the district courts "shall have origi nal and exclusive jurisdiction of all cases under title 11, " and "original, but not exclusive, jurisdiction of all c ivil proceedings arising under title 11, or arising in o r related to cases under title 11." 28 U.S.C. S 1334(a)-(b). The Bankruptcy Court, by virtue of referral by the Dist rict Court, has jurisdiction over cases falling under th ese categories. See 28 U.S.C. S 157(a)-(b).

We agree with the District Court's conclusion that the trustee's action to enforce the post-confirmation f ee provision is "related to" or "arising in" the bankr uptcy, and was thus within the Bankruptcy Court's jurisdiction . A matter is "related to" a chapter 11 case if it " `c ould conceivably have any effect on the estate being administered in bankruptcy.' " Belcufine , 112 F.3d at 636 (quoting Pacor v. Higgins, 743 F.2d 984, 994 (3d Ci r. 1984)). Belcufine further defined the test as wheth er the outcome of the case " `could alter the debtor's rig hts, liabilities, options, or freedom of action (either positively or

6negatively) and which in any way impacts upon the

handling and administration of the bankrupt estate. ' " Id. The trustee's award of fees clearly satisfies this test, because it directly relates to the debtor's liabili ties -- in fact it creates a liability -- and could impact the hand ling and
administration of the estate.

Although finding that the trustee's action is relat ed to a bankruptcy case is sufficient in order to establish the Bankruptcy Court's jurisdiction, the District Court also found that the trustee's action might even be said to "arise in" bankruptcy. We agree. Proceedings "arise in" bankruptcy if they have no existence outside of the bankruptcy. See Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir. 1987). By definition, an action for tr ustee's fees pursuant to S 1930(a)(6) applies only in chapter 11 cases, during the pendency of the case.6

Furthermore, 11 U.S.C. S 1142(b), the provision rel ied upon by the Bankruptcy Court to support its conclus ion that its jurisdiction was limited, does not change the jurisdictional analysis under S 1334. Section 1142( b) provides that the bankruptcy court may take action to ensure the consummation of a confirmed plan; it doe s not provide that this is the only action the bankruptcy court may entertain post-confirmation. As explained by th e District Court, "[s]ection 1142(b) is a grant of au thority to the bankruptcy court that channels, but does not ab rogate, the bankruptcy court's jurisdiction post-confirmati on." United States Trustee v. Gryphon at the Stone Mansi on, Inc., 216 B.R. 764, 768 (W.D. Pa. 1997) (emphasis added).

We affirm the reasoning of the District Court as a proper statement of the breadth of the Bankruptcy Court's jurisdiction to entertain issues that necessarily m ust come

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6. Because we have determined that this claim"arise s in" bankruptcy,

we need not be concerned about the extent of the Ba nkruptcy Court's power to resolve this claim on its own -- without r eference to the
district court -- on remand. Claims that by nature can only arise in a bankruptcy context are "core proceedings" that the bankruptcy court has comprehensive power to hear and decide by enteringf inal orders and judgments. See Torkelsen v. Maggio (In re The Guild & Gallery Plus, Inc.), 72 F.3d 1171, 1178 (3d Cir. 1996).

7its way prior to the close of the case. Although th e

Bankruptcy Court may have been justified in harbori ng genuine reservations as to the categorization and implementation of this claim imposed by Congress af ter the fact, nonetheless the Bankruptcy Court clearly had jurisdiction to entertain the trustee's claim and p rovide for
it.

We address our jurisdiction to entertain this appea l at this juncture because our decision is informed by t he facts we have recounted and statutory provisions we have referenced. The prevailing rule followed by the maj ority of the circuit courts is that courts of appeals have j urisdiction over bankruptcy appeals pursuant to 28 U.S.C. S 158 (d) notwithstanding a remand ordered by the district co urt if there is little left for the bankruptcy court to do . See In re Lopez, 116 F.3d 1191, 1192 (7th Cir.), cert. denied , 118 S. Ct. 599 (1997) (explaining that such orders are app ealable only if "the further proceedings contemplated are o f a purely ministerial character"). Our court applies a n even more liberal rule in determining appealability, bal ancing reluctance to broaden traditional interpretations o ffinality against desire to further the expeditious completio n of the bankruptcy proceedings. See id. at 1193-94; In re M arket Square Inn, Inc., 978 F.2d 116, 120 (3d Cir. 1992). This rule is based on the principle that "finality" in t he bankruptcy sense is a flexible concept, taking into account the protracted nature of many bankruptcy proceeding s, and the waste of time and resources that might result i f immediate appeal were denied. See Market Square Inn , 978

F.2d at 120.

Nonetheless, if the Bankruptcy Court proceedings on remand would be purely ministerial, we need not res ort to the balancing test, since we would have jurisdictio n under either the prevailing or our own test. In order to make that determination, we must answer the question: "What i s left for the Bankruptcy Court to do on remand?" Here, th e debtor has funds on hand awaiting distribution to unsecured creditors. It is up to the Bankruptcy Cou rt to order trustee's fees to be paid from available fund s in compliance with law. In fact, all the Bankruptcy Co urt has to do to assess the fees is look to the specific am ounts

8provided for in S 1930(a)(6). This action is indeed

ministerial.

This is not the situation which seemed to confound the Bankruptcy Court in its opinion, namely, where no f unds are available. Nor do we view this, as the Bankrupt cy Court clearly did, as a situation in which Congress has l egislated a claim not cognizable in connection with a confirm ed plan. To the contrary, we agree with the statement of the trustee's counsel that Congress's "mandate requirin g payment of post-confirmation quarterly fees is not an effort to alter the terms of pre-existing debts; rather, i t creates a new expense that did not exist before the plan was confirmed." Brief for Appellee at 7. Courts recentl y addressing the nature of these post-confirmation fe es have regularly found them to be an administrative claim arising during the case that must be paid or provided for, and, that does not constitute an impermissible modification o f the confirmed plan. See, e.g., CF&I Fabricators, 150 F. 3d at 1238 (noting that post-confirmation fees are admini strative expenses attendant to an open case and are " `no di fferent from taxes arising post confirmation, or any simila r postconfirmation expenses not specified in the plan' " (quoting A.H. Robins, 219 B.R. at 148)).

The holding in Holywell Corp. v. Smith, 503 U.S. 47 (1992), is instructive on this issue. In Holywell, the Supreme Court rejected the argument that a trustee was not obligated to pay taxes that accrued post-confir mation because they were not provided for in the confirmed plan. Id. at 58. The Court noted that the tax liability d id not arise until after the plan was confirmed, and that the pl an didnot and could not extinguish claims arising postconfirmation. Id. at 58-59. Like the tax liability in Holywell, the trustee's claim for post-confirmation fees did not exist until after the plan was confirmed, so the plan cou ld not discharge the debtor's obligation to pay the fees.

Notwithstanding the Bankruptcy Court's skepticism t hat Congress would impose fees in contravention of the scheme set out in the Bankruptcy Code, we suggest that, by amending S 1930(a)(6) as it did, Congress has in fa ct purposely changed the scheme so as to require payme nt of
trustee's fees until the case is closed. The fact t hat the fees

9do not fit nicely into plan parlance is irrelevant. Congress

has mandated that they be paid.7

We should also note that this issue should be of wa ning importance, with the passage of time. Debtors, now aware of this post-confirmation obligation, will reserve funds in order to fulfill this obligation.

For all of the foregoing reasons, we will affirm th e order
of the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

___________________________________________________ ______________

7. Courts have considered and rejected constitution al challenges to amended S 1930(a)(6) based on retroactivity and vio lation of the takings clause of the Fifth Amendment ("takings clause"). T he retroactivity argument, although not raised specifically by appel lant on appeal, has been rejected on the basis that the fee provision i s not retroactive, or, alternatively, that even if it is retroactive, it i s constitutionally

sound because it is supported by a rational legislative p urpose. See CF&I Fabricators, 150 F.3d at 1237-38; In re McLean Squa re Assocs., 201 B.R. 436, 441 (Bankr. E.D. Va. 1996); A.H. Robins, 219 B .R. at 148; In re Richardson Serv. Corp., 210 B.R. 332, 334 (Bankr. W .D. Mo. 1997). Appellant did raise a takings clause challenge to t he statute, but it is also without merit. Application of the fee provisio n post-confirmation is not a violation of the takings clause because, due to the vagaries of the bankruptcy process, there can be no reasonable expe ctation that the
amount of the final distribution will remain fixed throughout the process. See CF&I Fabricators, 150 F.3d at 1238-39 (noting that one of the elements of a takings clause violation is inter ference with reasonable investment-backed expectations, and that "[i]n a ba nkruptcy case as complex as this, we believe it would be patently un reasonable to expect no variability in the final amount available to pla n distributees").

10