Opinion ID: 3166758
Heading Depth: 2
Heading Rank: 3

Heading: Validity of the Bankruptcy Court Judgment

Text: [¶20] DiPietro also advances several arguments to support his contention that the bankruptcy judgment is void and therefore unenforceable. Because DiPietro did not appeal the bankruptcy judgment at the time it was entered, his right to collaterally attack the judgment in this later proceeding is limited. See Reville v. Reville, 370 A.2d 249, 253-54 (Me. 1977); Hobbs v. Hurley, 117 Me. 449, 453, 104 A. 815, 817 (1918). [¶21] A challenge to a court’s subject matter jurisdiction is one instance where a collateral attack on a judgment is permissible, because “[f]undamental lack of authority in the court to enter the judgment for want of jurisdiction either of the subject matter or over the parties . . . transcends any waiver of the right of appeal.” Warren v. Waterville Urban Renewal Auth., 290 A.2d 362, 365 (Me. 1972). We will therefore consider DiPietro’s argument that the Bankruptcy Court did not have subject matter jurisdiction to issue a money judgment against him because issuance of a money judgment is not a “core” bankruptcy proceeding pursuant to the Bankruptcy Act, see 28 U.S.C.S. § 157(b)(1) (LEXIS through P.L. 114-91). Because he is collaterally attacking the judgment in a new proceeding, DiPietro must “demonstrate affirmatively from the face of the record 13 that the court lacked jurisdiction.” Warren, 290 A.2d at 366; see also Guardianship of Gabriel W., 666 A.2d 505, 507-08 (Me. 1995) (stating that lack of subject matter jurisdiction must “appear[] on the face of the record of the judgment attacked”). [¶22] “Bankruptcy courts have only the jurisdiction permitted under the Constitution and given to them by Congress.” Juan Juan Chen v. Wen Jing Huang (In re Wen Jing Huang), 509 B.R. 742, 750 (Bankr. D. Mass. 2014) (alteration omitted) (quotation marks omitted). The Bankruptcy Act gives bankruptcy courts jurisdiction over “all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11.” 28 U.S.C.S. § 157(b)(1); see also Stern v. Marshall, 564 U.S. ---, 131 S. Ct. 2594, 2620 (2011); N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 85-87 (1982). “[D]eterminations as to the dischargeability of particular debts” are core proceedings pursuant to the Act. See 28 U.S.C.S. § 157(b)(2)(I) (LEXIS through Pub. L. No. 114-91). Consequently, the Bankruptcy Court had subject matter jurisdiction to determine that DiPietro’s liability to Faith Temple was nondischargeable. The question here, however, is whether it is clear “on the face of the record,” see Guardianship of Gabriel W., 666 A.2d at 508, that the Bankruptcy Court’s liquidation of the debt and issuance of a money judgment incident to its dischargeability determination exceeded its subject matter jurisdiction. 14 [¶23] The majority of federal courts to consider the issue have concluded that bankruptcy courts have jurisdiction to quantify a debtor’s liability and enter a money judgment against the debtor as a function of their authority to determine the dischargeability of a debt. See, e.g., Cowen v. Kennedy (In re Kennedy), 108 F.3d 1015, 1018 (9th Cir. 1997) (“We conclude, in conformity with all of the circuits which have considered the matter, that the bankruptcy court acted within its jurisdiction in entering a monetary judgment . . . in conjunction with a finding that the debt was non-dischargeable.”); Porges v. Gruntal & Co. (In re Porges), 44 F.3d 159, 164 (2d Cir. 1995) (holding that pursuant to federal statute and the court’s “inherent equitable powers,” a bankruptcy court had jurisdiction to issue a separate money judgment after determining the amount and dischargeability of a claim). This has been referred to as the “expansive approach” to jurisdiction. See Cambio v. Mattera (In re Cambio), 353 B.R. 30, 32 (B.A.P. 1st Cir. 2004). [¶24] Although some courts, including the First Circuit Bankruptcy Appellate Panel, have adopted the “limited jurisdiction approach” and declined to enter money judgments, even those courts have recognized that there is significant disagreement and that they are in the minority. See id. at 32-34 (describing the division between courts that take the expansive approach to jurisdiction and courts that take the limited jurisdiction approach, and noting that “[m]ost published decisions adopt the expansive approach”); First Omni Bank N.A. v. Thrall (In re 15 Thrall), 196 B.R. 959, 963-64 (Bankr. D. Colo. 1996) (declining to enter a money judgment on nondischargeable debt but recognizing that the “standard operating procedure” of “most [bankruptcy] courts” is to enter a money judgment on a nondischargeable debt). Indeed, the U.S. Bankruptcy Court for the District of Massachusetts recently exemplified that point by rejecting the “limited approach” adopted by Cambio and adopting the “majority position” that bankruptcy courts do have jurisdiction to enter a money judgment following a dischargeability determination. See, e.g., Juan Juan Chen, 509 B.R. at 747, 751-52.6 [¶25] These cases demonstrate that the law in this area is unsettled and that there is significant legal authority to support the Bankruptcy Court’s exercise of jurisdiction to determine DiPietro’s liability as part of its dischargeability determination. Accordingly, the “face of the record,” Guardianship of Gabriel W., 666 A.2d at 508, falls short of establishing that the court lacked subject matter jurisdiction to reduce the nondischargeable claim against DiPietro to a money 6 In Juan Juan Chen v. Wen Jing Huang (In re Wen Jing Huang), 509 B.R. 742, 749-50 (Bankr. D. Mass 2014), the court expressed the view that bankruptcy courts do not have the authority to issue money judgments incident to a dischargeability determination when “money judgment” is defined as “a judgment that entitles a party to enforcement of the judgment in [the Bankruptcy] Court” because enforcement of a judgment is not a “core proceeding.” The court held, however, that bankruptcy courts do have subject matter jurisdiction “to liquidate or quantify the underlying debt and to determine the debtor's liability thereon.” Id. at 749-50. That is what the Bankruptcy Court did here: its order was limited to a determination of the amount of DiPietro’s nondischargeable liability to First United, which Faith Temple now seeks to enforce in state court. Therefore, under the Juan Juan Chen analysis, issuance of that order was within the Court’s jurisdiction. 16 judgment. DiPietro’s collateral challenge to the judgment issued against him by the Bankruptcy Court is therefore unavailing.7