09-3848-bk

In re Aston Baker

1 UNITED STATES COURT OF APPEALS

2

3 FOR THE SECOND CIRCUIT

4 

5

6 August Term, 2009

7

8 (Submitted: June 22, 2010 Decided: July 30, 2010)

9

10 Docket No. 09-3848-bk

11 

12

13 ASTON BAKER,

14

15 Creditor-Appellant,

16

17 –v.– 

18

19 CHARLES SIMPSON, WINDELS MARX

20 LANE & MITTENDORF, LLP, STANLEY

21 GALLANT, GALSTER CAPITAL LLC,

22 GALSTER MANAGEMENT CORP.,

23 ALLSTATE INSURANCE COMPANY,

24 JPMORGAN CHASE BANK, N.A.,

25

26 Trustees-Appellees.

27 

28

29 Before: WINTER, CABRANES, WESLEY, Circuit Judges.

30

31 Appeal from a judgment of the United States District

32 Court for the Eastern District of New York (Irizarry, J.),

33 entered on August 25, 2009, affirming the March 6, 2008

34 decision of the United States Bankruptcy Court for the

35 Eastern District of New York, and dismissing the appeal. 

36 The district court properly held that appellant’s claims are

37 civil proceedings “arising in” a case under Title 11 and

38 that the bankruptcy court had jurisdiction over appellant’s

39 claims. We hold that claims of professional malpractice,

40 based on services rendered pursuant to a Title 11 petition,

41 “arise in” a bankruptcy case because they implicate the

42 integrity of the bankruptcy process and are inseparable from
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1 that proceeding. We further hold that we lack jurisdiction

2 to consider whether the bankruptcy court’s decision with

3 respect to permissive abstention was proper.

4

5 AFFIRMED.

6 

7

8 ASTON BAKER, pro se, Brooklyn, New York; VIVIAN M.

9 WILLIAMS, Vivian Williams & Associates, P.C.,

10 New York, New York, for appellant.

11

12 CHARLES E. SIMPSON, Windels, Marx Lane &

13 Mittendorf, LLP, New York, New York, for

14 appellees Charles E. Simpson and Windels Marx

15 Lane & Mittendorf, LLP.

16

17 RICHARD A. KLASS, Brooklyn, New York, for

18 appellees Stanley Gallant, Galster Capital

19 LLC, Galster Management Corp.

20

21 BRUCE W. FARQUHARSON, Feldman, Rudy, Kirby &

22 Farquharson, P.C., Westbury, New York, for

23 appellee Allstate Insurance Company.

24

25 JACQUELINE M. DELLA CHIESA (Debra Lynne Wabnik, on

26 the brief), Stagg, Terenzi, Confusione &

27 Wabnik LLP, Garden City, New York, for

28 appellee JPMorgan Chase Bank, N.A.

29 

30

31 PER CURIAM:

32 This Court has not previously determined whether claims

33 of professional malpractice based on services rendered

34 pursuant to a Title 11 bankruptcy petition, see 11

35 U.S.C. § 101 et seq., fall within the bankruptcy court’s

36 “original but not exclusive jurisdiction.” 28 U.S.C.
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1 § 1334(b). We now join several of our sister circuits in

2 holding that appellant’s claim that he was afforded

3 substandard legal representation in his Title 11, and

4 related bankruptcy proceedings, are subject to the

5 bankruptcy court’s “arising in” jurisdiction. See id. We

6 further hold that we lack jurisdiction to review the

7 propriety of the bankruptcy court’s decision not to abstain

8 pursuant to 28 U.S.C. § 1334(c)(1). 

9 Background

10 On November 15, 2001, appellant Aston Baker filed a

11 petition for relief in the United States Bankruptcy Court

12 for the Eastern District of New York pursuant to Chapter 7

13 of Title 11 of the United States Code. By order of the

14 bankruptcy court, Baker’s Chapter 7 case was converted into

15 a “reorganization” under Chapter 11 of the Bankruptcy Code. 

16 The bankruptcy court appointed appellee Charles E. Simpson,

17 and the law firm to which he belongs, Windels Marx Lane &

18 Mittendorf, LLP (“Windels Marx”), as counsel to Baker and

19 two entities for which he was the sole controlling

20 shareholder.

21 On October 23, 2007, Baker filed a claim against
 The bankruptcy court issued three orders authorizing 1

and approving these mortgage loans.

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1 appellees in New York State Supreme Court for Kings County. 

2 Baker alleged legal malpractice, conversion, negligence,

3 fraud, and intentional misrepresentation. The facts and

4 circumstances that Baker maintains gave rise to these claims

5 are summarized in the district court’s opinion below. Baker

6 v. Simpson, 413 B.R. 38, 40-41 (E.D.N.Y. 2009) (Irizarry,

7 J.). In brief, Baker contends that: (1) On the advice of

8 counsel, he refinanced through appellee Galster Capital LLC,

9 which he contends misrepresented itself as a lender and

10 failed to fund his mortgage loans as agreed. (2) Galster 1

11 Capital caused him to incur legal fees, forgo offers from

12 other prospective lenders, and accrue interest on his debt. 

13 (3) During a status conference before the bankruptcy court,

14 attorney Simpson made a misrepresentation concerning the

15 bankruptcy estate. (4) Simpson arranged an improperly

16 “fixed” auction sale of two of his commercial properties

17 without notice to Baker, and after a prospective buyer moved

18 to reopen the sale, the bankruptcy court issued an order

19 vacating the original sale and scheduling a new sale on

20 notice. (5) Allstate Insurance Company acted negligently
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1 when, at Simpson’s direction, it deposited insurance

2 proceeds into a JPMorgan Chase bank account in Baker’s name. 

3 (6) And, Simpson improperly converted the funds deposited

4 into the JPMorgan account for his personal use. See Baker,

5 413 B.R. at 40-41.

6 Simpson and Windels Marx then filed a motion to remove

7 the matter to bankruptcy court based on appellant’s ongoing

8 reorganization under Title 11. The state court granted

9 appellees’ motion to remove and Baker promptly moved, in the

10 bankruptcy court, to remand. At a hearing before the

11 bankruptcy court, Simpson argued that while Baker’s action

12 in the state court was “ostensibly” based on state law

13 issues, what Baker was in fact “objecting to [was] counsel,

14 the bank, and the insurance company’s compliance with valid

15 orders” of the bankruptcy court. Simpson further maintained

16 that “[a]ll of the orders complained of, all of the hearings

17 complained of, [and] all of the sales complained of arise

18 out of” the proceedings in the bankruptcy court. The

19 bankruptcy court denied appellant’s motion to remand and

20 dismissed the case in its entirety. The bankruptcy court

21 concluded that “removal in this case . . . from the Supreme

22 Court in New York County to [the bankruptcy court was] . . .
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1 eminently appropriate and warranted” and that Baker had “not

2 set forth . . . a cause of action that [could] survive

3 against any of these defendants.”

4 Baker appealed the order of the bankruptcy court to the

5 United States District Court for the Eastern District of New

6 York. However, he did not challenge the merits of the

7 bankruptcy court’s dismissal before the district court. 

8 Rather, his appeal was limited to the contention that the

9 bankruptcy court’s exercise of jurisdiction over his claims

10 was improper. Accordingly, the district court did not

11 address the merits of Baker’s substantive claims, Baker, 413

12 at 42 n.3; nor will we. 

13 In ruling on Baker’s jurisdictional contentions, the

14 district court concluded that “the gravamen in each claim is

15 that Simpson and Windels Marx provided substandard legal

16 services in the course of representing appellant in his

17 Title 11 and related legal proceedings.” Id. at 44. The

18 court held that “[t]he alleged malpractice . . . implicates

19 the integrity of the entire bankruptcy process” and, “[a]s

20 such, appellant’s claims ‘arise in’ the Title 11 case, and

21 Section 1334(b) clearly gives the bankruptcy court

22 jurisdiction over them.” Id. The district court also
 Baker was pro se in the proceeding before the 2

district court. Baker also filed his briefs before this

Court as a pro se litigant. On February 19, 2010, a notice

of appearance from Michael Freeman, of Greenberg Freeman

LLP, on behalf of Baker, was docketed before this Court. On

June 16, 2010, Greenberg Freeman submitted a motion to

withdraw as counsel of record for the appellant. The

affidavit accompanying the motion stated that the law firm

was retained by Baker, pursuant to a retainer agreement, for

the limited purpose of arguing the appeal. According to the

sworn affidavit, the agreement expressly provided that

counsel had no obligation to make written submissions on

behalf of appellant. Notice was sent to the parties that

this Court intended to decide this matter without oral

argument. See Fed. R. App. P. 34(a)(2). Thus, Greenberg

Freeman’s motion to withdraw as counsel is hereby granted. 

A notice of appearance by Vivian Williams, on behalf of

Baker, was docketed before this Court on June 17, 2010. On

June 18, 2010, this Court granted appellant’s new counsel an

extension of time to file a reply brief. We have considered

the reply brief submitted by counsel, as well as the rest of

the record on appeal, in rendering our decision.

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1 rejected Baker’s contention that the “bankruptcy court’s

2 jurisdiction over his claims was circumscribed by the

3 disposal of his estate,” finding that the disposal of the

4 estate was “immaterial to the jurisdictional issue.” Id. at

5 43. Finally, the district court found no error in the

6 bankruptcy court’s decision not to exercise its authority

7 under the permissive abstention doctrine, see 28

8 U.S.C. § 1334(c)(1), to refrain from adjudicating Baker’s

9 claims. Baker, 413 B.R. at 45-46.

10 Baker filed a notice of appeal on September 9, 2009.2
 With respect to whether the bankruptcy court’s 3

exercise of jurisdiction under 28 U.S.C. § 1334(b) was

proper, “[o]ur review of the district court’s decision

affirming the bankruptcy court order[] is plenary.” In re

NextWave Personal Commc’ns, Inc., 200 F.3d 43, 50 (2d Cir.

1999). Therefore, “[l]ike the [d]istrict [c]ourt, we review

the [b]ankruptcy [c]ourt’s . . . conclusions of law de

novo.” In re Bayshore Wire Prods. Corp., 209 F.3d 100, 103

(2d Cir. 2000).

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1 We find that the bankruptcy court’s exercise of its “arising

2 in” jurisdiction, as set forth in 28 U.S.C. § 1334(b), was

3 proper and affirm.3

4 Discussion

5 In facing a question similar to the one now before us,

6 the Fifth Circuit Court of Appeals stated:

7 That the bankruptcy court has some kind of

8 jurisdiction over this malpractice action

9 against court-appointed professionals is

10 not in doubt. But what the court can do

11 with its jurisdiction depends first on

12 whether the malpractice case is a “core”

13 bankruptcy matter or one that is “related

14 to” [a bankruptcy proceeding]. If the

15 suit . . . is merely related to bankruptcy,

16 the bankruptcy court was required to

17 abstain from hearing it. 28 U.S.C.

18 § 1334(c)(2). If, however, the controversy

19 lies at the core of the federal bankruptcy

20 power, the bankruptcy law permits but does

21 not require abstention.

22

23 In re Southmark Corp., 163 F.3d 925, 928-29 (5th Cir. 1999)

24 (some internal quotation marks and citations omitted). The
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1 Southmark court properly noted that the fact that the

2 “origin” of the claims was found in state law, was “not

3 dispositive.” Id. at 930; see also 28 U.S.C. § 157(b)(3)

4 (“A determination that a proceeding is not a core proceeding

5 shall not be made solely on the basis that its resolution

6 may be affected by [s]tate law.”). Rather, the

7 determinative issue is whether claims that appear to be

8 based in state law are really an extension of the

9 proceedings already before the bankruptcy court. The Fifth

10 Circuit concluded that “the professional malpractice claims

11 alleged” were “inseparable from the bankruptcy context” and

12 that the doctrine of permissive rather than mandatory

13 abstention applied. In re Southmark Corp., 163 F.3d at 931-

14 32; cf. N. Pipeline Constr. Co. v. Marathon Pipe Line Co.,

15 458 U.S. 50, 70-72 (1982). We find that the same is true in

16 the matter now before us.

17 Having determined that the bankruptcy court had

18 jurisdiction over this matter, we look to the abstention

19 doctrine to provide guidance as to the proper exercise of

20 that jurisdiction. See In re Southmark Corp., 163 F.3d at

21 929-30. As we have previously explained, “the abstention

22 provisions implicate the question whether the bankruptcy
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1 court should exercise jurisdiction, not whether the court

2 has jurisdiction in the first instance.” In re S.G.

3 Phillips Constructors, Inc., 45 F.3d 702, 708 (2d Cir.

4 1995). 

5 Mandatory abstention applies when “a proceeding based

6 upon a [s]tate law claim or [s]tate law cause of action” is

7 “related to a case under [T]itle 11" but does not arise

8 under or arise in a case under Title 11. 28 U.S.C.

9 § 1334(c)(2). In the proceeding before the district court,

10 Baker conceded that the mandatory abstention provision set

11 out in section 1334(c)(2) is inapplicable to this case. 

12 Baker, 413 B.R. at 42 n.4. Therefore, this Court may

13 properly find any argument that the mandatory abstention

14 provision governs this appeal waived. See United States v.

15 Brown, 352 F.3d 654, 663 (2d Cir. 2003); Billing v. Ravin,

16 Greenberg & Zackin, P.A., 22 F.3d 1242, 1245 n.1 (3d Cir.

17 1994).

18 In any event, any argument that — in the absence of a

19 waiver — mandatory abstention would apply, is without merit.

20 A bankruptcy court has “plenary jurisdiction over ‘all cases

21 under [T]itle 11 and all core proceedings arising under
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1 [T]itle 11, or arising in a case under Title 11’” Mt.

2 McKinley Ins. Co. v. Corning Inc., 399 F.3d 436, 447-48 (2d

3 Cir. 2005) (quoting 28 U.S.C. § 157(b)(1)). As the Fifth

4 Circuit has explained, although the definition of a

5 proceeding “arising in” Title 11 is not entirely clear, it

6 covers claims that “are not based on any right expressly

7 created by [T]itle 11, but nevertheless, would have no

8 existence outside of the bankruptcy.” In re Wood, 825 F.2d

9 90, 97 (5th Cir. 1987). 

10 The adjudication of Baker’s malpractice and other

11 claims was an “essential part of administering the estate”

12 and therefore implicated the bankruptcy court’s “core

13 jurisdiction.” In re Ben Cooper, Inc., 896 F.2d 1394, 1400

14 (2d Cir. 1990); see also In re Ferrante, 51 F.3d 1473, 1476

15 (9th Cir. 1995). Baker’s claims against appellees “would

16 have no existence outside of the bankruptcy.” In re Wood,

17 825 F.2d at 97; see also Sanders Confectionery Prods., Inc.

18 v. Heller Fin., Inc., 973 F.2d 474, 483 (6th Cir. 1992);

19 D.A. Elia Constr. Corp. v. Damon & Morey, LLP, 389 B.R. 314,

20 317 (W.D.N.Y. 2008); In re SPI Commc’ns & Mktg., Inc., 114

21 B.R. 14, 18 (N.D.N.Y. 1990).
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1 While the meaning of the statutory language “arising

2 in” may not be entirely clear, In re Wood, 825 F.2d at 97,

3 it is clear to us that the bankruptcy court has the ability

4 to review the conduct of attorneys, such as appellee

5 Simpson, who are appointed by the court to aid a person in

6 need of counsel in a proceeding pursuant to Title 11. See

7 In re Southmark Corp., 163 F.3d at 931. The “bankruptcy

8 court must be able to assure itself and . . . [those] who

9 rely on the process that court-approved

10 [professionals] . . . are performing their work[]

11 conscientiously and cost-effectively.” Id. As in the

12 Southmark case, the claims here “inevitably involve[] the

13 nature of the services performed for” the bankruptcy estate

14 and “cannot stand alone.” Id.; see also Sanders

15 Confectionery Prods., 973 F.2d at 483 n.4. 

16 The “appellant’s relationship with all appellees arose

17 only in connection with his Title 11 proceeding.” Baker,

18 413 B.R. at 44. We therefore agree with the district court,

19 see id., that Baker’s claims against the appellees

20 “implicate[] the integrity of the entire bankruptcy

21 process.” In re Seven Fields Dev. Corp., 505 F.3d 237, 260
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1 (3d Cir. 2007) (internal quotation marks omitted). This

2 conclusion is in accord with the conclusion reached by other

3 circuit courts of appeal that have addressed this question. 

4 For example, the Fourth Circuit held that a professional

5 malpractice claim, filed by a Chapter 11 debtor against the

6 firm that represented him in that proceeding, “arose in the

7 bankruptcy case.” Grausz v. Englander, 321 F.3d 467, 469,

8 471-72 (4th Cir. 2003). As already discussed, the Third,

9 Fifth, and Ninth Circuit Courts of Appeal all agree. See In

10 re Seven Fields Dev. Corp., 505 F.3d at 60; In re Southmark

11 Corp., 163 F.3d at 931-32; In re Ferrante, 51 F.3d at 1476. 

12 In accord with this precedent from our sister circuits, we

13 conclude that Baker’s claims, which “would have no practical

14 existence but for the bankruptcy,” Grausz, 321 F.3d at 471,

15 “arise in” a bankruptcy proceeding and do not require

16 mandatory abstention on the part of the bankruptcy court.

17 Our conclusion that mandatory abstention is

18 inapplicable to Baker’s claims is bolstered by this Court’s

19 understanding of congressional intent to define “core”

20 bankruptcy proceedings expansively. See In re CBI Holding

21 Co., 529 F.3d 432, 460-61 (2d Cir. 2008). To that end, we
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1 have given “core” proceedings a “broad interpretation that

2 is close to or congruent with constitutional limits.” In re

3 U.S. Lines, Inc., 197 F.3d 631, 637 (2d Cir. 1999) (internal

4 quotation marks omitted); see also In re S.G. Phillips

5 Constructors, 45 F.3d at 705. To hold that mandatory

6 abstention barred the district court from disposing of

7 Baker’s claims would undermine “the efficient administration

8 of bankruptcy proceedings.” In re CBI Holding Co., 529 F.3d

9 at 460.

10 The district court properly rejected Baker’s claim

11 that the disposal of his estate limited the bankruptcy

12 court’s jurisdiction. As the district court recognized, “a

13 bankruptcy court retains post-confirmation jurisdiction to

14 interpret and enforce its own orders.” Baker, 413 B.R. at

15 43 (quoting In re Millenium Seacarriers, Inc., 419 F.3d 83,

16 96 (2d Cir. 2005)). And, “the Title 11 case ends only when

17 it is closed under [s]ection 350(a) of Title 11, and not, as

18 appellant argue[d], with the disposition of the estate.” 

19 Id. (citing 11 U.S.C. § 350(a)). Indeed, “[i]n core

20 proceedings, the bankruptcy court has comprehensive power

21 and may enter appropriate orders and judgments.” In re
 Although this jurisdictional issue was not raised by 4

the parties, we have an independent obligation to confirm

our own jurisdiction. E.g., Local 377, RWDSU, UFCW v. 1864

Tenants Ass’n, 533 F.3d 98, 99 (2d Cir. 2008).

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1 Petrie Retail, Inc., 304 F.3d 223, 228 (2d Cir. 2002).

2 Because we agree with the district court that Baker’s

3 claims “arise in” his bankruptcy proceedings, we hold that

4 mandatory abstention pursuant to 28 U.S.C. § 1334(c)(2) was

5 not required. To the extent Baker argues that the district

6 court erred in declining to abstain pursuant to

7 28 U.S.C. § 1334(c)(1), we lack jurisdiction to review that

8 aspect of the district court’s decision. Pursuant to 4

9 28 U.S.C. § 1334(d), “[a]ny decision to abstain or not to

10 abstain made under subsection (c) (other than a decision not

11 to abstain in a proceeding described in subsection (c)(2)

12 [i.e., a decision on mandatory abstention]) is not

13 reviewable by appeal or otherwise by the court of appeals

14 under section[s] 158(d), 1291, or 1292 of this title or by

15 the Supreme Court of the United States under section 1254 of

16 this title.” Id. 

17 Unlike decisions concerning mandatory abstention,

18 decisions on permissive abstention, which lie within the

19 discretion of the bankruptcy court, are not subject to
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1 review by the court of appeals. We therefore lack

2 jurisdiction to decide whether the district court’s decision

3 on permissive abstention was correct. See In re Cody, Inc.,

4 338 F.3d 89, 97 (2d Cir. 2003); accord Mt. McKinley Ins.

5 Co., 399 F.3d at 445.

6 Conclusion

7 We have considered all of appellant’s arguments raised

8 before this Court, and find them to be without merit. 

9 Appellant’s claims, which derive from services rendered in

10 connection with his Title 11 proceeding in the bankruptcy

11 court, fall within the scope of that court’s “arising in”

12 jurisdiction as set out in 28 U.S.C. § 1334(b). 

13 Accordingly, the district court’s judgment of August 25,

14 2009, affirming the March 6, 2008 decision of the bankruptcy

15 court and dismissing the appeal, is hereby AFFIRMED.