Court Opinion

ID: 6496881
Source: CourtListenerOpinion
Date Created: 2022-06-30 18:00:35.752619+00
Date Added: 2024-06-11T08:49:22.083771
License: Public Domain

Case: 21-20559    Document: 00516376993       Page: 1    Date Filed: 06/30/2022

          United States Court of Appeals
               for the Fifth Circuit
                                                                United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                                                   June 30, 2022
                               No. 21-20559                       Lyle W. Cayce
                             Summary Calendar                          Clerk

   In the Matter of: South Central Houston Action
   Council, doing business as Central Care Integrated
   Health Services,

                                                                      Debtor,

   South Central Houston Action Council, doing business
   as Central Care Integrated Health Services,

                                                                 Appellant,

                                    versus

   Oak Baptist Church, doing business as The Fountain of
   Praise,

                                                                    Appellee.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                          USDC No. 4:20-CV-2194

   Before Jones, Elrod, and Higginson Circuit Judges.
   Edith H. Jones, Circuit Judge:
Case: 21-20559      Document: 00516376993           Page: 2    Date Filed: 06/30/2022

                                     No. 21-20559

          Fountain of Praise, a church that owns a large commercial building,
   leased space to Central Care Integrated Health Services to open a low-cost
   medical clinic for residents in the area around the building. The contractual
   relationship between Fountain of Praise and Central Care soured as soon as
   the clinic opened. Among other things, the parties quarreled over the amount
   and timing of rent payments and which party bore responsibility for fixing a
   leaky roof.   Eventually, Fountain of Praise terminated the lease and
   successfully evicted Central Care from the premises.
          In the meantime, Central Care filed for Chapter 11 reorganization.
   Central Care then sued Fountain of Praise in state court, alleging breach of
   contract and unjust enrichment claims. Fountain of Praise removed the case
   to the bankruptcy court as an adversary proceeding related to Central Care’s
   bankruptcy case. In the bankruptcy court, Fountain of Praise moved for
   summary judgment on all of Central Care’s claims against it. The bankruptcy
   court granted summary judgment on all accounts, concluding that Central
   Care’s failure to make timely rent payments excused any breach by Fountain
   of Praise and that Central Care lacked the requisite interest in the property
   for an unjust enrichment claim.
          Central Care appealed the order granting summary judgment to the
   district court. At the parties’ request, and with their consent, the district
   court reassigned the matter to a magistrate judge under 28 U.S.C. § 636(c).
   The magistrate judge affirmed the bankruptcy court’s judgment. Central
   Care now seeks review in this court.
          This court has an obligation to consider the basis of the district court’s
   jurisdiction sua sponte before addressing the merits of a dispute. Bridgmon v.
   Array Systems Corp., 325 F.3d 572, 575 (5th Cir. 2003). We must vacate the
   judgment because the district court improperly authorized referral of the
   appeal from a bankruptcy court decision to a magistrate judge. See Minerex

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Case: 21-20559         Document: 00516376993               Page: 3      Date Filed: 06/30/2022

                                          No. 21-20559

   Erdoel, Inc. v. Sina, Inc., 838 F.2d 781, 786 (5th Cir. 1988). In Minerex, this
   court held that, notwithstanding the broad latitude for referring matters to
   magistrate judges under 28 U.S.C. § 636(c), the statute governing appeals
   from bankruptcy decisions, 28 U.S.C. § 158, plainly and solely allows appeals
   to “be taken either to (i) the District Court or (ii) to a panel of bankruptcy
   judges.” 1 Id. at 786.        “[H]ad Congress meant for its appeals scheme to
   include the potential for reference to a magistrate,” the court explained,
   “Congress would have expressly so provided,” but it “did not do so.” Id.
   We therefore VACATE the magistrate judge’s judgment and REMAND
   to the district court for further proceedings consistent with this opinion.

           1
              Importantly, subsequent cases explained that a district judge may refer
   bankruptcy appeals for a report and recommendation so long as the district court “engaged
   in an independent consideration of the issues . . . .” In re Foreman, 906 F.2d 123, 125-26
   (5th Cir. 1990), abrogated on other grounds by Grogan v. Garner, 498 U.S. 279, 291, 111 S. Ct.
   654, 661 (1991).

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