Court Opinion

ID: 6942052
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:08:28.527357+00
Date Added: 2024-06-11T16:07:44.257786
License: Public Domain

FLETCHER, Circuit Judge,
Partial Concurrence, Partial Dissent:
I concur in the majority opinion except for the part that deals with the lift of the automatic stay. I respectfully dissent from the majority’s decision to require the district court to remand to the bankruptcy court to allow it to reconsider whether relief from the automatic stay should be granted. We should simply affirm the district court or, at most, remand to the district court to consider all relevant factors, including abstention, in determining whether the bankruptcy court abused its discretion.
The majority is correct that abstention and stay are discrete issues. However, since the decision of the district court to abstain is non-reviewable, the bankruptcy court’s decision is now almost irrelevant. We should look to whether, in light of the decision to abstain, the district court abused its discretion in reversing the bankruptcy court’s refusal to lift the stay.
Ordinarily, we review the decision of the district court de novo to determine whether it erred in its review of the bankruptcy court in determining whether the bankruptcy court abused its discretion. In re Arnold, 806 F.2d 937, 939 (9th Cir.1986); See also In re Windmill Farms, Inc., 841 F.2d 1467, 1469 (9th Cir.1988) (same for our review of BAP’s review of bankruptcy court).
Here, we review with “a twist”. We must accept the decision of the district court to abstain as a given since it is non-reviewable by us. This factor was not considered by the bankruptcy court since it declined to abstain. We then should look to whether the district court, in light of the abstention, erred in reversing the bankruptcy court’s denial of the motion to lift the stay.
The majority also makes much too much of Benedor’s having filed a claim. The filing of a claim does not convert the state court action into a core proceeding and should not affect whether the stay should be lifted. The district court had it entirely right:
Simply stated, the existence of a debt and the allowance or disallowance of a debt are separate issues. The determination of whether a debt exists involves a non-core proceeding and whether to allow or disallow the debt after determining a debt exists involves a core proceeding arising under title 11. In other words, the bankruptcy court has jurisdiction over the distribution of funds, but may not always have jurisdiction to adjudicate whether a claim for distribution of the funds exists.
District Court Memorandum Opinion of November 16, 1994, 174 B.R. 814, 820. See In re Tucson Estates, Inc., 912 F.2d 1162, 1168 (9th Cir.1990). The majority notes in foot*355note 6 that there may be an issue as to whether Benedor is entitled to a jury trial in state court on its state court claim. Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) would seem to eliminate doubt on that issue.
One senses in the majority opinion an undercurrent that individual creditors can be held hostage indefinitely for the greater good of the estate. Rehabilitation of debtors and maximization of estate assets are primary goals of the Bankruptcy Code, but there are limits. Individual creditors have rights too. When an automatic stay of a non-core proceeding becomes a virtual permanent stay, constitutional concerns emerge. See Northern Pipeline Constr. Co.
I suggest we cannot say that the district court erred in the exercise of its discretion. I would affirm the district court or, at most, remand for its further exercise of discretion.