Opinion ID: 869684
Heading Depth: 5
Heading Rank: 2

Heading: Kashani Factors

Text: Five questions were identified in Kashani as being relevant to whether the bankruptcy court should retain jurisdiction: 1. Whether the acts or transactions relate to the carrying on of the business connected with the property of the bankruptcy estate. If the proceeding is under 28 U.S.C. § 959(a), then no court approval is necessary. . . . 2. If approval from the appointing court appears necessary, do the claims pertain to actions of the trustee while administering the estate? By asking this question, the court may determine whether the proceeding is a core proceeding or a proceeding which is related to a case or proceeding under Title 11. . . . 3. Do the claims involve the individual acting within the scope of his or her authority under the statute or orders of the bankruptcy court, so that the trustee is entitled to quasi-judicial or derived judicial immunity? 4. Are the movants or proposed plaintiffs seeking to surcharge the trustee; that is, seeking a judgment against the trustee personally? 5. Do the claims involve the trustee’s breaching her fiduciary duty either through negligent or willful misconduct? Kashani, 190 B.R. at 886-87. The existence of “one or more of these factors may be a basis for the bankruptcy court to retain jurisdiction over the claims.” Id. at 887; see also In re Crown Vantage, 421 F.3d at 976 (discussing Kashani). Here, the bankruptcy court addressed each factor and found that they militated in favor of retaining jurisdiction. Nos. 12-5874/5875/5876 Grant, Konvalinka & Harrison v. Banks, et al. Page 25 Without repeating those findings, we are satisfied that GKH has not established an abuse of discretion in the bankruptcy court’s denial of its motion for leave to sue in state court. GKH’s arguments to the contrary are briefly addressed. First. As already discussed, the § 959(a) exception to the Barton doctrine does not apply. GKH misapprehends this factor by focusing on Judge Cook’s ruling that the 50-acre parcel was not property of the bankruptcy estate. Second. As discussed above, the bankruptcy court did not err in finding that the Trustee’s actions in filing and pursuing the Bradley County Complaint were taken within the scope of his authority to administer the bankruptcy estate. Nor is it relevant that the Trustee filed his “non-core” claims in state court. As the bankruptcy court explained: The categorization of an action as “core” or “non core” for purposes of bankruptcy court jurisdiction may be determinative of what forum the trustee must use to obtain jurisdiction over the party from whom he is seeking the recovery. It is not determinative of whether the filing of that suit is inside or outside the scope of the trustee’s duties. In re McKenzie, 2011 WL 3439081, at . The bankruptcy court did not err in finding that this factor weighed in favor of retaining jurisdiction. Further, as is discussed below, the late addition of claims against the Debtor and the attorneys (to the extent that they represented him) did not require a different result. Third and Fourth. GKH contends that the need for bankruptcy court oversight may be less when the claims against the trustee are personal capacity claims that do not implicate the bankruptcy estate directly. That is not the case, however, when the trustee is entitled to immunity. Here, the bankruptcy court observed that similar questions of the Trustee’s immunity were already being considered in GKH’s related adversary proceedings. It was not an abuse of discretion to conclude that because there was a strong possibility that the Trustee would be entitled to immunity in this case, these factors weighed in favor of retaining jurisdiction over the claims against the Trustee. Indeed, the bankruptcy court has since dismissed the claims against the Trustee and his attorneys on the grounds of quasi-judicial immunity. Nos. 12-5874/5875/5876 Grant, Konvalinka & Harrison v. Banks, et al. Page 26 Fifth. The bankruptcy court acknowledged that GKH’s claims did not allege breach of any fiduciary duty owed to it as a creditor, but found that GKH’s tort claims were better suited to be heard in bankruptcy court both because the claims were “intertwined with the Trustee’s duties pursuant to 11 U.S.C. § 704” and because GKH was already pursuing a similar adversary proceeding based on the same operative facts. Id. at . We have already rejected GKH’s argument that the Trustee exceeded the scope of his authority under § 704.