Broadhead v. Kansas Power & Light Co.

671 F.2d 1264
CourtCourt of Appeals for the Tenth Circuit
DecidedMarch 1, 1982
DocketNo. 81-1811
StatusPublished
Cited by1 cases

This text of 671 F.2d 1264 (Broadhead v. Kansas Power & Light Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Broadhead v. Kansas Power & Light Co., 671 F.2d 1264 (10th Cir. 1982).

Opinion

SEYMOUR, Circuit Judge.

This is an appeal by the trustee in bankruptcy from the district court’s ruling that it does not have jurisdiction to entertain a negligence suit by the trustee against Kansas Power and Light Company (KPL). Under the particular facts of this case, we agree that 11 U.S.C. § 46 prevents the trustee from pursuing his plenary action in federal court.

Louis and Sharon Broadhead, formerly doing business as Broadhead’s Family Food Center, I.G.A., filed a petition in bankruptcy on August 2, 1976. Subsequent to the filing, KPL terminated the electrical service to Broadhead’s store, allegedly causing spoilage loss to perishable goods which had been refrigerated.

[1265]*1265On October 19, 1977, the trustee in bankruptcy brought an action in the federal district court in Kansas against KPL and Harry Bauersfeld, an employee of the parent company of IGA who allegedly authorized the cutoff of electricity. The trustee contended that defendants negligently terminated the electrical supply to the food store and negligently failed to obtain prior permission for the cutoff from the federal district court having jurisdiction over the bankruptcy estate. KPL denied liability. Subsequently, the trustee brought Duane Guy, attorney for the Broadheads, into the suit as an additional defendant.

Guy filed a motion to dismiss the action against him for lack of subject matter jurisdiction. The motion was granted. In turn, similar motions were filed by KPL and Bauersfeld, which the district court also granted. The trustee has appealed only as to KPL.

This appeal is governed by the bankruptcy provisions in effect prior to the 1978 Bankruptcy Reform Act.1 The sole issue is whether the federal district court has subject matter jurisdiction to adjudicate this plenary action by the trustee in bankruptcy.

The broad general jurisdiction of United States district courts when sitting as courts of bankruptcy is prescribed in 11 U.S.C. § 11. In particular, § 11(a)(7) enables bankruptcy courts to “[ejause the estates of bankrupts to be collected, reduced to money, and distributed, and determine controversies in relation thereto, except as herein otherwise provided (emphasis added). However, when a trustee brings a plenary suit in a federal district court against an adverse claimant, the provisions of section 23 of the Bankruptcy Act, 11 U.S.C. § 46 are applicable “as herein otherwise provided.” See 2 W. Collier, Collier on Bankruptcy ¶ 23.12.at 589 (14th ed. 1976). Section 46 provides:

“(a) The United States district courts shall have jurisdiction of all controversies at law and in equity, as distinguished from proceedings under this title, between receivers and trustees as such and adverse claimants, concerning the property acquired or claimed by the receivers or trustees, in the same manner and to the same extent as though such proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants.
“(b) Suits by the receiver and the trustee shall be brought or prosecuted only in the courts where the bankrupt might have brought or prosecuted them if proceedings under this title had not been instituted, unless by consent of the defendant, except as provided in sections 96,107, and 110 of this title.”

(Emphasis added). Section 46 thus operates as a limitation on the otherwise extensive [lower of the federal courts to determine controversies relating to the estates of bankrupts. 2 Collier, supra ¶ 23.12 at 589, 591-92. See Wymard v. McCloskey & Co., 342 112(1 495, 497-98 (3d Cir.), cert. denied, 382 U.S. 823, 86 S.Ct. 52, 15 L.Ed.2d 68 (1965).

The Supreme Court in Schumacher v. Beeler, 293 U.S. 367, 374, 55 S.Ct. 230, 233, 79 L.Ed. 433 (1934), explained the legislative intent behind 11 U.S.C. § 46:

“In enacting § 23 [11 U.S.C. § 46], it was clearly the intent of the Congress that the federal courts should not have the unrestricted jurisdiction of suits between trustees in bankruptcy and adverse claimants which those courts had exercised under the broad provisions of § 2 of the Act of 1867. The purpose was to leave such controversies to be heard and determined for the most part in the state courts, ‘to the greater economy and convenience of litigants and witnesses’.”

Notwithstanding the language of section 46(b), the trustee argues that it is not applicable to the present case because the cause of action here arose after the petition for bankruptcy was filed and relates to property in the possession of the bankruptcy court. The trustee contends that because [1266]*1266the cause of action did not exist prior to bankruptcy, the bankrupt could not have brought the suit himself and the limiting language of section 46 therefore does not apply. This argument is without merit.

The trustee does not dispute that this is a plenary action. Section 46(b) is applicable to all plenary actions. See Schumacher, 293 U.S. at 373, 55 S.Ct. at 233; see generally Tamasha Town & Country Club v. McAlester Construction Finance Corp., 252 F.Supp. 80 (S.D.Cal.1966). The test under section 46(b) for determining whether federal jurisdiction exists is that “[sjuits by ... the trustee shall be brought or prosecuted only in the courts where the bankrupt might have brought or prosecuted them if proceedings under this title had not been instituted .... ” There is no distinction drawn for causes of actions that arose before or after a bankruptcy filing. See Stiefel v. 14th St. & Broadway Realty Corp., 48 F.2d 1041, 1043 (2d Cir. 1931). The trustee’s argument in this regard is supported neither by statutory language nor case law. Rather, the subsection directs us to examine whether jurisdiction exists by determining where the bankrupt could have brought the suit if bankruptcy proceedings had not been filed. The Broadheads could not have brought a negligence suit against KPL in federal court because there is no independent basis of federal jurisdiction.

The trustee alternatively contends that jurisdiction is present under section 46 because defendant “consented” to jurisdiction. See 11 U.S.C. § 46(b); Schumacher, 293 U.S. at 377, 55 S.Ct. at 235. A defendant’s “consent” to be sued by the bankruptcy trustee in a federal plenary action need not be express; tacit acquiescence is sufficient “consent” to federal court jurisdiction. See 2 Collier, supra ¶ 23.14 at 602 & n.13. The trustee argues that KPL impliedly consented either by filing a proof of claim in the bankruptcy proceedings, or by failing to object to jurisdiction until after defendant Guy was brought into the suit.

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Broadhead v. Kansas Power and Light Company
671 F.2d 1264 (Tenth Circuit, 1982)

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671 F.2d 1264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/broadhead-v-kansas-power-light-co-ca10-1982.