US Attorneys > USAM > Title 4 > Civil Resource Manual
prev | next

187.

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).