Alabama Fuel Sales Co. v. Newpark Resources, Inc. (In re Alabama Fuel Sales Co.)

44 B.R. 551, 1984 Bankr. LEXIS 4536, 12 Bankr. Ct. Dec. (CRR) 533
CourtDistrict Court, N.D. Alabama
DecidedNovember 27, 1984
DocketBankruptcy No. 80-06320; Adv. No. 84-0516
StatusPublished
Cited by1 cases

This text of 44 B.R. 551 (Alabama Fuel Sales Co. v. Newpark Resources, Inc. (In re Alabama Fuel Sales Co.)) is published on Counsel Stack Legal Research, covering District Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alabama Fuel Sales Co. v. Newpark Resources, Inc. (In re Alabama Fuel Sales Co.), 44 B.R. 551, 1984 Bankr. LEXIS 4536, 12 Bankr. Ct. Dec. (CRR) 533 (N.D. Ala. 1984).

Opinion

MEMORANDUM OPINION

STEPHEN B. COLEMAN, Bankruptcy Judge.

Congress in the 1984 Bankruptcy Amendments and Federal Judgeship Act by 28 U.S.C. § 1334(a) effectively stripped bankruptcy courts of any jurisdiction to hear or decide anything. All jurisdiction is placed in the District Court with “original and exclusive jurisdiction of all cases under title 11.” It would seem inappropriate to style cases “In the Bankruptcy Court.” There is in truth no effective bankruptcy court with power to hear and determine cases.

Section 151 provides in Chapter 6 headed Bankruptcy Judges: “In each judicial district, the bankruptcy judges in regular active service shall constitute a unit of the district court to be known as the bankruptcy court for that district.” All authority is placed in each bankruptcy judge as a judicial officer of the district court who "... may exercise the authority conferred under this chapter with respect to any action, suit, or proceeding and may preside alone and hold a regular or special session of court, except as otherwise provided by law or rule or order of the district court” and in section 152(a) it is stated “bankruptcy judges shall serve as judicial officers of the United States district court established under Article III of the Constitution.” No power is placed in bankruptcy courts.1 In section 152(c) it is stated “Each Bankruptcy Judge may hold court at such places within the Judicial District, in addition to the official duty station of such judge, as the business of the court may require.” Quaere —Is he sitting as a judicial officer of the district court, as a bankruptcy court, as a bankruptcy judge, or as a unit of the district court?

Very similar to sections 22 and 38 of the Old Bankruptcy Act, section 157 provides for a reference to bankruptcy judges for the District of “any or all cases under title 11 and any or all proceedings arising in or related to a case under title 11 ...” See matrix prepared by Keith Lundin2 No definition is asserted by Congress under its definition of what a related proceeding is unless it includes everthing not a core proceeding. But Northern Pipeline is saturated with such definitions3 and no satisfactory definition can be found.

By Lundin’s matrix, a bankruptcy judge may “hear and determine” any matter however classified with consent of parties. Section 157(c).

In an article published in The ABI Newsletter, this writer attempted to review some former decisions dealing with jurisdiction by consent.4 No case has been found where jurisdiction was denied after consent was obtained from the adverse party. See [553]*553Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966). Apparently, under section 23 of the 1898 Act, the adverse party ceased to have a bona fide adverse claim after he gave his consent to jurisdiction. Possibly Cline v. Kaplan, 323 U.S. 97, 65 S.Ct. 155, 89 L.Ed. 97 (1944) could be construed as an exception.

However, these cases were decided without the construction and influence of Northern Pipeline.5 Congress in the 1984 Bankruptcy Amendments enumerated and declared its definition of core proceedings. In some instances, the writer questions whether Congress has not violated the admonitions of the Supreme Court in Northern Pipeline by ignoring basic guidelines in granting to bankruptcy judges right to hear related matters reserved only to Article III Judges.

Must not Congress’ assertion and definition of core matters be examined in the light of Northern Pipeline? The bankruptcy judges’ sought from Congress an enumeration and catalogue of matters that could properly be heard and determined by a non-Article III Judge, and we should therefore not be critical of the effort. However, the Constitution must be reckoned with.

Can a core matter become such simply because Congress has so designated it? A good example would be a preference action or fraudulent transfer case which is on the facts not really a core matter. Does consent render such a proceeding a core matter or is the defendant estopped to later question jurisdiction?

Does consent confer substantive jurisdiction where none existed before? Congress does not attempt to define core matters, but names them.

Exploring section 1334 further, we find District Courts “shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11. Keith Lundin in his matrix breaks down arising in and arising under in different categories. However, he comes to the same result both procedurally and jurisdictionally so that for all practical purposes they could be put in the same category as far as the 1984 Act is concerned, whether deemed core or not core.

Background and experience in each instance is found in the former emergency rule,6 but especially in the decisions.7 Each term must be reviewed and studied in light of Northern Pipeline.

However, the most applicable part of 1334 to this case is found under (d). 1334(d) reads:

The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all of the property, wherever located, of the debtor as of the commencement of such case, and of the estate.

The subject matter of this case is a twenty (20) year lease of an operating coal facility in the State of Kentucky. Possession may be in Newpark or in Elpac jointly with the debtor. The debtor has heretofore assigned some of the rights under the lease to Little Creek Coal Company, now Elpac, but reserved to debtor the prime and prior right to ship its coal through the facility to the exclusion of Elpac and Newpark. The leases contained clauses prohibiting or restricting the right of assignment without consent of the other party. Now debtor seeks to assign the lease to Pyramid Coal Company over the vigorous objection of Elpac and Newpark who assert lack of jurisdiction in the bankruptcy judge and the United States District Court for the Northern District of Alabama and object to the summary and expedited nature of the proceeding which the bankruptcy judge is treating as just a sale of an asset. The [554]*554debtor’s whole future and the success of its chapter 11 reorganization depends on the consummation of its sale to Pyramid promptly. The declared purpose of the defendants is to slow down and obstruct the sale and to prevent its consummation. The debtor asserts that it is merely a sale of assets of the estate which is essential to the accomplishing of a Plan for the payment of its creditors, which it has a right to make under section 365(C)(2) of the Bankruptcy Reform Act of 1978.

The matter does not involve merely a debtor and creditor relationship. Rather, it involves a dispute between a bona fide adverse third party or parties who hold assignments of the very lease in litigation.

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44 B.R. 551, 1984 Bankr. LEXIS 4536, 12 Bankr. Ct. Dec. (CRR) 533, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alabama-fuel-sales-co-v-newpark-resources-inc-in-re-alabama-fuel-sales-alnd-1984.