Source: https://law.justia.com/cases/federal/appellate-courts/F2/921/74/324980/
Timestamp: 2017-11-24 18:13:35
Document Index: 52765646

Matched Legal Cases: ['§ 701', '§ 151', '§ 1471', '§ 1334', '§ 363', '§ 105', '§ 1471']

In Re Granger Garage, Inc., Ow Granger Garage Sales Andequipment, Inc., Debtor.myron E. Wasserman, Trustee, Plaintiff-appellant, v. Mark Immormino, Defendant-appellee, 921 F.2d 74 (6th Cir. 1990) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1990 › In Re Granger Garage, Inc., Ow Granger Garage Sales Andequipment, Inc., Debtor.myron E. Wasserman, T...
In Re Granger Garage, Inc., Ow Granger Garage Sales Andequipment, Inc., Debtor.myron E. Wasserman, Trustee, Plaintiff-appellant, v. Mark Immormino, Defendant-appellee, 921 F.2d 74 (6th Cir. 1990)
U.S. Court of Appeals for the Sixth Circuit - 921 F.2d 74 (6th Cir. 1990)
Argued Aug. 13, 1990. Decided Nov. 30, 1990
This case began when creditors filed an involuntary bankruptcy petition against the debtor, Granger Garage Sales and Equipment, Inc., on May 6, 1981, under Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 701 et seq. On April 30, 1982, the bankruptcy court appointed an interim trustee, Myron Wasserman. A court-appointed appraiser conducted an appraisal of the debtor's property on May fourth and tenth; the appraiser valued the property, consisting primarily of a dynamometer and a 1970 tow truck, at $35,058. On June 1, 1982, the trustee filed a complaint to sell all the debtor's property.
The bankruptcy court is a court of limited jurisdiction. White Motor Corp. v. Citibank, N.A., 704 F.2d 254 (6th Cir. 1983). Bankruptcy Judges for each circuit are appointed by the United States Court of Appeals for that Circuit. 28 U.S.C. § 151. Bankruptcy courts now, and at the time of this order was issued, have only derivative jurisdiction; "They do not operate under an exclusive grant of jurisdiction as in Sec. 1471(c) but rather derive their jurisdiction from the district courts...." White Motor Corp., 704 F.2d at 263. See Northern Pipeline v. Marathon Pipeline Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982); 28 U.S.C. § 1471; compare 28 U.S.C. § 1334 (Jurisdictional provision amended by Congress after Northern Pipeline) .
The trustee argues that the court correctly issued this order under the powers granted the bankruptcy court in 11 U.S.C. §§ 363(e) and 105(a). Section 363(e) allows a bankruptcy court to prohibit or condition the sale if necessary to provide adequate protection of the interest. Section 105(a) grants the bankruptcy courts the power to "issue any order, process, or judgment that is necessary to carry out the provisions of [the Bankruptcy Code]." 11 U.S.C. § 105(a). Neither Sec. 363(e) or Sec. 105(a) are jurisdictional provisions. The subject matter jurisdiction of the bankruptcy court is limited to that which congress specifically grants. See White Motor Corp., 704 F.2d at 259-261. This jurisdiction at the time the order was issued was limited to 28 U.S.C. § 1471(a) and (b). Northern Pipeline, 458 U.S. at 54, 102 S. Ct. at 2862; White Motor Corp., 704 F.2d at 259. Neither Sec. 1471(a) or (b) grant subject matter jurisdiction over an indemnification order to an attorney who argued the creditor's motion for public sale; thus, the bankruptcy court had no power to hold the creditor's attorney personally liable under Sec. 363(e), Sec. 105(a) or any other section of the Bankruptcy Code.
Nor do the bankruptcy court's equitable powers allow it to impose indemnity on a creditor's attorney. Those equitable powers may only be exercised within the confines of the Bankruptcy Code. Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 108 S. Ct. 963, 99 L. Ed. 2d 169 (1988). A bankruptcy court does not have unfettered equity powers. Id. A bankruptcy court cannot extend its subject matter jurisdiction under the guise of acting "equitably." Because congress did not grant the bankruptcy court subject matter jurisdiction, the equitable powers of the bankruptcy court can not be used to impose the order either. Id. Indeed, even if the court had the power, such an indemnification order would have been inequitable, not equitable. Equity opposes placing the interests of an attorney against those of his client. The bankruptcy court order placed a creditor's attorney in the dilemma of acting in his own best interest to avoid the potential liability of personal indemnification or of acting in his client's best interest by actually incurring that liability. We cannot hold such a result to be "equitable."For the foregoing reasons, we deny the trustee's motion.