Court Opinion

ID: 9689862
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:48:55.139911+00
Date Added: 2024-06-11T18:18:52.560802
License: Public Domain

RYAN, Bankruptcy Judge,
concurring in part and dissenting in part.
I believe that the bankruptcy court had ancillary jurisdiction18 to enter the order annulling the automatic stay (the “Order”), and I concur with that portion of the opinion. However, I do not believe that it is *253necessary to address whether the bankruptcy court had “arising under” jurisdiction, and as to that portion of the opinion, I respectfully dissent.
A bankruptcy court’s jurisdiction is governed by 28 U.S.C. § 1884, which provides in part that “the district courts [and bankruptcy courts] shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). The majority takes the position that even absent ancillary jurisdiction, a bankruptcy court has “arising under” jurisdiction after a bankruptcy case has been dismissed. Apparently, according to the majority, as long as the matter involves a provision of title 11, jurisdiction can be asserted postdismissal. I disagree.
The majority reasons that the legislative history of the Code supports its conclusion. It further asserts that our prior decisions support their position. Finally, the majority contends that prior Ninth Circuit authority does not preclude the result that it reaches today. For the reasons stated below, I disagree with all these assertions.
I begin by noting that a bankruptcy court is a court of limited jurisdiction. See Taxel v. Elec. Sports Research (In re Cinematronics, Inc.), 916 F.2d 1444, 1449-50 (9th Cir.1990). The Ninth Circuit narrowly construes a bankruptcy court’s postdis-missal jurisdiction. See Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 481 (9th Cir.1989). Therefore, we should carefully consider our jurisdiction and not seek to expand it. See Linkway Inv. Co., Inc. v. Olsen (In re Casamont Invs., Ltd.), 196 B.R. 517, 521 (9th Cir. BAP 1996).
First, the majority errs because a motion for relief from the automatic stay falls into the “arising in” category of bankruptcy jurisdiction, and not the “arising under” category as asserted by the majority. In Eastport Assocs. v. City of L.A. (In re Eastport Assocs.), 935 F.2d 1071 (9th Cir.1991), the Ninth Circuit established the definition for “arising in” jurisdiction. Id. at 1076. There, the court quoted the Fifth Circuit and stated that
[t]he meaning of “arising in” proceedings is less clear, but seems to be a reference to those “administrative” matters that arise only in bankruptcy cases. In other words, “arising in” proceedings are those that are not based on any right expressly created by title 11, but nevertheless, would have no existence outside of the bankruptcy.
Id. (quoting Wood v. Wood (In re Wood), 825 F.2d 90, 96-97 (5th Cir.1987) (emphasis in original)). In Wood, the court’s definition of “arising in” jurisdiction was taken from Collier. See Wood, 825 F.2d at 96-97 (citing 1 Collier on Bankruptcy ¶ 3.01 at 3-23 (1987)).
Collier defines
“[a]rising in” acts as the residual category of civil proceedings, and [it] includes such things as administrative matters, “orders to turn over property of the estate,” and “determinations of the validity, extent, or priority of liens.” “Arising in” proceedings might also include contempt matters, motions to change the composition of a creditors’ committee under section 1102, and motions to appoint or elect trustees and examiners under section 1104. An action to recover a postpetition account “arises in the bankruptcy case.”
It seems apparent, therefore, that the phrase “administrative matters,” discussed below, is the principal constituent of “arising in” jurisdiction.
1 Collier on Bankruptcy ¶ 3.01 [4][c][iv] (Lawrence P. King et al. eds. 15th ed. rev.2001) (footnotes omitted). Collier then cross-references ¶ 3.02[3][a], which is entitled “Matters of Administration.”
*254The first category, matters of administration, includes (A) matters concerning the administration of the estate; (B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 ...; (D) orders in respect to obtaining credit; (G) motions to terminate, annul, or modify the automatic stay; (I) determinations as to the dischargeability of particular debts; (J) objections to discharges; and (L) confirmations of plans.
Collier ¶ 3.02[3][a] (emphasis added and footnotes omitted).
By this cross-reference, Collier indicates that the core proceedings discussed in ¶ 3.02[3][a] come under the “arising in” jurisdiction of a bankruptcy court. A motion to annul the automatic stay is one of those proceedings.
Thus, to the extent that the majority predicates jurisdiction on an “arising under” basis, the majority errs. The bankruptcy court did not have “arising under” jurisdiction to annul the automatic stay.
Secondly, even assuming that “arising under” jurisdiction exists, it does not serve as an independent jurisdictional basis in a dismissed case. The authority cited by the majority for this proposition is inapposite. For example, the majority cites portions of legislative history in support of its argument:
... anything that occurs within a case is a proceeding. Thus, proceeding here is used in its broadest sense, and would encompass what are now called contested matters, adversary proceedings, and plenary actions under the current bankruptcy law. It also includes any disputes related to administrative matters in a bankruptcy case.
The use of the term “proceeding,” though, is not intended to confine the bankruptcy case. Very often, issues will arise after the case is closed, such as over the validity of a purported reaffirmation agreement, [under Section] 524(b), the existence of prohibited post-bankruptcy discrimination, [under Section] 525, the validity of securities issued under a reorganization plan, and so on. The bankruptcy courts will be able to hear these proceedings because they arise under title 11.
Opinion, part IV.2.b. (quoting H.R.Rep. No. 595, 95th Cong., 1st Sess. 445 (1977), U.S.Code Cong. & Admin.News 1978, 5963, 6401). The legislative history speaks in terms of closed cases, not dismissed cases. Congressional intent clearly supports the majority’s assertion that a bankruptcy court has postclosing jurisdiction over certain matters. However, nothing in the language of the legislative history supports extending post closing jurisdiction to postdismissal jurisdiction. Additionally, the majority cites Menk v. LaPaglia (In re Menk), 241 B.R. 896 (9th Cir. BAP 1999), and Davis v. C.G. Courington (In re Davis), 177 B.R. 907 (9th Cir. BAP 1995), as standing for the proposition that “ ‘arising under’ jurisdiction does not depend on the present existence of an open case or a non-dismissed case.” Opinion, part IV.2.b. These cases do not support a claim for postdismissal jurisdiction, as is the case here.
In Menk, the bankruptcy court reopened a chapter 7 debtor’s case to allow a creditor that had not been properly scheduled to file a dischargeability complaint. After a judgment was entered, the debtor appealed the order reopening his case, but he did not appeal the determination that the debt was nondischargeable. See Menk, 241 B.R. at 903-04. We held that the debtor lacked standing to appeal the order reopening his case because the bankruptcy *255court had jurisdiction to determine the dischargeability of the underlying debt regardless of whether the debtor’s bankruptcy case was open. Id. at 917.
In Davis, the debtor filed a complaint alleging that a creditor had wilfully violated the automatic stay. After the debtor’s bankruptcy case was dismissed, the creditor filed a motion to dismiss the adversary proceeding, which the bankruptcy court granted. See Davis, 177 B.R. at 910.
On appeal we reversed, holding that the dismissal of the underlying bankruptcy case did not moot a complaint for a willful violation of the automatic stay. Id. at 911. We reasoned that the bankruptcy court had ancillary jurisdiction postdismissal because subject-matter jurisdiction had been established prior to dismissal of the case.19 Id. at 912. We further stated that “dismissal of the underlying case renders moot a motion for prospective relief regarding the stay, but does not render moot an action for damages based on violation of the stay.” Id. at 912-13.
Neither Menk nor Davis is on point. As stated above, Menk was a closed case, not a dismissed case. In Davis, jurisdiction was established as to the complaint for a willful violation of the automatic stay prior to dismissal. Here, we have a dismissed case, and the motion to annul the automatic stay was not filed prior to dismissal of the case. Thus, the holdings of Menk and Davis are clearly distinguishable from the situation here.20
More importantly, the result reached by the majority is contrary to Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478 (9th Cir.1989), and Armel Laminates, Inc. v. Lomas & Nettleton Co. (In re Income Prop. Builders, Inc.), 699 F.2d 963 (9th Cir.1983). In Taylor, two creditors sought prospective relief from the automatic stay. To obtain this relief, they filed an adversary proceeding. This adversary proceeding and the underlying bankruptcy case were dismissed by one bankruptcy judge. Later, a second bankruptcy judge entered a default judgment that granted the prospective relief sought. The Ninth Circuit held that the default judgment was void because the second bankruptcy court lacked postdismissal jurisdiction to enter that order. See Taylor, 884 F.2d at 481-82.
There, the Ninth Circuit stated that the bankruptcy court retained subject-matter jurisdiction to interpret orders entered prior to dismissal of the case and to dispose of ancillary matters. However, the bankruptcy court did not have jurisdiction to grant new relief independent of its prior rulings once the bankruptcy case and the adversary action had been dismissed. Therefore, even though the bankruptcy court had jurisdiction to lift the automatic stay prior to the dismissal of the case, it exceeded its jurisdiction postdismissal by signing the stay lift order that granted prospective relief. Id.
In Income Prop. Builders, after a creditor appealed an order denying a motion to reimpose the automatic stay, the bankruptcy court dismissed the debtor’s case. The Ninth Circuit then dismissed the appeal because the underlying case had been dis*256missed. The Ninth Circuit stated that “[o]nce the bankruptcy was dismissed, a bankruptcy court no longer had power to order the stay or to award damages allegedly attributable to its vacation [of the stay].” Income Prop. Builders, 699 F.2d at 964.
Thus, a bankruptcy court is precluded from granting “new relief’ postdismissal that is independent of a prior order. See Franklin, 802 F.2d at 327. Nonetheless, the majority’s approach would allow a bankruptcy court to provide new relief independent of a prior order as long as the relief was covered by the “arising under” umbrella. Indeed, the majority’s approach would render Taylor and Income Prop. Builders meaningless. According to the majority, a right to relief or a cause of action created by the Code provides “arising under” jurisdiction. Therefore, if the bankruptcy court had “arising under” jurisdiction, then it had jurisdiction to provide postdismissal “new relief.” This certainly is contrary to both Taylor and Income Prop. Builders.
The Ninth Circuit has provided a clear roadmap for deciding cases such as this one. The Ninth Circuit consistently looks to ancillary jurisdiction for the answer. See, e.g. Taylor, 884 F.2d at 481 (ancillary jurisdiction to interpret orders, but not enter an order granting new relief); Elias, 188 F.3d at 1163-66 (ancillary jurisdiction over attorney’s fee dispute); Franklin, 802 F.2d at 326-27 (ancillary jurisdiction to interpret an order); Spacek v. Tabatabay (In re Universal Farming Indus.), 873 F.2d 1332, 1333 (9th Cir.1989) (ancillary jurisdiction may be exercised postdismis-sal). We should do likewise.
Here, ancillary jurisdiction appropriately applies and permits the bankruptcy court to take jurisdiction in granting the relief requested. Unwilling to rest on this basis, the majority inappropriately expands a bankruptcy court’s postdismissal jurisdiction to anything that arguably falls within the “arising under” umbrella. This is just the type of jurisdictional expansion that the Ninth Circuit has admonished bankruptcy courts not to undertake.
In summary, I believe that the postdis-missal jurisdiction of the bankruptcy court to adjudicate an action initiated postdis-missal must rest on ancillary jurisdiction, which relates back to the jurisdiction that the court had predismissal. In other words, a bankruptcy court has no separate postdismissal jurisdiction under 28 U.S.C. § 1334 to deal with an action that does not satisfy the ancillary jurisdictional requirements.

. The term "supplemental jurisdiction" refers to both ancillary and pendent jurisdiction. See 28 U.S.C. § 1367; Darrell Dunham, Bankruptcy Court Jurisdiction, 67 UMK.C L. Rev. 229, 271-75 (1999). Here, I refer to "ancillary jurisdiction” to mean jurisdiction over a postdismissal matter that involves interpreting orders previously issued by the bankruptcy court, see Beneficial Trust Deeds v. Franklin (In re Franklin), 802 F.2d 324, 326-27 (9th Cir.1986); jurisdiction over a postdis-missal matter that was established prior to dismissal of the case, see Davis v. C.G. Courington (In re Davis), 177 B.R. 907, 912 (9th Cir. BAP 1995); or jurisdiction to dispose of "ancillary matters,” such as attorney's fee disputes, see Elias v. U.S. Trustee (In re Elias), 188 F.3d 1160, 1162 (9th Cir.1999).

. Subject-matter jurisdiction is determined at the time the action is initiated. See Linkway Inv. Co., Inc. v. Olsen (In re Casamont Investors, Ltd.), 196 B.R. 517, 525 (9th Cir. BAP 1996).

. I note that the majority has not cited a case in which a bankruptcy court has asserted "arising under” jurisdiction over a postdis-missal case. Indeed, my own research has revealed no such case. However, as noted below, there are numerous Ninth Circuit cases holding that a bankruptcy court may exercise ancillary jurisdiction postdismissal.