Court Opinion

ID: 62307
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:42:35+00
Date Added: 2024-06-11T17:20:03.911704
License: Public Domain

[DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS
                                                       FILED
                   FOR THE ELEVENTH CIRCUIT   U.S. COURT OF APPEALS
                     ________________________   ELEVENTH CIRCUIT
                                                     MAY 8, 2008
                                                 THOMAS K. KAHN
                           No. 07-10845
                                                      CLERK
                       ________________________

         D. C. Docket Nos. 06-60677 CV-CMA &02-22260 BKC-PG

IN RE:

THOMAS J. RYAN, III,

                                          Debtor.
 __________________________________________________________________
WINCHESTER GLOBAL TRUST CO.,

                                               Plaintiff-Appellee,

                                 versus

ENTRUST NPL, CORP.,

                                               Defendant-Appellant.

                       ________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                     _________________________

                             (May 8, 2008)
Before WILSON, COX and BOWMAN,* Circuit Judges.

PER CURIAM:

       The sole issue before us is whether the bankruptcy court has subject matter

jurisdiction to resolve a dispute between two non-debtors—Winchester Global

Trust Company Limited and Entrust NPL Corporation—over which entity owns

certain business records relating to property sold as part of the bankruptcy estate of

debtor Thomas J. Ryan, III. The district court determined that the bankruptcy court

does not have jurisdiction over the dispute, and Entrust appealed. Because we find

that the dispute over the business records is "related to" the administration of a

bankruptcy estate, we conclude that the bankruptcy court has jurisdiction under 28

U.S.C. § 1334(b) and reverse the judgment of the district court.

                                               I.

       Ryan filed a voluntary petition for bankruptcy in early 2002. At the time, he

owned 100% of the stock in a number of corporate entities ("the Entities"),

including Riverside Capital Advisors, Inc. On August 7, 2002, the bankruptcy

trustee sold Ryan's interests in the Entities to Entrust for the sum of $60,000. In an

order approving the sale, the bankruptcy court stated, in relevant part:

       Any original books and records, and/or assets of the Entities . . . for

       *
        Honorable Pasco Bowman, II, United States Circuit Judge for the Eighth Circuit, sitting
by designation.

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      which the Debtor has possession, custody, or control, shall be turned
      over to the Trustee forthwith. The Court shall retain jurisdiction to
      ensure that the Trustee and/or the Debtor turn over the books, records,
      or assets of the Entities to Entrust . . . .

Bankr. Ct. Order of Aug. 16, 2002, at 2. The trustee then turned over most of the

business records of the Entities to Entrust. There remain, however, business

records of Riverside that have not been turned over because Entrust and

Winchester disagree about who owns them.

      The dispute over the Riverside documents has its start in events that

occurred prior to Ryan's bankruptcy. At some point before 2001, Winchester, a

trust company that acts as sole trustee for several trusts, retained Riverside to

provide investment advice. Ryan was an officer, director, and sole stockholder of

Riverside. In August 2001, Winchester and Riverside terminated their business

relationship. Pursuant to severance agreements, Ryan and Riverside were required

to return to Winchester all files, books, and records related to the Winchester trusts.

Ryan returned most of the records, but failed to return 26 boxes of records that had

been stored in a warehouse with Ryan's property and were not located until after

Ryan filed his bankruptcy petition. Winchester asserts that it owns these records

pursuant to the severance agreements. Entrust asserts that it owns these records

pursuant to its purchase of Riverside in the bankruptcy sale.

      Winchester and Entrust filed various motions in the bankruptcy proceeding

                                           3
regarding the documents. Entrust filed a motion for the bankruptcy court to

establish a procedure for determining ownership, which the bankruptcy court

granted. Winchester then filed a motion to dismiss for lack of subject matter

jurisdiction, arguing that the disputed records had never been part of the

bankruptcy estate and that the matter therefore did not arise under federal

bankruptcy law and was not related to the bankruptcy case. The bankruptcy court

denied Winchester's motion to dismiss, stating:

      The Court finds and concludes it has jurisdiction to determine
      ownership of the records because the order approving the sale of the
      stock of the [Entities] specifically retained jurisdiction to resolve any
      disputes, the dispute concerns the enforcement of its order regarding
      the sale of estate assets and this court has inherent jurisdiction to
      enforce its own orders.

Bankr. Ct. Order of Feb. 9, 2006, at 3.

      On February 17, 2006, Winchester appealed the jurisdictional order to the

district court. The district court reversed the bankruptcy court, holding that the

bankruptcy court did not have jurisdiction to resolve the dispute over the Riverside

documents because the dispute did not "arise in" and was not "related to" the

bankruptcy case. D. Ct. Order of Jan. 23, 2007, at 7–11. The district court

remanded the case to the bankruptcy court "for further proceedings consistent with

                                           4
[the district court's] opinion." Id. at 11. Entrust appeals the district court's order.1

                                                 II.

       We review de novo the district court's determination that the bankruptcy

court does not have subject matter jurisdiction to determine ownership of the

Riverside business records. Munford v. Munford, Inc. (In re Munford, Inc.), 97
F.3d 449, 453 (11th Cir. 1996); Cmty. Bank of Homestead v. Boone (In re Boone),

52 F.3d 958, 960 (11th Cir. 1995).

       Bankruptcy courts have jurisdiction over "civil proceedings arising under

title 11, or arising in or related to cases under title 11." 2 28 U.S.C. § 1334(b); see

also id. § 157(a) (permitting district courts to refer proceedings under title 11 to

bankruptcy judges). Entrust argues that the bankruptcy court has jurisdiction under

both the "arising in" and the "related to" language of § 1334(b). Winchester

maintains that the dispute is a simple contract matter over the effect of the 2001

severance agreements and therefore neither arises in nor is related to the

bankruptcy case. We conclude that the bankruptcy court has "related to"

       1
         While a district court order remanding a case for further proceedings is ordinarily not
final, an order that leaves nothing for the bankruptcy court to do on remand but carry out a
ministerial duty is final. See Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1547–48 (11th Cir. 1996).
Here, the district court's order left nothing for the bankruptcy court to do but dismiss the
adversary proceeding initiated by Entrust for lack of subject matter jurisdiction. The district
court's order was thus final and immediately appealable, giving us jurisdiction over this case.
       2
           Title 11 of the United States Code contains the Bankruptcy Code.

                                                 5
jurisdiction and therefore do not proceed to address "arising in" jurisdiction.

                                          III.

      A dispute is "related to" a case under title 11 when its result "'could

conceivably'" have an "'effect on the estate being administered in bankruptcy.'"

Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir.

1990) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rd Cir. 1984), overruled

on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 129

(1995)). The "'proceeding need not necessarily be against the debtor or against the

debtor's property,'" if it could affect the administration of the bankruptcy estate. Id.

(quoting Pacor, Inc., 743 F.2d at 994); see also Celotex Corp. v. Edwards, 514 U.S.
300, 307 n.5 (1995) ("Proceedings 'related to' the bankruptcy include . . . suits

between third parties which have an effect on the bankruptcy estate."). "The key

word in the Lemco Gypsum/Pacor test is 'conceivable,' which makes the

jurisdictional grant extremely broad." Cont'l Nat'l Bank of Miami v. Sanchez (In

re Toledo), 170 F.3d 1340, 1345 (11th Cir. 1999). As the Supreme Court

recognized in Celotex Corp., "'Congress intended to grant comprehensive

jurisdiction to the bankruptcy courts so that they might deal efficiently and

expeditiously with all matters connected with the bankruptcy estate.'" 514 U.S. at

308 (quoting Pacor, Inc., 743 F.2d at 994).

                                           6
        In this case, we find the Lemco Gypsum/Pacor "conceivable effect" test

satisfied. The dispute between Winchester and Entrust over the Riverside

documents could conceivably affect the bankruptcy estate because the resolution of

the dispute could impact the amount of money in the estate. If the documents are

not turned over to Entrust as arguably required by the bankruptcy court's order

approving the sale of the Entities, Entrust will have a viable claim for a refund

from the estate of all or part of the $60,000 purchase price.3 We have recognized

that a bankruptcy court has jurisdiction over a dispute when the resolution of that

dispute could conceivably have an impact on the amount of money in the

bankruptcy estate. See Carter v. Rodgers, 220 F.3d 1249, 1253–54 (11th Cir.

2000) (holding that bankruptcy court had jurisdiction where the outcome of a

dispute concerning the sale of property that belonged to the bankruptcy estate

would affect the amount of estate property available to satisfy creditors' claims),

cert. denied, 531 U.S. 1077 (2001); Munford, Inc., 97 F.3d at 454 (holding that

bankruptcy court had jurisdiction to bar claims for contribution and indemnity by

one nondebtor against another nondebtor because the claims, if allowed to be

        3
        Indeed, Entrust notes, "If Entrust does not receive the benefit of its bargained for
consideration, i.e., the books and records relating to the . . . Entities, it will assert a claim against
the bankruptcy estate in the amount of at least $60,000.00 (the purchase price paid to the
bankruptcy trustee)." Reply Br. of Appellant at 7.
       We express no opinion about who is the rightful owner of the Riverside documents. We
simply hold that the bankruptcy court has jurisdiction to address this issue in the first instance.

                                                    7
brought, would affect the amount of money in the bankruptcy estate).

      Winchester asserts that Lemco Gypsum is analogous to this case and

forecloses a finding of "related to" bankruptcy jurisdiction, but we disagree. In

Lemco Gypsum, the debtor's landlord filed a motion in the bankruptcy court

seeking an award of damages against the purchaser of the debtor's property because

the purchaser failed to remove the property from the landlord's land. 910 F.2d at

786. Our Court ruled that the bankruptcy court lacked jurisdiction over the dispute

because the outcome of the dispute—an order requiring the purchaser to pay

damages directly to the landlord—would have no conceivable effect on the

bankruptcy estate. Id. at 789. We explained, "Overlap between the bankrupt's

affairs and another dispute is insufficient [for bankruptcy jurisdiction to lie] unless

its resolution also affects the bankrupt's estate or the allocation of assets among

creditors." Id. In the case presently before us, the dispute between Entrust and

Winchester does have a conceivable effect on the bankruptcy estate, which could

be subject to a $60,000 refund claim. Thus, our holding today is consistent with

Lemco Gypsum.

      For the reasons stated herein, the judgment of the district court is reversed.

      REVERSED.

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