Court Opinion

ID: 9488350
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:42:27.568637+00
Date Added: 2024-06-11T17:52:49.750917
License: Public Domain

GARZA, Circuit Judge,
concurring:
Although I agree with the majority’s implicit holding that the dismissal of the underlying bankruptcy case does not deprive the district court of the power to remand a proceeding that was appealed prior to the dismissal, I disagree with the majority’s holding that the remand deprives the bankruptcy court of its discretion to 1) consider its own jurisdiction and 2) decide whether it should actually adjudicate the dispute. For that reason, I concur in the judgment only.
I agree with the majority’s statement that “[djismissal of a bankruptcy proceeding normally results in dismissal of related proceedings because federal jurisdiction is premised upon the nexus between the underlying bankruptcy case and the related proceedings,[1] but this general rule is not without exceptions.” At 1289.2 The question is *1291whether an exception applies here. Although it is partially correct that “[t]he rationale for retention of jurisdiction ... is that some cases ‘have progressed so far that judicial interference is needed to unravel or reserve the rights of parties,’ ” at 1289 (citation omitted), the rationale for retaining jurisdiction turns on more than the degree to which a case has progressed.
In this case, “[t]he debtor’s rights were not implicated in this dispute, as the sole issue was whether LaSalle was entitled to all or only a portion of the proceeds.” At 1289. Therefore, regardless of the outcome, there will be no return of funds to the estate. LaSalle appears to argue that because the estate no longer exists, neither does any nexus. I distinguish, however, “between the determination of the existence of jurisdiction at the outset of [the dispute] and the determination of whether ‘related’ claims should be dismissed with the dismissal of the bankruptcy case.” In re Smith, 866 F.2d at 580.3 Turnover actions arise out of the bankruptcy case and proceedings initiated to correct errors in a turnover action are related to that bankruptcy case; accordingly, initial jurisdiction existed.
The question now is whether the bankruptcy court still had jurisdiction over the remanded proceeding after the underlying bankruptcy had been dismissed. Because LaSalle failed to give the government proper notice of the turnover action, the bankruptcy court must reconsider the entire turnover action as if it had not yet been heard. Because the underlying bankruptcy case has been dismissed,4 the first question a bankruptcy court must address is whether the circumstances warrant retention of bankruptcy jurisdiction. The majority, however, would deprive the bankruptcy court of its discretion and would mandate actual adjudication of this proceeding. I would allow the bankruptcy court its full range of authority.5
In determining whether to retain jurisdiction, courts look to four factors: economy, convenience to the parties, fairness to the parties, and comity. Querner, 7 F.3d at 1202; In re Carraher, 971 F.2d at 328; In re Morris, 950 F.2d at 1534. Thus, when claims had been pending for several years and concerned issues with which bankruptcy courts are familiar, the factors have warranted continuing jurisdiction. See, e.g, In re Carraher, 971 F.2d at 328 (finding postbankruptcy jurisdiction appropriate where comity not implicated because issue concerned res judicata effect of prior bankruptcy decision and claims had been pending for six years); In re Morris, 950 F.2d at 1534 (continuing jurisdiction over contract claim that had been pending six years); In re Smith, 866 F.2d at 580 *1292(holding post-bankruptcy jurisdiction proper over fraud claim pending for four years). In contrast, continuing jurisdiction was not proper when the initiation of the dispute was recent, no action had been taken prior to the dismissal, and the dispute concerned issues of probate law, in which state courts had more expertise. In re Querner, 7 F.3d at 1202.
In this case, the dispute between LaSalle and the United States has been pending for several years. If the bankruptcy court declines jurisdiction, the parties would have to refile and relitigate the same issues in district court. Accordingly, judicial economy, convenience, and fairness favor jurisdiction. Moreover, because the issue remaining concerns bankruptcy law, not state law, comity is not implicated. Consequently, the factors stated above support the continuation of jurisdiction.
I would therefore hold that where a bankruptcy court dismisses a bankruptcy case while a matter related to the bankruptcy has been appealed, the bankruptcy court has the discretion to retain jurisdiction and decide the matter remanded by the appellate court. In re Querner, 7 F.3d at 1202 (citing Carnegie-Mellon, 484 U.S. at 353, 108 S.Ct. at 620-21); In re Carraher, 971 F.2d at 328; In re Morris, 950 F.2d at 1534; In re Smith, 866 F.2d at 580. Because the majority eliminates the bankruptcy court’s discretion and mandates adjudication without first addressing the question of the bankruptcy court’s discretion to retain jurisdiction,6 I cannot agree with its reasoning. Accordingly, I concur in the judgment.

1. The confirmation of a reorganization plan or the close of a bankruptcy estate regularly results in the dismissal of related claims. See In re Querner, 7 F.3d 1199, 1201 (5th Cir.1993) ("[A]s a general rule the dismissal or closing of a bankruptcy should result in the dismissal of related proceedings.”); In re Smith, 866 F.2d 576, 580 (3d Cir.1989) ("As a general rule, the dismissal of a bankruptcy case should result in the dismissal of ‘related proceedings' because the court's jurisdiction of the latter depends, in the first instance, upon the nexus between the underlying bankruptcy case and the related proceedings."). This result occurs because the nexus between the related claim and the bankruptcy estate no longer exists. See In re Querner, 7 F.3d at 1201 ("The general rule favors dismissal because the court's jurisdiction over the related proceedings depends upon the nexus between the underlying bankruptcy case and the related proceeding.").

. See also In re Querner, 7 F.3d at 1201 ("Notwithstanding the general rule, however, nothing in the statute governing bankruptcy jurisdiction mandates automatic dismissal of related proceedings upon termination of the underlying bankruptcy case.”); In re Carraher, 971 F.2d 327, *1291328 (9th Cir.1992) ("[B]ankruptcy courts are not automatically divested of jurisdiction over related cases when the underlying bankruptcy case is dismissed.").

. See also In re Querner, 7 F.3d at 1201 (addressing existence of jurisdiction "while the [bankruptcy] case was proceeding”); In re Morris, 950 F.2d 1531, 1534 (11th Cir.1992) (looking to whether the dispute "was related to the bankruptcy case at the time of its commencement”),

. The parties, including the Government, agreed or at least acquiesced to the dismissal. See at 1287.

. I find this situation analogous to that in which the proceeding in question concerns only matters of state law. Under the majority's reasoning, if the remanded dispute rested only on issues of state law, the bankruptcy court would nonetheless be required to adjudicate it. Resolution of state claims, however, properly remains within a federal court's discretionary pendent jurisdiction. See In re Querner, 7 F.3d at 1202 (analogizing postbankruptcy jurisdiction over related claims to pendent jurisdiction over state law claims) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 353, 108 S.Ct. 614, 620-21, 98 L.Ed.2d 720 (1988)); In re Carraher, 971 F.2d at 328 ("turning] for guidance to cases considering the authority of federal district courts to retain pendent state claims”); In re Morris, 950 F.2d at 1534 ("The disposition of an adversary proceeding is appropriately compared to the disposition of pendent state claims....”); In re Smith, 866 F.2d at 580 ("[d]rawing upon an analogy to the disposition of ancillary and pendent claims”). Indeed, the Supreme Court in Camegie-Mellon rejected an argument that would require the federal district courts to retain jurisdiction over pendent state claims after the companion federal claims had been dismissed: "Under petitioners' suggested approach, district courts would retain jurisdiction over cases that ... properly belong in state courts. There is no reason to compel or encourage district courts to retain jurisdiction over such cases when the alternative of remand is readily available.” Carnegie-Mellon, 484 U.S. at 352 n. 10, 108 S.Ct. at 620 n. 10.

. See In re Morris, 950 F.2d at 1535-36 (remanding for consideration of merits of appeals only because "we cannot say that the bankruptcy court abused its discretion by retaining jurisdiction over the adversary proceeding....").