Opinion ID: 685625
Heading Depth: 2
Heading Rank: 1

Heading: Whether the district court had subject matter jurisdiction over the state court appeal.

Text: 21 We need not review whether jurisdiction existed under the Carnacchi proceeding or at the time the state court appeal was removed because NRP did not renew its objection to the bankruptcy court's jurisdiction until after a decision was rendered. In Grubbs v. General Electric Credit Corp., 405 U.S. 699, 702, 92 S.Ct. 1344, 1347, 31 L.Ed.2d 612 (1972), the Supreme Court held that when a case is improperly removed but is tried to judgment on the merits without objection, a party waives his right to later raise the issue of lack of subject matter jurisdiction at the time of removal. As Judge Merritt stated in Morda v. Klein, 865 F.2d 782 (6th Cir.1989), the Grubbs rule is eminently sensible, and conservative of judicial economy; it prevents a party who waits until after he loses in the court below to object to the jurisdictional defect from getting a second bite at the apple. Id. at 784. 22 Therefore, the issue before us on appeal is whether the bankruptcy court had subject matter jurisdiction over the arbitration award at the time judgment was entered. Resolution of the jurisdictional issue depends on this court's interpretation of 28 U.S.C. Sec. 1334, which provides: 23 Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. 28 U.S.C. Sec. 1334(b). 6 We have held that 24 [f]or the purpose of determining whether a particular matter falls within bankruptcy jurisdiction, it is not necessary to distinguish between the second, third, and fourth categories (proceedings arising under, arising in, and related to a case under title 11). These references operate conjunctively to define the scope of jurisdiction. Therefore, for purposes of determining section 1334(b) jurisdiction, it is necessary only to determine whether a matter is at least related to the bankruptcy. 25 In re Wolverine Radio Co., 930 F.2d 1132, 1141 (6th Cir.1991) (citations omitted). 26 The test of whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. Robinson v. Michigan Consol. Gas Co., 918 F.2d 579, 583 (6th Cir.1990) (emphasis in original) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984)). The proceeding need not be against the debtor or the debtor's property as long as the outcome could alter the debtor's rights, liabilities, options, or freedom of action.... Id. 27 Under our interpretation of related to, the bankruptcy court in the Time bankruptcy proceeding clearly had jurisdiction over the state court action to vacate the arbitration award. The award was the largest asset of the bankrupt company, and the resolution of the action to vacate would clearly have an impact on the value of its bankruptcy estate. The same argument could also apply to the Carnacchi proceeding, if we were required to engage in such an analysis. 7 Therefore, we hold that the bankruptcy court properly exercised subject matter jurisdiction over the state court action. 28 B. Whether the arbitrator committed reversible error in not refusing to adjourn the hearing because of De Ciantis' absence? 29 Michigan Court Rules require the state court to vacate the Arbitrator's award if 30 (d) the arbitrator refused to postpone the hearing on a showing of sufficient cause, refused to hear evidence material to the controversy, or otherwise conducted the hearing to prejudice substantially a party's rights. 31 Mich. Court Rule 3.602(J)(1)(d). Courts, however, are not permitted to overturn freely the arbitrator's refusal to grant a continuance. The limited abuse of discretion standard of review that applies generally to an arbitrator's decision also applies to review of an arbitrator's refusal to postpone a hearing. Lee v. Dean Witter Reynolds, Inc., 594 So.2d 783, 785 (Fla.App.1992). The party seeking to vacate the arbitration award carries the burden of proving by clear and convincing evidence that the arbitrators abused their discretion. See Kemp v. Fisher, 89 Wis.2d 94, 277 N.W.2d 859, 862 (1979). See also Concord General Mutual Ins. Co. v. Northern Assurance Co., 603 A.2d 470, 472 (Maine 1992). 32 Prior to reviewing the merits of this case, it should be noted that the applicable rules allow the arbitration panel to conduct the hearing even in the absence of one of the parties. Rule 30 of the Construction Industry Rules provides: 33 Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or counsel who, after due notice, fails to be present or fails to obtain an adjournment. 34 It should also be noted that two other NRP partners who were also parties to the suit apparently voluntarily missed large portions of the hearing. 35 Based on the facts before the panel, it was not an abuse of discretion for the panel to refuse to postpone the hearing due to De Ciantis' illness. NRP did not present sufficient medical evidence to inform the panel of De Ciantis' condition or how long his condition would require the hearings to be postponed. It was NRP's burden to provide this information; the panel is not required to ask the party seeking a postponement to present evidence that is sufficient in determining whether a postponement is appropriate and the length of such a postponement. 36 Although De Ciantis was a partner of NRP, other partners were present at the hearing, including Mancuso, who was the managing partner. NRP's counsel, however, resisted the panel's efforts to use the time productively. Several witnesses, including Geralt and Mancuso, were listed as witnesses but NRP's counsel dismissed Geralt as someone who doesn't know anything about anything. He also summarily stated that Mancuso's testimony built on De Ciantis' proposed testimony, but he did not give the court sufficient detail about what either party would testify. Although he insisted that De Ciantis must testify first, he had outlined a different strategy earlier. And despite the opportunity to do so, NRP's counsel did not attempt to present De Ciantis' testimony until after the arbitrators had rendered their decision some two months after the original hearing. 37 It was not an abuse of the arbitrators' discretion to encourage NRP to use the remainder of the day productively. As the record indicates, the arbitration panel had been generous in granting NRP continuances and allowing early adjournments throughout the two and a half years the suit had been in arbitration. NRP had expended its goodwill by numerous delays throughout the arbitration proceeding and it should not be able to create reversible error by its own failure to prosecute its case.