1

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3

4 August Term 2002

5 (Argued June 23, 2003 Decided August 21, 2003)

6 Docket No. 02-5060

7 ------------------------------------------------------x

8 CENTRAL VERMONT PUBLIC SERVICE CORPORATION,

9

10 Defendant-Appellant,

11

12

13 -- v.--

14

15

16 HAROLD HERBERT and EDITH HERBERT,

17

18 Plaintiffs-Appellees.

19

20 ------------------------------------------------------x

21

22 B e f o r e : WALKER, Chief Judge, STRAUB and POOLER, Circuit

23 Judges. 

24 Appeal from an order by the United States District Court for

25 the District of Vermont (J. Garvan Murtha, Judge), denying

26 appellant’s Fed. R. Civ. P. 60(b)(4) motion for relief from a

27 bankruptcy court order permanently enjoining it from pursuing

28 civil claims against the appellees.

29 AFFIRMED.

30

31 JAMES B. ANDERSON, Ryan, Smith

32 & Carbine, Ltd., Rutland, VT,

33 for Appellant.
2

1 MARY P. KEHOE, Lisman,

2 Webster, Kirkpatrick &

3 Leckerling, P.C., Burlington,

4 VT, for Appellee. 

5

6

7 JOHN M. WALKER, JR., Chief Judge:

8 Defendant-appellant Central Vermont Public Service Corp. 

9 (“CVPS”) appeals from the district court’s order denying its Fed.

10 R. Civ. P. 60(b)(4) motion. In that motion, CVPS sought relief

11 from a bankruptcy court order permanently enjoining it from

12 pursuing civil claims against the appellees Harold and Edith

13 Herbert (“the Herberts”). After waiting more than four years to

14 challenge the bankruptcy court injunction, CVPS contended that

15 the bankruptcy court order was void for lack of jurisdiction. 

16 The district court ruled that the Rule 60(b)(4) motion was

17 untimely and rejected CVPS’s jurisdictional argument. Although

18 the district court’s untimeliness ruling was in error, we agree

19 that the bankruptcy court at least had an arguable basis for

20 exercising its jurisdiction, and accordingly, we affirm the

21 district court’s denial of CVPS’s Rule 60(b)(4) motion.

22 I. BACKGROUND

23 In 1993, the Herberts purchased the mortgage and security

24 agreements encumbering Pico Ski Resort in southern Vermont. In

25 1995, they foreclosed against the resort and incorporated it as

26 “Pico Mountain, Inc.” (d/b/a Pico Mountain Resort), which they

27 owned and controlled as shareholders, officers, and directors. 
3

1 In July 1996, the Herberts formed two new entities: Sherburne

2 Pass Mountain Properties, LLC, to which the Herberts conveyed all

3 of the resort’s real estate; and Pico Mountain Operating Company,

4 to which they conveyed all of the resort’s personal property

5 assets. Less than one month later, their original company, Pico

6 Mountain, Inc. filed a Chapter 7 petition in bankruptcy, listing

7 no significant assets and $2.7 million in unsecured debts. In

8 December 1996, the Herberts conveyed the resort’s real property

9 from Sherburne Pass Mountain Properties, LLC, to Pico Management

10 and conveyed the personal assets of Pico Mountain Operating

11 Company to American Skiing Company. It appears from the

12 appellate record that the Herberts controlled Pico Management,

13 but not American Skiing Company. The December 1996 sales

14 directly and indirectly yielded $2.5 million in benefits to the

15 Herberts, which they did not disburse to the creditors of Pico

16 Mountain, Inc., including CVPS. 

17 In January 1997, CVPS filed a proof of claim in the Pico

18 Mountain, Inc. Chapter 7 proceeding for the cost of the

19 electrical power it had supplied to the resort. Pico Management

20 placed $214,802.79 in escrow to pay the CVPS electrical power

21 bill for utilties. Meanwhile, the trustee of the bankruptcy

22 estate of Pico Mountain, Inc. investigated causes of action

23 against the Herberts for alleged breaches of fiduciary duty

24 toward the debtor. This issue was resolved when the trustee
 

1 CVPS asserts that “[i]t is not even clear that [it]

ever received the summons, complaint, and pre-trial order the

Trustee mailed on June 6, 1997. With 249 defendants served by

first class mail, it is possible clerical errors were made.” 

When asked about this assertion at oral argument, CVPS admitted

that there is nothing to support it beyond the claim that CVPS’s

files did not contain the referenced documents when they were

searched in preparation for the filing of the complaint in the

instant action. In other words, the assertion is pure

speculation, and it should not have been made.

4

1 entered into a settlement agreement whereby the Herberts agreed

2 to pay the lesser of $120,000 or thirty percent of the allowed

3 unsecured claims against the debtor. In an adversary proceeding,

4 the trustee sought bankruptcy court approval of the settlement

5 and filed a complaint in that court to enjoin all creditors,

6 including CVPS, from bringing actions against the Herberts

7 “through any derivative or alter ego claim[s] regarding a Pico

8 Mountain, Inc. debt.” 

9 On June 16, 1997, the trustee’s summons and complaint were

10 served on CVPS. CVPS does not dispute that it failed to enter an

appearance or defend against the trustee’s action.1 11 On October

12 29, 1997, Bankruptcy Judge Francis G. Conrad approved the

13 settlement and entered an injunction barring creditors of the

14 bankruptcy estate from pursuing any claim, direct or derivative,

15 against the Herberts. Canney v. AEI Music Network (In re Pico

16 Mountain, Inc.), No. 96-10756, Adv. Proceeding No. 97-1036

17 (Bankr. D. Vt. Oct. 29, 1997). On December 2, 1997, Judge Conrad

18 entered a default judgment against those defendants that had not
5

1 answered the trustee’s complaint, including CVPS, and ordered

2 that the trustee was not required to serve those defendants with

3 copies of the injunction. 

4 CVPS concedes that it learned of the injunction from the

5 Herberts’ counsel on December 15, 1997, less than two months

6 after the injunction and less than two weeks after the default

7 judgment was entered against it. Nevertheless, CVPS waited more

8 than four years – until February 13, 2002 – to challenge the

9 injunction by filing a Rule 60(b)(4) motion. This attack on the

10 injunction was prompted by a suit filed by the Herberts in

11 Chittenden Superior Court. That suit seeks to reclaim the moneys

12 that Pico Management had placed in escrow, on the basis that the

13 settlement and the related injunction barred CVPS’s claims for

14 those moneys. In its motion papers, CVPS invoked Rule 60(b)(4)’s

15 provision that “the court may relieve a party . . . from a final

16 judgment, order, or proceeding [if] the judgment is void,” and

17 argued that the injunction was void for lack of subject-matter

18 jurisdiction. 

19 In an oral ruling on June 18, 2002, the bankruptcy court

20 denied the motion as both untimely, citing Beller & Keller v.

21 Tyler, 120 F.3d 21 (2d Cir. 1997), and without merit because the

22 bankruptcy court had an arguable jurisdictional basis for its

23 order, citing Nemaizer v. Baker, 793 F.2d 58 (2d Cir. 1986). On

24 October 3, 2002, the district court affirmed the bankruptcy
6

1 court’s denial of the motion on both grounds. CVPS now appeals

2 from the judgment of the district court.

3 II. DISCUSSION

4 A. Standard of Review

5 Generally, we review Rule 60(b) motions for abuse of

6 discretion. Lawrence v. Wink, 293 F.3d 615, 623 (2d Cir. 2002).

7 However, a district court’s ruling on a Rule 60(b)(4) motion is

8 reviewed de novo where “there are no disputes over the subsidiary

9 facts pertaining to [the] issue” of jurisdiction. United States

10 v. Forma, 42 F.3d 759, 762 (2d Cir. 1994). “Under Rule 60(b)(4)

11 a deferential standard of review is not appropriate because if

12 the underlying judgment is void, it is a per se abuse of

13 discretion for a district court to deny a movant's motion to

14 vacate the judgment under Rule 60(b)(4)." Jalapeno Prop. Mgmt.,

15 LLC v. Dukas, 265 F.3d 506, 515 (6th Cir. 2001) (Batchelder, J.,

16 concurring) (citations and quotation marks omitted); see also

17 Recreational Properties, Inc. v. Southwest Mortgage Serv. Corp.,

18 804 F.2d 311, 314 (5th Cir. 1986) (“[T]he district court has no

19 discretion [in ruling on a 60(b)(4) motion], the judgment is

20 either void or it is not.”). Almost every Circuit has adopted

21 de novo review of Rule 60(b)(4) motions, and we know of no

22 Circuit that defers to the district court on a Rule 60(b)(4)

23 ruling. See Vinten v. Jeantot Marine Alliances, S.A., 191 F.

24 Supp. 2d 642, 649-50 & nn.12-13 (D. S.C. 2002) (collecting
7

1 cases); see also Page v. Schweiker, 786 F.2d 150, 152 (3d Cir.

2 1986).

3 B. Timeliness

4 At the outset, CVPS argues that the district court erred in

5 ruling that the motion was not timely. Even though Rule 60(b)

6 states that “[t]he motion must be made in a reasonable time,”

7 courts have been “exceedingly lenient in defining the term

8 ‘reasonable time,’ with respect to voidness challenges. In fact,

9 it has been oft-stated that, for all intents and purposes, a

10 motion to vacate a default judgment as void ‘may be brought at

11 any time.’” Beller & Keller, 120 F.3d at 24 (quoting 12 James

12 Wm. Moore, et al., Moore’s Federal Practice § 60.44[5][c] (3d ed.

13 2003)). We conclude that the district court erred in finding

14 that CVPS’s motion was untimely.

15 C. Bankruptcy Court Jurisdiction to Enter the Underlying Order

16 CVPS argues that the bankruptcy court’s order was void for

17 lack of subject matter jurisdiction. CVPS contends that the

18 bankruptcy court issued a final order in a non-core proceeding

19 without the parties’ consent and without a district court’s de

20 novo review, and that therefore it exceeded its jurisdiction

21 under Northern Pipeline Constr. Co. v. Marathon Pipe Line Co.,

22 458 U.S. 50 (1982) (plurality opinion), and 28 U.S.C. § 157. 

23 Where bankruptcy courts have exceeded their jurisdiction in non24 core proceedings, we have not hesitated to vacate the bankruptcy
8

1 court judgment on direct appeal. See, e.g., Orion Pictures Corp.

2 v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d

3 1095, 1102-03 (2d Cir. 1993); see also Cathedral of the

4 Incarnation v. Garden City Co. (In re Cathedral of the

5 Incarnation), 90 F.3d 28, 34 n.5 (2d Cir. 1996); Gallucci v.

6 Grant (In re Gallucci), 931 F.2d 738, 744 (11th Cir. 1991).

7 However, this case comes to us, not on direct appeal, but on

8 appeal from a denial of a Rule 60(b)(4) motion through which CVPS

9 seeks to overturn a final default judgment. Because “final

10 judgments should not be lightly reopened, [Rule 60(b)] may not be

11 used as a substitute for timely appeal. . . . Since 60(b) allows

12 extraordinary relief, it is invoked only upon a showing of

13 exceptional circumstances.” Nemaizer, 793 F.2d at 61-62

14 (citations omitted). In the context of a Rule 60(b)(4) motion, a

15 judgment may be declared void for want of jurisdiction only when

16 the court “plainly usurped jurisdiction,” or, put somewhat

17 differently, when “there is a total want of jurisdiction and no

18 arguable basis on which it could have rested a finding that it

19 had jurisdiction.” Id. at 65 (internal quotation marks and

20 citations omitted). 

21 CVPS claims that the bankruptcy court’s injunction is void

22 under Marathon because the court lacked jurisdiction to

23 adjudicate pre-petition state law rights. In Marathon, the

24 Supreme Court held that Congress could not constitutionally
9

1 empower a bankruptcy court, which is not an Article III court, to

2 adjudicate a state breach-of-contract action (based on a pre3 petition contract) brought by a debtor against a defendant that

4 had not filed a claim with the bankruptcy court. See 458 U.S. at

5 85. The Supreme Court observed that "our Constitution reserves

6 for Art[icle] III courts" traditional functions of the judicial

7 power such as adjudicating state breach-of-contract claims like

8 debtor’s claim in that case. Id. at 83. The Marathon Court

9 found unconstitutional the Bankruptcy Act of 1978’s broad grant

10 of jurisdiction to the bankruptcy courts to adjudicate such state

11 law claims. 

12 In the wake of Marathon, Congress passed the Bankruptcy

13 Amendments and Federal Judgeship Act of 1984 (“1984 Amendments”),

14 categorizing “core” and “non-core” proceedings. 28 U.S.C. § 157. 

15 Core proceedings are actions essential or basic to the

16 administration of a bankruptcy case, and Congress offered a non17 exhaustive list of such actions. 28 U.S.C. § 157(b)(2). In a

18 core proceeding, a bankruptcy court may “enter appropriate

19 [final] orders and judgments.” § 157(b)(1). Where a bankruptcy

20 court acts in a non-core proceeding, a final order may be issued

21 only in one of two ways: by the district court after de novo

22 review of the bankruptcy court’s proposed factual findings and

23 legal conclusions, § 157(c)(1); or by the bankruptcy court with

24 the consent of the parties, § 157(c)(2). See generally Orion
10

1 Pictures Corp., 4 F.3d at 1100-01. In this case, because the

2 district court did not originally review nor independently

3 adjudicate the bankruptcy court’s order enjoining CVPS from

4 pursuing its state claims against the Herberts, bankruptcy

5 jurisdiction can exist only if the proceeding was core or was

6 consented to by the parties. 

7 As noted above, when reviewing the denial of a Rule 60(b)(4)

8 motion to vacate for want of jurisdiction, we consider only

9 whether there is at least an arguable basis for jurisdiction. If

10 so, we will not disturb the judgment on jurisdictional grounds. 

11 In this case, we easily conclude that there is, at a minimum, an

12 arguable basis for bankruptcy court jurisdiction, because CVPS’s

13 claims are arguably part of the core proceeding before the

14 bankruptcy court and because CVPS consented to the bankruptcy

15 court’s jurisdiction. 

16 The non-exhaustive list of “core proceedings” in the 1984

17 Amendments includes: “matters concerning administration of the

18 estate,” 28 U.S.C. § 157(b)(2)(A), “proceedings to . . . recover

19 fraudulent conveyances,” § 157(b)(2)(H), and “other proceedings

20 affecting . . . the adjustment of the debtor-creditor . . .

21 relationship,” § 157(b)(2)(O). The 1984 Amendments clarified

22 that “[a] determination that a proceeding is not a core

23 proceeding shall not be made solely on the basis that its

24 resolution may be affected by State law.” § 157(b)(3). Since
11

1 the 1984 Amendments, “both the Supreme Court and this court have

2 concluded that the Marathon holding was a narrow one and have

3 broadly construed the jurisdictional grant in the 1984 Bankruptcy

4 Amendments.” See S.G. Phillips Constructors, Inc. v. City of

5 Burlington (In re S.G. Phillips Constructors, Inc.), 45 F.3d 702,

6 707 (2d Cir. 1995) (citations omitted). “[B]ankruptcy courts are

7 not precluded from adjudicating state-law claims [as core

8 proceedings] when such claims are at the heart of the

9 administration of the bankruptcy estate.” Ben Cooper, Inc. v.

10 Ins. Co. of the State of Pa. (In re Ben Cooper), 896 F.2d 1394,

11 1399 (2d Cir.), vacated, 498 U.S. 964 (1990), reinstated, 924

12 F.3d 36 (2d Cir. 1991). A finding that a proceeding is core, we

13 have held, may be based upon the “nature of the proceeding,” S.G.

14 Phillips Constructors, 45 F.3d at 706, and “the ramifications of

15 the dispute on the administration of the estate,” Shugrue v. Air

16 Line Pilots Ass’n Int’l (In re Ionosphere Clubs, Inc.), 922 F.2d

17 984, 994 (2d Cir. 1990). 

18 The distinction between core and non-core is somewhat

19 subjective and contextual, and we need not determine whether the

20 injunction in this case was actually part of a core proceeding,

21 because the issue before us is only whether the bankruptcy court

22 arguably had jurisdiction. Here we conclude that the proceeding

23 was arguably core. As part of a settlement by which the Herberts

24 contributed to the bankruptcy estate, the injunction, at least
12

1 arguably, was “at the heart of the administration of the

2 bankruptcy estate,” had significant “ramifications . . . for the

3 administration of the estate,” or was core because of the “nature

4 of the proceeding.” 

5 Moreover, even if the injunction in itself was not part of a

6 core proceeding as defined by the 1984 Amendments, CVPS’s claims

7 against the Herberts also were arguably subject to bankruptcy

8 court jurisdiction based upon CVPS’s filing a proof of claim in

9 the bankruptcy court in January 1997, almost a year before the

10 bankruptcy court’s injunction. Our cases have upheld bankruptcy

11 jurisdiction in what would otherwise be non-core proceedings

12 where the party opposing the finding of jurisdiction has filed a

13 proof of claim. In doing so, we have relied on two theories: (1)

14 the proof of claim transforms litigation into a core proceeding;

15 and (2) by filing the proof of claim, the creditor consents to

16 the bankruptcy court’s broad equitable jurisdiction. See S.G.

17 Phillips Constructors, 45 F.3d at 706 (“The City, by filing its

18 proof of claim in this case, not only triggered § 157(b)(2)(B) [a

19 listed core proceeding in allowing claims against an estate and

20 estimating claims for the purposes of confirming a plan], but

21 also necessarily submitted to the court’s equitable power to

22 resolve its claims.”); see also Cibro Petroleum Prods. v. City of

23 Albany (In re Winmo Realty Corp.), 270 B.R. 108, 120 & n.7

24 (S.D.N.Y. 2001) (citing numerous cases in which filing proof of
13

1 claim is a sufficient basis for finding the proceeding core); Pan

2 American World Airways, Inc. v. Evergreen Int’l Airlines, 132

3 B.R. 4, 7 (S.D.N.Y. 1991) (“When a creditor files a proof of

4 claim it submits itself to the bankruptcy court's equitable

5 power, and the claims, even though arising under state law,

6 become core proceedings within the jurisdiction of the bankruptcy

7 court.”); cf. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 59

8 n.14 (1989) (“[B]y submitting a claim against the bankruptcy

9 estate, creditors subject themselves to the court's equitable

10 power to disallow those claims . . . ."); Orion Pictures Corp., 4

11 F.3d at 1102 (holding “breach-of-contract action by a debtor

12 against a party to a pre-petition contract, who has filed no

13 claim with the bankruptcy court, is non-core”). The foregoing

14 authorities establish that after CVPS filed its proof of claim

15 against Pico Mountain, the bankruptcy court had an arguable basis

16 for jurisdiction to enter its injunction against CVPS.

17 One could argue that CVPS’s proof of claim gave the

18 bankruptcy court core jurisdiction only over CVPS’s claims

19 against Pico Mountain, Inc. and not over its claims against the

20 Herberts. However, CVPS’s claims against the Herberts are state

21 law claims arising from the Herberts’ alter ego relationship with

22 Pico Mountain or the Herberts’ liability for Pico Mountain’s

23 debts. In the context of cases such as this, we have ruled that

24 the trustee is “the proper person to assert claims . . . .
14

1 against the debtor’s alter ego or others who have misused the

2 debtors property in some fashion,” and by extension, we have held

3 that such alter ego claims are core proceedings. St. Paul Fire

4 and Marine Ins. Co. v. Pepsico, Inc., 884 F.2d 688, 701 (2d Cir.

5 1989). As long as state law permits alter ego tort claims or

6 similar actions, such actions are core proceedings because they

7 “relate[] to the property of the estate,” and “bring[] property

8 into the estate of the debtor,” particularly as a proceeding to

9 “recover fraudulent conveyances” under 28 U.S.C. 157(b)(2)(H). 

10 Id. (internal quotations and citations omitted). 

11 In this case, the trustee’s complaint for injunctive relief

12 specifically cited the creditors’ “derivative or alter-ego

13 claim[s],” and CVPS now bases its state claims against the

14 Herberts, in part, on Vermont’s alter ego doctrine and similar

15 claims of incorporator liability and breach of fiduciary duty,

16 citing Winey v. Cutler, 678 A.2d 1261 (Vt. 1996), Hardwick17 Morrison Co. v. Albertsson, 605 A.2d 529 (Vt. 1992), Herbert v.

18 Boardman, 349 A.2d 710 (Vt. 1975). CVPS cannot pursue alter ego

19 liability and similar derivative liability claims against the

20 Herberts under Vermont state law, and, at the same time, assert

21 that core jurisdiction is absent because Vermont does not

22 recognize alter ego or derivative liability. One might argue

23 that the injunction exceeds the bankruptcy court’s core

24 jurisdiction for alter ego and derivative liability claims
15

1 because it protects the Herberts from all claims “of any kind of

2 nature, direct or derivative.” Canney, Adv. Proceeding No. 97-

3 1036, at 2. However, we need not consider whether there was an

4 arguable jurisdictional basis for the potential reach of the

5 injunction because all of CVPS’s state claims are based on alter

6 ego or derivative liability, or relate to the debtor-creditor

7 relationship, and hence are at least arguably part of the core

8 proceedings in the bankruptcy court. 

9 In sum, we conclude that the bankruptcy court did not

10 “plainly usurp[]” its power and that there was an arguable basis

11 for jurisdiction. Nemaizer, 793 F.2d at 65. Therefore we

12 conclude that the district court properly denied CVPS’s Rule

13 60(b)(4) motion.

14 III. CONCLUSION

15 For the foregoing reasons, we AFFIRM the district court’s

16 denial of CVPS’s Rule 60(b)(4) motion.