United States Court of Appeals, Third Circuit
United States Court of Appeals, Third Circuit
3d 154
This appeal addresses the scope of "related to" jurisdiction of the bankruptcy
court for post-confirmation claims brought on behalf of a litigation trust against
an accounting firm. The trustee sued the accounting firm for professional
negligence and breach of contract for work it performed for the trust. The
Bankruptcy Court declined to hear the claim, finding it lacked subject matter
jurisdiction. The District Court disagreed and reversed. We will reverse the
order of the District Court and remand for proceedings consistent with this
opinion.
I.
A. Overview of Affected Parties
2
The debtor, Resorts International, Inc., is not a party to the malpractice action.
The debtor assigned to the Litigation Trustee all its rights, title, and interest in
the Litigation Trust's primary asset, its claim against Donald Trump and
affiliated entities. Because the Bankruptcy Court confirmed the Reorganization
Plan, the debtor's estate no longer exists.
Nonetheless, the Trustee alleges the debtor's estate would still be affected by
the malpractice suit because the Litigation Trust is effectively a continuation of
the bankruptcy estate. Furthermore, contends the Trustee, any recovery
obtained in this action would necessarily become Trust assets, available to
cover any liability that might arise in the accrued interest lawsuit or available
for possible distribution to the beneficiaries of the Litigation Trust, who were
former creditors of the debtor's estate.
Price Waterhouse responds that the Litigation Trust, a legally distinct entity, is
not a continuation of the bankruptcy estate for jurisdictional purposes.
Moreover, Price Waterhouse contends the debtor is only tangentially affected
by this malpractice action after it assigned away its interests in the litigation
claims, and the Litigation Trust beneficiaries traded their creditor status to
attain rights to the Trust's assets.
B. Facts
On August 28, 1990, the Bankruptcy Court issued an Order confirming the
Second Amended Joint Plan of Reorganization. On September 17, 1990, the
parties entered into a Final Plan and Litigation Trust Agreement. The Final Plan
created a Litigation Trust for the benefit of certain creditors. Section 7.10(a) of
the Plan provided: "Litigation Trustee shall retain and preserve the Litigation
Claims for enforcement, as representative of and successor to the Reorganizing
Entities in accordance with Bankruptcy Code 1123(b)(3)(B) and 1145(a)."
The beneficial interests in the Litigation Trust were divided into ten million
Litigation Trust Units and allocated to certain creditors, the Unitholders,2 under
a formula set forth in section 7.10(b) of the Plan. Under section 7.10(d), each
Unitholder was entitled to a pro rata share of any distribution from the
Litigation Trust.
The assets assigned to the Litigation Trust were claims originally held by the
debtor, Resorts International, Inc., against Donald J. Trump and affiliated
entities, arising from Trump's 1988 leveraged buyout of the Taj Mahal Resort.
Upon formation of the Litigation Trust, the litigation claims were assigned to
the Trustee. The Plan authorized the Trustee to prosecute the claims against the
Trump entities. The Plan and Litigation Trust Agreement also required the
debtor to provide an irrevocable letter of credit in the amount of $5,000,000 to
the Litigation Trust to enable it to pursue the litigation claims.
On May 28, 1991, the Trustee entered into an agreement with Trump and his
affiliates and the debtor settling the litigation claims on behalf of the Trust's
Unitholders in the amount of $12,000,000, subject to approval by the
Unitholders. Approval was solicited and received by July 15, 1991. The
Settlement Agreement proceeds became assets of the Litigation Trust.
10
12
13
On April 15, 1997, almost seven years after Reorganization Plan confirmation,
the Trustee filed the underlying professional malpractice action against Price
Waterhouse in the United States Bankruptcy Court for the District of New
Jersey. On January 4, 2002, the Bankruptcy Court granted Price Waterhouse's
motion to dismiss for lack of subject matter jurisdiction finding there was no
"related to" or "core" jurisdiction. Binder v. Price Waterhouse & Co. (In re
Resorts Int'l, Inc.), Adv. No. 97-2283, slip op. at 22, 30, 35 (Bankr.D.N.J. Jan.
4, 2002). Disagreeing with the Trustee that this was a "core" proceeding, the
Bankruptcy Court characterized the matter as a post-confirmation dispute
between two non-debtors involving state law claims that did not affect the
"administration of the estate, property of the estate, or liquidation of assets of
the estate." Id. at 21. Although finding its post-confirmation jurisdiction to be
"extremely limited," the Bankruptcy Court recognized that it retained postconfirmation jurisdiction over disputes that potentially "affect the successful
implementation and consummation of the plan." Id. at 28 (internal quotations
omitted). But the Bankruptcy Court rejected "related to" jurisdiction because
the claims could not have had any "conceivable effect on the administration of
the estate," and because the dispute would not significantly affect
consummation of the Reorganization Plan. See id. at 29-32. It also found that
none of the Plan's retention provisions were intended to serve as a basis for
jurisdiction over the Litigation Trust and third-party accountants; nor could the
Plan language create jurisdiction greater than that granted by Congress. Id. at
13-14.
14
The Trustee appealed to the District Court, which reversed and remanded.
Binder v. Price Waterhouse & Co. (In re Resorts Int'l, Inc.), No. 02-1333, slip
op. at 19 (D.N.J. Dec. 18, 2002). The District Court held "the terms on which
the Litigation Trust was created and its practical role in the Plan lead to the
conclusion that claims arising from professional misconduct in the Trust's
affairs are sufficiently related to the bankruptcy case to be within the
jurisdiction of the Bankruptcy Court." Id. at 7. The Court explained:
15
[C]onfirmation did not terminate the estate with respect to the property vested
in the Litigation Trust; and the Trust represented a partial continuation of the
estate. Consequently, the jurisdiction of the bankruptcy court over proceedings
arising from the affairs of the Litigation Trust is not substantially different from
its jurisdiction over similar matters pre-confirmation, and it should have the
power to hear claims of professional malpractice in the administration of the
Trust.
16
17
Price Waterhouse claims the District Court erred in upholding "related to"
bankruptcy jurisdiction because there can be no conceivable effect on the
administration of the estate. Furthermore, it contends, the District Court's
judgment, if permitted to stand, threatens unending jurisdiction in the
Bankruptcy Court well after dissolution of the debtor's estate. The Trustee
The jurisdiction of the Bankruptcy Court is at issue. The District Court had
jurisdiction to review the Bankruptcy Court's order under 28 U.S.C. 158. We
have jurisdiction under 28 U.S.C. 1292(b). Our review of the District Court's
order on jurisdiction is de novo. Resolution Trust Corp. v. Swedeland Dev.
Group (In re Swedeland Dev. Group), 16 F.3d 552, 559 (3d Cir.1994).4
II.
19
Both the Reorganization Plan and Litigation Trust Agreement contain retention
of jurisdiction provisions. Article XI of the Plan provides in part:
20
The Bankruptcy Court will retain jurisdiction of the Reorganizing Cases for the
following purposes: ... (c) To ensure that the distribution of Holders of Claims
and Interests are [sic] accomplished as provided herein; ... (h) To hear and
determine disputes arising in connection with the Plan or its implementation
including disputes arising under agreements, documents or instrument executed
in connection with this Plan; ... (i) To construe and to take any action to enforce
the Plan and issue such orders as may be necessary for the implementation,
execution, and consummation of the Plan; ... (o) To hear and determine any
other matters not inconsistent with Chapter 11 of the Bankruptcy Code.
21
22
The Bankruptcy Court shall retain exclusive jurisdiction over the Litigation
Claims and Counterclaims, the Trust, the Trustee, and the Trust Assets, as
provided for in the Plan, including, without limitation, the determination of all
controversies and disputes arising under or in connection with this Trust
Agreement.
23
III.
25
26
jurisdiction of all cases under title 11," and "original but not exclusive
jurisdiction of all civil proceedings arising under title 11, or arising in or related
to cases under title 11." Id. at (a)-(b). Procedurally, a district court may refer all
cases and proceedings that fall within this section to the bankruptcy court. 28
U.S.C. 157(a) provides: "Each district court may provide that any or all cases
under title 11 and any or all proceedings arising under title 11 or arising in or
related to a case under title 11 shall be referred to the bankruptcy judges for the
district." Id. The district courts' power to refer is discretionary, but courts
"routinely refer" most bankruptcy cases to the bankruptcy court. Torkelsen v.
Maggio (In re Guild & Gallery Plus, Inc.), 72 F.3d 1171, 1175 (3d Cir.1996).
27
28
30
31
32
Regardless, we need not resolve whether this is a "core" proceeding for subject
matter jurisdictional purposes because "[w]hether a particular proceeding is
34
35
36
As noted, Pacor and its progeny provide the analytical framework for
determining "related to" jurisdiction. But most of the cases decided under
Pacor do not arise post-confirmation or even after the creation of a litigation
trust. Litigation trusts, which serve a valid purpose in the bankruptcy process,
may continue long after a reorganization plan has been confirmed and the
debtor has emerged from bankruptcy. And yet bankruptcy jurisdiction may still
obtain if there is sufficient connection to the bankruptcy.
37
The post-confirmation context of this dispute affects our "related to" inquiry
because bankruptcy court jurisdiction "must be confined within appropriate
limits and does not extend indefinitely, particularly after the confirmation of a
plan and the closing of a case." Donaldson, 104 F.3d at 553. 7 After
confirmation of a reorganization plan, retention of bankruptcy jurisdiction may
be problematic. See Bank of La. v. Craig's Stores of Tex., Inc. (In re Craig's
Stores of Tex., Inc.), 266 F.3d 388, 391 (5th Cir.2001); In re Fairfield Cmtys.,
Inc., 142 F.3d 1093, 1095-96 (8th Cir.1998). This is so because, under
traditional Pacor analysis, bankruptcy jurisdiction will not extend to a dispute
between non-debtors unless the dispute creates "the logical possibility that the
estate will be affected." In re Federal-Mogul Global, Inc., 300 F.3d 368, 380
(3d Cir.2002) (internal quotations omitted), cert. denied, 537 U.S. 1148, 123
S.Ct. 884, 154 L.Ed.2d 851 (2003). At the most literal level, it is impossible for
the bankrupt debtor's estate to be affected by a post-confirmation dispute
because the debtor's estate ceases to exist once confirmation has occurred. See
In re Fairfield Cmtys., 142 F.3d at 1095 (holding that once a bankrupt debtor's
plan has been confirmed the debtor's estate ceases to exist). Unless otherwise
provided by the plan or order confirming the plan, "the confirmation of a plan
vests all of the property of the estate" in the reorganized debtor. 11 U.S.C.
1141(b). See also NVF Co. v. New Castle County, 276 B.R. 340, 348
(D.Del.2002) (holding that the confirmation of a plan revests the estate's
property in the reorganized debtor, and accordingly, the bankruptcy estate "no
longer existed"), aff'd 61 Fed.Appx. 778 (3d Cir.2003).
38
But courts do not usually apply Pacor's "effect on the bankruptcy estate" test so
literally as to entirely bar post-confirmation bankruptcy jurisdiction. As the
District Court correctly noted, though the scope of bankruptcy court jurisdiction
diminishes with plan confirmation, bankruptcy court jurisdiction does not
disappear entirely. Binder, No. 02-1333, slip op. at 9. Post-confirmation
jurisdiction is assumed by statute and rule: 11 U.S.C. 1142(b) authorizes the
bankruptcy court to "direct the debtor and any other necessary party... to
perform any other act ... that is necessary for the consummation of the plan,"
id., and Fed. R. Bankr.P. 3020(d) provides that "[n]otwithstanding the entry of
the order of confirmation, the court may issue any other order necessary to
administer the estate." Id. Although 1142(b) assumes that post-confirmation
jurisdiction exists for disputes concerning the consummation of a confirmed
plan, 28 U.S.C. 1334 remains the source of this jurisdiction. In re United
States Brass Corp., 301 F.3d at 306.
39
40
41
Though courts have varied the standard they apply post-confirmation, the
essential inquiry appears to be whether there is a close nexus to the bankruptcy
plan or proceeding sufficient to uphold bankruptcy court jurisdiction over the
matter. For example, in Donaldson, 104 F.3d 547, we upheld bankruptcy court
jurisdiction because the trustee through the lawsuit was "basically ... seeking to
carry out the intent of the reorganization plan." Id. at 553. We distinguished the
matter from other cases denying jurisdiction because it had a "much closer
nexus to the bankruptcy case." Id. In upholding jurisdiction, we found
significant the fact that the case did "not involve a dispute essentially collateral
to the bankruptcy case." Id. Rather, the action "implicat[ed] the integrity of the
bankruptcy process" because one party's actions impaired the other party's
ability to act in accordance with the plan. Id. The post-confirmation fee dispute
in Gryphon, 166 F.3d 552, also had a close nexus to the bankruptcy proceeding
because it involved a U.S. Trustee's action to enforce a post-confirmation fee
provision and created a liability for the debtor. Id. at 555. At the postconfirmation stage, the claim must affect an integral aspect of the bankruptcy
process-there must be a close nexus to the bankruptcy plan or proceeding.
42
43
44
Bergstrom, 86 F.3d 364, and Falise v. Am. Tobacco Co., 241 B.R. 48
(E.D.N.Y.1999), are useful for illustrating when there is a sufficiently close
nexus to the bankruptcy plan or proceeding to uphold bankruptcy jurisdiction in
post-confirmation situations involving continuing trusts. In Bergstrom, 86 F.3d
364, the dispute implicated an integral aspect of the bankruptcy process. The
plan-created trust intended to distribute surplus funds to tort claimants on a pro
rata basis. Id. at 367. But certain attorneys claimed entitlement to contingent
fees. Id. The district court, sitting in bankruptcy, limited attorneys' fees to ten
percent of the amounts distributed. Id. To resolve the dispute, it was necessary
to interpret the plan's accompanying documents to determine whether it was
unreasonable to charge standard attorneys' fees out of the pro rata distribution.
See id. at 368-71. In upholding "related to" jurisdiction, the court explained
why the dispute was central to the bankruptcy proceeding: "The Trust was
created to protect and pay those persons who had been damaged by use of the
Dalkon Shield. The efforts of the Trust to settle the remaining claims could
easily be affected if the remaining claimants are aware that any attorneys' fees
out of the pro rata distribution will be limited to ten percent." Id. at 372.
Accordingly, the dispute integrally affected the bankruptcy plan and
proceeding, and it was appropriate for the district court, sitting in bankruptcy,
to exercise jurisdiction over that proceeding.
45
In contrast, this kind of close nexus to the bankruptcy plan or proceeding was
absent in Falise, 241 B.R. 48. Falise involved a dispute between tobacco
manufacturers and a trust created as a result of the bankruptcy of an asbestos
products producer. Id. at 51. The trust sought to recover from the tobacco
companies for their role in contributing to asbestos-related illnesses. Id. Noting
that the resolution of the dispute would require more than merely interpreting
the plan's terms, the court held that bankruptcy court jurisdiction does not
extend to a "major suit" brought by the trust against non-parties to the
bankruptcy or to any closely related proceeding. Id. at 52, 55. In Falise, the
resolution of the dispute would have had no impact on any integral aspect of
the bankruptcy plan or proceeding. Accordingly, it was appropriate to find no
bankruptcy jurisdiction over that collateral matter.
46
47
Montana v. Goldin (In re Pegasus Gold Corp.), 296 B.R. 227 (D.Nev.2003), is
also instructive. A reclamation services corporation ("RSC") was created under
a reorganization plan for the purpose of performing short-term reclamation
work "in order to benefit the overall Plan goal of preserving the jobs of
Debtors' employees to thereby maximize the possibility of creditor recovery."
Id. at 231. The Trustee and RSC contended the state of Montana had
represented that RSC would be given preference in the bidding for long-term
reclamation work. Id. at 232. They brought suit, alleging Montana breached the
agreement by hiring a competitor to perform the reclamation work. Id. The
court upheld bankruptcy court jurisdiction because RSC's failure, and its
inability to retain the debtors' employees on account of Montana's breach,
"undermine[d] the Plan's objectives for reorganization and the payment of
creditors." Id. at 233-35. The court held that the "facts demonstrate the
necessary close nexus between appellees' tort and contract claims and the
bankruptcy proceeding." Id. at 235.
48
IV.
49
We now assess whether the Bankruptcy Court can exercise "related to"
jurisdiction over these malpractice claims. As noted, the Trustee's principal
allegation was that Price Waterhouse erroneously reported in its audit reports
that accrued interest on Litigation Trust accounts belonged to the debtor rather
than to the Litigation Trust. The Trustee also alleged other errors in auditing
and tax advice. Price Waterhouse's errors, according to the Trustee, constituted
professional negligence and breach of contract.
50
The Trustee has made several arguments why the malpractice claims are
sufficiently connected to the bankruptcy process to uphold bankruptcy court
jurisdiction: the claims affect the Litigation Trust, which is a continuation of
the estate; the claims affect the debtor; the claims affect the operation of the
Reorganization Plan; the claims affect the former creditors as beneficiaries of
the Litigation Trust; and the jurisdictional retention provisions confer continued
jurisdiction. The jurisdictional import of these arguments is not easily resolved.
51
The Trustee argues the estate is affected because the Litigation Trust is a
continuation of the estate. The District Court agreed, reasoning that the affairs
of post-confirmation trusts are "effectively those of the estate (or at least
analogous to those of the estate) for jurisdictional purposes." Binder, No. 021333, slip op. at 12-13. Though the Litigation Trust's assets, the proceeds from
the litigation claims, were once assets of the estate, that alone does not create a
close nexus to the bankruptcy plan or proceeding sufficient to confer
bankruptcy jurisdiction. The Litigation Trust's connection to the bankruptcy is
not identical to that of the estate. Under section 1.1 of the Litigation Trust, the
debtor "absolutely assigned to the Trustee and to its successors and assigns, all
right, title and interest of the Reorganizing Entities in and to the Litigation
Claims." Moreover, the Litigation Trust was created in part so that the Plan
could be confirmed and the debtor freed from bankruptcy court oversight
without waiting for the resolution of the litigation claims. The deliberate act to
separate the litigation claims from the bankruptcy estate weakens the Trustee's
claim that the Litigation Trust has the same jurisdictional nexus as that of the
estate. Given the limited jurisdiction of non-Article III bankruptcy courts,
jurisdiction does not extend necessarily to all matters involving litigation trusts.
53
The Trustee also contends the resolution of the malpractice claim will affect
the debtor, Resorts International, Inc. The debtor is not a party to this litigation
because, as stated, under section 1.1 of the Litigation Trust Agreement, it
assigned away its right, title, and interest in the litigation claims. But the
Trustee argues Resorts would still be affected by this dispute because it "is
claiming to be a continuing creditor of the estate" due to the litigation over the
accrued interest. Oral Argument Transcript at 32. Should Resorts prevail in that
ongoing dispute,11 the Trustee contends Resorts may have a claim against the
Litigation Trust, and an award in the malpractice action could be distributed
back to Resorts to pay on that claim. Such attenuated effect on the reorganized
debtor does not create a close nexus to the bankruptcy plan or proceeding
sufficient to confer bankruptcy court jurisdiction. After assigning away its right,
title, and interest in the Litigation Trust's litigation claims, the reorganized
debtor would have no greater claim to the proceeds from this malpractice action
than any other Litigation Trust creditor. Any funds eventually received by the
debtor as a result of the malpractice dispute would be incidental to the
bankruptcy process.
54
The Trustee maintains that continuing jurisdiction over the matter is "essential
to the integrity of the Plan and its implementation." Appellee's Br. at 2. We
disagree. It is true that accounting services are essential in administering trusts,
and in certain circumstances, accounting errors could have a sufficiently close
nexus to the bankruptcy plan or proceeding to warrant exercising "related to"
jurisdiction post-confirmation. But the resolution of the claims here will have
no substantial effect on the success of the Plan.
55
Resolution of this matter will not require a court to interpret or construe the
Plan or the incorporated Litigation Trust Agreement. Whether Price
Waterhouse was negligent or breached its contract will not be determined by
reference to those documents. There is no dispute over their intent. The
Trustee's claims are "ordinary" professional negligence and breach of contract
claims that arise under state common law. Though the Plan and Trust
Agreement provide the context of the case, this bare factual nexus is
insufficient to confer bankruptcy jurisdiction.
56
The malpractice action could result in an increase in the Litigation Trust's finite
assets. But the potential to increase assets of the Litigation Trust and its
beneficiaries does not necessarily create a close nexus sufficient to confer
"related to" bankruptcy court jurisdiction post-confirmation. The Trust
beneficiaries here no longer have the same connection to the bankruptcy
proceeding as when they were creditors of the estate. For reasons they believed
financially prudent, they traded their creditor status as claimants to gain rights
to the Litigation Trust's assets. Thus, their connection to the bankruptcy plan or
proceeding is more attenuated. Furthermore, if the mere possibility of a gain or
loss of trust assets sufficed to confer bankruptcy court jurisdiction, any lawsuit
involving a continuing trust would fall under the "related to" grant. Such a
result would widen the scope of bankruptcy court jurisdiction beyond what
Congress intended for non-Article III bankruptcy courts. Accordingly,
resolution of these malpractice claims will not affect the interpretation,
implementation, consummation, execution, or administration of the Plan.12
V.
57
For these reasons, there is no "related to" jurisdiction over the malpractice
dispute, and it cannot find a home in the Bankruptcy Court. We will reverse the
order of the District Court and remand for proceedings consistent with this
opinion.
Notes:
1
Resorts International, Inc. changed its name on June 30, 1995, to Griffin
Gaming & Entertainment, Inc. For sake of clarity, we will continue to refer to it
as Resorts International, Inc
The Unitholders were the holders of allowed Class 3B Claims, allowed Resorts
International, Inc. Debenture Claims, and allowed Other Class 3C Claims as
defined by the PlanIn re Resorts Int'l, Inc., 199 B.R. 113, 115 n. 2
(Bankr.D.N.J.1996).
The Bankruptcy Court allocated the interest between the Litigation Trust and
the debtor in the following manner:
Interest income earned on the Expense Account for the period beginning on or
about October 3, 1990 through May 28, 1991 belongs to Resorts. Upon
settlement of the Litigation Claims, the balance of the $ 5 million deposit
became a "Trust Asset" as defined by Article II of the Litigation Trust
Agreement, and any interest earned on such "Trust Asset" also became a "Trust
Asset." Accordingly, the Litigation Trust is entitled to interest earned on the
balance of the initial $ 5 million deposit for the period beginning May 28, 1991
through the present date. To the extent that the Settlement Agreement dated
May 28, 1991 between the former Litigation Trustee Feinberg and Resorts
provided for interest income earned on the Expense Account for the period
March 16, 1991 through May 28, 1991 to be paid to Resorts, the Litigation
Trust's entitlement to interest shall accrue from the post-settlement period
following May 28, 1991.
In re Resorts Int'l, 199 B.R. at 125.
We agree with the District Court that the challenge is a facial attack regarding
an issue of law rather than a factual attack and accordingly will assume the truth
of the allegations in the ComplaintSee Binder, No. 02-1333, slip op. at 7-8.
against the estate for purposes of distribution in a case under title 11; (C)
counterclaims by the estate against persons filing claims against the estate; (D)
orders in respect to obtaining credit; (E) orders to turn over property of the
estate; (F) proceedings to determine, avoid, or recover preferences; (G) motions
to terminate, annul, or modify the automatic stay; (H) proceedings to determine,
avoid, or recover fraudulent conveyances; (I) determinations as to the
dischargeability of particular debts; (J) objections to discharges; (K)
determinations of the validity, extent, or priority of liens; (L) confirmations of
plans; (M) orders approving the use or lease of property, including the use of
cash collateral; (N) orders approving the sale of property other than property
resulting from claims brought by the estate against persons who have not filed
claims against the estate; and (O) other proceedings affecting the liquidation of
the assets of the estate or the adjustment of the debtor-creditor or the equity
security holder relationship, except personal injury tort or wrongful death
claims.
28 U.S.C. 157(b)(2).
6
The Supreme Court effectively has overruledPacor with respect to its holding
that the prohibition against review of a remand order in 28 U.S.C. 1447(d) is
not applicable in a bankruptcy case. See Things Remembered, Inc. v. Petrarca,
516 U.S. 124, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995). But Things Remembered
does not disturb the authority of Pacor on the points for which we cite it. In
fact, the Pacor test "has been enormously influential" as a "cogent analytical
framework" relied upon by our sister circuits more than any other case in this
area of the law. In re Guild & Gallery Plus, 72 F.3d at 1181.
The District Court recognized that "special considerations dictate that the
application of thePacor test provides jurisdiction over a narrower range of
cases post-confirmation than pre-confirmation." Binder, No. 02-1333, slip op.
at 10. Other courts have also recognized how confirmation affects bankruptcy
jurisdiction, though they have not specifically done so in cases involving
litigation trusts. See H & L Developers v. Arvida/JMB Partners (In re H & L
Developers), 178 B.R. 71, 76 (Bankr.E.D.Pa.1994) ("[O]nce a plan has been
confirmed, the court's jurisdiction begins to weaken.") (internal quotations
omitted); Eastland Partners Ltd. v. Brown (In re Eastland Partners Ltd.), 199
B.R. 917, 919-20 (Bankr.E.D.Mich.1996) ("Following confirmation of a
chapter 11 debtor's plan, a bankruptcy court has a fairly narrow jurisdiction.").
involving a settlement trust where the court had to interpret the plan of
reorganization in order to resolve a dispute); Plotner v. AT & T Corp., 224 F.3d
1161, 1171 (10th Cir.2000) (holding that a post-confirmation fraud action
involving a plan-created trust was related to the bankruptcy proceeding); United
States v. Unger, 949 F.2d 231, 233-35 (8th Cir.1991) (holding a bankruptcy
court had post-confirmation jurisdiction when a representative of the creditors
committee deposited trust funds into his personal account in contravention of
the plan); Mayor v. W. Va. (In re Eagle-Picher Indus., Inc.), 285 F.3d 522, 524
(6th Cir.2002) (assuming without analysis post-confirmation bankruptcy
jurisdiction over a dispute involving a settlement trust).
9
Other courts have applied similar tests that assess whether the dispute could
conceivably affect the implementation or consummation of the confirmed
planSee Trans World Airlines, Inc. v. Karabu Corp., 196 B.R. 711, 714
(Bankr.D.Del.1996) ("[T]his court has subject matter jurisdiction over any
proceeding that conceivably could affect [the debtor's] ability to consummate
the confirmed plan."); In re Walker, 198 B.R. 476, 482 (Bankr.E.D.Va.1996)
("Jurisdiction over certain post-confirmation disputes remains with the
Bankruptcy Court to the extent that those disputes might affect the successful
implementation and consummation of the confirmed plan."); Eubanks v.
Esenjay Petroleum Corp., 152 B.R. 459, 464 (E.D.La.1993) (Bankruptcy courts
maintain jurisdiction if the proceeding has "a conceivable effect on the debtor's
ability to consummate the confirmed plan."). Some courts have been reluctant
to apply such a broad standard post-confirmation but have nonetheless found
that bankruptcy court jurisdiction continues post-confirmation. See In re
Craig's Stores of Tex., 266 F.3d at 391 (holding that a bankruptcy court has
jurisdiction over a civil proceeding if the litigated matter "bear[s] on the
interpretation or execution of the debtor's plan"); In re Dilbert's Quality
Supermarkets, Inc., 368 F.2d 922, 924 (2d Cir.1966) (holding that bankruptcy
court jurisdiction continues post-confirmation at least "to protect its decree, to
prevent interference with the execution of the plan and to aid otherwise in its
operation"); In re Leeds Bldg. Prod., Inc., 160 B.R. 689, 691
(Bankr.N.D.Ga.1993) (concluding that the bankruptcy court's role postconfirmation "is limited to matters involving the execution, implementation, or
interpretation of the plan's provisions, and to disputes requiring the application
of bankruptcy law").
10
11 U.S.C. 1142(b) authorizes the bankruptcy court to "direct the debtor and
any other necessary party ... to perform any other act ... that is necessary for the
consummation of the plan."Id.
11
Even though the Bankruptcy Court resolved the interest dispute inIn re Resorts
Int'l, 199 B.R. 113, according to the Trustee's Complaint, the dispute is
"ongoing" because Resorts International, Inc. and the Litigation Trust "remain
engaged in negotiations over the form of the order and settlement of other
issues." Joint Appendix at 76.
12
Price Waterhouse argues the matter turns in part on the fact that it was not
explicitly named in the Litigation Trust Agreement or the Reorganization Plan
and that the Bankruptcy Court did not approve its retention or dismissal. In
some circumstances, these factors may affect the jurisdictional inquiry. But
they are not significant here
Price Waterhouse also argues the lapse of time since confirmation factors
against bankruptcy jurisdiction. The Bankruptcy Court issued an Order
confirming the Plan on August 28, 1990. The Trustee filed this malpractice
action on April 15, 1997. The Trustee responds that Price Waterhouse's
malpractice "began barely after the ink dried on the confirmation order," and
notes that Price Waterhouse released its allegedly erroneous report that the
interest income belonged to the Debtor in 1992. Appellee's Br. at 12-13.
Though in some circumstances, the lapse of time since confirmation may be
relevant to whether a matter has a "close nexus" to a bankruptcy plan or
proceeding, we do not find it to be so here.