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Civil Resource Manual 187. Limitations Upon The Exercise Of Bankruptcy Jurisdiction


Limitations Upon the Exercise of Bankruptcy Jurisdiction

1. Abstention
2. Primary Jurisdiction
3. Exhaustion of Administrative Remedies
4. Removal and Remand
5. Personal Injury and Wrongful Death Claims
6. Jury Trials
7. Contempt
8. "Court of the United States
9. Article III Judicial Power
10. Scope of the Court's Authority Under Selected Bankruptcy Code Sections
11. Res Judicata and Collateral Estoppel

 Bankruptcy jurisdiction, though broad, is subject to such limiting principles as justiciability and standing, which govern Federal courts generally.  The following topics address various other rules and principles (besides sovereign immunity, which is treated later in this outline), which limit the exercise of bankruptcy jurisdiction under certain conditions.   1.    Abstention.  "Abstention" is a judicially created doctrine to resolve conflicts between  Federal and state court and is based on comity with state courts.   See 17A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,  Federal Practice and Procedure: Jurisdiction 2d §§ 4241-55  (2d ed. 1988).  However, abstention in the context of bankruptcy cases is  statutory, see 28 U.S.C. § 1334(c), and has been extended to  administrative and Federal forums.  See Eastport Assocs. v. City  of Los Angeles (In re Eastport Assocs.), 935 F.2d 1071 (9th Cir. 1991)  (district court did not abuse its discretion by abstaining to local  administrative proceedings to resolve issues in adversary proceeding); In  re T.D.M.A. Inc., 66 B.R. 992, 995 (Bankr. E.D. Pa. 1986) ("the  statement that '[n]othing . . . prevents a district court in the interests  of justice' from abstaining . . . probably applies to reference to federal  as well as state forums").       a.    Mandatory Abstention.             A bankruptcy court must abstain where:             (1)   timely motion is made by a party;             (2)   proceeding is based on a state law claim or cause of                   action;             (3)   proceeding is "related to" a case, not "arising under" the                   Code or "arising in" a case; In re Chicago, Milwaukee,                   St. Paul & Pac. R.R., 6 F.3d 1184, 1194 (7th Cir.                   1993); In re Emerald Acquisition Corp., 170 B.R.                   632, 646 (Bankr. N.D. Ind. 1994) (non-core proceeding                   requirement is most important factor);               (4)   but for the bankruptcy, proceeding would have been brought                   in state, not Federal, court (i.e., no independent ground                   of Federal jurisdiction); and             (5)   action is commenced which the bankruptcy court finds will                   be timely adjudicated.  28 U.S.C. § 1334(c)(2).                    See Miller & Miller Auctioneers, Inc. v. Ritchie                   Bros. Auctioneers Int'l (In re Mo. Props. Inc.), 211                   B.R. 914 (Bankr. W.D. Mo. 1996).                   Non-core proceedings involving the  liquidation or                   estimation of personal injury tort and wrongful death                   claims against the estate are not subject to mandatory                   abstention. 28 U.S.C. § 157(b)(4).       b.    Permissive Abstention.             (1)   Bankruptcy courts may abstain from hearing a                   proceeding arising under the Code or arising in or related                   to a case under the Code if such abstention is in the                   interest of justice, comity with state courts, or respect                   for state law.  28 U.S.C. § 1334(c)(1).  The court may                   abstain from the entire bankruptcy case in some                   circumstances.  11 U.S.C. § 305.             (2)   Permissive abstention is not limited to state law claims.                    Bankruptcy courts have abstained to permit other Federal                   courts and administrative boards to resolve disputes,                   inter alia, government contract issues.                    See, e.g., Asbestosis Claimants v. Apex Oil Co.                   (In re Apex Oil Co.), 980 F.2d 1150 (8th Cir. 1992)                   (court abstained in favor of a Federal district court                   multi-district action involving Jones Act and maritime                   claims); Plum Run Serv. Corp. v. United States Dep't of                   the Navy (In re Plum Run Serv. Corp.), 167 B.R. 460,                   464-65 (Bankr. S.D. Ohio 1994) (abstention in favor of                   Armed Services Board of Contract Appeals); United States                   v. Am. Pouch Foods, Inc. (In re Am. Pouch Foods, Inc.),                   30 B.R. 1015, 1023-24 (N.D. Ill. 1983) (same),                   aff'd, 769 F.2d 1190 (7th Cir. 1985); see                   also Franklin Sav. Corp. v. Office of Thrift                   Supervision, 213 B.R. 596 (D. Kan. 1997) (deferring                   consideration of Fifth Amendment "taking" claim to Court of                   Federal Claims); In re Kalvar Microfilm, Inc., 208                   B.R. 819 (Bankr. D. Del. 1997) (abstaining from hearing                   tariff drawback dispute in favor of Customs Service).                    Abstention requires the consideration, inter                   alia, of (1) the effect on the efficient                   administration of the estate; (2) the extent to which                   Federal law issues predominate over bankruptcy issues; (3)                   the difficulty of the applicable Federal law issues; (4)                   the presence or availability of related proceedings in                   nonbankruptcy fora; (5) the degree of relatedness or                   remoteness of the proceeding to the main bankruptcy case;                   and (6) the feasibility of severing the Federal law claims                   from core bankruptcy matters.  Plum Run Serv. Corp.,                   167 B.R. at 465; see also Hutchins v. Fordyce                   Bank & Trust Co. (In re Hutchins), 211 B.R. 319 (Bankr.                   E.D. Ark. 1997); Fid. Nat'l Title Ins. Co. v. Franklin                   (In re Franklin), 179 B.R. 913, 928 (Bankr. E.D. Cal.                   1995) (12 factors to consider in deciding whether to                   abstain).             (3)   See also Apex Oil Co. v. United States Customs                   Serv. (In re Apex Oil Co.), 122 B.R. 559 (Bankr. E.D.                   Mo. 1990), rev'd, 131 B.R. 712 (E.D. Mo. 1991)                   (bankruptcy court's abstaining in favor of CIT was not in                   the interest of justice). But see In re Kalvar                   Microfilm, Inc., 208 B.R. 819, 824 (Bankr. D. Del.                   1997) (Apex decision merely highlights                   fact-intensive nature of inquiry, supports abstention in                   favor of CIT in this case).                   Abstention decision is made by the  bankruptcy court.  Fed.                  R. Bankr. P. 5011(b).                   Review Of Abstention Decisions.  Orders refusing to abstain                   in state law legal proceedings may be appealed.  28 U.S.C.                   § 1334(d).  However, other abstention decisions are                   otherwise reviewable only by the district court and not by                   the courts of appeals or the Supreme Court.  See                   Chemical Bank v. Togut (In re Axona Int'l Credit &                   Commerce Ltd. (Formerly Bancom Int'l Ltd.)), 924 F.2d                   31 (2d Cir. 1991) (§ 305(c) permits district court --                   but not court of appeals or Supreme Court -- to review                   decision to dismiss or suspend a case under § 305(a),                   thereby avoiding Art. III constitutional difficulties).                    But see In re United States Brass Corp., 110                   F.3d 1261 (7th Cir. 1997) (abstention order taking form of                   dismissal or remand rather than mere stay of district court                   proceedings is an appealable final decision).         2.  Primary Jurisdiction.       a.    Courts must defer to another forum when "enforcement of the claim             requires the resolution of issues which, under a regulatory             scheme, have been placed within the special competence of an             administrative body; in such a case the judicial process is             suspended pending referral of such issues to the administrative             body for its views." United States v. W. Pac. Ry. Co., 352             U.S. 59, 64 (1956); see also Miller v. WD-40 Co.,             29 F. Supp. 2d 1040, 1045 (D. Minn. 1998) (primary jurisdiction             requires referral of tariff dispute to Surface Transportation             Board where interpretation of disputed term or phrase implicates             larger issues of transportation policy demanding uniform             administration by an expert body); Bousa, Inc. v. United             States (In re Bulk Oil (USA), Inc.), 209 B.R. 29 (S.D.N.Y.             1997); In re Buckeye Countrymark, Inc., 227 B.R. 498             (Bankr. S.D. Ohio 1998).        b.   Deferral in such circumstances has been expanded to include             virtually any case whose consideration lies within a specialized             agency.  See, e.g., Oasis Petroleum Corp. v. United             States Dep't of Energy, 718 F.2d 1558, 1563-64 (Temp. Emer.             Ct. App. 1983); Nat'l Republican Cong. Comm. v. Legi-Tech             Corp., 795 F.2d 190 (D.C. Cir. 1986) (deferral of a copyright             matter to the Federal Election Commission); Niagara Mohawk             Power Corp. v. Megan-Racine Assocs. (In re Megan-Racine             Assocs.), 180 B.R. 375 (Bankr. N.D.N.Y. 1995) (defers             resolution of issues involving interpretation of the Public             Utility Regulatory Act to the Federal Energy Regulatory             Commission).        c.   Even in the bankruptcy context deferral of issues in such             circumstances is not discretionary.  See Reiter v.             Cooper, 507 U.S. 258, 268 (1993) (doctrine of primary             jurisdiction is "applicable to claims properly cognizable in             court that contain some issue within the special competence of an             administrative agency.  It requires the court to enable a             'referral' to the agency [here the ICC], staying further             proceedings so as to give the parties reasonable opportunity to             seek an administrative ruling"); Board of Governors of Fed.             Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32, 41-42 (1991)             (where Congress has committed certain types of decisions to             specialized tribunals, bankruptcy courts must defer);             Nathanson v. NLRB, 344 U.S. 25, 30 (1952) (court must             defer to NLRB over unfair labor practice claims); Order of Ry.             Conductors of Am. v. Pitney, 326 U.S. 561, 564-65 (1946)             (court must defer to Railway Labor Adjustment Board over extent             of union authority); Smith v. Hoboken R.R., 328 U.S. 123,             126, 132 (1946) (court must defer to ICC over determination of             right to leased tracks); Hargrave v. Freight Distrib. Serv.,             Inc., 53 F.3d 1019, 1021 (9th Cir. 1995) (bankruptcy court             must refer issues to the ICC if they are properly under the             "primary jurisdiction" of that agency); Delta Traffic Serv.,             Inc. v. Transtop, Inc., 902 F.2d 101, 103-04 (1st Cir. 1990)             (Breyer, C.J.) (primary jurisdiction doctrine requires court to             suspend its process and refer a matter to an administrative body             whenever enforcement of a judicial claim requires resolution of             issues which, under a regulatory scheme, have been placed within             the special competence of that administrative body); Kellogg             v. United States Dep't of Energy (In re Compton Corp.), 889             F.2d 1104, 1107 (Temp. Emer. Ct. App. 1989) (bankruptcy court             "must defer" to specialized forum); United States v. Gen.             Dynamics Corp., 828 F.2d 1356, 1364 n.15 (9th Cir. 1987)             ("[A]n issue is either within an agency's primary jurisdiction or             it is not, and, if it is, a court may not act until the agency             has made the initial determination.  Failure to defer when the             doctrine so mandates is reversible error."  Court holds that             deferral not appropriate in government contracting issues because             BCA/CFC are not "agencies" so doctrine does not apply; dissent             argues persuasively to the contrary); Gary Aircraft Corp. v.             United States (In re Gary Aircraft Corp.), 698 F.2d 775, 784             (5th Cir. 1983) (deferral of government contracting issues to CDA             forums mandatory); Friedman's Express, Inc. v. SKF USA, Inc.             (In re Friedman's Express, Inc.), 180 B.R. 788 (Bankr. E.D.             Pa. 1995) (deferral to ICC); Allen v. G.H. Bass & Co., 176             B.R. 91, 100 (D. Me. 1994) (deferral to ICC); In re Am. Ship             Bldg. Co., 164 B.R. 358, 362 (Bankr. M.D. Fla. 1994) ("in             matters dealing with contract disputes [with the government], [a             bankruptcy court] should yield to the jurisdiction of the Board             of Contract Appeals unless the government seeks the bankruptcy             court's jurisdiction or waives any right to object to [its]             jurisdiction"); Misener Indus. v. United States (In re Misener             Indus.), 54 B.R. 89 (Bankr. M.D. Fla. 1985) (deferral to             Board of Contract Appeals or Court of Federal Claims is             mandatory; the CDA "is the scheme, to the exclusion of all             others, which Congress has enacted for the resolution of contract             disputes involving government procurement contracts").              Contra Quality Tooling, Inc. v. United States, 47             F.3d 1569 (Fed. Cir. 1995) (bankruptcy courts need not defer to             CDA forums for resolution of government contract issues; while             resolution by CDA forums "is preferable," transfer is not             required when "transfer of a relatively straightforward contract             claim would cause substantial losses to the creditors . . . while             resolution of the claim [by the bankruptcy court] would do no             harm to the fabric of government contracting law"); Jones             Truck Lines, Inc. v. Price Rubber Corp., 182 B.R. 901, 911             (M.D. Ala. 1995) (where issue falls within the particular             expertise of a government agency, court may (1) retain             jurisdiction; (2) stay the proceedings retaining jurisdiction and             referring the matter to the administrative agency for a ruling;             or (3) or dismiss the case without prejudice).  Note: in             Carrington Gardens Associates v. United States (In re             Carrington Gardens Associates), 248 B.R. 752, 768-69 n.7             (Bankr. E.D. Va. 2000), aff'd, 258 B.R. 622 (E.D. Va.             2001), a case involving a debtor's action for contract damages             against HUD, the court, noting the Supreme Court's intervening             decision in Department of the Army v. Blue Fox, Inc., 525             U.S. 255 (1999), which reiterates that waivers of sovereign             immunity must be both explicit and narrowly construed, expressly             rejects the Federal Circuit's Quality Tooling decision.         3. Exhaustion of Administrative Remedies.       a.    The doctrine of exhaustion of administrative remedies provides             that a party is not entitled to judicial relief unless and until             available administrative remedies have been exhausted.  Myers             v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51 (1938);             accord Reiter v. Cooper, 507 U.S. 258 (1993);             cf. Board of Governors of Fed. Reserve Sys. v. MCorp             Fin., Inc., 502 U.S. 32 (1991) (§ 1334 concurrent             jurisdiction with other courts is not an appropriate basis for             staying administrative proceedings; specific preclusive language             regarding administrative powers is not qualified or superseded by             general bankruptcy provisions).       b.    Where exhaustion of administrative remedies is judicially             imposed, courts may waive the requirement under certain             circumstances; however, those circumstances do not authorize             waiver if the requirement is statutory.  Bentley v.             Glickman, 234 B.R. 12, 19 n.3 (N.D.N.Y. 1999); Scholl v.             Neb. Student Loan Program (In re Scholl), 259 B.R. 345             (Bankr. N.D. Iowa 2001) (before a court may determine the             existence of hardship, the Higher Education Act, 20 U.S.C. §             1087(c), and 34 C.F.R. § 685.215 require that the Secretary             of Education make an initial determination in certain instances).              But see Cottrell v. United States (In re Cottrell),             213 B.R. 33, 38 (M.D. Ala. 1997) (considering "defense" of             estoppel against administrative exhaustion requirement).        c.   The doctrine is applicable to bankruptcy cases even though the             court may have concurrent jurisdiction with an administrative             agency.  See, e.g., United States v. James, 256             B.R. 479 (W.D. Ky. 2000) (debtor must follow administrative             procedures for review of decision excluding him  from Federal             health care program participation); Welt v. Shalala (In re             Hosp. Staffing Servs., Inc.), 258 B.R. 53 (S.D. Fla. 2000)             (same, Medicare reimbursement); N.Y. Therapeutic Techs., Inc.             v. Shalala (In re Orthotic Ctr., Inc.), 193 B.R. 832 (N.D.             Ohio 1996) (same); Mid-Delta Health Sys., Inc. v. Shalala             (In re Mid-Delta Health Sys., Inc.), 251 B.R. 811 (Bankr.             N.D. Miss. 1999) (same); Winston v. Soc. Sec. Admin. (In re             Winston), 1999 WL 401691 (Bankr. E.D. Pa. 1999) (party             aggrieved by termination of Social Security benefits must exhaust             administrative review process before seeking redress in court);             2045 Wheatsheaf Assocs. v. United States (In re 2045             Wheatsheaf Assocs.), 1998 WL 910228 (Bankr. E.D. Pa. 1998)             (contracting officer's decision a jurisdictional prerequisite             under Contract Disputes Act); In re S. Inst. for Treatment and             Evaluation, 217 B.R. 962, 965 (Bankr. S.D. Fla. 1998)             (another Medicare case, similar holding); Niagara Mohawk Power             Corp. v. Megan-Racine Assocs. (In re Megan-Racine Assocs.),             180 B.R. 375, 382-83 (Bankr. N.D.N.Y. 1995) (debtor should             exhaust administrative remedies at FERC before court hears             issues); In re St. Johns Home Health Agency, Inc., 173             B.R. 238 (Bankr. S.D. Fla. 1994) (debtor cannot avoid Medicare's             statutory requirement that it exhaust its administrative remedies             prior to court having jurisdiction over matters "inextricably             intertwined" with demands for Medicare funds); W.J.P. Props.             v. RTC (In re W.J.P. Props.), 149 B.R. 604 (Bankr. C.D. Cal.             1992); In re Upsher Labs., Inc., 135 B.R. 117 (Bankr. W.D.             Mo. 1991); see also Pugh v. FmHA, 846 F. Supp. 60             (M.D. Fla. 1994) (no jurisdiction over claim absent compliance             with FTCA admin procedures), aff'd, 74 F.3d 1251 (11th             Cir. 1995); Gosha v. Fed. Nat'l Mortgage Ass'n (In re             Gosha), 59 B.R. 280 (Bankr. E.D. Pa. 1986) (FTCA claim             against HUD dismissed where debtor's administrative claim was not             "finally denied" by letter sent by certified or registered mail);             Sharman Co. v. United States, 24 Cl. Ct. 763, 766 (1991)             ("where the entitlement claimed derives from a contract that is             subject to the provisions of the Contract Disputes Act . . .,             then the adjudication of that entitlement is conditioned upon             exhaustion of administrative remedies").             Compare AHN Homecare, L.L.C. v. Home Health             Reimbursement and Health Care Fin. Admin. (In re AHN Homecare,             L.L.C.), 222 B.R. 804, 812 (Bankr. N.D. Tex. 1998) (42 U.S.C.              § 405(h) prohibits judicial review of controversies arising             under the Medicare Act before exhaustion of all administrative             remedies) with In re Healthback, LLC, 226 B.R. 464             (Bankr. W.D. Okla. 1998) (§ 405(h) does not state that 28             U.S.C. § 1334 is subordinate to 42 U.S.C. § 405;             therefore, bankruptcy courts have jurisdiction over Medicare             matters).             See also In re Univ. Med. Ctr., 973 F.2d 1065,             1072-74 (3d Cir. 1992) (exhaustion of administrative remedies not             required where adversary proceeding is based on Bankruptcy Code             and does not involve issue inextricably intertwined with any             dispute within agency's normal review process); United States             ex rel. Rhodey (In re R & W Enters.), 181 B.R. 624, 642-45             (Bankr. N.D. Fla. 1994) (exhaustion of administrative remedies             not required for cause of action relating to claim of the             government against the bankruptcy estate; collects cases).   4. Removal and Remand.  28 U.S.C. § 1452(a) permits removal of any claim or cause of action in  a civil action to the district court for the district where the action is  pending if such district court has § 1334 jurisdiction.  [Exceptions:  proceedings in U.S. Tax Court or to enforce police or regulatory power.]  In  any case, the court to which the action is removed may remand "on any  equitable ground." Id. § 1452(b).  Removal orders are not  appealable. Id.; Things Remembered, Inc. v. Petrarca, 516 U.S.  124 (1995); see In re United States Brass Corp., 110 F.3d  1261, 1265-66 (7th Cir. 1997); see also Belcufine v. Aloe, 112  F.3d 633 (3d Cir. 1997) (where action could have been brought originally in  Federal court, defects in removal from state court were procedural, not  jurisdictional, and subject to waiver).   5. Personal Injury and Wrongful Death Claims.  District court must try.  28 U.S.C. § 157(b)(5).  But see  Baumgart v. Fairchild Aircraft Corp., 981 F.2d 824 (5th Cir. 1993)  (district court may dismiss, under forum non conveniens doctrine, a  bankruptcy-related wrongful death case that arose in a foreign country).   6. Jury Trials.       a.    The Code provides that the bankruptcy judge may conduct a jury             trial if (1) specially designated to exercise such jurisdiction             by the district court, (2) the parties expressly consent, and (3)             the right to a jury trial otherwise applies.  28 U.S.C. §             157.             The legislative history indicates that the 1994 amendment             intended to resolve the conflict among the circuits regarding             bankruptcy judges' authority to conduct jury trials.  140 Cong.             Rec. H10766 (daily ed. Oct. 4, 1994). Compare Ben             Cooper, Inc. v. Ins. Co. of Pa. (In re Ben Cooper, Inc.), 896             F.2d 1394 (2d Cir.) (bankruptcy courts have authority to preside             at jury trials), vacated and remanded, 498 U.S. 964             (1990), aff'd, 924 F.2d 36 (2d Cir. 1991), and             Bertholet v. Harman, 126 B.R. 413 (Bankr. D.N.H. 1991)             (collecting cases) with Official Comm. of Unsecured             Creditors v. Schwartzman (In re Stansbury Poplar Place,             Inc.), 13 F.3d 122 (4th Cir. 1993), In re Grabill             Corp., 967 F.2d 1152 (7th Cir. 1992), rehear'g denied,             976 F.2d 1126 (7th Cir. 1992), Raforth v. Nat'l Union Fire             Ins. Co. (In re Baker & Getty Fin. Servs., Inc.), 954 F.2d             1169 (6th Cir. 1992), In re United Mo. Bank, 901 F.2d 1449             (8th Cir. 1990), and Kaiser Steel Corp. v. Frates (In             re Kaiser Steel Corp.), 911 F.2d 380 (10th Cir. 1990) (all             holding there is no authority for bankruptcy courts to conduct             jury trials).  See also Taxel v. Elec. Sports Research             (In re Cinematronics, Inc.), 916 F.2d 1444 (9th Cir. 1990);             Beard v. Brunstein, 914 F.2d 434 (3d Cir. 1990);             Scotland Guard Servs. v. Autoridad de Energia Electrica (In re             Scotland Guard Servs., Inc.), 179 B.R. 764 (Bankr. D.P.R.             1993) (all holding that bankruptcy court may not conduct jury             trial if matter is non-core, related); see generally             Jury Trials and Case Proceedings: The Bankruptcy Judge's             Uncertain Authority, 65 Am. Bankr. L.J. 143 (1991);             Symposium On Jury Trials In Bankruptcy Courts, 65 Am.             Bankr. L.J. 1 (1991); Sabino, Jury Trials, Bankruptcy Judges             and Article III:  The Constitutional Crisis, 21 Seton Hall L.             Rev. 258 (1991).                    "The right to a jury trial in bankruptcy involves two            separate inquiries - the existence of such a right, and the             ability of a bankruptcy court to conduct a jury trial."             Scotland Guard Servs. v. Autoridad de Energia Electrica (In re             Scotland Guard Servs., Inc.), 179 B.R. 764, 767 (Bankr.             D.P.R. 1993).  While the 1994 amendment clarifies the statutory             authority of bankruptcy courts to conduct jury trials, it does             not necessarily resolve constitutional concerns.  See             In re Clay, 35 F.3d 190 (5th Cir. 1994) (suggesting that             absent consent of the parties, bankruptcy court's conduct of jury             trial would result in Art. III violation).       b.    Parties are entitled to a jury trial for personal injury or             wrongful death claims, which 28 U.S.C. § 157(b)(5) requires             be tried in the district court.  28 U.S.C. § 1411.  Section             1411 also permits issues arising under § 303 (involuntary             filing) to be tried without a jury.                           c.    Non-Consenting Third Party.  Although the Seventh             Amendment does not prohibit Congress from assigning resolution of             a dispute to a non-Article III tribunal that does not use a jury             so long as claim asserts a "public right" (either matter arising             between Government and others or seemingly "private" right that             is closely intertwined with a Federal regulatory program),             non-consenting (i.e., those who have not filed a proof of claim)             parties may not be divested of their right to a jury in actions             involving "private" rights (here fraudulent conveyance action).              While restructuring of debtor-creditor relations in bankruptcy             "may" be a "public right," action that seeks to augment the             estate and does not involve creditors' claims to a pro rata             distribution of the estate, involves a "private" right.             Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989).             But see RTC v. Pasquariello (In re Pasquariello),             16 F.3d 525 (3d Cir. 1994) (not clear that Congress was precluded             from assigning fraudulent conveyance claim to a non-Article III             adjudicative body that does not use jury); Consol. Indus.             Corp. v. Welbilt Holding Corp., 254 B.R. 237 (N.D. Ill. 2000)             (defendant can waive right to jury trial by failing to make             timely motion for withdrawal of the reference);.       d.    Creditor.  By filing a claim, a creditor triggers the             process of allowance and disallowance of claims thereby             subjecting itself to the bankruptcy court's equitable power. "If             the creditor is met, in turn, with a preference action from the             trustee, that action becomes part of the claims- allowance             process which is triable only in equity.  As such, there is no             Seventh Amendment right to a jury trial." Langenkamp v.             Culp, 498 U.S. 42 (1990) (per curiam), rev'g, 897 F.2d             1041 (10th Cir. 1990); accord Benedor Corp. v. Conejo             Enters., Inc. (In re Conejo Enters., Inc.), 96 F.3d 346 (9th             Cir. 1996); Travellers Int'l AG v. Robinson, 982 F.2d 96             (3d Cir. 1992) (creditor who files a claim -- even a "protective             and contingent" claim -- submits itself to the bankruptcy court's             equitable jurisdiction and waives any Seventh Amendment right to             a jury trial); In re United Mo. Bank of Kan. City, 901             F.2d 1449 (8th Cir. 1990); Ryan v. Loui (In re Corey), 892             F.2d 829 (9th Cir. 1989) (applying "claim filing rule" to uphold             right of jury trial only for creditor who did not file a claim);             see First Fid. Bank v. Hooker Invs., Inc. (In re Hooker             Invs., Inc.), 937 F.2d 833 (2d Cir. 1991) (creditor can be             forced to choose between filing a proof of claim and thereby             losing its right to a jury trial, or forgoing proof of claim and             preserving right to jury but risking loss of any distribution             from estate); Beard v. Braunstein, 914 F.2d 434 (3d Cir.             1990) (debtor's action for rent under pre-petition lease against             tenant who did not submit to bankruptcy court's jurisdiction is             non-core matter and tenant has Seventh Amendment right to jury             trial); Aaron Gleich, Inc. v. Housing Auth. of New Haven (In             re Aaron Gleich, Inc.), 200 B.R. 464 (Bankr. D. Me. 1996)             (creditor waived right to jury trial by filing proof of claim);             Atl. Computer Sys., Inc. v. Mut. of Omaha Ins. Co. (In re Atl.             Computer Sys., Inc.), 165 B.R. 781 (Bankr. S.D.N.Y. 1994)             (creditor lost right to jury trial by participating in claims             process even though no formal proof of claim filed); Schwinn             Plan Comm. v. AFS Cycle & Co. (In re Schwinn Bicycle Co.),             184 B.R. 945 (Bankr. N.D. Ill. 1995); Murray v. Richmond Steel             & Welding Co. (In re Hudson), 170 B.R. 868 (E.D.N.C. 1994);             Shields v. Ciccone (In re Lloyd Sec., Inc.), 156 B.R. 750             (Bankr. E.D. Pa. 1993) (all holding that creditor's filing of             counterclaim to trustee's claims against him was a sufficient             invocation of court's "claim resolution" process to waive             creditor's right to jury trial); Styler v. Jean Bob Inc. (In             re Concept Clubs, Inc.), 154 B.R. 581 (D. Utah 1993)             (creditor's assertion of affirmative defense of setoff in             adversary proceeding did not waive creditor's right to jury             trial); Valley Steel Prods. Co. v. DARCO (In re Valley Steel             Prods. Co.), 147 B.R. 189 (Bankr. E.D. Mo. 1992) (while             violation of automatic stay not entitled to jury trial, jury             trial was required for common law counts alleging breach of             contract); Chaplin v. Harbison Group (In re Friedberg),             131 B.R. 6 (S.D.N.Y. 1991) (suit in tort for rescission and             restitution is equitable in nature; hence, no right to jury);             Bowers v. McGladrey & Pullen (In re Fla. Hotel Props.             L.P.), 163 B.R. 757 (W.D.N.C. 1994) (accounting firm did not             waive jury trial right by submitting a fee application for post-             petition services; fee application was not a "claim" because it             was not a prepetition debt); see also Smith v.             Dowden, 47 F.3d 940 (8th Cir. 1995) (claimant's jury trial             right revived after withdrawal of proof of claim).       e.    Debtor.  Most courts hold that the debtor, by voluntarily             filing a bankruptcy petition, waives its right to a jury trial.              Compare N.I.S. Corp. v. Hallahan (In re Hallahan),             936 F.2d 1496 (7th Cir. 1991) (comity with creditors who are             forced to forego jury rights by filing a claim requires             individual who voluntarily submits to the equity jurisdiction of             the bankruptcy court by filing a petition has neither a Seventh             Amendment nor a statutory right to a jury trial), In re             McNaughton, 171 B.R. 65 (Bankr. W.D. Mo. 1994) (involuntary             chapter 7 debtor not entitled to jury trial on issues raised in             involuntary petition), Crews v. Lyons (In re Lyons), 200             B.R. 459 (Bankr. S.D. Ga. 1994) (debtor waived right to jury             trial by filing petition), Auto Imports, Inc. v. Verres Fin.             Corp. (In re Auto Imports, Inc.), 162 B.R. 70 (Bankr. D.N.H.             1993) (by voluntarily initiating reorganization case, debtor             triggers claims allowance process, implicitly waiving right to             jury, notwithstanding legal or equitable nature of the allegation             in the underlying complaint), Martinson v. Towe (In re             Towe), 151 B.R. 262 (Bankr. D. Mont. 1993), Taxel v.             Marine Midland Bus. Loans, Inc. (In re Palomar Elec. Supply,             Inc.), 138 B.R. 959 (S.D. Cal. 1992), and Haile v.             R.J. Reynolds Tobacco Co. (In re Haile Co.), 132 B.R. 979             (Bankr. S.D. Ga. 1991) (chapter 11 debtor waived right to jury             trial by filing adversary proceeding in bankruptcy court)             with Germain v. Conn. Nat'l Bank, 988 F.2d 1323 (2d             Cir. 1993) (where trustee's tort action against bank seeks only             legal relief in the form of money damages, he is entitled to a             jury trial under the Seventh Amendment).  See also             Smith v. United States (In re Smith), 205 B.R. 226 (B.A.P.             9th Cir.) (no right to jury trial in action by debtor against IRS             where such right would not have been available in action against             sovereign in 18th century common-law England), appeal             dismissed, 127 F.3d 1106 (9th Cir. 1997); Leslie Salt Co.             v. Marshland Dev., Inc. (In re Marshland Dev., Inc.), 129             B.R. 626 (Bankr. N.D. Cal. 1991) (chapter 11 debtor did not waive             jury trial right by voluntarily filing petition; nevertheless, no             right to jury for environmental action because it was the             functional equivalent of a claim objection proceeding); Frost,             Inc. v. Miller, Canfield, Paddock & Stone, P.C. (In re Frost,             Inc.), 145 B.R. 878 (Bankr. W.D. Mich. 1992) (chapter 11             debtor has no right to jury trial on its objection to a proof of             claim for prepetition attorney fees or on its counterclaim             against the attorneys for negligence as these actions were an             inextricable part of the claims allowance process); Citicorp             N. Am., Inc. v. Finley (In re Washington Mfg. Co.), 133 B.R.             113 (M.D. Tenn. 1991) (trustee for chapter 11 debtor not entitled             to jury trial in fraudulent conveyance against creditor which             filed a proof of claim); Haile Co. v. R.J. Reynolds Tobacco             (In re Haile Co.), 132 B.R. 979 (Bankr. S.D. Ga. 1991)             (chapter 11 debtor waived right to jury trial by filing adversary             proceeding in bankruptcy court); Longo v. McLaren (In re             McLaren), 129 B.R. 480 (Bankr. N.D. Ohio 1991) (chapter 7             debtor who filed petition to avail himself of claims resolution             process could not claim right to jury trial).   7. Contempt.  Most courts hold that bankruptcy courts have authority to issue civil  contempt orders, and this grant is constitutionally permissible under Art.  III where district courts provide de novo review of findings  of fact and conclusions of law. Mountain Am. Credit Union v. Skinner (In  re Skinner), 917 F.2d 444, 447-50 (10th Cir. 1990).  However, the  circuits are not in complete agreement as to bankruptcy court's contempt  powers. Compare Burd v. Walters, 868 F.2d 665 (4th Cir. 1989)  (§ 105 authorizes sanctions for contempt) with Plastiras v.  Isdell (In re Sequoia Auto Brokers), 827 F.2d 1281 (9th Cir. 1987)  (bankruptcy courts do not have inherent civil contempt power and such power  should not be  implied from § 105).  See also Mapother &  Mapother, P.S.C. v. Cooper (In re Downs), 103 F.3d 472 (6th Cir. 1996)  (bankruptcy courts have inherent power to sanction improper conduct;  decisions under Fed. R. Bankr. P. 9011, which tracks Fed. R. Civ. P. 11, are  reviewed only for abuse of discretion); Shervin v. Liebersohn (In re  Shervin), 200 B.R. 109 (E.D. Pa. 1996); Headrick v. Ga. Dep't of  Revenue (In re Headrick), 200 B.R. 963 (Bankr. S.D. Ga. 1996), aff'd  sub nom. Ga. Dep't of Revenue v. Burke (In re Burke), 146 F.3d  1313 (11th Cir. 1998), cert. denied, 527 U.S. 1043 (1999); Mayex  II v. Du-An Prods., Inc. (In re Mayex II Corp.), 178 B.R. 464, 469-70  (Bankr. W.D. Mo. 1995) (bankruptcy courts have authority to exercise civil  contempt power).  A "serious question" exists concerning the bankruptcy  court's power to punish for criminal contempt a violation of an order.   United States v. Guariglia, 962 F.2d 160, 162-63 (2d Cir. 1992)  (holding that district court could punish for contempt a violation of a  bankruptcy court order because the order is an order of both the bankruptcy  court and the district court, of which the bankruptcy court is a unit);  see also In re Lawrence, 164 B.R. 73 (W.D. Mich. 1993)  (bankruptcy court lacks jurisdiction to conduct criminal contempt hearing  and enter order against chapter 13 debtor).  Current Bankruptcy Rule 9020 provides that, with respect to findings of  contempt for acts not committed in the presence of the bankruptcy judge, the  bankruptcy court's ruling is subject to review in the manner provided in  Rule 9033(b) which governs review of proposed finds of fact and conclusions  of law in non-core proceedings.  As noted above, the case law is split on  whether bankruptcy judges have independent contempt authority, and the  Advisory Committee on Bankruptcy Rules viewed current Rule 9020 as  inappropriately staking out a substantive position on the question, i.e.,  that de novo review is required.  Thus, Rule 9020 will be amended, as  of December 1, 2001, simply to provide that Rule 9014, governing contested  matters, will govern a motion for an order of contempt made by the United  States trustee or a party in interest.   8. "Court of the United States."  Is a bankruptcy court a "court of the United States" as that term is used in  various jurisdictional statutes?  For the purpose of granting a motion to  proceed in forma pauperis? Compare Perroton v. Gray (In re  Perroton), 958 F.2d 889 (9th Cir. 1992) (no) with In re  Woodman, 213 B.R. 53, 55 (Bankr. D. Conn. 1997) (no, but the district  court's authority to consider such motions "flows to the bankruptcy court"  as a "unit of the district court" by virtue of the order of reference).  For  purposes of the Equal Access to Justice Act? Compare Gower v. FmHA  (In re Davis), 899 F.2d 1136 (11th Cir. 1990) (no) with  O'Connor v. United States Dep't of Energy, 942 F.2d 771 (10th Cir.  1991), and Gumport v. ICC (In re Transcon Lines), 178 B.R.  228, 232 (Bankr. C.D. Cal. 1995) (yes).  For awarding attorney fees in tax  litigation under 26 U.S.C. § 7430?  Compare United States v.  Yochum (In re Yochum), 89 F.3d 661 (9th Cir. 1996) and Range v.  United States, 245 B.R. 266, 279 (S.D. Tex. 1999) (yes) with  IRS v. Brickell Inv. Corp. (In re Brickell Inv. Corp.), 922 F.2d 696  (11th Cir. 1991) (no).  For awarding sanctions pursuant to 28 U.S.C. §  1927? Compare Jones v. Bank of Santa Fe (In re Courtesy Inns),  40 F.3d 1084, 1086 (10th Cir. 1994) (bankruptcy court not a "court of the  United States," and lacks jurisdiction to impose sanctions under §  1927), Determan v. Sandoval (In re Sandoval), 186 B.R. 490 (B.A.P.  9th Cir. 1995) (BAP not "court of the United States"), Lauber v. Gremli  (In re Lauber), 179 B.R. 712, 715 (Bankr. M.D. Fla. 1995) (bankruptcy  court not entitled to award sanctions pursuant to § 1927 because it is  merely a "unit" of the district court, not independent "court of the United  States"), and In re Westin Capital Mkts., Inc., 184 B.R. 109,  117-18 (Bankr. D. Or. 1995) (following Courtesy Inns) with  Baker v. Latham Sparrowbush Assocs. (In re Cohoes Indus. Terminal,  Inc.), 931 F.2d 222, 230 (2d Cir. 1991) (bankruptcy court may impose  sanctions pursuant to § 1927), In re Volpert, 186 B.R. 240,  242-45 (N.D. Ill. 1995) (bankruptcy courts are "courts of the United States"  for § 1927 purposes; collects cases), aff'd, 110 F.3d 494 (7th  Cir. 1997) (discussing § 1927 but declining to decide issue; affirmed  imposition of sanctions as authorized by 11 U.S.C. § 105 and Fed. R.  Bankr. P. 9011), and In re French Bourekas Inc., 183 B.R. 695,  697 (Bankr. S.D.N.Y. 1995) (awarding sanctions under § 1927),  aff'd, 195 B.R. 19 (S.D.N.Y. 1996).  See also In re  Dembrosky, 235 B.R. 245, 247 (Bankr. W.D.N.Y. 1999) (bankruptcy courts  are not "courts of the United States" under 28 U.S.C. § 451 (Rules of  Decision Act) but are generally viewed as enjoying that status derivatively  as a unit of the district court), rev'd on other grounds sub nom.,  Chrysler Fin. Co. v. Schlant, 243 B.R. 613 (W.D.N.Y. 2000);  accord In re Kliegl Bros. Universal Elec. Stage Lighting Co.,  238 B.R. 531, 553 (Bankr. E.D.N.Y. 1999).   9. Article III Judicial Power.  See generally Land-O-Sun Dairies, Inc. v. Fla. Supermarkets, Inc.  (In re Finevest Foods, Inc.), 143 B.R. 964 (Bankr. M.D. Fla. 1992) (28  U.S.C. § 157 accords with Art. III of the Constitution); see  Gruntz v. County of Los Angeles, 202 F.3d 1074, 1080 (9th Cir.  2000)(separation of core and non-core proceedings "creates a distinction  between those judicial acts deriving from the plenary Article I bankruptcy  power and those subject to general Article III federal court jurisdiction");  Lebovits v. Scheffel (In re Lehal Realty Assocs.), 101 F.3d 272 (2d  Cir. 1996) (distinction between core and non-core proceedings is intended to  deal with problem of vesting Art. III judicial power in Art. I judges);  Hudgins v. Shah (In re Sys. Eng'g & Energy Mgmt. Assocs., Inc.), 252  B.R. 635 (Bankr. E.D. Va. 2000) (discussing importance of "public rights"  nature of bankruptcy proceedings to designation of "core" proceedings);  Noonan v. Cellu Tissue Corp. (In re Palmer Trucking Co.), 201 B.R. 9  (Bankr. D. Mass. 1996).  Although the bankruptcy court is not an Article III court, its jurisdiction  is limited by the constitutional standing requirement.  United States V.  Amoskeag Bank Shares, Inc. (In re Amoskeag Bank Shares, Inc.), 239 B.R.  653, 657 n.3 (D.N.H. 1998).   10. Scope of the Court's Authority Under Selected Bankruptcy Code Sections.  The following subsection addresses 11 U.S.C. § 105 (the "all writs"  section of the Bankruptcy Code) and proceedings "arising under" selected  Code sections where the scope of the bankruptcy court's authority is often  subject to controversy.       a.    Power of the Court, § 105.  Section 105 authorizes the             bankruptcy court to issue any order necessary or appropriate to             carry out the provisions of the Code.             "The Supreme Court has taught that any grant of authority given             to the bankruptcy courts under § 105 must be exercised             within the confines of the bankruptcy code." Gouveia v.             Tazbir, 37 F.3d 295, 301 (7th Cir. 1994) (citing Norwest             Bank Worthington v. Ahlers, 485 U.S. 197 (1988)).  Thus,             courts may not use § 105 to create substantive rights             unavailable under the Code.  See Taylor v. United             States (In re Taylor), 263 B.R. 139 (N.D. Ala. 2001) (note:             on appeal to 11th Cir.); MFS Telecom, Inc. v. Motorola, Inc.             (In re Conxus Communications, Inc.), 262 B.R. 893, 899 (D.             Del. 2001); Waugh v. Eldridge (In re Waugh), 165 B.R. 450,             451 (Bankr. E.D. Ark. 1994); see also In re One Times             Square Assocs. Ltd. P'ship, 159 B.R. 695, 702 (Bankr.             S.D.N.Y. 1993), aff'd, 165 B.R. 773 (S.D.N.Y.),             aff'd, 41 F.3d 1502 (2d Cir. 1994) (§ 105 should be             used sparingly and then only to supplement, not supplant, the             Code).             The question of whether the court should issue an injunction             under § 105 also turns upon the "traditional elements,"             i.e., irreparable harm, balance of hardships, likelihood of             success on the merits, and public interest.  Pac. Gas & Elec.             Co. v. Cal. Pub. Utils. Comm'n (In re Pac. Gas & Elec. Co.),             263 B.R. 306, 321 (Bankr. N.D. Cal. 2001).             Courts do not always apply § 105 according to the above             rules.             Bryan v. Rainwater, 254 B.R. 273 (N.D. Ala. 2000)             (bankruptcy court used § 105 to enter writ of habeas corpus             and declare void the revocation of debtor's probation for failure             to make restitution payments.  On appeal, the district court             reversed, holding that the bankruptcy court lacked authority to             issue a writ of habeas corpus because that power was reserved             exclusively for the Supreme Court, circuit courts, and district             courts.  [Also, the state court's revocation of probation was             excepted from the automatic stay under 11 U.S.C. § 362(b)(1)             as a continuation of a criminal proceeding against the debtor.]             In re Dow Corning Corp., 255 B.R. 445 (E.D. Mich. 2000)             (11 U.S.C. §§ 105 and 1123 authorized injunction             prohibiting claimants from pursuing related claims against             non-debtor third parties); In re American Family             Enterprises, 256 B.R. 377 (D.N.J. 2000) (permanent injunction             and third party release ordered under § 105 because of             "exceptional or extraordinary circumstances," i.e., the             discharges, releases and injunctions provided in the plan were             essential to debtors' reorganization and were a condition             precedent to payment of substantial sums to general unsecured             creditors and consumer claimants that would not otherwise be             available, and liquidation of the debtors' assets would yield no             return to unsecured creditors); Boyd v. United States Dep't of             Educ. (In re Boyd), 254 B.R. 399 (Bankr. N.D. Ohio 2000)             (debtor failed to establish any of the three requirements for a             hardship discharge of student loan debt under § 523(a)(8);             nevertheless, the court felt the debtor should enjoy some of the             benefits a bankruptcy brings in the form of debt relief and,             therefore, under § 105(a), discharged past and future             interest accruals); Morgan v. United States (In re             Morgan), 255 B.R. 247 (Bankr. N.D. Ga. 2000) (§ 105             authorized tolling three-year lookback period for priority tax             claims where debtors' prior chapter 13 case prevented IRS tax             collection efforts; tolling limited to 70 days prior to filing of             prior petition; dilatory conduct or bad faith on debtors' part             need not be found for court to find equities in government's             favor or exercise tolling authority).             Where the court approves a settlement agreement between the IRS             and the debtors, and the debtors make a payment under such             settlement to the IRS, and the case is later converted to chapter             7, the court cannot use its equitable powers under § 105 to             order the IRS to disgorge the payment because, in hindsight, the             settlement is not in the interests of creditors.  The settlement             must be upheld if, at the time the debtor seeks approval, it             appears to be in the best interest of the estate.  Schwab v.             IRS (In re Shop N'Go P'ship), 261 B.R. 810, 815 (Bankr. M.D.             Pa. 2001).         b.    Automatic Stay, § 362.   Subsection 362(d) of the Bankruptcy             Code provides as follows: "On request of a party in interest and             after notice and a hearing, the court shall grant relief from the             stay . . . such as by terminating, annulling, modifying, or             conditioning such stay . . . ."  11 U.S.C. § 362(d).  A             request for relief from the stay is a "contested matter"             commenced by a motion and governed by Bankruptcy Rule 9014.  Fed.             R. Bankr. P. 4001.             Relief from stay proceedings always relate to substantive rights             and, thus, may implicate underlying substantive disputes.  Where             such disputes also lie within bankruptcy jurisdiction, it might             seem to be inefficient and exalting form over substance to not             resolve the underlying disputes along with the stay relief             motion.  Nevertheless, the mere relationship between the relief             from stay motion and the underlying dispute does not confer upon             the bankruptcy court jurisdiction to resolve the dispute within             the relief from stay proceeding.             The hearing on a motion for relief from the automatic stay is (1)             "merely a summary proceeding of limited effect," (2) "not a             proceeding for determining the merits of the underlying             substantive claims, defenses, or counterclaims," and (3) "merely             a grant of permission from the court allowing the creditor to             litigate its substantive claims elsewhere without violating the             automatic stay."  Grella v. Salem Five Cent Sav. Bank, 42             F.3d 26, 31-35 (1st Cir. 1994); accord In re Vitreous             Steel Prods. Co., 911 F.2d 1223, 1232-34 (7th Cir. 1990);             Johnson v. Righetti (In re Johnson), 756 F.2d 738, 740             (9th Cir. 1985).             At the expedited hearing under subsection (e), and at all             hearings on relief from the stay, the only issue will be the             claim of the creditor and the lack of adequate protection or             existence of other cause for relief from the stay.  This hearing             will not be the appropriate time at which to bring in other             issues, such as counterclaims against the creditor on largely             unrelated matters.  Those counterclaims are not to be handled in             the summary fashion that the preliminary hearing under this             provision will be.  In re Vitreous Steel Prods. Co., 911             F.2d 1231 (quoting H.R. Rep. No. 595, 95th Cong., 1st Sess. 344             (1977), U.S. Code Cong. & Admin. News, 1978, pp. 5787, 6300).             That the moving creditor's claim may be at issue does not mean             that the stay relief proceeding is the proper forum to adjudicate             the claim.  "The validity of the claim or contract underlying the             claim is not litigated during the hearing."  Johnson v.             Righetti (In re Johnson), 756 F.2d at 740;  see also             Ellis v. Parr (In re Ellis), 60 B.R. 432, 435 (B.A.P. 9th             Cir. 1985) (stay litigation not "proper vehicle" to determine             nature and extent of creditor's foreclosure rights).  As most             courts hold, the hearing involves "simply a determination as to             whether a creditor has a colorable claim to property of the             estate."  Grella v. Five Cent Sav. Bank, 42 F.3d at 32;             see also D-1 Enters., Inc. v. Commercial State             Bank, 864 F.2d 36 (5th Cir. 1989) (legislative history of             § 362(e) makes clear that counterclaims against creditor             seeking to lift stay on largely unrelated matters are not to be             handled in the summary fashion required by the expedited nature             of the proceeding).        c.    Tax Liability, § 505.             Although the bankruptcy court has jurisdiction to determine the             amount or legality of Federal tax liability, the Internal Revenue             Code's provision permitting abatement of interest reserves the             authority to abate interest to the Secretary of the Treasury.              Nor does the court have jurisdiction to review the Secretary's             failure to abate interest, a decision committed by law to agency             discretion. Karlsson v. United States (In re Karlsson),             247 B.R. 321 (Bankr. M.D. Fla. 2000);  see also New             Haven Projects Ltd. Liability Co. v. City of New Haven (In             re New Haven Projects Ltd. Liability Co.), 225 F.3d 283 (2d             Cir. 2000) (bankruptcy court has discretion to abstain from             redetermining a debtor's tax liability where doing so would             frustrate purpose of the statute), cert. denied, 121 S.             Ct. 1093 (2001).       d.    Turnover, § 542.             11 U.S.C. § 542, the turnover provision of the Bankruptcy             Code, may not be used to acquire rights the debtor does not have             as of the commencement of the case or to determine disputed             rights to property; rather, it is intended as a remedy to obtain             what is acknowledged to be property of the estate.  Victoria             Alloys, Inc. v. Fortis Bank SA/NV (In re Victoria Alloys,             Inc.), 261 B.R. 424 (Bankr. N.D. Ohio 2001);  Marlow v.             Oakland Gin Co. (In re Julien Co.), 128 B.R. 987 (Bankr. W.D.             Tenn. 1991), aff'd, 44 F.3d 426 (6th Cir. 1995).             Debtor cannot use § 542 to liquidate contract disputes or             otherwise demand assets when their title is in dispute. United             States v. Inslaw, Inc., 932 F.2d 1467 (D.C. Cir. 1991);             see Charter Crude Oil Co. v. Exxon Co., U.S.A. (In re             Charter Co.), 913 F.2d 1575 (11th Cir. 1990); FLR Co. v.             Brant Constr. Co. (In re FLR Co.), 58 B.R. 632 (Bankr. W.D.             Pa. 1985).  But see Nat'l Enters., Inc. v. Koger             P'ship, Ltd. (In re Nat'l Enters., Inc.), 128 B.R. 956 (E.D.             Va. 1991) (debt may be both matured, and thus fall within scope             of turnover proceedings, and nonetheless disputed by defendant,             and thus, for action to be turnover proceeding, it is not             relevant that defendant disputes existence of debt by, perhaps,             denying complaint's allegations, as long as those allegations             state existence of matured debt); Calhoun v. Copeland Corp.             (In re Gordons Transports, Inc.), 51 B.R. 633 (Bankr. W.D.             Tenn. 1985) (terms "matured, payable on demand, and payable to             order" refer to debts that are presently payable, as opposed to             those that are contingent and become payable only upon occurrence             of certain act or event; thus, existence of dispute as to whether             debt is owing does not preclude debt from being one that is             "matured, payable on demand, or payable to order").             Shipping line's turnover claim seeking payment of withheld             operating differential subsidy amount from Maritime             Administration, Department of Transportation was not one for             matured amount payable on demand or on order, given that actual             withheld ODS amount had yet to be determined in accordance with             proper administrative procedures and was subject to contractual             dispute, and thus did not fall within bankruptcy section             governing turnover of property to estate, so as to waive             governmental agencies' sovereign immunity pursuant to bankruptcy             provision establishing waiver of sovereign immunity to extent             that order of bankruptcy court will bind governmental unit when             court makes determination and issues order pursuant to Code             section allowing court to bind creditor, entity, or governmental             unit.  Prudential Lines, Inc. v. United States Maritime Admin.             (In re Prudential Lines, Inc.), 79 B.R. 167 (Bankr. S.D.N.Y.             1987).             In debtor's action alleging damages from breach of contract and             interference with ability of debtor contractor to timely perform             under contract, where legitimate dispute existed as to whether             debtor was entitled to recover funds claimed due under contract,             and resolution of action involved state law determination of             defendant's liability under contract, proceeding was not true             "turnover" proceeding and therefore did not constitute "core             proceeding."  Acolyte Elec. Corp. v. City of New York, 69             B.R. 155 (Bankr. E.D.N.Y. 1986), aff'd, 1987 WL 47763             (E.D.N.Y. 1987).         11.   Res Judicata and Collateral Estoppel.  The doctrine of res judicata has two aspects: claim preclusion and  issue preclusion.  Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26,  30 (1st Cir. 1994).  Claim preclusion bars relitigation of any issue that  was or might have been raised in a prior action between the same parties on  the same cause of action concluding with a final judgment on the merits.   Id. Issue preclusion (also called collateral estoppel) bars  relitigation of any factual or legal issue that was actually decided in  prior litigation between the parties whether on the same or a different  cause of action.  Id.  How principles of res judicata should apply in regard to bankruptcy  proceedings may be difficult to determine at times. For example, in D-1  Enterprises, Inc. v. Commercial State Bank, 864 F.2d 36 (5th Cir. 1989),  noting the two forms of adversary process in bankruptcy cases, i.e.,  adversary proceedings and contested matters, the court concluded that, as a  general rule, res judicata does not apply to contested matters, which  employ a "quick motion-and-hearing style."  Id. at 39-40.  However,  in Iannochino v. Rodolakis (In re Iannochino), 242 F.3d 36 (1st Cir.  2001), under res judicata, the court's prior fee award to debtor's  attorney barred debtor's malpractice claim even though the court awarded the  fees in response to an application, which had commenced a contested matter,  not an adversary proceeding.  In FCC v. NextWave Personal Communications, Inc. (In re NextWave Personal  Communications, Inc), 200 F.3d 43, 54 (2d Cir. 1999), cert.  denied, 531 U.S. 924 (2000), the Second Circuit reversed the bankruptcy  court's holding that the FCC could not cancel certain licenses.  On  NextWave's further challenge to the cancellations, the D.C. Circuit held  that claim preclusion was no bar because the Second Circuit's decision was  based on the bankruptcy court's lack of jurisdiction rather than on the  merits of the underlying dispute.  NextWave Pers. Communications, Inc. v.  FCC, 254 F.3d 130, 142-47 (D.C. Cir. 2001) [petition for cert. filed].   A substantive determination of an issue in connection with a jurisdictional  holding can have issue preclusive effect but only if it is clear that the  issue was actually and necessarily decided in the prior action.  Id.  at 147-49.  The Circuits are split on the question of whether res judicata effect  is to be accorded judgments in both core and non-core proceedings.  The  Seventh and Fifth Circuits have held that non-core proceedings cannot be  given res judicata effect because the bankruptcy court cannot enter a  final judgment. Barnett v. Stern, 909 F.2d 973, 978-79 (7th Cir.  1990); Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183, 189-90 (5th  Cir. 1990); see also I.A. Durbin, Inc. v Jefferson Nat'l Bank,  793 F.2d 1541, 1548 n.8 (11th Cir. 1986) (dicta). The Tenth, Ninth, Sixth  and Second Circuits accord res judicata effect to judgments in both  types of proceedings. Plotner v. AT&T Corp., 224 F.3d 1161, 1172-74  (10th Cir. 2000);  Robertson v. Isomedix, Inc. (In re Int'l Nutronics,  Inc.), 28 F.3d 965, 969-70 (9th Cir. 1994); Sanders Confectionery  Prods., Inc. v. Heller Financials, Inc., 973 F.2d 474, 483 (6th Cir.  1992);  Sure-Snap Corp. v. State Street Bank & Trust Co., 948 F.2d  869, 873-77 (2d Cir. 1991).    In re Robinson, 256 B.R. 482 (Bankr. S.D. Ohio 2000) (arbitration  award should be given preclusive met standards for res judicata;  effect upon financial rehabilitation not determinative because relief under  the Bankruptcy Code is a privilege, not a fundamental right).  Patton v. United States Dep't of Educ. (In re Patton), 261 B.R. 44  (Bankr. E.D. Wash. 2001) (Creditor who received notice of but failed to  object to debtors' confirmed chapter 13 plan could not attack plan  post-confirmation, even though plan purported to discharge student loan debt  in a manner inconsistent with Bankruptcy Code.  The bankruptcy court stated  it would not knowingly confirm any plan that contained language that  attempted to discharge student loan obligations independent of an adversary  proceeding to determine dischargeability, and that including such language  might subject debtors' counsel to sanctions. Nonetheless, the court held  that confirmed plans containing this language would be binding on all  parties, and the student loan obligations would be discharged, unless the  confirmation order was appealed or revoked.); see also Banks v.  Sallie Mae Servicing Corp. (In re Banks), 261 B.R. 896 (Bankr. W.D. Va.  2001) (Lender failed to object to Chapter 13 plan which provided for full  payment of principle on student loan debt, but provided that no interest  would accrue during the pendency of the case. Although the court noted that  the debtor should have brought an adversary proceeding to alter the terms of  his non-dischargeable student loan, the court held that the policy favoring  the finality of confirmation is stronger than the court and/or trustee's  obligation to verify that a plan complies with the Code.); Great Lakes  Higher Educ. Corp. v. Pardee (In re Pardee), 218 B.R. 916 (B.A.P. 9th  Cir. 1998) (over strong dissent by Judge Klein, held that creditor's failure  to object to plan's discharge provision at confirmation hearing constituted  waiver of its right to collect postpetition interest on non-dischargeable  claim, even if provision was contrary to Code), aff'd, 193 F.3d 1083  (9th Cir. 1999).  In In re Matunas, 261 B.R. 129 (Bankr. D.N.J. 2001), debtors and the  IRS entered into a stipulation which determined the amount of the  government's secured, priority and unsecured tax claims for purposes of  distribution under the debtors' confirmed plan.  Thereafter, the IRS sought  to collect additional taxes against the debtors, and the debtors moved to  reopen their bankruptcy case to enforce the stipulation.  The bankruptcy  court held that the normal rules of res judicata apply to its  decisions, and that the three circumstances for a prior judgment to be given  res judicata, or claim preclusive effect under federal law were  present: (1) the stipulation had the effect of a valid final judgment on the  merits pursuant to 11 U.S.C. § 505(a)(1); (2) the debtor and the IRS  were identical parties that entered into the stipulation; and (3) the IRS's  claim grew out of the same transaction and occurrences that was the subject  of the stipulation, i.e., for the same taxable years.   The doctrine of collateral estoppel applies in bankruptcy discharge and  dischargeability proceedings.  Krumhorn v. IRS (In re Krumhorn), 249  B.R. 295 (Bankr. N.D. Ill. 2000) (tax court's decision that debtor's  transactions intentionally lacked economic substance precluded the  bankruptcy court from separately inquiring into whether the debtor willfully  evaded payment of taxes by filing a fraudulent return).  IRS v. Palmer (In re Palmer), 207 F.3d 566 (9th Cir. 2000) (taxpayer  who failed to respond to IRS' allegations of fraud in Tax Court was not  collaterally estopped from contesting the fraud in taxpayer's subsequent  bankruptcy case; in essence, debtor defaulted in Tax Court, and issue of  fraud was not "actually litigated").  In re DiSalvo, 219 F.3d 1035 (9th Cir. 2000) (chapter 11 debtor in  possession is barred by claim preclusion from bringing claims that he could  have raised in an earlier proceeding; debtor did not avoid claim preclusion  by suing in capacity as debtor in possession rather than in individual  capacity).  But see Boberschmidt v. Soc. Nat'l Bank (In re  Jones), 226 F.3d 917 (7th Cir. 2000) (trustee is not same entity as  debtor for purposes of issue preclusion).
Updated February 19, 2015