1 ELECTRONIC C ITATION: 2004 FED App. 0002P (6th C ir.)

File Name: 04 b0002p.06
BA NKRUPTC Y A PPELLA TE PA NEL OF TH E SIXTH CIR CUIT
In re: BUCKEYE STEEL CASTINGS COMPANY, INC.,
Debtor.

TRANSP ORTATIO N & TRA NSIT ASSOCIATES, Appellant,

v. No. 03-8060 COLUMBUS S TEEL CASTINGS COMPANY, Appellee.

Appeal from the Unite d States Bankruptcy Court for the Southern District ofOhio at Columbus.

No. 02-66859 Argued: February 4, 2004
Decided and Fi led: March 2, 2004 Before: COOK, LATT A, and RHODES, Bankruptcy Appellate Pan el Judges.

________________ COUNSEL
A RGUED : Jonathan M. Yarger, CHERNETT, W ASSERMAN, YARGER & PASTERNAK, Cl eveland, Ohi o, for Appellant. Mark A. Kel ley, KITCH ENS KELLEY GAYNES, Atl anta, Georgi a, for Appellee. ON BRIEF: Jonathan M. Yarger, CHERNETT, WASSERMAN, YAR GER & PASTERNAK , Clevel and, Ohio, for Appel lant. Mark A. Kel ley, KITCH ENS KELLEY GA YNES, Atla nta, Georgi a, Marvi n A. Sicherman, DETTELBACH, SICH ERMAN & BAU MGART, Cleveland, Ohio, for A ppellee.2 ____________________ OPINION

____________________ JOHN C. COOK, Bank ruptcy Appel late Panel Judg e. In this case we must decide whether a motion to enforce a n injunction contained in a sale order was ripe for adjudication. For the reas ons that follow , we do not t hink the ques tion wasripe, and we therefore affirm the bankruptcy court’s or

der dismissi ng the matter for lackof jurisdict ion.

I. ISSUE A ND SCOPE OFREVIEW The issue in t his c ase is whether the bankruptcy court erred in determining tha t it lacked jurisdic

tion of a motion to enforce an injunctio n. A determinati on regardi ng jurisdict ion is a quest ion of law rev iewed de novo

. Nichols v. Muskingum College , 318 F.3d 674, 677 (6th Cir. 2003 ) (citing Joelson v. U n ited States , 86 F.3d 1413, 1416 (6th Cir. 1996)). Any factual fin dings underl ying thedecision ar e review ed for clear error. Id. (citing Jones v. Cit

y of Lakeland , 175 F.3d 410, 413 (6th Cir. 199 9)). The order

on appeal is final and may, ther efore, be appealed as ofright. 28 U.S.C. § 158(a)(1). The Un ited States Di strict Co urt for the Souther n Distric t of Ohio has authorized appeals to the Bankruptcy Appellate Panel, and no ne of the parties has tim ely elected to have this appeal hea rd by t he district court. 28 U.S.C. §§ 158(b)(6), (c)(1). Accordingly, the panel has jurisdiction to decide this app eal.

II. FACTS On December 20, 2002, Buckeye Ste el Casting s Company, In c., and certain affiliated corporations (“Debtor”) fil ed v oluntary C hapter 11 bankruptcy petiti ons. On February14, 2003, the bankr uptcy cour t entered an order

approving the sale, free a nd clear of liens and other claims, of substantially all of the Debto r’s assets to Col umbus Steel Castings Company (“CSC”), then known as Rail Castings Corp. Among the assets sold
were the Debtor’s

accounts receivable, i ncluding an account alleg edly owed it by Transportation & Transit Ass ociates (“ TTA”). The sale order, in addition to pr oviding that3

the sale be free and c lear of liensand other clai ms, enjoined all persons from taking any action against C SC to recover any claim they might have against the Debtor i n respect to the assets sol d. The sale wasconsummated, and in due course CSC made demand on TTA for the payment of an account

receivab le CSC had boug ht under the Ass etPurchase Ag reement. This receivab le origi nated in a contr act in whi ch the Debtor was to supply certain parts to TTA, which i n turn woul d use them in the construction of r ailroad carriage s . As of the petition date, TTA owed theDebtor ov er $1 milli on for parts already de livered. It refused CSC’s demand for payment, how ever, conte nding that i t had a right of recoupment which effecti velywi ped out CSC’sreceivab le. Accordi ng to TTA, the Debtor had breached i ts contract to supply parts, and TTA suffered damages of approximatel y $4 mill ion as a resul t. TTA has filed a proof of cl aim against t he Debtor reflec ting its alleged damages for breach of the contract, less the amoun t of the receivable it owes the debtor. TTA’s proof of claim , in other words, is co mputed as though th e recoupment has al ready taken place. On May 12, 2003 , CSC filed a mot ion (not an ad ve rsary pr oceeding) i n the bankruptcy court seeki ng an order (a) enforcing thesale order, and (b) compel ling TTA to pay the account recei vable. CS C contends that TTA’s defenses, to the e xtent they include
a set-off, are barr

ed by the order’s pr

ovisionsthat the sale wasfree and clear of l iens and other claims. It seeks enforcement of that part of the court’ s order that prohibits ac tions to recover claims against CSC that arose out of the claimant’s relationship with the Debtor. On July 10, 2003, the bankruptc y court conducted a hearing on t he motion at which neither party present ed any evide nce. At t he hea ring, CSC effectively withdrew its request for an order compel ling pay ment, asking only for a d etermination that

the sale order enjoined TTA from enforcing it s defense to the accou nt receivable. Also at the hea ring, TTA announced thatit had already applied the re coupment in the computation of its proof of claim , and it the n exp ressl y and irr evocably waiv ed its rig ht to increas e the amount of its claim if the ass erted rig ht of recoupment is ever denied in any

court. By

order entered
on July 21, 2003 , th e bankruptcy court dismi ssed the motion for lack of subject matter jurisdiction, and CSC filed this timely appeal.4 III. DISCU SSION Notions of

ripeness and t he prohibitio n on advisory opinions bear out the bankruptcy
cour t’s co nclusion that it had no juri sdiction in this matter. The power of federal courts extends only to cases and controv ersies, U .S. Const. ar

t. III, § 2, cl. 1, and this has been interpreted tomean that [t]o be co gnizabl e in a federal cour t, a suit “mus t be definite and conc rete, touching the l egal relat ions of parties having adv erse legal interests. * * * It must be a real a nd subs tantia l controve rsy admitt ing of sp ecific relief t hrough a decree of a conclusive character, as distingui shed from an opinionadvising what the law would be upon a hypothe tical state of facts .” Aetna Life Ins. C o. v. Haworth , 300 U.S. 227, 240-241, 57 S. Ct. 461, 464, 81 L. Ed. 617 (1937).
North Carolina v. Rice , 404 U .S. 244 , 246, 9 2 S. Ct . 402, 4 04 (197 1) (pe r cur iam) (emphasis added). CSC’s motion se eks just such an advisory opinion: whether TTA, in defending a lawsuit in district or state court by CSC to collectthe account receivable, can successfully

maintain the defense of r ecoupment. The parties ag ree that the defense of r ecoupmentsurvives the bankruptcy court’s sale order and that TTA is therefore free to raise i t in any l itigation between the parties in any jurisdiction. They also agr ee th at th e defe nse o f set-off is barred i n any such l itigation because it involves prosecuting a claim against theDebtor or CSC as assignee, which is prohibited by the sa le order. Thus , CSC’s moti on asks the bankruptcy cour t to make a determination that “the facts constitute the defense of offset, or constitute a defense other than recoupment, and that [the Sale] orde r enjoine d [TTA] f rom enforcing t hat defense; pure and simple.” The bankrupt cy court’s jurisdict i on was thus invoked by CSC, a mere buyer of estate assets, in order f or the court to gi ve its opi nion about whe ther a not-yetraised defense to a not-yet- filed collecti on action in s ome other court mi ght be something other than a recoupment. That issue is not ripe for adju dication upon hy pothetical facts of a hypothetical case. See Stark v. A rmstr ong World Indus., Inc., N o

. 0 0

- 3 4 4 4 , 2 0 0 1 WL 1217016, at*4, 20 Fed. App. 495, 500 (6th Cir. Oct. 3, 2001) ( “Generally , where an opinion is sought merely toassist a par

ty in some po ssible future l itigation, justiciabi lity pr inciples argue against ass uming juri sdiction.”) . The fact that the parties have a disagre ement about how to characterize a possible defense in some possible future litig ation does not present5

a real and substantial controvers y of sufficient immediacy to confer juris diction on a federa l court. In a similar case the Sixth Circuit h as held that a di strict cour t lacked jur isdiction to grant Rule 60(b)

relief to plaintiffs wh ere the purpose of their motion w as not to affect the
case in which it

was filed, but to position the plaintiffs to better parry a defense likely

to be raised by defendants in a separate state court action that the pla inti ffs had filed. McCurry
v. Adventist Health System/Sunbelt, Inc. , 298 F.3d 586 (6t h Cir. 2002) . In McCurry , a wrongful death action w as brought by

the mother of a decea sed man in district court under the diversi ty juri sdiction of the court. She was a r esident of North Carolina, al l defendants
were Tennesseans. Under applicable Tennes see law, h owever , sh e lacked standi ng to
sue because the decedent had a s pouse, residi ng in Tennessee, who was the proper par

ty plaintiff. Upon discovering thesefacts, the court dismissed the case for lac k of standing and lack of subject mat ter jurisdiction (no diversity between wife and defendant s). Abouta year

a fter the dismissal, the plain tiff moved fo r relief under Rule 60(b), asking the court to al low the wife to be j oined as a plai ntiff, despite the ack nowledged fact thatthis could no t cure the jurisdictional defect that had cause d dismissal in the first instance. The distric

t court gr

anted the Rule 60 r eli ef, but the Six th Circui t revers ed, holding in part that the district court lacked “case or controversy” j urisdicti on and had given
an advisory

opinion. It q uoted with a pproval from General Electri c Co. v. L ocal 761, International

Union of Electrical, R

adio & Machine Worker s , 395 F.2d 891, 895 (6th Cir. 1968), saying that “[t]he duty of this Court ‘is to decide actual contr oversiesby a judg ment which c an be carr ied into effect , and not to . . . declare principles or rules of law which cannotaffect the m atter in issue in the case before it.’” McCurry , 298 F.3d at 586 (quoti ng Mills v . Green , 159 U.S. 651, 653 , 16 S. Ct. 132 ( 1895)). The cour t went on to find that [i]n lig ht of all this, it is ev ident that the DistrictCourt’s ruling on the Rule 60(b) motion could have no conceivable bea ring upon any claim or issue in the present cas e. McCurry and Turner [plain tiffs] admit as much. Befo re the District Court, their counsel candidly stated that the “real reason” for theirRule 60(b) motion was

to an tic ipate a s tatu te of l imitat ions defense that De fendants were likely

to assert i n the state cour t wrong ful death action br ought by McCurry and Turner.6

McCurry , 298 F.3d at 597. Itseems that Tennessee had a saving s stat ute which pr ovided that di smissed
a cti ons could be refil ed within a year of dis missal, but pl aintiffs were concerned that th e wi fe was not an original party pl aintiff and that, as toher, the one year statute of li mitations might have run unless recourse could be had to the sav ings statute. The saving s statute, however, might

not a pply

beca use o f the lac k of i dent ity betw een t he tw

o pl aint iffs (mother and wife) in the later state court law suit and the sin glepla inti ff (the mother) in the orig inal federal court law

suit. Hence, the R ule 60(b) moti on was desi gned as an attempted pat ch of that potential pr

oblem. The Six

th Circui t rejected the attempt. Given this ruli ng’s lack

of impact upon any

matter at iss ue in thiscase -- and, indeed, it does not appear that there were any outs tand ing issues in this case at the time of the ruli ng -- it isextr emely doubtful whet her th e circumstances permitted an ex ercise of the District Court’s limited jur isdiction ov er actual cases and controversies.
Id . at 598 (emphasis

in origi nal). Simi larly, a ruling on CSC’s moti on would have no impact on any matter at issue in the bankruptcy

case of Buckeye Steel Casti ngs Company , Inc. Rath er, a ruli ng on the motion would be tantamount to providi ng an advi sory opin ion on a possibl e defense that might be raised by

TTA in a future law

suit filed against i t by CSC. The bankruptcy court properly declined to g ive an adv isory opi nion and properl y refused jur isdiction. Appellant

CSC r elies on L uan Investment S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.) , 304 F.3d 223 (2d Cir . 2002), a case in which a lease ow ned by the debtor was sold free and clear of ex isting c laims and an inj unction in the sale order provided th at the lessor, Luan Investment S.E., wasenjoined from asser ting any claim or any extant default
or breach of the lease against the buyer, Marianne. D espite these pr ohibitions, Lu an made d emand on Marianne for rent arrearage and th reatened to terminate the lease. It also sued Marianne in Puerto Rico Superior C ourt, claimi ng that Mar ianne had defaulted under the lease. Marianne applied to the bankruptc y court for

an order enforcing its previously issued injunction, and the bankruptcy court, in g ranting the relief, s pecific ally found that “Luan’s demand of Marianne i nvolved excluded l iabilities as defined in the sale order.” Id

.7

at230. These “excluded liabilities” were the very ones whic h th e sale order prohibited Luan f rom asse rting. The Second Circuit affi rmed, upholding the well -established rule that a cou rt has jurisdict ion to enforce its injunctions . The injuncti on in Petrie , howeve r, had already been violated by the demand and the lawsui t, and the bankruptcy court made findings that the “excluded liabilities” were indeed the basis of Luan’s claim s against Marianne. I t was the classicsituation in whic h a court determi ned that its i njunction had i n fact been viol ated and took actio n acc ordi ngly. In the case at ba r, by cont rast, there i s no showi ng that TTA has done anything in violati on of any order, there is no pending lawsuit of any kind, and there is only the bar

e possibili ty that

TTA might

assert a pr

ohibited clai m (i.e., somethi ng other than recoupment) if indee d it is ever sued. These material d is tinctions undercut CSC’s reliance on Petrie. The immediacy and actualit y of the viola tion in Petrie conferred jurisdict ion. Here, neither exists an d the matter is therefore not ri pe for adjudicati on. Fina lly, it should be no ted that distr ict courtsand, by refer ence, bankruptcy

courts have jurisdiction of “cases under title 11" an d “civil proceedings arising under tit l e 11, or arising in or rel ated to cases under title 11.” 28 U.S.C. §§ 1 334. The claim presented in this case could onl y be one “r elated to” the bankr uptcy case. “[C]lai ms will be considered ‘related to’ the . . . bankruptcy proceeding i f ‘the outcome of that pro ceeding could conceivably have any effect on the estat e being administered in bankrupt cy.’” Browning
v. Levy , 283 F.3d 761, 773 ( 6th Cir. 2002) (citation omi tted). “Stated another way, a claim is ‘related to’ the bankruptcy proceeding if it woul d have affected t he debto r’s rig hts or liabilities.” Id. In dismissing the matter for lack ofsubject matter juri sdiction, the bankruptcy court, und erst and ably, could not see how the dispute between CSC and TTA , which was “not hing
more than a collection action,” could possib ly affect the bankruptcy

estate, giv

en that TTA had waived its right to amend its pro of of claim upwards i n the event i ts claim of recoupment

were late r reje cted by a court. W e likewise fail to see how a resolution of this collection a ction could affect thebankruptcy estate.8 IV. CONCLU SION In the case at bar, CSC desires an order from the bankruptcy court forecl osing TTA from emp loyin g the defense ofset-off, though no t recoupment, against it in any futu re litigati on to recover

the account receivable. Since the parties agree and ack nowledge that the defense of set- off is pr ohibi ted by

the pr ovis ions o f the ass et sal e order , it s eems unlikely tha t TTA w ill r isk contempt by r aisin g that

defense in futur

e liti gati on. If TTA should, in some future li tigation, pl ead the defense of recoupment, C SC and its at torn eys will be on hand to ensur e thatthe t rial c ourt make s the nece ssary d istin ctio ns an d allo ws onlya recoupment, ifproper, and not a set-off. Given these conside rations, the bankruptcy court properly dismissed CSC’s motion for lack of subject matter jurisdiction. W e therefore AFFIRM

.