Bankruptcy Court Jurisdiction

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Bankruptcy Court Jurisdiction

As a general rule, bankruptcy courts enjoy broad authority over bankruptcy cases and related proceedings under Title 11 of the United States Bankruptcy Code.[1] Congress has granted United States District Courts with original and exclusive jurisdiction over all cases under title 11 and original jurisdiction over “all civil proceedings arising under title 11, or arising in or related to cases under title 11” of the Bankruptcy Code[2] and has enabled them to refer such proceedings to bankruptcy judges, who are considered “judicial officers” of the district courts.[3]

Congress effectively established three statutory categories of bankruptcy matters: those (1) arising under title 11, (2) arising in title 11, and (3) related to title 11. In using such expansive language, Congress conferred substantial authority upon bankruptcy judges to hear matters related to bankruptcy proceedings. Indeed, the Supreme Court has acknowledged that “Congress intended to grant comprehensive jurisdiction to the bankruptcy courts so that they might deal efficiently and expeditiously with all matters connected with the bankruptcy estate.”[4]

As a Congressionally created court, a bankruptcy court’s power is constrained by statutory limitations.[5] Once a district court has referred a matter to a bankruptcy court, the bankruptcy judge’s authority in a given case depends on the type of the proceeding. Bankruptcy judges are statutorily empowered to “hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11.”[6] Bankruptcy judges are required to determine whether a proceeding is a “core proceeding” or, alternatively, whether it is a “proceeding that is otherwise related to a case under title 11.”[7] If the matter is a core proceeding, then the bankruptcy judge is authorized to enter a final judgment on the merits. Bankruptcy courts may only submit proposed findings of fact and conclusions of law to the district court in non-core proceedings.[8] In addition to the enumerated statutory list of core proceedings, courts generally define core proceedings as those having to do with the structuring of debtor-creditor relations.[9]

Therefore, even though a bankruptcy court may have subject matter jurisdiction over a particular matter under 28 U.S.C. § 1334, it may still nonetheless lack the power to enter a final judgment under 28 U.S.C. § 157(b)(3).[10] Thus, for example, while some courts have found that determining a debtor’s tax liability under § 505 to constitute “core” proceedings clearly within the power of bankruptcy courts,[11] there may be instances where a matter is not sufficiently related to bankruptcy so as to justify the court’s exercise of jurisdiction.

 

 

[1] In re Wilshire Courtyard, 729 F.3d 1279, 1287 (9th Cir. 2013) (“A bankruptcy court’s related to jurisdiction is very broad, including nearly every matter directly or indirectly related to the bankruptcy.”) (internal quotation marks omitted).

[2] 28 U.S.C. § 1334(a), (b).

[3] 28 U.S.C. § 157 (a), (b)(1); 28 U.S.C. § 152(a)(1). Together, bankruptcy courts “constitute a unit of the district court.” 28 U.S.C. § 151.

[4] Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984 (1984).

[5] Celotex Corp. v. Edwards, 514 U.S. 300, 307 (1995) (“The jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute.”).

[6] 28 U.S.C. § 157(b)(1).

[7] 28 U.S.C. § 157(b)(3).

[8] 28 U.S.C. § 157(c)(1).

[9] Exec. Benefits Ins. Agency v. Arkison, 573 U.S. 25, 32–33 (2014); but see Dunmore v. United States, 358 F.3d 1107, 1115 (9th Cir. 2004) (finding that “[t]he district court read the definition of ‘core’ proceeding too broadly when it concluded that the refund claims were core simply because they affected the adjustment of the debtor-creditor relationship”) (internal quotation marks omitted). The 9th Circuit held that the tax refund claims at issue were not core proceedings because they did not depend on title 11 for their existence and could have been brought in district court. Id.

[10] See Dunmore v. United States, 358 F.3d 1107, 1109 (9th Cir. 2004) (“We conclude that, although the bankruptcy court had “related to” jurisdiction over Dunmore’s tax refund claims, those claims constituted non-core proceedings.”).

[11] In re Bulk Petroleum Corp., 796 F.3d 667, 670–71 (7th Cir. 2015); United States v. Wilson, 974 F.2d 514, 517 (4th Cir. 1992); In re Starnes, 159 B.R. 748, 749 (Bankr. W.D.N.C. 1993); In re Hunt, 95 B.R. 442, 444 (Bankr. N.D. Tex. 1989) (“The determination of a debtor’s tax liability constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(B) (Supp. IV 1986), and 11 U.S.C. § 505(a)(1) (1982).”).