MOAC MALL HOLDINGS LLC, Petitioner, v. TRANSFORM HOLDCO LLC, ET AL., Respondents
Interviewer(s): Samuel A. Alito, Jr., Amy Coney Barrett, Elena Kagan, John G. Roberts, Jr., Ketanji Brown Jackson, Neil Gorsuch, Sonia Sotomayor, Clarence Thomas
Interviewee(s): Colleen E. Roh Sinzdak, Douglas Hallward-Driemeier, G. Eric Brunstad, Jr.

John G. Roberts, Jr.: We'll hear argument next in 21-1270, MOAC Mall Holdings versus Transform Holdco LLC. Mr. Hallward-Driemeier.

Douglas Hallward-Driemeier: Mr. Chief Justice, and may it please the Court: Because of the harsh consequences of designating a procedural prerequisite jurisdictional, this Court requires a clear indication from Congress before it will treat a limit as such. Nothing in the text, structure, or context of Section 363(m) suggests, much less clearly reflects, that Congress ex -- intended the absence of a stay to deprive the appellate courts of jurisdiction.

To the contrary, the text explicitly presupposes the exercise of appellate jurisdiction, including to reverse or modify a sale order.

The provision merely limits the remedial consequences of such a ruling and then only if there was no stay. Transform's few appellate decisions concerning an earlier rule of bankruptcy procedure do not provide a clear indication of con -- jurisdictional character.

None of the cases Transform cites are from this Court, and none actually designated the rule jurisdictional.

Because the requirement of a stay is not jurisdictional, it was subject to waiver, forfeiture, and estoppel, each of which applies here. Transform assured the bankruptcy court that it would not invoke Section 363(b) to defeat MOAC's appeal because Transform did not believe Section 363(m) applied.

And Transform was right.

The order under review did not authorize a sale under 363(b).

The asset sale had already closed.

Rather, the order authorized assumption and assignment of a lease under Section 365, with no additional payment to the debtor. It does not defeat any congressional limit on the Court's power to hold Transform to the position it took in the bankruptcy court. Finally, Transform's alternative argument that the lease's transfer deprived the appellate courts of jurisdiction to review the assignment order is confused on multiple levels. It wrongly assumes that bankruptcy courts' jurisdiction is solely in rem, which this Court has rejected, but even if it were, this Court has made clear that the transfer of the res does not deprive the appellate courts of jurisdiction where, as here, the transferee is a party to the proceedings. I welcome the Court's questions.

Clarence Thomas: In your -- I -- I understand you'd like to get to the jurisdiction/non-jurisdiction question, but I think I've almost had my fill of that.

The -- could you just take a second to explain what provision you rely on to -- as the -- to challenge the lease assignment?

Douglas Hallward-Driemeier: We argue that the -- the less -- the -- that the assignee did not satisfy adequate assurance of future performance.

And that's in --

Clarence Thomas: Yeah, I understand that.

Douglas Hallward-Driemeier: -- 365(b)(1)(C) and also 365(b)(3)(A).

So the Bankruptcy Code requires -- it's -- it's very protective of mall owners.

Congress was very solicitous of them.

And it provided that both in order to assume and to assign a shopping center lease, the -- the debtor and the assignee would have to show that there would be adequate assurance of future performance, and that required specifically showing that the assignee had the same financial wherewithal and operation experience as the -- the original lessee, here, Sears in 1991.

And the district court held that that was not met here.

Clarence Thomas: As a practical matter, what -- what would the difference be?

Douglas Hallward-Driemeier: Well, on -- on remand, we believe that MOAC would be entitled to recover the property because the -- the time to -- to designate and assume and assign the lease has now expired.

But, even if we were not right on that, at the very least, MOAC would be entitled to an assignee that satisfied that statutory requirement, which would also protect the mall's interest. Of course, whether we're entitled to either of those reliefs is a merits question. It does not go to this Court's jurisdiction.

John G. Roberts, Jr.: Does your argument depend upon there being issues that could be raised that do not go to the authorization of the sale or lease? In other words, I understand the argument that this doesn't bar jurisdiction across the waterfront, but it does seem to bar any further inquiry into the validity of the sale or lease.

No?

Douglas Hallward-Driemeier: Where -- where the statute is properly invoked, that would be true.

But, here, its protections were both waived and forfeited.

It was not raised in the district court until -- after the district court had ruled on the merits, and it was affirmatively waived in the bankruptcy court as part of Transform's objection to a stay --

John G. Roberts, Jr.: So --

Douglas Hallward-Driemeier: -- pending appeal.

John G. Roberts, Jr.: -- so what would you have left apart from the issues of waiver?

Douglas Hallward-Driemeier: Well, we would also argue that this was not a -- a -- a sale of property of the estate under 363(b) because that had already happened.

The sale had closed.

The money had been paid to Sears, and there was no -- it was not subject to adjustment if the designated leases were later held not to be eligible for assignment. In fact, the A -- the -- the APA, the purchase agreement, explicitly contemplated that the bankruptcy court would have to consider and decide whether there had been adequate assurance of future performance and that if it was not found, then the debtor would have no obligation to assume or assign the lease. So the sale closes while that possibility of an individual designated lease not being assignable was still outstanding.

So there is -- there's no way in which the sale is invalidated by a ruling in our favor.

That's why I say Transform was right initially to say that this is not an order that -- to which 363(m) applies even on its terms because it specifically contemplates the purchase or sale. The words "sale" and "purchaser" appear several times in the provision, and it is a -- an authorization under 363(b). The authorization that is relevant here appears at Petition Appendix 114a.

It's paragraph 11 of the APA, and it says: "Debtors are hereby authorized, in accordance with Sections 105(a) and 365 [...] to assume and assign the Designated Lease." Assumption and assignment occurs under 365.

There's no reference there to 363.

We're challenging the assumption and assignment, not the earlier sale. What was sold was designation rights. The sale of the designation rights is done and gone.

It's been completed and not going to be undone with this.

But the sale of the designation rights contemplated that a designated lease might never be successfully assigned because the assignee could not satisfy their statutory requirement of adequate protection, and that's what happened here. So Transform is simply being held to the terms of its bargain.

Samuel A. Alito, Jr.: Suppose we agree with you on the jurisdictional question.

What would happen on remand? Can the district court simply vacate the assignment order?

Douglas Hallward-Driemeier: Yes, Your Honor.

And --

Samuel A. Alito, Jr.: Okay.

What -- what if that happens? To whom would the lease revert?

Douglas Hallward-Driemeier: So we believe that the lease would revert to the -- to Mall of America, and that's because, under 365(d)(4), the -- the statutory time to assume a lease expires after 210 days, unless extended by consent.

Here, there was extension by consent until the end of August --

Samuel A. Alito, Jr.: But why wouldn't it revert --

Douglas Hallward-Driemeier: -- but no further.

Samuel A. Alito, Jr.: -- either to the Sears bankruptcy estate, if there is still such a thing, or to the reconstituted Sears?

Douglas Hallward-Driemeier: Well, it -- it -- in a sense, it would revert to the estate, but because, under the language of 365(d)(4), once the 210-day period to assume has passed, the lease is deemed rejected, and since we're past that time, it would, under the terms of the statute, immediately revert to the lessor. But there's another reason why the same thing holds, and that's because Transform only had designation rights during the designation period, and that expired on May 3, 2019.

So we think it's too late two times over for them to -- to try to -- to redesignate a new assignee and go through that process. But that's my merits argument.

If I'm wrong on that, then, at the very least, assuming that Sears or its -- its successor has an ability to designate a new assignee, at the very least, we would be entitled to only being assigned to someone who can satisfy the protections afforded by the statute.

Samuel A. Alito, Jr.: But there are news reports that Sears exited bankruptcy in November, is -- is that correct? So is there still an estate?

Douglas Hallward-Driemeier: Your -- Your -- Your Honor, we would take the position again that it's too late.

There is a -- a -- a litigation trust, and I assume an argument could be made that it would become property of the litigation trust.

We would dispute that. But, again, those are merits issues for the courts to determine on remand.

They don't go to this Court's jurisdiction because there's an Article III case or controversy.

Samuel A. Alito, Jr.: No, I -- I understand that.

I'm just trying to figure out what the practical implications of a ruling in your favor are.

Douglas Hallward-Driemeier: But, again, our -- our position is -- is that twice over the time to designate and to assume and assign this lease have passed, but that's because both under the terms of the APA and under the terms of the statute Congress created, basically, Sears had one shot to -- to identify an assignee that would satisfy the requirement. And had they designated an assignee, it could have been any -- it could have been Target, it could have been Bloomingdale's that had the similar financial situation and -- and operating experience as Sears in 1991.

That would have been fine and good.

Instead, they designated a holding company that had never had any such experience.

Neil Gorsuch: Counsel, I -- I -- I think --

Samuel A. Alito, Jr.: But you -- no, go ahead.

Neil Gorsuch: You sure?

Samuel A. Alito, Jr.: Yeah.

Neil Gorsuch: All right.

I -- I -- I think what I'm struggling with and I'm -- I -- I sense my colleagues are too is that it's a little unusual to say a good faith purchaser of a bankruptcy asset might have to disgorge it, you know, some years later after perhaps the bankruptcy estate has been eliminated and -- and -- and the bankruptcy's discharged. So, what do we do about that? Does every good faith purchaser now take an asset subject to the possibility that it will be reverted to and a bankruptcy estate might have to re-emerge? I mean, I -- I'm just -- I'm just unfamiliar with -- I'm not a bankruptcy expert.

Douglas Hallward-Driemeier: Yeah.

Neil Gorsuch: You are.

Douglas Hallward-Driemeier: So -- so 360 --

Neil Gorsuch: Tell -- tell me -- is there any other analogue to this that you're aware of in the --

Douglas Hallward-Driemeier: 363(m) protects the good faith purchaser's interests.

Neil Gorsuch: Yes, as -- as if there's a stay, but, you know, then you waive and then here we are.

Douglas Hallward-Driemeier: But -- exactly.

Here --

Neil Gorsuch: So, and I guess I'm asking is there any other instance in the bankruptcy laws -- maybe that's the way to get at it --

Douglas Hallward-Driemeier: Well --

Neil Gorsuch: -- where there's this kind of reversion of -- of -- of an asset that -- that -- that a good faith purchaser has taken on?

Douglas Hallward-Driemeier: So, in -- in -- in the first instance, I want to reiterate that we don't think that Transform is a purchaser with respect to the asset assignment.

Neil Gorsuch: I understand, yes, yes, yes, yes, yes.

Douglas Hallward-Driemeier: Right? Because this was a separate --

Neil Gorsuch: Yes, but your argument doesn't turn on that fact.

Your argument turns on the meaning of the statute. So that doesn't help me.

Douglas Hallward-Driemeier: So, again, I think that the statute -- this Court has recognized that even important principles, even emphatic, you know --

Neil Gorsuch: Yes, yes.

I -- I -- I -- I spot you --

Douglas Hallward-Driemeier: -- rules written emphatically --

Neil Gorsuch: -- counsel, I spot you all of that, but you are dancing, my friend.

Douglas Hallward-Driemeier: So --

Neil Gorsuch: So let's get to the -- let's get to the center stage, you know, is there another example that you can think of where a good faith purchaser in the bankruptcy laws -- just a straightforward question -- would have to disgorge an asset?

Douglas Hallward-Driemeier: I -- I -- I think, absent it's in a sense agreement to do so, as it has here be -- by waiving the protections of the statute, I don't think that's --

Neil Gorsuch: Well, the good faith purchaser is not the one who waives it or not. It's --

Douglas Hallward-Driemeier: Oh.

Well, here --

Neil Gorsuch: -- it's the debtor.

Douglas Hallward-Driemeier: -- here, it is, Your Honor.

Neil Gorsuch: I understand here it is, but that's not always going to be true.

Douglas Hallward-Driemeier: No, and -- and, in fact, that's -- the cases that we cite -- and the reply brief on page 18 make that distinction -- they hold that where the transferee is outside of the -- the -- the proceedings and -- and not subject to the court's jurisdiction order, that the -- that it can't be ordered back.

But, they say, where the transferee is a party to the proceeding, where the order can in effect be undone through an order to the parties to the proceeding, then there is jurisdiction to give that relief, as here.

Neil Gorsuch: So you would be okay with a rule that says it's not jurisdictional, but in no circumstances may a court order a good faith purchaser outside of the bankruptcy proceedings to revert an asset?

Douglas Hallward-Driemeier: Well, that -- that issue is not presented in this case, and I would urge the Court not to reach out to decide it because I don't think it's been briefed in this case. Their -- the -- the principles of what are called equitable mootness have, you know, been legion, and I know that there have been a number of petitions about that to the Court. This is about statutory mootness.

It was a statutory protection that was waived by Transform specifically twice in the bankruptcy court.

And the bankruptcy court ended its comment about that -- and this is at page 7(a) of the brief in opposition appendix -- saying they're not going to rely on 363(m). Mr. Chesley just reiterated that for a second time.

If that were an inaccurate characterization of Transform's position, and, indeed, they had twice disavowed 363(m) already at that time, it was -- it was incumbent upon Transform to clarify. The district court recognized that if ever there was a case for judicial estoppel, this is it.

But we don't need to rely on either of these doctrines because we also have forfeiture. Transform went through the entire merits litigation in the district court without asserting that 363(m) had any application to the court's jurisdiction to hear this decision, jurisdiction in the statutory sense, jurisdiction in the Article III sense, said nothing about that until after it had lost. And that's precisely the -- the unfair harsh consequences of misdesignating a rule jurisdictional.

Here, there is no indication that Congress intended that effect. And I would ask -- give the example, Your -- Your Honor, Justice Gorsuch, you asked about the good faith purchaser, but Transform's argument is so broad that it would mean that there is no authority to recover the property even from a bad faith purchaser, one who did not purchase in good faith. They say the only remedy is Section 549.

But Section 549 here is a two-year period of repose.

It's also the debtor's cause of action subject to waiver.

They assert that Sears has already waived any claim under 549, and, of course, the two-year period is gone.

Neil Gorsuch: Counsel, I hear all of that, okay? I guess my concern -- and -- and I'm just -- put aside this case, I know it's really hard, okay, and -- and -- and I -- I -- I'm -- I'll put my cards on the table.

I have a hard time seeing this as jurisdictional, okay? But I just -- I just can't think that there are many circumstances in the bankruptcy laws, if there are any, where good faith purchasers might have to relinquish an asset. Okay.

Forget about bad faith purchasers. Forget about those. And -- and -- and so we're going to be scrambling to come up with some sort of rule to deal with that fact, okay, and -- and I just want to know where on earth that would come from, and you haven't seemed to have given me much help so far.

Douglas Hallward-Driemeier: Well, again, the -- it's a merits question, and --

Neil Gorsuch: I got that.

I really do.

Douglas Hallward-Driemeier: -- and the -- the -- the -- so the -- I would point the Court to both this Court's decision Republic Bank of Miami, which is not a bankruptcy case, granted, but where the Court seemed to understand that because the United States was a party before it and had, indeed, brought the action, then a court order to undo the -- the transfer would be honored by the United States.

I mean, there were complications because the United States needs an appropriations, but the court found it. Chafin v. Chafin, which is referred to in the law professors' amicus brief, is another one to the same effect.

There, the Court characterized it as simply asking for the routine relief on appeal that the decision of the district court be reversed and its order undone.

There, the question involved a child's custody.

The child had during litigation because there was no stay pending appeal been removed to Scotland.

Neil Gorsuch: Thank you, counsel.

John G. Roberts, Jr.: Thank you. Following up on Chafin, if I'm remembering correctly, the Court went on a little bit about how narrow the issues that would be available in the proceeding would be.

Douglas Hallward-Driemeier: Well, the Court actually does not resolve the question. They said that on remand there was a question whether the -- the -- that the agreement, the -- the international convention would itself provide for an order of re-return or if principles of equity would allow. And I think what the cases that we're citing on page 18 of the reply reflect is that the bankruptcy court is a court of equity.

A party like Transform comes to the court, asks for an order.

It's subject to the court's personal jurisdiction because that was a term of the APA, consent to the personal jurisdiction of the bankruptcy court, that if the court undoes it, then Transform will have to honor that order. At the moment, there are two pieces of paper.

There's a -- a lease that was given to Sears, and there's a second piece of paper that says, pursuant to authority under Section 365 of the bankruptcy court -- code, the -- the -- Sears' lease has been assigned to Transform, but when on remand that order is taken away, then Transform has nothing to -- to assert in terms of its right to the -- to the leasehold in -- at Mall of America.

John G. Roberts, Jr.: Thank you.

Ketanji Brown Jackson: Isn't part of --

John G. Roberts, Jr.: Justice -- I'm sorry. Justice Thomas?

Clarence Thomas: Nothing.

John G. Roberts, Jr.: Oh, I'm sorry, we're not there yet.

Elena Kagan: No, we are.

John G. Roberts, Jr.: No, we are. Yeah. Justice Thomas? Justice Alito? I thought we were. Justice Sotomayor? Justice Kagan?

Elena Kagan: Can -- can I ask you to make an assumption you don't want to make? But would you assume, sort of along the lines that Justice Gorsuch was -- was saying, that, in fact, at this late date, the Court is not going to be able to undo the assignment? Does that make this constitutionally moot, or is there some other form of relief that the Court could provide to resolve this dispute?

Douglas Hallward-Driemeier: Well, Your -- Your Honor, I think there might be additional relief that could be provided to -- to Mall of America in terms of out of the compensation from the sale.

That's not been explored yet.

I do want to make one point in terms of whether this assignment can be undone.

Elena Kagan: But, I -- I -- I -- I want to --

Douglas Hallward-Driemeier: The parties have stipulated --

Elena Kagan: Just -- just stick with my question.

Douglas Hallward-Driemeier: Okay.

Elena Kagan: You gave one -- flesh out, like, what -- what do you think a court might do, even assuming -- and I know you dispute this, and I'm not suggesting that you're wrong -- but -- but, if there is no unwinding to be done, what is left?

Douglas Hallward-Driemeier: Well, Your -- Your Honor, the -- the rule -- the statute only precludes an -- an invalidation of the -- of the sale.

Of course, we think this is an assignment, not a sale, so it doesn't apply. But, if that is unavailable, then the court has to consider whether there can be any other relief.

Here, we think other relief might be, for example, further protection to ensure us that -- that Transform actually does comply with all of its requirements or perhaps money out of the estate to compensate Mall of America for what it has lost. But, again, that's not necessary to reach here because, here, the parties entered into a stipulation that Transform would not do anything further that would moot the appeal.

As a consequence, this property remains dark.

It has never been developed.

There's no -- nobody operating it right now.

So, if ever there's a situation in which an assignment of a lease could be undone, it's this one because the parties agreed to a -- a stipulated --

John G. Roberts, Jr.: Justice Gorsuch? Justice Kavanaugh? Justice Barrett? Justice Jackson?

Ketanji Brown Jackson: I just wanted to ask whether in part -- partly in response to Justice Gorsuch's question, is it your view that the statute itself, (m), assuming that it applies, does contemplate circumstances in which you might have to unravel it because it's -- it -- it only talks about the validity of a sale that has been made in good faith?

Douglas Hallward-Driemeier: Yes, Your Honor, it -- it -- it explicitly contemplates that if the transfer was not made in good faith, then there would be an unwinding.

So the -- Congress specifically contemplated an exercise of this jurisdiction, even that the -- the sale would have to be unwound in certain circumstances.

And Transform has waived whatever protection the statute might otherwise have afforded it.

Ketanji Brown Jackson: Thank you.

John G. Roberts, Jr.: Thank you, counsel. Ms. Sinzdak.

Colleen E. Roh Sinzdak: Mr. Chief Justice, and may it please the Court: Section 363(m) is not jurisdictional because nothing in its text suggests that it is, and there is no other evidence that satisfies the clear statement rule described in Arbaugh. Respondent is incorrect in asserting that Section 363(m) is nonetheless jurisdictional because it reflects a longstanding limit on in rem jurisdiction. Among other things, this Court's decision in Republic National Bank rejected the existence of the very limit on in rem jurisdiction that Respondent now asserts. Nor should Respondent prevail based on its new argument that Section 549 and 550 provide the exclusive means to unwind the disputed lease assignment.

This new argument about whether Petitioner is entitled to relief under the bankruptcy statutes is not jurisdictional, and even if it were, there is no reason that this Court would have to address it before the question of subject matter jurisdiction on which this Court granted cert. I welcome the Court's questions.

Clarence Thomas: I know there's a resistance to projecting what would happen when this case -- if this case goes back, but what do you think will happen?

Colleen E. Roh Sinzdak: We are not taking a position on that.

The United States does not have --

Clarence Thomas: Nobody is.

Colleen E. Roh Sinzdak: Nobody is. (Laughter.)

Colleen E. Roh Sinzdak: Nobody is.

It does not affect this Court's subject matter jurisdiction to decide this question, so we do not need to. We would say that we are not aware of cases in which courts have insisted that there be additional process in order to unwind a -- a lease assignment once the court has reversed the lease assignment on appeal.

There aren't cases as far as we can tell either way. It is our -- it is our -- our sense that in general this -- this idea that there would need to be further process it -- it -- it doesn't have a lot of precedent.

We have looked, for example, at what happens when there's a good faith purchaser, and in the cases that we found, there hasn't been additional process that the good faith -- purchaser has had to go through.

At least looking at the bankruptcy court dockets, we haven't been able to see that.

But -- but we aren't taking a -- a position on that because that wasn't a question on which this Court granted cert.

Neil Gorsuch: Counsel, I -- I hear everything you say, okay? So take it as read, okay? But, normally -- I mean, my bankruptcy experience is limited, so -- and yours is much, much more -- you -- you have access to people with great more expertise, and so I'm -- I'm -- I'm really pleading for that, okay? Normally, I think of good faith purchasers -- put aside bad faith purchasers, okay -- as once they purchase an asset in bankruptcy, we're done and it's all about finality and resolution and moving on and quickly resolving these cases.

And that's really pretty essential to the greater purposes of the bankruptcy laws, certainty and allowing people an opportunity for a new start, okay? What happens to good faith purchasers in these circumstances who, through no fault of their own but because of the monkey business of the parties, have major assets, you know, potentially with -- withdrawn from them years later? I mean, we're going to -- we're talking years later.

That just seems to me contrary to what I know instinctively about the bankruptcy laws. Now perhaps there's some other limitation that we can make up, we can find. Yes, yes, you're -- you're -- you're shaking your head to the right question and nodding it to the right question.

Help me.

What -- what is it?

Colleen E. Roh Sinzdak: Sure.

So, if the purchaser, the good faith purchaser, was not a party to the appeal, which -- which we think is not the situation we have here --

Neil Gorsuch: Got you.

Colleen E. Roh Sinzdak: -- if, instead, they -- they're sort of -- it's three years later --

Neil Gorsuch: Yes.

Colleen E. Roh Sinzdak: -- and suddenly someone is showing up at their door and saying you need to give us the property, then we think they could assert Section 363(m).

They wouldn't have had an opportunity to assert it before, so they would not have waived.

They would not have forfeited.

Neil Gorsuch: Interesting.

Colleen E. Roh Sinzdak: There would be no concerns with respect to judicial estoppel.

Neil Gorsuch: That's helpful. Thank you.

Colleen E. Roh Sinzdak: If I could just address the three -- a -- a -- a few quick points about jurisdiction because we do think this is a straightforward question, and we do -- no, we know that with respect to the Court's precedents, but we think there are three issues where things can get a little bit confused in terms of what governs subject matter jurisdiction. And so the first one is a statutory restriction on relief does not normally govern subject matter jurisdiction.

And I think that there can be some concern because of the redressability prong under Article III, the Article III analysis, that relief should play into that.

We think that Steel Co. squarely addresses this at page 96, where the Court explained that a statutory restriction on relief, the question doesn't usually affect jurisdiction because the question under the redressability analysis is not whether a party is entitled to the relief that it's seeking but, rather, whether, if they are able to obtain that relief, it will truly redress their -- their injury.

Now --

Ketanji Brown Jackson: Counsel, I'm sorry to interrupt you, but can you just make sure to address an issue that I think you didn't have a chance to address, which is the mootness question sort of directly? What -- what is -- what is the most straightforward reason this case remains live given what has been argued on the other side?

Colleen E. Roh Sinzdak: Okay.

Again, I just want to say at the threshold that I -- we don't think the Court has to -- to deal with the new question because this is itself a question of subject matter jurisdiction.

So we're not in a world where you have to worry about your -- your -- your -- your weighing in on the merits when there is a --

Ketanji Brown Jackson: So we can pick either one for jurisdiction?

Colleen E. Roh Sinzdak: That's right.

But I -- I also want to say we do not think that the new question presented -- the -- sorry, pardon me, the new argument is actually jurisdictional, and that's because it's essentially an assertion about whether the -- the Petitioner is going to be able to get the relief it seeks on remand. And we do think that Chafin versus Chafin, the 2013 opinion that I believe Petitioner's counsel were -- was referring to, that directly said that questions about whether a statutory scheme -- or, in that instance, it was actually a statute and a convention. Questions about whether that statutory scheme permit the relief that a part -- the appellant is seeking on remand, those questions go to the merits, not mootness.

And it's -- it's -- it's very clear.

So I think Chafin versus Chafin at page 174 is the direct answer to the mootness question, and that actually anticipated one of the three jurisdictional points I wanted to make. The last one is just about in rem jurisdiction, and I think there are points in Respondents' brief where it treats in rem jurisdiction as synonymous with subject matter jurisdiction. And we think that's not right because subject -- in rem jurisdiction is really an alternative to in personam jurisdiction, so I think every law student learns pretty early on that in order for a court to hear a case, it needs to assure itself that it has both subject matter jurisdiction, that is, the power to hear the class of cases into which the controversy falls.

And either person -- in -- in -- in personam jurisdiction, personal jurisdiction, or in rem jurisdiction. And the reason that's important is that we know that limits on personal jurisdiction can be waived.

And we think the same is -- is true of limits on in rem jurisdiction such that even if Respondent was correct that there is some principle of in rem jurisdiction that's floating around here, it just doesn't matter because it could be waived. And if the Court has no further questions?

John G. Roberts, Jr.: No one? Okay.

Thank you.

Colleen E. Roh Sinzdak: Thank you.

John G. Roberts, Jr.: Rebuttal, Mr. Brunstad.

G. Eric Brunstad, Jr.: Not quite yet for rebuttal, Your Honor.

John G. Roberts, Jr.: Ah, ah, yes. (Laughter.)

John G. Roberts, Jr.: It's a tough day.

Sorry.

Your opening points.

G. Eric Brunstad, Jr.: Mr. Chief Justice, and may it please the court: Justice Thomas, I am going to take a position on your question. Justice Gorsuch, I have a better answer to the question that's actually correct. Justice Kagan, there is no additional relief that can be granted. Justice Jackson, this case is moot. There is no case or controversy. But, first, it's important to set forth the actual facts because my -- my friend got a few things wrong. In 1991, Sears and MOAC entered into a 100-year freely assignable essentially rent-free ground lease.

Sears built the building, not MOAC.

Decades later, in 2018, when Sears filed for bankruptcy, the building that Sears built with this ground lease became property of the bankruptcy estate of Sears' bankruptcy estate. Sears moved for authority to sell by private contract this property to Transform. After the necessary approvals from the bankruptcy court were obtained, that sale transaction closed on October 4, 2019, three years ago, and it was a sale, as the district court determined.

It was a transfer of ownership of property for a price. There was additional consideration that was paid for this specific asset, this building and this lease, millions of dollars in additional consideration that's elaborated on pages 13 to 14 of the red brief. Okay.

There is no remedy that can be granted to them at this point.

What is the relief, the sole relief that they identify? It's on page 10 of their reply brief.

Ketanji Brown Jackson: Before you get into that, though, can -- I'm interested in the fact that your recitation of the facts did not include the waiver that they continue to point to.

G. Eric Brunstad, Jr.: Yes.

Ketanji Brown Jackson: Isn't there a point in the procedural history of this in which your client, Transform, said we're not going to rely on 363(m) and what do we do about that?

G. Eric Brunstad, Jr.: Justice Jackson, there is that point that goes to Section 363(m).

My argument initially is wholly apart from Section 363(m).

Put that statute aside, put the question of waiver aside because it only pertains to Section 363(m). There is no case or controversy. There is no way to undo the sale in this instance.

And here is why, three reasons: The remedy they seek, which is specified on page 10 of their brief, the courts can simply enter an order voiding transfer of MOAC's lease.

You can just simply take the property from them. That remedy does not exist as a matter of law.

The statutory remedy, the exclusive remedy is the avoidance powers.

That's not available here.

The bankruptcy court on remand has no subject matter jurisdiction over this property.

Its property is -- its jurisdiction is limited to property of the estate. This is not property of the estate. If this were remanded back to the bankruptcy judge, the judge would say, I don't have jurisdiction here.

I have jurisdiction over property of the estate, not Transform's property.

If you want me to have jurisdiction, you have to invoke the avoidance powers to bring it back into the estate.

That's not available. But, Justice Gorsuch, your question about what is the -- what is the answer, it is in this Court's seminal decisions, so for commercial law geeks like me, these decisions, although not widely known, they are seminal in my field, and they are this -- this -- this Court's triumvirate of decisions in Gray versus Brignardello, in Voorhees versus Bank of the United States, and in Grignon's Lessee versus Astor, and there the Court unequivocally explained, if you reverse a sale order on appeal, it does nothing to affect the sale.

The sale cannot be overturned. This Court's language explanation in Gray is -- is -- is -- is -- is straightforward. Although the judgment or decree may be reversed, yet all rights acquired at a judicial sale while the decree or judgment were in full force and which they authorized will be protected. With the errors of the Court, the purchaser has no concern and the Court said this is so well established, you know, we don't -- we shouldn't even have to reiterate it.

The Court was even more unequivocal in Voorhees versus Bank of the United States.

Sonia Sotomayor: If I go to the sale order itself, I thought the sale order which was selling Sears' right to assign the lease to Transform, the sales order said that that right reserved the landlord's right to object to any lease assignment that failed to conform to the requirements of 365. So the sale order itself reserved the right of objection.

That's what you bought.

At the assignment or at the step of the assignment, the landlord objected.

And the Court said no, I'm going to overrule it.

But then you came in and said -- you, Transform, came in and said, I'm not going to rely on 365(m).

I'm here before the Court.

I'm going to subject myself to this procedure, which you did.

And it got -- you got overruled.

And then you wanted to appeal that.

I don't understand.

G. Eric Brunstad, Jr.: First off --

Sonia Sotomayor: You took -- you're before the Court.

G. Eric Brunstad, Jr.: Yes.

Sonia Sotomayor: So you're in personam.

G. Eric Brunstad, Jr.: Ah.

Sonia Sotomayor: You're defending your own rights and -- to the assignment, and now you've lost, or you -- you're invoking 365(m).

So I don't understand how the Court has lost jurisdiction.

G. Eric Brunstad, Jr.: A proceeding --

Sonia Sotomayor: And I'm not even sure how you're a good faith purchaser because you purchase subject to the landlord's objection.

G. Eric Brunstad, Jr.: The -- the bankruptcy court found we were a good faith purchaser, and as the court of appeals explained, that designation was not challenged.

We are a quintessential good faith --

Sonia Sotomayor: Yes, but --

G. Eric Brunstad, Jr.: -- purchaser.

Sonia Sotomayor: -- subject to a condition.

G. Eric Brunstad, Jr.: Well, well -- two -- several things, Justice Sotomayor.

First of all, it was a two step-process for the sale. The sale was under Section 363 of the assets, which required further approval of the Court for the transfer of the lease, which is also part of the sale, for which additional consideration was paid in addition to the 1.4 billion that was paid for the bulk sale.

So this was all a package together. What happened, though, was, at that point, right, and -- and this is -- this is -- this is important, the bankruptcy court does not exercise in personam jurisdiction over property of the estate.

There's no summons and complaint against the purchaser.

There's no ordinary in personam process.

It's all in rem. This Court said so in Stratton versus New -- and as the Seventh Circuit explained, a proceeding under Section 363, that's the sale statute, is an in rem proceeding.

One does not convert an in rem proceeding into in personam as a buyer by -- by showing up. If that were true, this Court's decision in Hood would be wrong.

If -- if -- Your Honor may recall in Hood --

Sonia Sotomayor: I'm sorry, I'm -- I'm totally confused now by you.

G. Eric Brunstad, Jr.: Certainly, Your Honor.

Sonia Sotomayor: Only for the certain --

G. Eric Brunstad, Jr.: Let me explain.

Sonia Sotomayor: You are the party who bought.

You're a good faith --

G. Eric Brunstad, Jr.: We are the --

Sonia Sotomayor: -- buyer.

G. Eric Brunstad, Jr.: -- buyer, Your Honor, yes.

Sonia Sotomayor: You bought subject to the objection.

G. Eric Brunstad, Jr.: No, Your Honor.

Sonia Sotomayor: You're before the Court --

G. Eric Brunstad, Jr.: That's the -- that's this Court's point in Gray versus Brignardello. Whatever may have been the merits of the objection is not the buyer's concern.

This Court was emphatic about that -- emphatic about that.

Sonia Sotomayor: I see what you're saying.

G. Eric Brunstad, Jr.: When you show up at a sale, all -- the Court said -- and this is just repeating its language from prior decisions. This has been the settled commercial law rule for 200 years.

The purchaser is not concerned with any errors the trial court might make in authorizing the sale.

As long as the sale was authorized, the purchaser takes free.

If it's reversed on appeal, it does not matter --

Sonia Sotomayor: I now have --

G. Eric Brunstad, Jr.: -- which is why there's no common law rule that you can undo it.

Neil Gorsuch: Okay.

So they say there might be some other relief.

G. Eric Brunstad, Jr.: Not so, Justice Gorsuch.

Neil Gorsuch: All right.

Help me --

G. Eric Brunstad, Jr.: Here's why.

Here's why.

This is bankruptcy.

Neil Gorsuch: Yeah.

G. Eric Brunstad, Jr.: And, in bankruptcy, if you have a claim, you must file a proof of claim.

They did.

They filed a proof of claim for the unpaid rent.

Transform paid that as additional consideration, which was then paid to them.

The opportunity to file a claim for additional damages has long since gone.

There is no possibility.

That is foreclosed.

Neil Gorsuch: Counsel --

G. Eric Brunstad, Jr.: They're out of bankruptcy.

Neil Gorsuch: -- the one --

G. Eric Brunstad, Jr.: There is another reason, Justice Gorsuch.

Neil Gorsuch: The one thing you're -- well, give me your other reason.

Then I -- then I've got a -- another question.

G. Eric Brunstad, Jr.: The other reason is there's no such thing as a cause of action for breach --

Neil Gorsuch: Right.

G. Eric Brunstad, Jr.: -- of Section 365 of the Bankruptcy Code.

There is no such thing. It would be an implied cause of action that does not exist.

So they are foreclosed procedurally and substantively from making any claim for damages which they've never heretofore even suggested.

It is not possible.

Especially since now Sears's bank -- Sears's bankruptcy is over.

The case is gone.

The funds have been distributed.

There is nothing left.

So they do not -- Justice Kagan, there is no opportunity for any additional relief whatsoever.

The sole statutory mechanism --

Neil Gorsuch: All right.

So, counsel, I'm sorry to interrupt you there, but --

G. Eric Brunstad, Jr.: Certainly, Justice Gorsuch.

Neil Gorsuch: -- boy, you've been so persuasive, you -- you -- you -- you got me into thinking I should dig this case --

G. Eric Brunstad, Jr.: I --

Neil Gorsuch: -- which you --

G. Eric Brunstad, Jr.: Yes, Your Honor.

Yes.

Neil Gorsuch: But you don't want that, do you?

G. Eric Brunstad, Jr.: I do want you to dismiss the petition as improvidently granted. (Laughter.)

G. Eric Brunstad, Jr.: I absolutely do, but I do think the statute's also jurisdictional, and I would like to explain why, and this -- this ties into the fact that, right, this is in rem subject matter jurisdiction.

Neil Gorsuch: Yeah.

G. Eric Brunstad, Jr.: Subject matter jurisdiction in the bankruptcy court is property of the estate.

What is the proceeding here? It is the sale of estate property.

That is fundamentally in rem. It cannot be in personam, right? If that were -- if it were in personam, this Court's decision in Hood would be wrong.

There, the state showed up.

You can't do in personam action against the state.

You can only do in rem, the Court said.

By the state showing up, which it did, it doesn't convert in rem into in personam.

It stays in rem.

This is in rem from the beginning.

Just like in admiralty, the ship has sailed.

Ketanji Brown Jackson: But, counsel --

Sonia Sotomayor: Mr. --

Ketanji Brown Jackson: -- you suggest that in rem is like a very, very narrow set of powers.

And I had understood the bankruptcy court could exercise certain additional powers in its review of the rem.

Is that not so?

G. Eric Brunstad, Jr.: As this Court explained in Ahlers, whatever equitable powers remain in the bankruptcy court must and can only be exercised within the confines of the Bankruptcy Code.

The Bankruptcy Code has a very specific remedy for upsetting these sales.

It's called the avoidance powers.

They essentially concede those are not available here.

They apply not only to good faith purchasers -- that's Section 549 and Section 550 -- but also bad faith purchasers.

There is a specific provision of Section 363 that allows for overturning a sale to bad faith purchasers, 363(n).

That remedial scheme would make no sense if there was also some vague general equitable power of the bankruptcy court to simply do an end run around the avoidance powers and simply bring property back into the estate.

Amy Coney Barrett: Mr. -- Mr. Brunstad, I feel like you're taking us far afield of the question that we granted cert on.

I mean, why does any of this matter? Why can't we just answer the jurisdictional question that we granted cert on and then send it away and you can make your arguments below?

G. Eric Brunstad, Jr.: Justice Barrett, because there is no case or controversy.

As this Court explained --

Amy Coney Barrett: But we don't have to -- we don't have to get into that, right?

G. Eric Brunstad, Jr.: Yes, yes, under --

Amy Coney Barrett: If we decided a jurisdictional question, you know, as counsel said, we can decide on either ground.

G. Eric Brunstad, Jr.: No, Justice Barrett. Here's why.

In this Court's decision in Official English for Arizonans, the Court said we consider not only our ability to decide the question but the lower court's ability to proceed.

Here, if you -- if you were to reverse and send it back, what could the lower court do? Absolutely nothing.

Elena Kagan: No, they can decide their own jurisdiction to decide jurisdiction. So we have a bunch of different jurisdictional questions.

As Justice Barrett said, one we took cert on, and they're split on it, and there's usefulness to our deciding that.

And then, as to anything else, send it back and they can decide on their own jurisdiction with respect to the rest --

G. Eric Brunstad, Jr.: No, Justice Kagan.

Elena Kagan: -- and you'll make your arguments there.

G. Eric Brunstad, Jr.: Jurisdiction is not relief.

There must be some tangible remedy that they must be able to get.

They cannot.

Wholly apart from Section 363 --

Elena Kagan: Well, that's just assuming the conclusion.

I mean, that's exactly what we would be asking -- you know, we would be saying there are a bunch of other issues in this case, and one of them is whether there's any possibility of relief remaining, and, you guys, the lower courts, go decide that.

G. Eric Brunstad, Jr.: But, Justice Kagan, in the Tempnology decision that Your Honor authored, you -- at the very beginning of that decision, Your Honor said, well, is there a contractual breach remedy here? And you thought there was enough evidence that there was to then reach the question of whether Section 365 breach equals rescission.

And Your Honor said it doesn't.

Very similar here, similar to the one that Your Honor rejected in that decision. But the threshold question under case or controversy jurisprudence is, is there some sort of tangible relief, something they can get out of actually prevailing? And, here, the answer is no.

The sole relief they want is to take away the property.

And they also want a forfeiture.

They've said so themselves.

It just simply goes back to them. That's not permissible under bankruptcy law for a whole host of complicated reasons.

But the fundamental threshold thing they want they cannot get.

John G. Roberts, Jr.: Well, counsel, the --

G. Eric Brunstad, Jr.: This Court's precedents establishes that.

John G. Roberts, Jr.: -- the Chafin case makes very clear that in terms of looking at what relief is available, they go -- they stretch it pretty far, I think, in -- in -- in analyzing it.

You know, maybe this will happen, and it's not inconceivable that this will happen.

Not their words, but the type of relief they were talking about under the convention seemed to me to be sort of any possible argument you've got is enough to get it to the district court to at least consider its jurisdiction.

G. Eric Brunstad, Jr.: Well, Your Honor, on page 10, there's a reason why there is --

John G. Roberts, Jr.: Page 10 of what?

G. Eric Brunstad, Jr.: -- their -- their statement of a remedy is citation-free.

They cite not --

John G. Roberts, Jr.: I'm sorry, page 10 of what?

G. Eric Brunstad, Jr.: Page 10 of the yellow brief, Your Honor.

John G. Roberts, Jr.: Oh, okay.

G. Eric Brunstad, Jr.: Where they actually articulate their remedy.

They cite not a single case in support of the remedy they claim that they have, and the reason why is because all of this Court's precedents is to the contrary.

The cases that I articulated at the beginning are very clear.

You cannot -- when -- when the order of a sale is reversed, you cannot disturb the sale.

That is blackletter, bench -- benchmark commercial law and practice in this country for two centuries.

If you want to get around it, you have to, in bankruptcy, use the statutory mechanism, which is the avoidance powers.

As we explain in our brief, that is just not available.

Amy Coney Barrett: Well, if it's that clear, you'll win below, right?

G. Eric Brunstad, Jr.: It's clear we'll win below because there is no --

Amy Coney Barrett: Well, I'm saying, so why can't -- you know, as Justice Kagan and I were talking about, we answer the question in which we get it -- granted cert, and you should feel good then if you're right about your chances below.

G. Eric Brunstad, Jr.: Because there's no case or controversy if there is no effective relief that can be granted.

Amy Coney Barrett: We're not saying there's a case or controversy, right? Let's imagine you lose and we say it's not jurisdictional.

All we're saying is that this isn't a jurisdictional bar.

G. Eric Brunstad, Jr.: Yes.

Amy Coney Barrett: Any other arguments you have, you can take them up below.

G. Eric Brunstad, Jr.: Because the case or controversy requirement of Article III constrains this Court's jurisdiction as well, not simply the lower courts' jurisdiction.

That -- that's -- that's -- that's the fundamental point. But there's a second point, and that is the bankruptcy court has no subject matter jurisdiction over this property.

Its subject matter jurisdiction is limited in rem to property of the estate. This is also why Section 364 is jurisdictional.

It is a blunt abrogation of subject matter jurisdiction.

It says, regardless of whether you reverse or you modify a decision on appeal, it does not affect the validity of the sale.

If you can't affect the validity of the sale, the property cannot be brought back into the estate. If the property can't be brought back into the estate, there's no subject matter jurisdiction in federal court.

The ship has sailed, and the statute says you cannot possibly get it back into port.

It is just like in admiralty jurisdiction. It's also jurisdictional because Section 363(m) codifies an historic practice. It codifies Rule 805, which was declaratory of existing case law which was uniform.

Ketanji Brown Jackson: Of course, if that's true, why did you waive it so many times in this case? I mean, that's the -- the only reason why we're here looking at this and trying to decide, per the question presented, whether it's jurisdictional is because you brought it up late.

And the court had already ruled against you, and you apparently waived, you know, the 363(m) question.

And so, when you brought it back again, you said, but wait, wait, wait, that question is jurisdictional, so you still have to decide it.

G. Eric Brunstad, Jr.: Counsel made a mistake in articulating what Section 3-6 --

Ketanji Brown Jackson: Your counsel? Counsel for Transform?

G. Eric Brunstad, Jr.: Counsel for Transform. It's the same mistake the bankruptcy judge made about Section 363.

But Transform knew this was a jurisdictional question.

They cited in their papers in the bankruptcy court the very jurisdictional precedents from the Second Circuit that say it's jurisdictional.

One also cannot by consent or waiver or misstatement of the law create subject matter jurisdiction that does not exist. Here, there is no subject matter jurisdiction because the statute bluntly says, no matter what you do on appeal, you cannot bring the asset back into the estate.

If you cannot bring the asset back into the estate, it's not property of the estate.

There cannot be federal subject matter jurisdiction in bankruptcy, which is limited in rem to assets of the estate.

Okay.

So it is a blunt jurisdictional abrogation. That is by design.

That was specifically what Congress intended by codifying verbatim in this oddly worded statute a former rule of procedure, Rule 805, which was declaratory of existing law. The two seminal cases were Fink and Taylor.

Taylor involved a situation where there were assets in bankruptcy that were sold, and then the Committee of Creditors appealed and the court of appeals said we don't have jurisdiction to decide this controversy.

We have no authority to hear. The same thing in Fink, which used jurisdiction three times in its decision, the Fourth Circuit's decision.

Jurisdiction, jurisdiction, jurisdiction.

We cannot bring the property back.

We cannot order it to come back. Again, one does not --

John G. Roberts, Jr.: Well, they -- they may have used -- they may have used it three times, but the statute doesn't use it at all.

G. Eric Brunstad, Jr.: Correct, but -- but -- and the question is why.

And in Boechler, this Court said we look at the traditional tools of statutory interpretation.

We look at the text, the context, and the history. Well, here, there is an established historical practice that Congress intended to codify.

It wasn't just that the courts limited remedial relief.

They said we have no authority to even hear the appeal where you're challenging the validity of the sale. And authority to hear is subject matter jurisdictional.

We can't even hear it. We're not going to even hear the merits.

In case after case after case, the appellate courts dismissed these bankruptcy appeals over and over again without hearing the merits.

That's the practice that Rule 805 captured. The courts construing Rule 805 interpreted it in exactly that way.

All the -- and some of them involved parties that were before the court.

The purchaser was there or not.

It did not matter.

What mattered was that the courts of appeals would not hear those appeals where the litigant was challenging the validity of the sale. Congress chose to codify that practice, but they did so in a specific context, and that is bankruptcy jurisdiction is fundamentally in rem.

This Court has said so since the early 1800s.

It reiterated that in Katz.

It reiterated that in Hood.

It established that asset sales in bankruptcy are in rem, not in personam in Stratton versus New. All the lower courts have said the same thing.

And they have also concluded as follows: Once property leaves the estate, the jurisdiction of the bankruptcy court lapses.

It ends.

Why? Because it's in rem and it is limited to property of the estate.

Once the property leaves the estate, as happened here when the sale was consummated on October 4, 2019, it was not property of the estate.

Ketanji Brown Jackson: But what do we do with the good faith language in the statute? I mean, that suggests that some court is going to litigate at least -- at least that issue.

G. Eric Brunstad, Jr.: Correct.

That limits the subject matter of the litigation to whether the purchaser was in good faith or not.

If the purchaser was in bad faith --

Ketanji Brown Jackson: Well, you said he had no jurisdiction.

You said, once it's gone, so the sale happens, the property is gone, and then we have 3 -- 363(m), which at least seems to preserve as a litigatable topic --

G. Eric Brunstad, Jr.: Yes.

Ketanji Brown Jackson: -- the question of whether the sale happened in good faith.

Your argument suggests that, too bad, so sad, there's nothing we can do.

The -- the -- the property is gone.

G. Eric Brunstad, Jr.: No, Justice Jackson, because -- because all that it does is it abrogates subject matter jurisdiction in a narrow category of cases.

It's as though, in -- in -- in the exercise of its authority to enact basically federal subject matter jurisdiction, the court said you have federal subject matter jurisdiction in the district courts but not with respect to this particular federal question. That would be an abrogation of subject matter jurisdiction. This statute works in exactly the same way.

If what you're challenging is the validity of a sale to a good faith purchaser, we do not have subject matter jurisdiction to hear it.

As a subject matter constraint, we have no authority to hear it.

John G. Roberts, Jr.: Well, how can that be? I mean, it says that the provision on which you're relying saying you don't have authority to hear it depends upon the fact that the property was purchased in good faith. You can't be circular.

It seems to me that you've got to have jurisdiction to decide the good faith question.

G. Eric Brunstad, Jr.: That's correct, Your Honor.

They have jurisdiction to decide whether it's good faith or not.

John G. Roberts, Jr.: Yeah.

G. Eric Brunstad, Jr.: But, if it is to a good faith purchaser, as in this case, there is no subject matter authority to take the property away, to hear an appeal challenging --

Amy Coney Barrett: But the property left.

But the property left.

I mean, in these hypotheticals, I mean, I think what Justice Jackson is saying and what the Chief is following up on is you told us before that once the property was gone, poof --

G. Eric Brunstad, Jr.: Yes.

Amy Coney Barrett: -- jurisdiction -- jurisdiction went away.

G. Eric Brunstad, Jr.: Correct.

Amy Coney Barrett: The property is gone, but somehow the Court by virtue of the statute still has to decide this good faith question --

G. Eric Brunstad, Jr.: And -- and --

Amy Coney Barrett: -- and have subject matter jurisdiction to do it.

G. Eric Brunstad, Jr.: Yes, Justice Barrett, and there is a remedy.

As this Court explained in Katz, the avoidance powers are ancillary to the court's in rem jurisdiction.

If, in fact, the sale were overturned because it was a bad faith purchaser, then there are ways, statutory means of undoing the sale and bringing the property back into the estate so the court can exercise in rem jurisdiction over it. But the statutory scheme is holistic. Section 363(m) suspends all of that if it's to a good faith purchaser by bluntly stating nothing that you can do can bring the asset back. Overturning it, reversing it, modifying it does not affect the validity of the sale.

The transfer of ownership must remain in the purchaser.

All of those ancillary processes to bring the race back into the estate, into the custody of the bankruptcy court so it can order an alternative disposition, are suspended. That's the -- that was the intended effect of Section 363(m).

John G. Roberts, Jr.: Well, I don't know.

Maybe they are and maybe they're not in particular instances.

But you do -- have acknowledged that under 363(m) there is jurisdiction in the court.

Now you want to say it's simply to adjudicate good faith, but then all sorts of consequences flow from that decision.

G. Eric Brunstad, Jr.: But that's the subject matter, Your Honor.

That's the point.

The subject matter of good faith is preserved.

The subject matter of the validity of the sale is not. Now this is -- this is an unusual statute.

This is not like any other statute we were able to find that the court had to construe whether it was jurisdictional or not.

It's unique.

But that's because bankruptcy jurisdiction is unique.

The remedial scheme is unique.

Its impact on -- it's very surgical. It is a key into the system as a whole, but it is supposed to be a subject matter block.

It says as so bluntly and directly: Reversal or modification on appeal does not affect the validity of the sale.

John G. Roberts, Jr.: If the --

G. Eric Brunstad, Jr.: That means what it says.

John G. Roberts, Jr.: -- purchase was in good faith.

G. Eric Brunstad, Jr.: Correct.

So the only subject matter you can hear is good faith or not.

If the purchaser was in bad faith, all of the remedial provisions under the code are preserved.

Ketanji Brown Jackson: Does the rem need to be back in order to adjudicate the good faith question?

G. Eric Brunstad, Jr.: It does, Your Honor. This is the opposite of --

Ketanji Brown Jackson: It does? So -- so, before the court could --

G. Eric Brunstad, Jr.: No, no, no, no, Your Honor, no, no.

Ketanji Brown Jackson: -- evaluate good faith, we've got to get the rem back?

G. Eric Brunstad, Jr.: I -- I misspoke, Your Honor.

Ketanji Brown Jackson: It does not?

G. Eric Brunstad, Jr.: No.

The good --

Ketanji Brown Jackson: All right.

So how does it have subject matter jurisdiction to address the question with the rem being gone if you're right about the impact of the rem being gone?

G. Eric Brunstad, Jr.: Because that is a precursor to being able to invoke the ancillary processes of avoidance, and those processes turn on whether you have a good faith purchaser or not.

If it's a bad faith purchaser, 363(n) applies, and 363(n) says, if you have a collusive bidder, the trustee can avoid the sale or collect damages.

It gives an option, which is why it can't be automatically void. So the determination of good faith or bad faith is a precursor to be invoking one of the ancillary processes, as this Court explained to them in Katz, to bring the asset back into the estate so the court can order a different disposition. 363(m), when it's a good faith purchaser, blocks all of that.

The subject matter is -- cannot be touched because you cannot affect the validity of the sale.

The statute says so bluntly.

If you cannot affect the validity of the sale, the asset cannot conceivably possibly come back into the estate. There is no avoidance mechanism.

So there cannot be any additional exercise of jurisdiction over the race, and -- and an appellate court cannot order a lower court to exercise jurisdiction it does not possess.

Elena Kagan: But, Mr. --

G. Eric Brunstad, Jr.: And once again, just because the purchaser showed up does not convert an in rem proceeding into an in personam action.

Elena Kagan: Mr. Brunstad, do you have anything to say about the question presented? (Laughter.)

G. Eric Brunstad, Jr.: I do, Your Honor.

I do, Your Honor.

Section 363(m) is jurisdictional, Your Honor, for three reasons: text, context, and history, the traditional methods of statutory interpretation that we look to to determine whether a statute was intended by Congress to be jurisdictional. The text has -- it -- the text has this blunt subject matter restriction, as I've articulated it.

But the context is really critical.

Elena Kagan: Well, to context, boy -- jumping to context in a place where we've always said you need a clear statement in the text, where is your clear statement in 363(m)?

G. Eric Brunstad, Jr.: The clear statement is does not affect the validity of a sale.

It's a subject matter constraint, not a procedural rule.

The other statutes involve things like file your notice of appeal in 14 days or a time limit.

This is not a procedural limitation.

Elena Kagan: I think -- I think what we've always meant when we say a clear statement about jurisdiction is something that says something like the court has no jurisdiction. (Laughter.)

G. Eric Brunstad, Jr.: That -- and, in fact, that would be wonderful if it were here.

It's not.

But the intent was exactly that.

You cannot bring the ship back into port.

The ship has sailed.

John G. Roberts, Jr.: And we've -- and we've also looked at any kind of wiggle room into -- you know, through the door.

You know, if you've got jurisdiction for something, we don't think that that statute is jurisdictional. I mean, you may pick and choose and, when you get into the court, you may be denied relief. You may be denied a big chunk of relief. But, if there's going to be jurisdiction for a little bit, we sort of let them sort out how -- what relief is available once they're in court.

G. Eric Brunstad, Jr.: There is no relief available here.

Put that -- putting that aside, it's a unique --

John G. Roberts, Jr.: Well, of course, there is if it's in bad faith.

G. Eric Brunstad, Jr.: But -- but that -- that was -- they did not appeal that determination. It was a factual determination below.

The court of appeals remarked they didn't raise that, they didn't timely raise that.

That is a settled question of fact, not subject to being reopened. Okay.

But --

John G. Roberts, Jr.: Settled questions of fact can also be appealed, right?

G. Eric Brunstad, Jr.: They did not.

That's the problem.

They did not challenge that on appeal, so that isn't established.

Plus, there's no basis for it. But, to Your Honor's point, this is a uniquely worded statute for a reason.

It codifies an historic practice, and the historic practice informs what this statute is.

Congress codified the rule, and the rule reflected a uniform body of case law that refused to even hear these appeals if there wasn't a stay where you're challenging the validity of the sale. That was what Congress intended to do. So I think it's important to sort of take a look at that.

I understand the clear statement rule, but, again, I would qualify that.

That makes sense and is easily applied when you have a procedural requirement, is that jurisdictional or not.

Again, here, we have a uniquely worded statute with intended jurisdictional consequences.

If you have a sale to a good faith --

Neil Gorsuch: Counsel, let me see if I could put it in my own words.

G. Eric Brunstad, Jr.: Yes, Justice Gorsuch.

Neil Gorsuch: Just so I -- just so I understand it because there's --

G. Eric Brunstad, Jr.: Perhaps you can do a better job than I could.

Neil Gorsuch: No, no.

I'm -- (Laughter.)

Neil Gorsuch: One thing I'm confident about is -- is -- is that I -- I am -- I am deeply confused by this case.

But I just want to make sure my confusion is at least what I think it is.

How about that? That you would say that, right, we normally require magic words like "no jurisdiction"? That those are typically in personam actions in an in rem world?

G. Eric Brunstad, Jr.: Yes.

Neil Gorsuch: What, say, no jurisdiction might look like would be you can't touch the property.

G. Eric Brunstad, Jr.: Correct, Your Honor.

Neil Gorsuch: And -- and this statute says you can't touch the sale.

G. Eric Brunstad, Jr.: Correct, Your Honor, and that is --

Neil Gorsuch: All right.

At least I understand the argument.

Okay.

Thank you.

G. Eric Brunstad, Jr.: So --

Ketanji Brown Jackson: Can't touch the sale if it was made in good faith?

G. Eric Brunstad, Jr.: Correct.

Correct.

And that's what we have here.

There was a finding by the --

Ketanji Brown Jackson: Right, but the question of whether it was made in good faith, who -- who handles that, is Congress intending for this Court to address that or no?

G. Eric Brunstad, Jr.: No, and I don't think the Court needs to reach that in this case because that's not an issue in this case.

Ketanji Brown Jackson: No, I understand, but, as you read the statute --

G. Eric Brunstad, Jr.: Yes.

Ketanji Brown Jackson: -- clearly, the good faith part is still in there.

It's --

G. Eric Brunstad, Jr.: Correct.

Ketanji Brown Jackson: -- a part of the analysis, and so, if the rem is gone, who addresses that?

G. Eric Brunstad, Jr.: Had they appealed it, the district court would have addressed it in the first instance.

They did not.

They did not object to good faith in the bankruptcy court. They did not raise it on appeal.

They did not argue it in their appellate briefs.

They did not raise it in the court of appeals.

They did not raise it anywhere.

Okay.

But had they addressed that determination, then that could have been addressed by the court of appeals. That's fine.

But what --

Ketanji Brown Jackson: Because somehow there's jurisdiction for that?

G. Eric Brunstad, Jr.: Well, there's jurisdiction for that because the statute only abrogates subject matter jurisdiction if you've got a good faith purchaser.

It goes to defining -- it's -- it's like saying suppose the federal question statute said you have federal subject matter jurisdiction over federal questions except for X.

Well, you would have to determine as a factual matter, is this about X? If it's about X, we don't have jurisdiction.

If it's not about X, we do. That's exactly the same thing that's going on here under Section 363(m).

Is it a good faith purchaser? That's a factual question.

If it's a good faith purchaser, the abrogation of jurisdiction applies.

If it's not a good faith purchaser, it doesn't.

And if it's not a good faith purchaser, we have a whole remedial scheme under the Bankruptcy Code that can get invoked.

But, if it is a good faith purchaser, you cannot touch the sale.

It cannot be undone. That was by design.

That was Congress's intent to do that in codifying this historic practice.

And when codify -- when Congress codifies an historic rule, especially in bankruptcy, this Court has said over and over again --

Sonia Sotomayor: I -- I'm sorry, did we have a common law rule on good -- it being the good faith buyer could still challenge the sale?

G. Eric Brunstad, Jr.: The -- there was a -- a -- a -- a -- a common law rule on that that wasn't particularly developed.

It has become --

Sonia Sotomayor: So what we know --

G. Eric Brunstad, Jr.: -- more developed over the Bankruptcy Code.

Sonia Sotomayor: -- so what we know now is whatever Congress wrote, it was doing away with the common law rule?

G. Eric Brunstad, Jr.: No, Your Honor.

No.

Sonia Sotomayor: It was because it was adding an exception, the good faith buyer exception, that didn't exist.

And it seems to me that I don't see anything in the words of the statute that suggests it wasn't imputing other equitable doctrines as well, like, yeah, if you know of the appeal and there's no sale order, you take -- you're still a good faith purchaser --

G. Eric Brunstad, Jr.: Justice Sotomayor --

Sonia Sotomayor: -- but if you -- if you --

G. Eric Brunstad, Jr.: -- I was not clear.

Sonia Sotomayor: -- if you've waived this --

G. Eric Brunstad, Jr.: Yeah.

On page 10a of the red brief, we reproduce Bankruptcy Rule 805, and it does, in fact, also have a good faith element to it.

Sonia Sotomayor: But --

G. Eric Brunstad, Jr.: So it was part of the common law.

It wasn't as developed as it is under the Bankruptcy Code.

It was part of the rule that Congress codified.

And as this Court has said over and over again, when Congress codifies an historic practice in bankruptcy, we will not construe the code to intend a change unless Congress clearly intended a change. Here, it's clear that they --

Sonia Sotomayor: By the way --

G. Eric Brunstad, Jr.: -- intended to codify the practice, which, again, was uniform.

The courts of appeals refused to hear --

Sonia Sotomayor: -- do -- do --

G. Eric Brunstad, Jr.: -- these cases on the merits.

Sonia Sotomayor: I just have a practical question.

G. Eric Brunstad, Jr.: Yes, Your Honor.

Sonia Sotomayor: At the end of the case -- or assume a stay had been granted --

G. Eric Brunstad, Jr.: Yes, Your Honor.

Sonia Sotomayor: -- does that mean the bankruptcy estate couldn't have been wound up subject to that pending case?

G. Eric Brunstad, Jr.: So perhaps, Your Honor, but if a stay had been granted, the property would not have left.

It would be -- have remained within the estate.

The bankruptcy could have -- court would have remained -- would have had in rem jurisdiction over the asset.

Sonia Sotomayor: I see.

G. Eric Brunstad, Jr.: It's because a stay was not granted that the transaction closed under private contract on October 4, 2019, and Transform has been -- has owned and maintained the building and occupied it for the last three years, has paid the taxes, has paid the utilities, has paid the rent, is fixing the roof. Here's another reason why we can't do an end run around the statutory mechanisms. Under the statutory mechanisms, all of those reliance interests of the purchaser are preserved if the -- if the transfer is avoided under Section 550.

Under their theory, their nonexistent, in my opinion, common law theory, there's no protection. So the millions of dollars in additional money that Transform paid to acquire this specific asset, in addition to the $1.4 billion it paid for the bulk -- bulk -- the bulk sale, the additional money it's expended to maintain the property, pay the taxes, is simply forfeited.

Under the statutory scheme, it's not.

You're given a lien for that on the property under the statutory avoidance scheme. That's another reason why we can't do an end run around Congress's carefully crafted protections for avoiding sales.

There's protections for purchasers there.

There's none in the common law theory. But, again, going back to -- and if I could just briefly cite these cases -- it's Gray versus Brignardello, 68 U.S. at 634; Voorhees versus Bank of U.S., 35 U.S. at 475 to 476; Grignon's Lessee versus Astor, 43 U.S. at 343. The Court is unequivocal in explaining -- this applies -- it applies in rem, it applies to sales, you cannot take the property away from the purchaser just because the trial court made an error that was reversed on appeal.

John G. Roberts, Jr.: Thank you. Justice Thomas?

Clarence Thomas: Nothing.

John G. Roberts, Jr.: Justice Alito? Justice Sotomayor? Justice Jackson? Okay.

Thank you, counsel.

G. Eric Brunstad, Jr.: Thank you, Your Honor. CHIEF JUSTICE ROBERTS: Mr. Hallward-Driemeier, rebuttal?

Douglas Hallward-Driemeier: Thank you, Your Honor. With respect to the general proposition that the ship has sailed, this Court explicitly rejected that proposition in Republic National Bank.

It said we hold, in an in rem forfeiture action, the court of appeals is not divested of jurisdiction by the prevailing party's transfer of the res out of the court. This Court rejected precisely the rule they have cited.

So perhaps they are suggesting there is a bankruptcy-specific rule to the same effect. We cite at page 18 of the reply brief several cases in the courts of appeals that concern this issue, and they say that if the transferee is not a party to the proceeding, then the court cannot order it back.

But, if the transferee is a party to the proceeding, then the court of appeals can undo the transaction.

That is the rule we are relying on.

It is the rule applied by Fink and other cases cited. Now, mind you, Gray, Voorhees, et cetera, were never cited in the briefs, and I don't know what they say.

I'm sorry.

But, to the extent that they purport to establish a rule similar to their characterization of The Ann or The Little Charles, again, this Court specifically rejected that in Republic National Bank. Now 363(m), as Your Honors' questions suggested -- as Your Honors' questions suggest, presupposes that there is authority in the courts to get that property back if, for example, it's a bad page -- bad faith purchaser. But it does not say that it has to be done via Section 549.

And, in fact, Transform's argument explains why that can't be the case, because 549 is a cause of action owned by the debtor.

It says, hey, too late, sorry, Sears waived any 549 cause of action, and also, guess what, two years have passed, so you can't do that either. Congress would not have subjected a party who prevails on appeal in establishing that the transfer is to a party in bad faith would have no viable cause of action or opportunity to recover it. It's inherent in the authority of the Court.

That's what the cases we cite on page 18 provide.

At the end of the day, all of these are merits issues that do not preclude this Court from deciding the issue on which it granted certiorari. I want to point out that with -- on that issue, first of all, that the good faith finding of fact was in the sale order.

Of course, it could not have made a good faith finding of fact with respect to the assignment because the assignment didn't happen until six months later. And MOAC is challenging their good faith.

We challenged it in the form of making an argument of judicial estoppel because they were the ones that were responsible for there being no stay because they told the bankruptcy court multiple times that they would not invoke 363(m).

This -- this bankruptcy court referred to that in its analysis of every one of the factors. And then, finally, with respect to Rule 805, it predated Section 363(m) by two years.

There was no established practice of the type they suggest, and, of course, the cases we cite are to the contrary. Thank you, Your Honor.

John G. Roberts, Jr.: Thank you, counsel.

The case is submitted.