Opinion ID: 413419
Heading Depth: 2
Heading Rank: 3

Heading: Bankruptcy Court v. ASBCA

Text: 44 Finally we have the necessary predicate to mediate between the bankruptcy court and the ASBCA. We have some basic understanding of the nature of the two institutions, we know a little better what it means to say that a bankruptcy court may, in its discretion, allow another court to liquidate claims, and we know of three occasions where the Supreme Court has held that a bankruptcy court should have deferred. 45 The bankruptcy court below made detailed findings to support its determination that it should not defer. If the question facing us today were simply whether the bankruptcy court abused its discretion in making that determination, we would clearly have to hold that it did not; the bankruptcy court's decision was neither arbitrary nor capricious, but rather deliberate and reasoned. We do, however, have an antecedent question: Was this decision a truly discretionary decision? Was this discretion by choice? 46 1. The Supreme Court Trilogy.--The first inquiry in determining whether the decision was truly discretionary is to determine whether the trilogy of Supreme Court cases discussed above has enunciated a rule of decision controlling the present case. The parties to the present case viewed these three Supreme Court cases as holding essentially that when Congress has committed a type of decision to a specialized tribunal, a bankruptcy court should defer. This view of the three cases explains why the parties disagreed so sharply over the characterization of the ASPRs, the disputes clause, and the ASBCA as being creatures of Congress or the product of a private law contractual agreement. If the mechanisms of government dispute resolution are congressionally created, the case lies within the rule of the trilogy of Supreme Court cases, and not within the bankruptcy judge's discretion. 47 In discussing the mechanisms of governmental contract dispute resolution, supra Part II, we found that they were not congressionally mandated. Thus, we do not view this case as being within the rule of the trilogy of Supreme Court cases. 48 2. Time for a Rule.--Gary would have us read these three Supreme Court cases as also standing for their negative pregnant--if Congress has not specifically committed a particular class of disputes exclusively to a specialized agency, then those disputes are within the free discretion of the bankruptcy court to adjudicate. As we discussed earlier, a decision may be discretionary for two reasons. It may be discretionary because the field has not matured enough for there to be rules governing everything--discretion by default--or it may be discretionary because of an affirmative judgment that it is not amenable to a rule--discretion by choice. It is our view that the three Supreme Court cases do not represent an affirmative judgment that cases are permanently committed to discretion by choice unless they are committed by Congress exclusively to a specialized tribunal. And so we must now decide whether liquidation of a government contract claim should be given over to discretion by choice. 49 Congress initially gave over to discretion the question of whether a bankruptcy judge should defer to another tribunal for resolution of a particular issue. This discretion is not unguided, however; it has both latitudinal and longitudinal dimension. It is neither cosmic nor omniscient, but rather discretion guided by the will of the law. In determining the will of the law, we are guided by the broad principles of bankruptcy. The three Supreme Court cases represent a judgment that in a particular class of disputes, judgments committed by Congress to the exclusive expertise of an administrative body, the broad principles of bankruptcy would consistently lead to one particular decision, i.e., the bankruptcy court should defer. Thus that formerly discretionary question was an appropriate subject for a rule of decision. We are now faced with a similar question: Should there be a jurisdictional rule regarding government contract disputes before the ASBCA? 50 To determine whether a rule is appropriate, we must look to the nature of the two processes involved. The primary purpose of a proceeding in bankruptcy is to ensure that all creditors are treated fairly. 5 This primary purpose makes it absolutely essential that all claims be satisfied in one forum. The ancillary jurisdiction of a bankruptcy court to liquidate claims, however, involves more nearly the administrative convenience of settling all disputes in a single forum; it just is not as vital to the purpose of bankruptcy. So, for example, we are told that in proper circumstances bankruptcy courts should defer unsettled questions of state law to state courts. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 483, 60 S.Ct. 628, 630, 84 L.Ed. 876 (1940). See also First State Bank and Trust Co. v. Sand Springs State Bank, 528 F.2d 350, 354 (10th Cir.1976) (Bankruptcy courts should be reluctant to entertain questions which may be equally well resolved elsewhere.). Furthermore, though Smith, Order of Railway Conductors, and Nathanson do not specifically control this case, they at least can stand for the general proposition that a bankruptcy court should defer a complicated, technical dispute to a specialized forum. 51 Given these generalized ideas about a bankruptcy court's ancillary jurisdiction, we must now investigate whether they justify articulating a general rule for resolution of government contract disputes pending before a Board of Contract Appeals. First, allowing a Board of Contract Appeals to liquidate claims arising out of a government contract would not impair the primary goal of bankruptcy--requiring satisfaction of all claims against the bankrupt's estate proceed in a central forum; once the Board of Contract Appeals liquidated the claim, the government would look to the bankruptcy court for satisfaction. Second, government contracting law tends to be technical and esoteric. For example, the trial below took eight months and generated a 17,000 page transcript. The findings of fact constitute a moderate-sized book in themselves. Third, there are specialized fora designed specifically to resolve government contract disputes. Boards of Contract Appeals were created precisely because of the needs for expertise, speed, and uniformity in resolving government contract disputes. One cannot help but think that the ASBCA might have been better qualified by its experience and expertise to resolve the present case than was a bankruptcy judge who was at one stroke forced to master government contracting law. Fourth, government contract disputes may often have claims running against the government in addition to claims against the contractor. Resolution of the claims against the government is in the exclusive jurisdiction of the Court of Claims; thus, if a bankruptcy court did not defer to the Board of Contract Appeals, the same basic contract dispute might have to be tried twice. 6 Finally, though the Board of Contract Appeals were not specifically created by Congress, Congress certainly was aware of them and has endorsed them in the Wunderlich Act and the newly enacted Contract Disputes Act of 1978. 52 In summary, this does seem to be an area where a rule of decision would be proper. The various factors we have just discussed seem common to most, if not all, government contract disputes normally heard before Boards of Contract Appeals. This common nature is the key indicator for whether a rule or discretion by choice is appropriate; given these common factors, a rule for deferral is appropriate. We hold that a bankruptcy court should defer liquidation of a government contracting dispute to the Board of Contract Appeals. 7