### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: K R ISTIN E L. A DA MS,

Deb to r. K R ISTIN E L. A DA MS

A p pellant,

v. N EW PO RT C R EST HO MEO W N ER S A SSO C IA TIO N, IN C .,

A p pellee. BA P N o . C C -17-1224-KuFS Bk. N o . 8:09-b k-12450-TA A dv. N o . 8:16-ap-01238-TA

M E M O RA ND U M *

Sub m itted W itho ut A rgum ent o n July 27, 2018

Filed – A ugust 7, 2018 A ppeal fro m the U nited States Bankruptcy C o urt fo r the C entral Distric t o f C alifo rnia Ho no rab le Theo d o r C . A lb ert, Bankruptcy Judge, Presiding 

# F IL ED AUG 07 2018
SUSAN M . SPRAUL, CLERK U. S

. BKCY

. APP. PANEL O F T HE NI NT H CI RCUI T

*Thi s di sposi ti on i s not appr opr i ate for publi cati on. Although i t may be ci ted for whatev er per suasiv e v alue i t may hav e, seeFed. R. App. P. 32.1, i t has no pr ecedenti al v alue, see9th Ci r . BAP Rule 8024-1.A ppearanc es: A p pellant K ristine L. A dam s pro se o n b rief; Brian R

. N elso n o f Ringstad &Sanders, LLP on b rief fo r A ppellee N ewpo rt C rest Ho m eo wners A sso c iatio n, Inc
.
Befo r e: KU RT Z, FA R IS, and SPRA K ER , Bankruptcy Judges. INT ROD U CT I ON K ristine Lynne A dam s sued N ewpo rt C rest Ho m eo wners A sso c iatio n, Inc . (N C HO A ) and o thers in the C alifo rnia state c o urt seeking dam ages and rem ediatio n o f her c o ndo m iniumdue to water intrusio n,
m o ld, and o ther issues. The parties m ediated their dispute and reached a settlem ent. Due to N C HO A 's failure to repair and rem ediate her pro perty, Ms. A dam s m o ved to enfo rc e the settlem ent agreem ent. The state c o urt denied her request and dism issed the lawsuit b ec ause it had settled. Ms. A dam s appealed the dism issal and at the sam e tim e filed a sec o nd lawsuit toenfo r c e the settlem ent agreem ent. Bo th m atters were pending when she filed a chapter 7 1 b ankruptcy petitio n. Po stpetitio n, Ms. A dam s filed a reply in the dism issal appeal. The C alifo rnia C o u rt o f A ppeal later affirm ed the trial c o urt’s dec isio n. Ms. A dam s rec eived her § 727 discharge and her c ase was c lo sed. N C HO A

1 Unless specifi ed other wi se, all chapterand secti on r efer ences ar e to the Bankr uptcy Code, 11 U.S

. C. §§ 101-1532, all "Rule" r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedur e, and all "Ci v i l Rule" r efer ences ar e to the Feder al Rules of Ci v i l Pr ocedur e. 2then suc c essfully m o ved fo r its fees and c o sts in the state c o urt o n the b asis

that it was the prevailing party in Ms. A dam s’ litigatio n to enfo rc e the settlem ent agreem ent and her appeal o f the dism issal o f the first lawsuit. Ms. A dam s appealed that ruling which was affirm ed. N C HO Am o ved again fo rits atto rney’s fees and c o sts o n appeal which were again granted. Meanwhile, in the sec o nd lawsuit after a trial, the jury fo und that N C HO A b reached the settlem ent agreem ent and awarded Ms. A dam s dam ages. N C HO Athen reo pened Ms. A dam s b ankruptcy c ase and filed an adversary c o m plaint. N C HO Aalleged that its fee awards were exc epted fro mMs. A dam s' discharge under the return to the fray do c trine. Therefo re, it so ught to seto ff o r rec o u p its fee awards against Ms. A d am s' judgm ent in the sec o nd lawsuit. In granting N C HO A 's m o tio n fo r
sum m ary judgm ent, the b ankruptcy c o urt fo und that its fee awards were
exc epted fro mdischarge under the return to the fray do c trine and that N C HO Awas entitled to o ffset and rec o u p its fee awards against Ms. A dam s’ judgm ent c laim . This appeal fo llo wed. Fo r the reaso ns explained b elo w, we A FFIRMthe b ankruptcy c o urt’s grant o f sum m a ry judgm ent o n N C HO A ’s first c laimfo r relief finding that the fee awards were exc epted fro mdischarge under the return to the fray do c trine. W e VA C A T E the b ankruptcy c o urt’s grant o f sum m ary judgm ent
o n N C H O A ’s c laim s fo r seto ff and rec o upm ent and rem and with instruc tio ns to dism iss these c laim s witho ut prejudic e fo r lac k o f

3jurisdic tio n. F A C T U A L BA CK GROU N D

A . T he Firs t L aws uit A nd M s . A dam s ’ Bankruptcy In 2005, Ms. A dam s filed a lawsuit against N C H O Aand o thers in the C alifo rnia Superio r C o u rt titled Ada m s v. N ewpo rt C rest H

o m eo wners Asso cia tio n, et a l. , O .C .S.C . C a se N o . 05C C 05516 (First Lawsuit). Ms. A dam s alleged b o dily injury and pro perty dam ages arising o ut o f water intrusio n and m o ld in her c o ndo m iniumunit. In N o vemb er 2006, b efo re trial, Ms. A dam s, N C HO A, and o ther defendants went to m ediatio n which resulted in a signed settlem ent agreem ent and release b etween the parties. The settlem ent had a m o netary
c o m p o nent in the am o unt o f $500,000.00, and a perfo rm anc e c o m po nent that required N C H O Ato rem ediate and repair Ms. A dam s ’ c o ndo m inium
. The agreem ent also c o ntained an atto rney’s fee pro visio n that autho rized an award o f reaso nab le atto rney’s fees and c o sts to the prevailing party in a dispute to enfo rc e the agreem ent. Finally, if a dispute aro se pertaining to the agreem ent, the parties agreed to sub m it the dispute first to a m ediato r and if issues rem ained unreso lved, the state c o urt wo uld retain jurisdic tio n to enfo rc e the term s o f the settlem ent. In June 2007, Ms. A dam s filed a m o tio n to enfo rc e the settlem ent agreem ent in the state c o u rt, asserting that N C HO Ahad b r eached the agreem ent b y failing to repair and rem ediate her pro perty. N C HO A

4o ppo sed the m o tio n and filed an ex parte applic atio n dem anding that the

state c o urt o rder the parties to m ediatio n which was required under the term s o f the settlem ent agreem ent. The state c o urt granted N C HO A ’s ex parte applic atio n, and o rdered the parties to m ediate their dispute b efo re additio nal litigatio n to o k plac e. Fo r reaso ns that are no t c o m pletely c lear fro mthe rec o rd, no
m ediatio n to o k plac e. The state c o urt sua sponte issued an o rder to sho w
c ause why the First Lawsuit should no t b e dism issed. A fter a hearing, the state c o urt o rdered the First Lawsuit dism issed o n the b asis that the m atter had b een settled. The state c o urt later denied Ms. A d am s’ m o tio n fo r
rec o nsideratio n o f the dism issal. Ms. A dam s appealed the state c o u rt’s dism issal and filed her o pening b rief in late 2008 (First A ppeal). N C HO A filed its b rief in January 2009. O n March 23, 2009, Ms. A dam s filed her chapter 7 b ankruptcy c ase. A fter her b ankruptcy filing, Ms. A dam s filed a reply b rief in the First A ppeal, seeking a reversal o f the o rder dism issing the First Lawsuit, a determ inatio n o f the validity and enfo rc eab ility o f the settlem ent agreem ent, and an award o f atto rney’s fees o n appeal against N C HO A

. In Septemb er 2009, the C alifo rnia C o urt o f A p peal affirm ed the state
c o u rt’s dism issal o rder. The C o urt o f A ppeal fo und that the c o u rt had
c o r rec tly interpreted the settlem ent agreem ent to m ean that there wo uld b e
no c o urt litigatio n o ver whether N C HO Ahad b reached its ob ligatio ns

5under the settlem ent agreem ent witho ut first giving a m ediato r an

o ppo rtunity to reso lve the dispute. O n N o vemb er 24, 2009, Ms. A dam s filed an am ended Schedule F which listed N C HO A as a c redito r which was o w ed atto rney’s fees and
c o s ts o n appeal in an unkno wn am o unt. O n Dec emb er 2, 2009, Ms. A dam s rec eived her § 727 discharge and her no asset c ase c lo sed sho r tly thereafter. Afew weeks after the b ankruptcy c ase was c lo sed, N C HO Afiled a
m o tio n in the state c o urt seeking atto rney’s fees and c o sts incurred in
c o nnec tio n with o ppo sing Ms. A dam s’ m o tio n to enfo rc e the settlem ent agreem ent and her First A ppeal. N C HO Aasserted that it was the prevailing party and entitled to its fees and c o sts under the term s o f the settlem ent agreem ent. In A ugust 2010, the state c o urt granted N C HO A ’s
m o tio n, awarding $59,746.26 in atto rney’s fees and c o sts, plus interest (First Fee A ward). Ms. A dam s appealed fro mthis dec isio n (Sec o nd A ppeal). In March 2012, the c o urt o f appeal affirm ed the fee award. In June 2012, N C HO A again filed a m o tio n fo r atto rney’s fees and c o sts incurred in o ppo s ing Ms. A dam s’ Sec o nd A ppeal (Sec o nd Fee A ward). On Septemb er 6, 2012, the state c o urt granted N C H O A ’ s m o t io n, awarding it $17,296.00 in atto rney’s fees and c o sts plus interest against Ms. A dam s . O n O c t ob er 26, 2012, the state c o urt entered a final fee award which inc luded the First and

6Sec o nd Fee A wards and ac c rued interest fo r a to tal o f $89,705.15

(c o llec tively, the Fee A ward). B. Sec ond L aws uit In O c t ob er 2007, prio r to the petitio n date and dism issal o f the First Lawsuit, Ms. A dam s filed a sec o nd ac tio n against N C HO Aand o ther defendants in the C alifo rnia Superio r C o urt titled Ada m s v. N ewpo rt C rest H o m eo wners Asso c ia tio n, et a l. , O .C .S.C . C ase N o . 07C C 01390 (Sec o nd Lawsuit). The c o m plaint alleged fifteen c auses arising under the agreem ent. In January 2008, N C HO Afiled a dem urrer, arguing that Ms. A dam s’ fifteen c auses o f ac tio n b o iled do wn to two legal c laim s: fraudulent induc em ent to enter into the settlem ent agreem ent and b r each o f the settlem ent agreem ent. N C HO Afurther argued that the first set o f c laim s was b a rred b y the litigatio n privilege and that the sec o nd set o f c laim s had already b een fully adjudic ated in the First Lawsuit. A ltho ugh the state
c o u rt held a hearing o n the dem urrer in May 2008, it dec lined to rule o n it due to Ms. A dam s ’ pending appeal o f the trial c o urt’s dism issal o f the First Lawsuit. The Sec o nd Lawsuit was reinstated in Feb ruary 2011, long after the
c lo s ing o f Ms. A dam s’ b ankruptcy c ase. On May 2, 2011, the state c o urt sustained N C HO A ’ s demurrer to Ms. A dam s’ c o m plaint witho ut leave to
am end. Ho wever, o n the fo llo wing day, the state c o u rt, sua sponte, vac ated

7its o rder and to o k the m atter under sub m issio n to further c o nsider the

parties’ written and o r al argum ents. Ms. A dam s filed a request fo r further b riefing. She represented to the
c o u rt that sub sequent to the dec isio n in the First A ppeal, she attended
m ediatio n in January 2010. Bec ause the dispute was no t settled, Ms. A dam s argued that she was entitled toseek a judic ial reso lutio n o f N C HO A ’s alleged b reach o f the settlem ent agreem ent. The trial c o urt dec lined her request fo r additio nal b r iefing. Thereafter, the c o urt sustained the demurrer witho ut leave to am end, finding that Ms. A dam s ’ c auses o f ac tio n were either b arred b y the litigatio n privilege (fo rpre-settlem ent c o nduc t) o r res judic ata in the First Lawsuit. The Sec o nd Lawsuit was dismissed. N C H O Am o ved fo r an award
o f atto rney’s fees and c o sts. On A ugust 15, 2011, the state co urt awarded it $37,336.00 in fees and c o sts, plus interest against Ms. A dam s. Ms. A dam s appealed, seeking to o verturn the judgm ent o f dism issal. O n A ugust 16, 2012, the c o urt o f appeal issued an o pinio n reversing the judgm ent o f dism issal and award o f atto rney’s fees and rem anded the
m atter fo r further pro c eedings. The c o urt o f appeal explained that the trial
c o u rt had m isinterpreted its ruling affirm ing the dism issal o f the First Lawsuit. The c o urt o f appeal stated that if the m ediato r did no t reso lve the
m atter, the trial c o u rt had jurisdic tio n to do so . Sinc e Ms. A dam s c o ntended that she had sub m itted the m atter to m ediatio n — altho ugh it did no t settle

8— the c o urt o f appeal fo und that she c o uld no w seek a judic ial rem edy.

Due to the reversal o f the dism issal, the c o urt o f appeal fo und that the trial
c o u rt’s award o f atto rney’s fees and c o s ts to N C HO A m ust alsofail. Ms. A dam s’ fifth am ended c o m plaint b ec am e the o perative
c o m p laint in the Sec o nd Lawsuit. It alleged twoc auses o f ac t io n: b reach o f
c o ntrac t against the signato r ies to the settlem ent agreem ent in the First Lawsuit and intentio nal inflic tio n o f em o tio nal distress. O n May 29, 2015, N C HO Aserved o n Ms. A dam s a settlem ent o ffer under C al. C o de o f C iv. Pro c . § 998 fo r $110,000 plus a waiver o f the Fee A ward in the am o unt o f $89,705.15 (998 Offer). Ms. A dam s did no t ac c ept the 998 O ffer and the m atter went to trial o n May 16, 2016. The jury rendered a verdic t o n June 2, 2016, finding in favo r o f Ms. A dam s and awarding her dam ages in the am o unt o f $142,599.00. On A ugust 5, 2016, the state c o urt entered judgm ent o n the jury’s verdic t. Thereafter, the state c o urt held a hearing o n Ms. A dam s’ m o tio n fo r a new trial. The c o urt denied the m o tio n in its entirety. Ab o ut two weeks later, the state c o urt held a hearing o n Ms. A dam s’ m o tio n fo r prejudgm ent interest. The c o urt granted the m o tio n in part, and denied it in part, awarding Ms. A d am s $80,679.71 in prejudgment interest. O n Septemb er 2, 2016, Ms. A dam s filed a no tic e o f appeal fro mthe final judgm ent and o ther o rders fro m2015 and 2016. She also served a
m o tio n fo r an award o f atto rney’s fees in the am o unt o f $283,626.15 and

9c o s ts in the am o unt o f $55,915.15.

C. T he 998 Is s ue and Reopening of the Bankruptcy Cas e Adispute aro se b etween N C HO Aand Ms. A dam s o ver whether she was a prevailing party in the Sec o nd Lawsuit entitled toatto rney’s fees and
c o s ts. In o ppo sitio n to Ms. A dam s ’ m o tio n fo r atto rney’s fees and c o sts, N C HO Aargued that she was no t entitled to fees and c o sts under the plain term s o f the settlem ent agreem ent and also b ec ause she did no t ob t a in a
m o re favo rab le judgm ent than the 998 O ffer. A c c o rding to N C HO A, its 998 O ffer c o nsisted o f $110,347.52 in c a sh and also its waiver o f the Fee A ward which m ade the 998 O ffer wo rth $220,347.52. N C H O Ac o ntended that Ms. A dam s’ judgm ent plus interest and c o s ts was less. N C HO Aalso disputed Ms. A dam s’ c o ntentio n that the Fee A ward was discharged during her b ankruptcy in 2009. N C HO Apo inted o ut that Ms. A dam s never argued in her appeal o f the First Fee A ward that it had b een discharged thereb y waiving her right to raise this argum ent. N C HO A also c o ntended the Fee A ward was no tdischarged under the return to the fray do c trine. Finally, N C HO Ac o ntended that it was entitled to an o ffset fo r the judgm ent it ob tained against Ms. A dam s and that the do c trine o f
rec o u pm ent applied. O n Septemb er 28, 2016, N C HO Afiled a m o tio n to reo pen Ms. A dam s’ b ankruptcy c ase seeking to have the b ankruptcy c o urt dec ide these issues and to ensure that N C HO Adid no t inadvertently vio late the

10discharge injunc tio n.

D . T he Bankruptcy Court’s Ruling s The b ankruptcy c o urt granted N C H O A ’s m o tio n to reo pen Ms. A dam s’ b ankruptcy c ase. N C HO Afiled an adversary c o m plaint alleging five c laim s fo rrelief: (1) dec larato ry relief determ ining that the Fee A ward was no t discharged b ased o n the return to the fray do c trine; (2) dec larato r y relief determ ining that Ms. A d am s was equitab ly esto pped fro marguing that the Fee A ward was discharged b ec ause she never raised the discharge in o ppo sing the fees; (3) dec larato ry relief determ ining that Ms. A dam s waived her right to assert that the Fee A ward was discharged b ec ause she failed toassert that N C HO A ’s c laim s fo r atto rney’s fees and
c o s ts were discharged in the b ankruptcy c ase prio r to entry o f the judgm ent in the Sec o nd Lawsuit; (4) toallo w N C HO Ato set o ff the Fee A ward against Ms. A dam s’ judgm ent; and (5) to allo w N C HO Ato rec o up the Fee A ward against Ms. A dam s’ judgm ent. Ms. A dam s filed an answer and asserted various c o unterc laim s, inc luding (1) dam ages and sanc tio ns against N C HO Afo r vio lating the discharge injunc tio n; (2) dec larato ry relief determ ining that N C HO A ’s 998 O ffer was no tvalid; and (3) seto ff in relatio n to am o unts incurred b y Ms. A dam s in litigating her Sec o nd Lawsuit and am o unts allegedly seized fro mMs. A dam s’ b ank ac c o unt under a default judgm ent in a c o llec tio n
ac tio n.
11N C HO Afiled a m o tio n fo r sum m ary judgm ent o n its c o m plaint. The

b ankruptcy c o urt granted in part and denied in part the m o t io n fo r
sum m ary judgm ent. O n the first c laimfo r relief, the b a nkruptc y c o urt dec ided as a m atter o f law that the Fee A ward was no t discharged under the return to the fray do c trine. O n the fo u rth c laimfo rrelief, the c o urt fo und as a m atter o f law that N C HO A ’ s seto ff rights survived the b ankruptcy discharge and that all elem ents fo r seto ff under § 553 were m et. Finally, o n the fifth c laimfo r relief, the b ankruptcy c o urt fo und as a m atter
o f law that N C H O Ac o uld rec o up the Fee A w ard against Ms. A dam s ’ c laim as the c laim s aro se o ut o f the sam e transac tio n. The c o urt reaso ned that the First Lawsuit direc tly led to b o th the Fee A ward and Ms. A dam s’ judgm ent against N C H O Aand thus were lo gic ally related to each o ther. The c o urt denied the m o tio n as to the sec o nd and third c laim s fo r relief. A t the sam e tim e, N C HO Afiled a m o tio n to dism iss Ms. A d am s
c o u nter-c laim s under C ivil Rule 12(b )(6). N C H O Aargued that her c laim fo r dam ages fo r the alleged vio latio n o f the discharge injunc tio n and her request fo r seto ff sho uld b e dism issed with prejudic e o n the gro unds that res judic ata (c laimprec lusio n) applied b ec ause b o th c laim s were litigated
o r c o uld have b een litigated in prio r pro c eedings that resulted in final adjudic atio ns o n the m erits that invo lved the sam e parties. N C HO Afurther argued that the Fee A ward was no t discharged b ec ause (1) Ms. A dam s returned to the fray; (2) Ms. A dam s’ sho uld b e equitab ly esto pped fro m
12asserting that the Fee A ward was discharged; and (3) Ms. A dam s waived

her right to assert the Fee A w ard was discharged. Finally, N C HO Aargued that Ms. A dam s’ c laimfo r seto ff failed to state a c laimfo rrelief b ec ause
no ne o f the c laim s she so ught to use fo r seto ff were ac tual ob ligatio ns fo r which N C HO Awas respo nsib le. The b ankruptcy c o urt granted the m o tio n to dism iss o n Ms. A dam s ’ first c laimfo r relief fo r N C HO A ’s alleged vio latio n o f the discharge injunc tio n witho ut prejudic e. The c o urt fo und that the c laimwas b a rred b y the do c trine o f c laimprec lusio n. The c o urt ab stained fro mdec iding the
sec o nd c laimregarding the validity o f the 998 O ffer. Finally, the c o u rt granted the m o tio n to dism iss the third c laimfo rrelief fo r seto ff witho ut prejudic e o n the gro unds that Ms. A dam s had failed toallege that she had a judgm ent against N C HO Afo r the am o u nts allegedly seized o r that N C HO Ahad any ob ligatio n to pay tho se funds toher. The c o urt further stated that the c o unter-c o m plaint did no t m entio n § 553 and that Ms. A dam s sho uld seek seto ff in the state c o urt. A c c o r dingly, Ms. A dam s’ first and third c o unter c laim s survived the m o t io n to dism iss with leave to
am end. The b ankruptcy c o urt entered o r ders o n its rulings in c o nnec t io n with N C HO A ’s m o tio n to dism iss and summ ary judgm ent. Ms. A dam s filed a prem ature no tic e o f appeal fro mthese o r ders. Ms. A dam s filed an am ended c o unter- c o m plaint, adding a so le c ause
13o f ac tio n fo r "false c laim/fraud," alleging that N C HO A ’s filing o f its pro o f

o f c laimwas false and fraudulent. She did no t am end her first and third
c o u nter c laim s. Ab o ut the sam e tim e, N C HO Am o ved fo r leave to am end its
c o m p laint to withdraw twoc laim s fo r relief that it did no t intend to pursue and fo r judgm ent o n the am ended c o m plaint. N C HO Aalso m o ved to dism iss all c laim s in Ms. A dam s’ am ended c o unter c o m p laint with prejudic e. Befo re these m o t io ns were heard in the b ankruptcy c o urt, N C HO A
m o ved to dism iss Ms. A dam s’ appeal tothis Panel as interlo c uto ry. The parties entered into a stipulatio n asking the Panel to suspend its adjudic atio n o f N C HO A ’ s m o tio n to dism iss until the final m o tio ns were heard in the b ankruptcy c o urt. The Panel sub sequently entered an o rder appro ving the suspensio n. Meanwhile, the b ankruptcy c o urt heard N C HO A ’s m o tio ns o n N o vemb er 30, 2017. The b ankruptcy c o urt granted N C HO A ’s m o tio n to dism iss Ms. A dam s’ am ended c o unter-c o m plaint. The c o urt fo und there
was no need to "re-dism iss" Ms. A d am s’ first and third c o unterc laim s as tho se had already b een dism issed and "technic ally" she was b arred fro m reasserting tho se c laim s b ec ause o f her failure to tim ely am end. The c o urt dism issed her am ended c laimfo r relief with prejudic e. The c o urt alsogranted N C HO Aleave to am end the c o m plaint and

14then later entered judgm ent o n N C HO A ’s am ended c o m plaint. The c o urt

entered judgm ent o n the first c laimfo rrelief, finding that the Fee A w ard
was no t discharged under the return to the fray do c trine. The sec o nd and third c laim s fo r relief were withdrawn in the am ended c o m p laint. The b ankruptcy c o urt entered judgm ent o n the fo urth c laimfo r relief, finding that N C HO Awas entitled to use the Fee A ward to set o ff against Ms. A dam s’ judgm ent under § 553(a). The b ankruptcy c o u rt also fo und in favo r o f N C HO Ao n the fifth c laimfo r relief, finding that it was entitled to use the Fee A wards torec o up against Ms. A dam s’ judgm ent. A fter entry o f the b ankruptcy c o urt’s judgm ent, this appeal pro c eeded. JU RISD ICT ION The b ankruptcy c o urt had jurisdic tio n pursuant to28 U .S.C . §§ 1334 and 157(b )(2)(I) to c o nstrue the sc o pe o f the discharge injunc tio n. Fo rthe
reaso ns discussed b elo w, we c o nc lude that the b a nkruptcy c o urt did no t have jurisdic tio n o ver N C H O A ’s c laim s fo rseto ff and rec o upm ent. W e have jurisdic t io n under 28 U .S.C

. § 158. ISSU E S Whether the b a nkruptcy c o urt erred in granting sum m a ry judgm ent in favo r o f N C HO Ao n the b asis that N C HO A ’s Fee A ward was exc epted fro mdischarge under the return to the fray do c trine; Whether the b a nkruptcy c o urt had jurisdic tio n to determ ine N C HO A ’s c laim s fo r seto ff and rec o upm ent.

15ST A ND A RD S OF RE V IE W

W e review sum m a ry judgm ent o rders de no vo . To bin v. S a n S o uci Ltd. P'ship (In re To bin) , 258 B.R . 199, 202 (9th C ir. BA P 2001). Viewing the evidenc e in the light m o st favo rab le to the no n-m o ving party, we m ust determ ine "whether there are any genuine issues o f m aterial fac t and whether the trial c o urt c o rrec tly applied relevant sub stantive law." Id. When reviewing an o rder granting sum m ary judgm ent, we m ay neither weigh the evidenc e no r determ ine the truth o f the m atter, b ut o nly determ ine whether there is a genuine issue fo rtrial. Abdul–Ja bba r v. Gen. Mo to rs Co rp. , 85 F.3d 407, 410 (9th Cir. 1996). W e m a y affirman o rder granting sum m ary judgm ent o n any gro und suppo rted b y the rec o rd. S im o v. Unio n o

f N eedletra des, Indus. &

Textile Emp loys. , 322 F.3d 602, 610 (9th Cir. 2003). Sum m ary judgm ent m ay b e appro priate when a m ixed questio n o f law and fac t invo lves undisputed underlying fac t s . C itico r p R ea l Esta te, Inc. v. S m i th , 155 F.3d 1097, 1103 (9th Cir. 1998). "[W ]here the underlying fac ts are undisputed, a [b a nkruptc y] c o urt is free, o n a m o tio n fo rsum m ary judgm ent, to determ ine whether the estab lished fac ts satisfy the statuto ry standard." M i ller v. S chum a n (In re S chum a n) , 81 B.R . 583, 586 n.1 (9th C ir. BA P 1987). Summ ary judgm ent is im pro per, ho wever, if m aterial fac tual issues exist fo r trial. S im o , 322 F.3d at 610. Whether a deb to r’s po st-discharge c o nduc t expo ses himo r her to

16atto rney’s fees liab ility arising fro ma prepetitio n c o ntrac t is a m ixed

questio n o f law and fac t that "require[s] the c o nsideratio n o f legal c o nc epts and invo lve[s] the exerc ise o f judgm ent ab o ut the values underlying legal princ iples," and is therefo re subjec t to de no vo review. S uzy's Z o o v. Co m m ’r , 273 F.3d 875, 878 (9th Cir. 2001) (a m ixed questio n "exists when prim ary fac ts are undisputed and ultim ate inferenc es and legal
c o nsequenc es are in dispute"). W e review the b a nkruptc y c o urt's sub jec t m a tter jurisdic t io n o ver N C HO A ’s c laim s fo r seto ff and rec o upm ent de no vo . H a rris v. W

i ttm a n (In re H a rris) , 590 F.3d 730, 736 (9th Cir. 2009). W e also review de no vo whether the b ankruptcy c o urt had supplem ental jurisdic tio n under 28 U .S.C

. § 1367(a) o ver N C H O A ’s c laim s fo r seto ff and rec o upm ent. Trs. o f the Co nstr. Indus. a nd La bo rers H e a lth a nd W

elfa re Trs. v. D esert V

a lley La ndscape &Ma int., Inc. , 333 F.3d 923, 925 (9th Cir. 2003). D ISCU SSION A . E xc eption to D is c harg e: Return to the Fray D oc trine Sec tio n 727 discharges the deb to r fro mall deb ts that aro se b efo re the date o f the o rder fo r relief. The C o d e defines "deb t" as "liab ility o n a c laim ." § 101 (12). "C laim " is defined as a "right topaym ent, whether o r no t such right is reduc ed to judgm ent, liquidated, unliquidated, fixed, c o ntingent,
m atured, unm a tured, disputed, undisputed, legal equitab le, secured, o r
unsecured." § 101(5)(A ). Whether a c laimexists generally is determ ined as

17o f the date o f the b ankruptcy petitio n. This "b ro adest po s sib le definitio n" o f

c laimis designed to ensure that "all legal ob ligatio ns o f the deb to r, no
m atter ho w rem o te o r c o ntingent, will b e ab le to b e dealt with in the b ankruptcy c ase." S N TL H o ldings Co rp. v. Centre Ins. Co . (In re S N T L Co rp.) , 571 F.3d 826, 839 (9th Cir. 2009) (c iting Ca l. D ep’t o f H ea lth S ervs. v. Jensen (In re Jensen) , 995 F. 2d 925, 929 (9th Cir. 1993)). Under N inth C irc uit law, "[a] c laimis 'c o ntingent' when 'the deb to r will b e c alled upo n to pay [it] o nly upo n the o c currenc e o rhappening o f an extrinsicevent whic h will trigger the liab ility o f the deb to r to the alleged
c redito r,'" and "[a] c laimis 'unliquidated' when it is no t 'sub jec t to ready determ inatio n and prec isio n in c o m putatio n o f the am o unt due.'" Picerne Co nstr. Co rp. v. Ca stellinoV illa s, A. K . F . LLC(In re Ca stellinoV illa s, A. K . F
. LLC) , 836 F.3d 1028, 1033 (9th Cir. 2016) (c iting Fo stvedt v. D o w (In re Fo stvedt) , 823 F.2d 305, 306 (9th Cir. 1987)). The N inth C irc uit applies the "fair c o ntem platio n" test fo r determ ining whether a c o ntingent o r
unm atured c laimhas suffic iently arisen as o f the petitio n date to
c o nstitutio n a pre-petitio n c laim

. Id. at 1034. Under this test, "a c laimarises when a c laim ant c a n fairly o r
reaso nab ly c o ntem plate the c laim 's existenc e even if a c ause o f ac t io n has
no t yet ac c rued under no nb a nkruptc y law." Id. ( quo ting In re S N T L Co rp. , 571 F.3d at 839). Here, N C HO Aac kno wledges that prio r to the petitio n date it c o uld

18reaso nab ly c o ntem plate that it wo uld have c laim s fo r atto rney’s fees and

c o s ts in the pending appeal o f the dism issal o f the First Lawsuit and in the Sec o nd Lawsuit if it was a prevailing party in either m atter. Therefo re, these atto rney’s fee c laim s were c o ntingent c laim s as o f the petitio n date under the fair c o ntem platio n test. Sec tio n 542(a) presc rib es the legal effec t o f a discharge: (a) Adischarge in a c ase under this title— . . . (2) o perates as an injunc tio n against the c o m m enc em ent o r c o ntinuatio n o f an ac tio n, the em plo ym ent o f pro c ess, o ran ac t, to c o llec t, rec o ver o r o ffset any such deb t as a perso nal liab ility o f the deb to r, whether o rno t discharge o f such deb t is waived[.] "The purpo se o f the discharge injunc tio n is to pro tec t the deb to r fro m having to put o n a defense in an im pro vident state c o urt ac tio n o r
o therwise suffer the c o sts, expense and b urden o f c o llec tio n ac tivity o n discharged deb ts." Em m ert v. Ta gga rt (In re Ta

g ga rt) , 548 B.R . 275, 286 (9th C ir. BA P 2016) (c iting In re Ea stlick , 349 B.R . 216, 229 (Bankr. D. Idaho2004),
a ff'd888 F.3d 438 (9th C ir. 2018). While a discharge in b ankruptcy generally relieves a deb to r fro mall prepetitio n deb ts, the N inth C irc uit has ado p ted a different standard fo r determ ining fo r discharge purpo ses when an atto rney’s fee c laimarises. "Under that standard, even if the underlying c laimaro se prepetitio n, the
c laimfo r fees inc urred po stpetitio n o n ac c o u nt o f that underlying c laimis deem ed to have arisen po stpetitio n if the deb to r 'returned to the fray'

19po stpetitio n b y vo luntarily and affirm atively ac ting to c o m m enc e o r

resum e the litigatio n with the c redito r." Id. at 288-89 (c itingBechto ld v. Gillespie (In re Gillespie)

, 516 B.R . 586, 591 (9th C ir. BA P 2014) (c itingBo eing N . Am ., Inc. v. Y

ba rra(In re Y

ba rra ) , 424 F.3d 1018, 1026-27 (9th Cir. 2005)). The rule prevents a deb t o r fro musing the discharge injunc tio n as a swo r d that enab les himo r her to undertake risk-free po stpetitio n litigatio n at
o thers' expense. Id. "The Yb a rra rule applies regardless o f whether the litigatio n b egins prepetitio n o r po stpetitio n, regardless o f the nature o f the underlying c laim, and regardless o f the fo rumin which the po stpetitio n litigatio n takes plac e." Id. Here, N C HO A ’s c o ntingent atto rney’s fee c laim s, whether in
c o nnec tio n with the First Lawsuit o rthe Sec o nd Lawsuit, were disc harged and sub jec t to the discharge injunc tio n. Ho wever, the undisputed fac ts sho w that Ms. A dam s vo luntarily and affirm atively resum ed the litigatio n with N C HO Apo s tpetitio n in c o nnec tio n with her appeal o f the state
c o u rt’s o rder dism issing her First Lawsuit. The rec o rd sho ws that Ms. A dam s filed her reply b rief in the appeal po stpetitio n. A fter her discharge, she o ppo sed N C HO A ’s m o tio n fo r atto rney’s fees. A fter the trial c o u rt awarded N C H O A ’s its atto rney’s fees, Ms. A dam s appealed that dec isio n. She igno red her discharge and vo luntarily and affirm atively so ught relief b y objec ting to N C HO A ’s request fo r fees and seeking to o verturn tho se fees in her appeal. In o ther wo rds, she returned to the fray.

20Likewise, the undisputed fac ts sho w that Ms. A dam s resum ed her

effo rts in pro s ec uting the Sec o nd Lawsuit against N C HO Apo stpetitio n. While Ms. A dam s’ discharge did no t prevent N C HO Afro mputting o n a defense in the Sec o nd Lawsuit, it did prevent N C HO Afro mseeking affirm ative relief o n prepetitio n c laim s such as prevailing party atto rney’s fees b ased o n the parties’ prepetitio n settlem ent agreem ent. A fter N C HO A
wo n its demurrer and suc c essfully m o ved fo r atto rney’s fees and c o sts, Ms. A dam s pursued an appeal and vo luntarily and affirm atively to o k
ac tio ns to resum e the litigatio n with N C HO Aand o therwise return to the fray. U ltim ately, Ms. A dam s was suc c essful in the Sec o nd Lawsuit. Based o n the undisputed fac ts, we c o nc lude that Ms. A dam s returned to the fray b y c o ntinuing her litigatio n against N C HO Apo stpetitio n. Therefo re, under the Y ba rra rule, N C HO A ’s Fee A ward in the First Lawsuit is deem ed to have arisen po s tpetitio n and is exc epted fro mher discharge. N C HO A ’s award o f atto rney’s fees and c o s ts in the Sec o nd Lawsuit is also deem ed to have arisen po stpetitio n. But fo rthe reversal o f that award b y the state appellate c o urt, it wo uld b e exc epted fro mher discharge thereb y negating any po tential vio latio n o f the discharge injunc tio n. A c c o rdingly, the b ankruptcy c o urt pro perly granted sum m ary judgm ent o n N C HO A ’ s first c laimfo r relief. 2

2 Because we affir m the bankr uptcy cour t’s gr ant of summar y j udgment on (continued...) 21B. Setoff A nd Rec oupm ent

W e m a y raise the questio n o f the b ankruptcy c o urt’s jurisdictio n at any tim e sua spo nte during the pendenc y o f the ac tio n, even o n appeal and when no t raised b y the parties. S e e S nell v. C levela nd, Inc. , 316 F.3d 822, 826 (9th C ir. 2002). 1. Subjec t M atter Juris dic tion Ab ankruptcy c o urt's sub jec t m atter jurisdic tio n is estab lished b y statute. Under 28 U .S.C

. § 1334(b ), a b ankruptcy c o u rt has jurisdic tio n o ver "all c ivil pro c eedings arising under title 11, o rarising in o r related to c ases under title 11." "A rising under title 11" desc r ib es tho se pro c eedings that invo lve a c ause o f ac tio n c r eated o r determ ined b y a statuto ry pro visio n in the b ankruptcy c o de. In re H a rris , 590 F.3d at 737. "Pro c eedings 'arising in' a b ankruptcy are generally referred to as 'c o re' pro c eedings, and essentially are pro c eedings that wo uld no t exist o utside o f b ankruptcy. . . ." Mo nta na v. Go ldin (In re Pegasus Go ld Co r p.) , 394 F.3d 1189, 1193 (9th Cir. 2005); see a lso Ba ttlegro und Pla z a, LLCv. R ay (In re R ay) , 624 F.3d 1124, 1131 (9th Cir. 2010). Ano nexhaustive list o f c o re pro c eedings is set o u t in 28 U .S.C . § 157(b )(2). The b ankruptcy c o urt alsohas jurisdic tio n o ver "tho s e pro c eedings that are 'related to ' a b ankruptcy c ase." In re Pega sus Go ld Co rp. , 394 F.3d at

2 (...continued) NCHOA’s fi r st clai m for r eli ef underthe r etur n to the fr ay doctr ine i t i s unnecessary to r each the cour t’s r uling based on pr eclusi on, on the di smi ssal of Ms. Adams’ fi rst counter c lai m for v i olati on of the di schar ge i nj uncti on. 221193. “[T]he test is whether . . . the outc o m e o f the pro c eeding c o uld

c o nc eivab ly have any effec t o n the estate b eing adm inistered in b ankruptcy. Thus, the pro c eeding need no t nec essarily b e against the deb to r o r against the deb to r's pro perty. A n ac tio n is related to b ankruptcy if the o utc o m e c o uld alter the deb to r's rights, liab ilities, o ptio ns, o r freedo m
o f ac tio n (either po s itively o r negatively) and whic h in any way im pac ts upo n the handling and adm inistratio n o f the b a nkrupt estate.” Id. (quo ting F ietzv. Grea t W

. S a vings (In re F ietz ) , 852 F.2d 455, 457 (9th Cir. 1988)) (ado pting the "Pac o r test" derived fro m Pa co r, Inc. v. H iggins , 743 F.2d 984, 994 (3d C ir. 1984)). The United States Suprem e C o urt endo rsed Pac o r's
c o nc eivab ility standard with the c aveats that "related to " jurisdic tio n "c anno t b e lim itless," and that the c ritic al c o m po nent o f the Pac o r test is that "b a nkruptc y c o urts have no jurisdic tio n o ver pro c eedings that have no effec t o n the estate o f the deb to r." Celo tex Co rp. v. Edwa rds , 514 U
. S. 300, 308 & n.6 (1995). A ltho ugh the b ankruptcy c o u rt plainly had c o re jurisdic tio n to interpret and enfo rc e the discharge o rder, we c o nsider whether the b ankruptcy c o urt had jurisdic tio n o ver N C HO A ’ s c laim s to allo w seto ff and rec o upm ent o f its Fee A ward against Ms. A dam s’ judgm ent awarded against N C H O Ain the Sec o nd Lawsuit. The lawsuits which resulted in the Fee A ward and Ms. A d am s’ judgm ent c laimwere ab a ndo ned to Ms. A dam s under § 554(c ). Thus,

23Ms. A dam s’ judgm ent c laimb elo ngs to her perso nally and, as explained

ab o ve, the Fee A ward has no t b een discharged and thus N C HO Am a y pursue c o llec tio n o f that award against Ms. A dam s. Therefo re, N C HO A ’s
c laim s fo r seto ff and rec o upm ent do no t im pac t the handling and adm inistratio n o f Ms. A dam s’ estate and are easily separab le fro mthe b ankruptcy c ase. Furtherm o re, N C HO A ’s c laim s fo r seto ff and rec o upm ent did no t require the b a nkruptcy c o urt to interpret o r enfo rc e the discharge o r der. Valid prepetitio n rights to seto ff survive the general disc harge o f deb ts. S e e Ca ro lco Televisio n, Inc. v. N a t'l Bro a d. Co . (In re D e La urentiis Entm 't Gro up Inc.) , 963 F.2d 1269, 1276 (9th Cir. 1992); Ca m elba ck H o sp., Inc. v. Buck

enm a ier (In re Buckenm a ier) , 127 B.R . 233, 237 (9th C ir. BA P1991). In addition, as
rec o u pm ent is neither a c laimno r a deb t, it is unaffec ted b y the deb to r’s discharge. O rego n v. H

a r m o n (In re H

a rm o n) , 188 B.R . 421, 425 (9th C ir. BA P 1995). In sho rt, Ms. A dam s’ discharge wo uld no t b e a b ar to N C HO A ’s defensive use o f seto ff o r rec o upm ent. In additio n, N C H O A ’s sub stantive right to seto ff and rec o upm ent under § 553 is go verned b y C alifo rnia law. C alifo rnia law c learly
rec o gnizes the right to seto ff, setting fo rth pro c edures fo r seto ff in C al. C o de C iv. Pro c . § 431.70, and a defense o f equitab le rec o upm ent is a spec ies
o f seto ff. Sim ply put, N C HO A ’s seto ff and rec o upm ent rights are
rec o gnized in C alifo rnia and exist independent o f Ms. A dam s’ b ankruptcy
24c ase. A gainst this b ac kgro und, we c o nc lude that the b ankruptcy c o urt did

no t have subjec t m atter jurisdic tio n o ver N C HO A ’ s c laim s fo r relief o n seto ff and rec o upm ent. Tho s e c laim s did no t arise under title 11 no r c an they b e c o nsidered c o re pro c eedings "arising in" the b ankruptcy as the
c laim s exist o utside the b ankruptcy as C alifo rnia state law affirm ative defenses. The c laim s alsodo no t fall within the "related to " c atego ry fo r
no nc o re pro c eedings. The seto ff and rec o upm ent c laim s c o uld no t have any
c o nc eivab le effec t o n Ms. A dam s’ estate. Regardless whether N C HO Ais
suc c essful o r no t with its c laim s o f seto ff and rec o u pm ent in the state c o urt, Ms. A dam s’ estate is no tim pac ted. Her c ase is c lo sed and there is no estate to adm inister. 2. Supplem ental Juris dic tion A ltho ugh no t discussed o r determ ined b y the b a nkruptc y c o u rt, we also c o nsider whether the b ankruptcy c o urt had supplem ental jurisdic tio n
o ver the seto ff and rec o upm ent c laim s . 28 U
. S.C . § 1367, entitled "Supplem ental jurisdic tio n," states: (a) Exc ept as pro vided in sub sec t io ns (b ) and (c ) o r as expressly pro vided o therwise b y Federal statute, in any c ivil ac tio n o f which the distric t c o urts have o r iginal jurisdic t io n, the distric t c o u r ts shall have supplem ental jurisdic tio n o ver a ll o ther cla im s tha t a re sorela ted to cla im s in the a ctio n within such o rigina l jurisdictio n tha t they fo rm pa rt o f the sa m eca se o r co ntro versy under Article III o

f the U nited S ta tes Co nstitutio n. [Em phasis added.]

25Such supplem ental jurisdic tio n shall inc lude c laim s that invo lve

the jo inder o r interventio n o f additio nal parties. This pro visio n c o dified the Suprem e C o urt's ho lding in United M ine W o rkers v. Gibbs that federal c o u rts have jurisdic tio n o ver a state law c laim where it and the federal c laim"derive fro m a c o m m o n nuc leus o f o perative fac t ," so"the relatio nship b etween [the federal] c laimand the state c laim perm its the c o nc lusio n that the entire ac tio n b efo re the c o urt c o m prises b ut
o ne c o nstitutio nal 'c ase.'" 383 U .S. 715, 725 (1966); C ity o f Chica go v. Int'l Co ll. o f S urgeo ns , 522 U .S. 156, 164–65 (1997). The c o urt must weigh "c o nsideratio ns o f judic ial ec o no my,
c o nvenienc e and fairness to the litigants; if these are no t present a federal
c o u rt sho uld hesitate to exerc ise jurisdic tio n o ver state c laim s." Gibbs , 383 U .S. at 726. Ho wever, "[n]eedless dec isio ns o f state law sho uld b e avo ided b o th as a m atter o f c o m ity and to pro m o te justic e b etween the parties, b y pro c uring fo r them a surer-fo o ted reading o f applic ab le law." Id . If "state issues sub stantially predo m inate, . . . the state c laim s m ay b e dism issed witho ut prejudic e and left fo r reso lutio n to state trib unals." Id . at 726–27. Mo reo ver, where a b ankruptcy c o urt has no statuto ry o r c o nstitutio nal autho r ity to hear a c laim, the interest o f judic ial ec o no m y c anno t c reate jurisdic tio n. In re Pa co r, Inc., 743 F.2d at 994. The N inth C irc uit has applied 28 U

. S.C

. § 1367 tob a nkruptc y c laim s, even when the subjec t m atter jurisdic tio n is b ased o n "related to "

26b ankruptcy jurisdic tio n. In re Pega sus Go ld Co rp. , 394 F.3d at 1195; S ec. Fa rm s

v. Int'l Bhd. o

f Tea m sters , 124 F.3d 999, 1008 n.5 (9th Cir. 1997); see a lso D a vis v. Co uringto n (In re D a vis) , 177 B.R . 907 (9th C ir. BA P 1995) (ho lding that the b ankruptcy c o urt had supplem ental jurisdic tio n o ver deb to r's prepetitio n state law c ause o f ac t io n against a c redito rb a nk b ec ause there was a
c o m m o n nuc leus o f fac t s b etween the prepetitio n state ac tio n and the b ank's po s tpetitio n b reach o f the auto m aticstay). Under the plain language o f 28 U

. S.C

. § 1367(a), the seto ff and
rec o u pm ent c laim s must b e "sorelated" to the sc o p e o f the discharge injunc tio n inquiry (c o r e jurisdic tio nal issue) such that they fo rmpart o f the
sam e c a se o r c o ntro versy under A rtic le III o f the United States C o nstitutio n. Astate law c laimis part o f the sam e c ase o r c o ntro versy when it shares a "c o m m o n nuc leus o f o p erative fac t" with the federal
c laim s and the state and federal c laim s wo uld no rm ally b e tried to gether. Ba hra m p o ur v. La m pert, 356 F.3d 969, 978 (9th Cir. 2004). Here, N C HO A ’s c laim s fo r seto ff and rec o upm ent do no t m eet this standard. The fac t s nec essary to estab lish whether the atto rney’s fee award in the First Lawsuit was sub jec t to the discharge injunc tio n differs fro mthe fac tual b ac kgro und nec essary to estab lish seto ff and rec o upm ent c laim s under C alifo rnia law. Fo r the vio latio n o f the discharge injunc t io n, N C HO Aneeded to sho w that the discharge did no tapply to the po stpetitio n atto rney’s fee award under the return to the fray do c trine - a

27fac tual inquiry here reso lved b y undisputed fac ts o n sum m ary judgm ent.

Fo r the seto ff and rec o upm ent c laim s, N C HO Ahad to sho w fac ts that estab lished the elem ents o f seto ff (and rec o upm ent) o f its atto rney’s fee award against Ms. A d am s’ judgm ent under C a lifo rnia law. The fac ts relating to pro ving the elem ents o f tho se c laim s wo uld no t assist the b ankruptcy c o urt in determ ining whether the atto rney’s fee award was subjec t to the discharge under the return to the fray do c trine. Further, the determ inatio n o f seto ff and rec o upm ent rights do es no t require an interpretatio n o f o r enfo rc em ent o f the discharge injunc tio n as did the return to the fray do c trine. In sho rt, N C HO Am ust sho w different fac ts which independently estab lish that it is entitled to seto ff and rec o u pm ent under C alifo rnia law. Therefo re, we c o nc lude that N C HO A ’s seto ff and rec o upm ent c laim s are to o disparate tofo rm part o f the "sam e c ase o r c o ntro versy." The fac ts and related evidenc e fo rpro ving that Ms. A dam s returned to the fray do
no t o verlap with the fac ts and the evidenc e needed to pro ve the elem ents fo r seto ff and rec o upm ent. The legal theo ries to b e litigated with respec t to tho se c laim s are who lly different. There is no c o m m o n nuc leus o f o perative fac t s. In sum, the essential fac ts o f the vario us c laim s are no t lo gic ally
c o nnec ted such that c o nsideratio ns o f judic ial ec o no m y and fairness dic tate that all the issues b e reso lved in o ne lawsuit. A c c o rdingly, supplem ental

28jurisdic tio n did no t em po wer the b ankruptcy c o urt to dec ide the seto ff and

rec o u pm ent c laim s. CONCL U SION Fo r the reaso ns explained ab o ve, we A FFIRM the b ankruptcy c o urt’s grant o f sum m a ry judgm ent o n N C HO A ’s first c laimfo r relief o n the b asis that the Fee A ward was exc epted fro m discharge under the return to the fray do c trine. W e VA C A T E the b ankruptcy c o urt’s grant o f sum m ary judgm ent o n N C HO A ’s c laim s fo r seto ff and rec o upm ent and rem a nd with instruc tio ns to dism iss these c laim s witho ut prejudic e fo r lac k o f subjec t
m atter o r supplem ental jurisdic tio n.

29