In re: Peter Szanto

Opinion

FILED JUN 03 2016 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK 2 U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. NV-14-1528-FBD ) 6 PETER SZANTO, ) Bk. No. 3:13-51261-GWZ ) 7 Debtor. ) Adv. No. 3:14-05003-GWZ _____________________________ ) 8 ) PETER SZANTO, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) JOSEPH M. BISTRITZ, ) 12 ) Appellee. ) 13 ______________________________) 14 Submitted Without Argument on May 19, 2016 15 Filed – June 3, 2016 16 Appeal from the United States Bankruptcy Court for the District of Nevada 17 Honorable Bruce T. Beesley, Chief Bankruptcy Judge, and 18 Gregg W. Zive, Bankruptcy Judges, Presiding 19 Appearances: Appellant Peter Szanto, pro se, on brief; 20 John S. Bartlett on brief for Appellee Joseph Bistritz. 21 22 Before: FARIS, BARASH,** and DUNN, Bankruptcy Judges. 23 24 * This disposition is not appropriate for publication. 25 Although it may be cited for whatever persuasive value it may 26 have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 27 ** Hon. Martin R. Barash, United States Bankruptcy Judge for 28 the Central District of California, sitting by designation. 1 INTRODUCTION 2 Appellant/chapter 111 debtor Peter Szanto appeals the 3 bankruptcy court’s decision to abstain from hearing his adversary 4 proceeding filed against Appellee Joseph Bistritz concerning a 5 residential lease. We AFFIRM. 6 FACTUAL BACKGROUND2 7 A. The Florida litigation 8 On May 24, 2013, Mr. Bistritz filed suit against Mr. Szanto 9 in Florida state court over Mr. Szanto’s lease of a Miami Beach, 10 Florida residential property from Mr. Bistritz in 2009. 11 Mr. Szanto had the option of purchasing the property by 12 January 3, 2011 for $1,100,000. Mr. Bistritz claimed that 13 Mr. Szanto did not exercise the option to purchase the property 14 and the lease expired by its own terms. He sought a judicial 15 declaration that Mr. Szanto had no remaining interest in the 16 residential property. 17 B. The Nevada bankruptcy proceedings 18 While the Florida action was pending, Mr. Szanto filed his 19 chapter 11 petition in the United States Bankruptcy Court for the 20 District of Nevada. The same day, he filed a notice of automatic 21 stay with the Florida state court. 22 1 23 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all 24 “Rule” references are to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, and all “Civil Rule” references are 25 to the Federal Rules of Civil Procedure, Rules 1-86. 26 2 Mr. Szanto presents us with a limited record. We have 27 exercised our discretion to review the bankruptcy court’s docket, as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, 28 Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).

2 1 On January 26, 2014, Mr. Szanto initiated the underlying 2 adversary complaint again Mr. Bistritz. Mr. Szanto asserted 3 various causes of action arising out of the lease of the Miami 4 Beach property. He argued that Mr. Bistritz breached the lease 5 agreement by failing to deliver the property to Mr. Szanto 6 (Breach of Contract); that Mr. Bistritz breached his fiduciary 7 duty to Mr. Szanto by not surrendering the property (Breach of 8 Fiduciary Duty); and that his eviction was “subterfuge” for 9 Mr. Bistritz to convert Mr. Szanto’s personal property 10 (Conversion). 11 He alleged that jurisdiction was proper in the Nevada 12 bankruptcy court “because the money and property which the 13 defendant has withheld from plaintiff is part of plaintiff’s 14 bankruptcy estate.” He also alleged that federal jurisdiction 15 was proper because “there is complete diversity between the 16 parties.” 17 C. The motion to abstain 18 Mr. Bistritz filed a motion requesting that the bankruptcy 19 court abstain from exercising jurisdiction over the claims raised 20 in the adversary complaint under 28 U.S.C. § 1334(c)(1) and (2) 21 and that the court dismiss the action (“Motion to Abstain”). 22 Essentially, he argued that the adversary complaint alleged only 23 non-core claims that are not dependent on the Bankruptcy Code for 24 their existence and that the factors laid out in Christensen v. 25 Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 26 1167 (9th Cir. 1990), weighed in favor of abstention. 27 In response, Mr. Szanto argued that complete diversity 28 existed between the parties, thus mandating that Mr. Bistritz’s

3 1 claims be heard in federal court. He also argued that the 2 litigation in Florida state court is a core proceeding because it 3 may potentially add to or affect his bankruptcy estate. 4 Ultimately, the court granted the Motion to Abstain. It 5 held that the Tucson Estates factors favored discretionary 6 abstention under 28 U.S.C. § 1334(c)(1). 7 D. The motion for reconsideration 8 Mr. Szanto filed a motion for reconsideration (“Motion for 9 Reconsideration”), arguing not that the court erred in 10 abstaining, but rather that the order prepared by Mr. Bistritz 11 (and signed by the court) did not accurately reflect the court’s 12 ruling. In summary, he contended that the court should not have 13 made any specific ruling concerning its jurisdiction, since it 14 had determined that it would abstain (and therefore should not 15 have gone further to explain its reasoning). 16 The hearing on the Motion for Reconsideration was delayed 17 for fifteen months because Mr. Szanto claimed that he was too ill 18 to appear. 19 E. Dismissal of the bankruptcy case 20 In the meantime, the bankruptcy court dismissed Mr. Szanto’s 21 bankruptcy case. The chapter 11 trustee moved to dismiss the 22 case or convert it to chapter 7 because Mr. Szanto failed timely 23 under § 1112(b)(4)(J) to file a disclosure statement. The court 24 granted the motion and dismissed the bankruptcy case with a 25 six-month bar on filing or re-filing any bankruptcy petition. 26 The district court affirmed the bankruptcy court’s order of 27 dismissal. Mr. Szanto appealed the district court’s decision to 28 the Ninth Circuit, and that appeal is currently pending.

4 1 F. Ruling on the Motion for Reconsideration 2 The court issued its findings of fact and conclusions of law 3 on the Motion for Reconsideration. It rejected Mr. Szanto’s 4 objections to the order on the Motion to Abstain, holding that 5 the court properly analyzed the Motion to Abstain under Tucson 6 Estates. The court reviewed the hearing transcript and concluded 7 that “the Order prepared by counsel accurately portrayed the oral 8 findings and conclusions . . . .” The court thus denied the 9 Motion for Reconsideration. 10 JURISDICTION 11 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 12 §§ 1334 and 157(b)(1). Mr. Szanto’s notice of appeal was 13 premature because he filed it before the bankruptcy court decided 14 his Motion for Reconsideration. Now that the bankruptcy court 15 has entered a final order on the Motion for Reconsideration, we 16 have jurisdiction under 28 U.S.C. § 158. 17 ISSUES 18 (1) Whether the bankruptcy court erred in abstaining from 19 considering the adversary proceeding in favor of the litigation 20 in Florida state court. 21 (2) Whether the bankruptcy court erred in entering the 22 counsel-prepared order on the Motion for Reconsideration, which 23 included a discussion of the court’s jurisdiction. 24 STANDARDS OF REVIEW 25 “A bankruptcy court’s determination regarding discretionary 26 abstention is fundamentally a matter within the discretion of the 27 court to be reviewed for abuse of discretion.” In re Bankr. 28 Petition Preparers Who Are Not Certified Pursuant to Requirements

5 1 of Ariz. Sup. Ct., 307 B.R. 134, 140 (9th Cir. BAP 2004) 2 (citations omitted). 3 Similarly, we review for abuse of discretion the court’s 4 decision to decline to exercise jurisdiction over an adversary 5 proceeding after dismissal of the underlying bankruptcy case. 6 Carraher v. Morgan Elecs., Inc. (In re Carraher), 971 F.2d 327, 7 328 (9th Cir. 1992). 8 We also review for abuse of discretion the denial of a 9 motion for reconsideration. See N. Alaska Envtl. Ctr. v. Lujan, 10 961 F.2d 886, 889 (9th Cir. 1992). 11 To determine whether the bankruptcy court has abused its 12 discretion, we conduct a two-step inquiry: (1) we review de novo 13 whether the bankruptcy court “identified the correct legal rule 14 to apply to the relief requested” and (2) if it did, whether the 15 bankruptcy court’s application of the legal standard was 16 illogical, implausible, or “without support in inferences that 17 may be drawn from the facts in the record.” United States v. 18 Hinkson, 585 F.3d 1247, 1262–63 & n.21 (9th Cir. 2009) (en banc). 19 “If the bankruptcy court did not identify the correct legal rule, 20 or its application of the correct legal standard to the facts was 21 illogical, implausible, or without support in inferences that may 22 be drawn from the facts in the record, then the bankruptcy court 23 has abused its discretion.” USAA Fed. Sav. Bank v. Thacker 24 (In re Taylor), 599 F.3d 880, 887–88 (9th Cir. 2010) (citing 25 Hinkson, 585 F.3d at 1261–62). 26 We may affirm on any ground supported by the record. Diener 27 v. McBeth (In re Diener), 483 B.R. 196, 202 (9th Cir. BAP 2012). 28

6 1 DISCUSSION 2 A. Abstention and dismissal of the adversary proceeding are proper, because the bankruptcy case has been dismissed. 3 4 By the time the bankruptcy court decided the Motion for 5 Reconsideration, the bankruptcy court had dismissed the main 6 bankruptcy case. This raises the question whether the bankruptcy 7 court could properly have retained jurisdiction of the adversary 8 proceeding.3 We hold that it would have been an abuse of 9 discretion to retain jurisdiction in these circumstances and that 10 therefore dismissal of the adversary proceeding was required. 11 In Carraher, the Ninth Circuit laid out a four-part test to 12 determine whether a court should retain jurisdiction over an 13 adversary proceeding after the underlying bankruptcy case has 14 been dismissed. The Ninth Circuit stated: 15 In considering what standards govern the bankruptcy court’s discretion in determining whether to 16 retain a related case after dismissal of the underlying bankruptcy case, we, like other courts, turn for 17 guidance to cases considering the authority of federal district courts to retain pendent state claims after 18 the federal claims have been dismissed. The Supreme Court has held that where a federal district court 19 dismisses federal claims, the court must consider economy, convenience, fairness and comity in deciding 20 whether to retain jurisdiction over pendent state claims. 21 22 In re Carraher, 971 F.2d at 328 (emphasis added) (internal 23 citations omitted); see also Linkway Inv. Co., Inc. v. Olsen 24 25 3 Although neither the bankruptcy court nor the parties has 26 addressed the question, we must assure ourselves that subject matter jurisdiction exists. See Snell v. Cleveland, Inc., 27 316 F.3d 822, 826 (9th Cir. 2002) (“a court may raise the question of subject matter jurisdiction, sua sponte, at any time 28 during the pendency of the action, even on appeal”).

7 1 (In re Casamont Inv’rs, Ltd.), 196 B.R. 517, 523 (9th Cir. BAP 2 1996) (“retention of jurisdiction was found to have been improper 3 when the initiation of the dispute was recent, no action had been 4 taken prior to the dismissal and the dispute concerned issues of 5 probate law, in which the state courts had more expertise” 6 (emphasis in original)); Zegzula v. JPMorgan Chase Bank, N.A. 7 (In re Zegzula), BAP No. WW-14-1119-JuKiF, 2015 WL 5786572 (9th 8 Cir. BAP Oct. 2, 2015) (holding that the bankruptcy court did not 9 abuse its discretion in declining to retain jurisdiction over the 10 adversary proceeding when it had previously dismissed the 11 underlying bankruptcy case and found that considerations of 12 judicial economy and fairness did not support the court’s 13 retention of jurisdiction over the adversary proceeding). 14 Applying the Carraher factors to the present case, we 15 conclude that the court had no basis to retain jurisdiction. 16 First, judicial economy did not favor retention of the 17 adversary proceeding. The adversary proceeding had not 18 progressed beyond the initial pleading stage, and Mr. Bistritz 19 had not answered the complaint. Moreover, the issues raised by 20 the adversary complaint are state law issues that can be resolved 21 expeditiously in state court. See In re Casamont Inv’rs, Ltd., 22 196 B.R. at 524. 23 Second, dismissal did not unduly inconvenience either party. 24 There was ongoing litigation in state court regarding the 25 residential lease,4 and Mr. Szanto could have brought his claims 26 4 27 The Florida state litigation was pending at the time of the hearing and the order on the Motion to Abstain in April 2014. 28 (continued...)

8 1 in that forum. See id. Although Mr. Szanto said that he is not 2 a resident of Florida, he admitted that he lived there for part 3 of the year, and the full extent of his contact with the forum is 4 unknown. 5 Third, it was not unfair to require Mr. Szanto to litigate 6 his claims in state court. The Florida state court was already 7 considering the lease dispute and could have adjudicated 8 Mr. Szanto’s claims. See id. Traditionally, disputes about real 9 property interests are adjudicated where the property is located. 10 It is not unfair to hold Mr. Szanto to the traditional rule. 11 Finally, comity favors refusing jurisdiction over the 12 adversary complaint. Mr. Szanto’s claims are straightforward 13 issues of Florida state law that are best decided by the Florida 14 state courts. See id. 15 Therefore, retention of jurisdiction over the adversary 16 proceeding following the dismissal of the underlying bankruptcy 17 case would have been an abuse of discretion. 18 B. The bankruptcy court did not abuse its discretion when it decided to abstain. 19 20 The bankruptcy court determined that it had grounds “to 21 abstain from taking jurisdiction over the claims in this 22 adversary proceeding under the provisions of 28 USC § l334(c)(1), 23 permissive abstention.” The court did not err. 24 A court may exercise discretionary abstention in bankruptcy 25 proceedings: 26 4 27 (...continued) Subsequently, on February 23, 2015, the Florida court dismissed 28 the state court lawsuit.

9 1 Except with respect to a case under chapter 15 of title 11, nothing in this section prevents a district 2 court in the interest of justice, or in the interest of comity with State courts or respect for State law, from 3 abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under 4 title 11. 5 28 U.S.C. § 1334(c)(1). 6 1. The bankruptcy court correctly applied the Tucson Estates factors. 7 8 The Ninth Circuit has held that, when deciding whether to 9 abstain, a court must consider: 10 (1) the effect or lack thereof on the efficient administration of the estate if a Court recommends 11 abstention, (2) the extent to which state law issues predominate over bankruptcy issues, (3) the difficulty 12 or unsettled nature of the applicable law, (4) the presence of a related proceeding commenced in state 13 court or other nonbankruptcy court, (5) the jurisdictional basis, if any, other than 28 U.S.C. 14 § 1334, (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case, (7) the 15 substance rather than form of an asserted “core” proceeding, (8) the feasibility of severing state law 16 claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to 17 the bankruptcy court, (9) the burden of [the bankruptcy court’s] docket, (10) the likelihood that the 18 commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties, (11) the 19 existence of a right to a jury trial, and (12) the presence in the proceeding of nondebtor parties. 20 21 In re Tucson Estates, Inc., 912 F.2d at 1167 (quoting 22 In re Republic Reader’s Serv., Inc., 81 B.R. 422, 429 (Bankr. 23 S.D. Tex. 1987)). 24 Mr. Szanto addresses only one of the Tucson Estates factors. 25 See section B.2, infra. He attempts to brush the Ninth Circuit’s 26 decision aside, saying that Tucson Estates “obfuscates the clear 27 issues” he presents. We cannot, however, simply disregard 28 controlling Ninth Circuit precedent.

10 1 He also argues that the test only becomes applicable after 2 Mr. Bistritz submitted to the jurisdiction of the bankruptcy 3 court. Neither authority nor logic supports this novel 4 proposition. 5 The bankruptcy court properly applied the Tucson Estates 6 test. The court specifically addressed the factors and concluded 7 that, on balance, the facts of the case favored abstention: 8 (1) the case can be more efficiently resolved in Florida state 9 court; (2) the case raised “totally a state law issue in state 10 court, in Florida, that’s controlled by Florida law”; (3) there 11 is already a related proceeding in Florida; (4) the adversary 12 proceeding is only remotely related to the underlying bankruptcy 13 case; (5) the adversary proceeding is not a core proceeding; 14 (6) it is not feasible to sever the state claims and bankruptcy 15 claims; (7) the court professed suspicion that Mr. Szanto is 16 forum shopping; (8) the bankruptcy court generally lacks power to 17 conduct jury trials; and (9) there are no non-debtor parties 18 (other than Mr. Bistritz) who would be affected by the 19 proceedings.5 20 We find no error in the bankruptcy court’s analysis. It 21 correctly identified the operative legal standard and considered 22 the various relevant factors to conclude that abstention was 23 warranted. 24 25 26 5 27 We note that Mr. Bistritz is not otherwise involved in the bankruptcy proceeding, so there are no other parties affected by 28 the abstention.

11 1 2. Mr. Szanto’s adversary complaint did not commence a “core proceeding.” 2 3 Mr. Szanto argues that his adversary proceeding against 4 Mr. Bistritz was a “core proceeding.” Although he does not say 5 so, this relates to the sixth and seventh Tucson Estates factors. 6 Mr. Szanto apparently thinks that a “core proceeding” is one that 7 is important to a particular bankruptcy case. He fails to 8 recognize that “core proceeding” is a term of art in bankruptcy 9 law and that his adversary proceeding is not a “core proceeding.” 10 Some historical background is helpful to understand the 11 meaning of “core proceedings.” 12 In 1978, Congress enacted the Bankruptcy Code, which (among 13 many other things) dramatically increased the powers of 14 bankruptcy judges. The Code “mandated that bankruptcy judges 15 ‘shall exercise’ jurisdiction over ‘all civil proceedings arising 16 under title 11 or arising in or related to cases under 17 title 11.’” Executive Benefits Ins. Agency v. Arkison, 134 S. 18 Ct. 2165, 2170-71 (2014) (citing 28 U.S.C. § 1471(b)-(c)). 19 In 1982, the United States Supreme Court decided Northern 20 Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 21 (1982) (“Marathon”). The Court held that Congress had granted 22 too much power to bankruptcy judges who lack the protections of 23 Article III status. Although the Marathon decision is difficult 24 to parse because there was no majority opinion, the holding of 25 the case is that Congress may not empower a judge lacking 26 Article III protections to enter final judgment in a case brought 27 by the representative of a bankruptcy estate against a third 28 party on state law claims (at least where the third party

12 1 objects). The Supreme Court concluded that “the broad grant of 2 jurisdiction to the bankruptcy courts” should be struck down so 3 Congress could rewrite it. Id. at 87. 4 In an attempt to solve the constitutional problem identified 5 in Marathon, Congress enacted the Bankruptcy Amendments and 6 Federal Judgeship Act of 1984. Congress gave the district courts 7 “original and exclusive jurisdiction of all cases under 8 Title 11,” 28 U.S.C. § 1334(a), and “original, but not exclusive, 9 jurisdiction of all civil proceedings arising under Title 11, or 10 arising in or related to cases under Title 11[,]” id. § 1334(b). 11 Congress created the bankruptcy courts as “units” of the district 12 courts, id. § 151, staffed them with bankruptcy judges appointed 13 to fourteen-year terms by the respective courts of appeal, id. 14 § 152(a), and authorized (but did not require) the district 15 courts to refer to the bankruptcy courts matters falling under 16 bankruptcy jurisdiction, id. § 157(a). 17 Congress further divided bankruptcy court jurisdiction into 18 “core proceedings” and so-called “non-core” proceedings. See 19 Executive Benefits Ins. Agency, 134 S. Ct. at 2171 (“The 1984 Act 20 implements that bifurcated scheme by dividing all matters that 21 may be referred to the bankruptcy court into two categories: 22 ‘core’ and ‘non-core’ proceedings. It is the bankruptcy court’s 23 responsibility to determine whether each claim before it is core 24 or non-core.” (internal citations omitted)). 25 The distinction between “core” and “non-core” proceedings 26 determines the scope of review of the bankruptcy court’s 27 decisions. The bankruptcy court can enter a final judgment, 28 subject to appellate review under the usual standards, in a “core

13 1 proceeding,” or if all parties consent. See Battle Ground Plaza, 2 LLC v. Ray (In re Ray), 624 F.3d 1124, 1130 (9th Cir. 2010), 3 overruled on other grounds by Stern v. Marshall, 563 U.S. 462, 4 476-77 (2011). 5 In all other cases, the bankruptcy court must submit 6 proposed findings of fact and a recommended judgment to the 7 district court for de novo review. See generally Wellness Int’l 8 Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1940 (2015) (“Congress 9 gave bankruptcy courts the power to ‘hear and determine’ core 10 proceedings and to ‘enter appropriate orders and judgments,’ 11 subject to appellate review by the district court. But it gave 12 bankruptcy courts more limited authority in non-core proceedings: 13 They may ‘hear and determine’ such proceedings, and ‘enter 14 appropriate orders and judgments,’ only ‘with the consent of all 15 the parties to the proceeding.’ Absent consent, bankruptcy 16 courts in non-core proceedings may only ‘submit proposed findings 17 of fact and conclusions of law,’ which the district courts review 18 de novo.” (citations omitted)). 19 “[A] core proceeding is one that ‘invokes a substantive 20 right provided by title 11 or . . . a proceeding that, by its 21 nature, could arise only in the context of a bankruptcy case.’” 22 In re Ray, 624 F.3d at 1131 (quoting Gruntz v. Cty. of L.A. 23 (In re Gruntz), 202 F.3d 1074, 1081 (9th Cir. 2000)). In 24 contrast, proceedings are “related to” a bankruptcy case and thus 25 “non-core” if “they do not depend on the Bankruptcy Code for 26 their existence and they could proceed in another court.” Id. 27 (quoting Dunmore v. United States, 358 F.3d 1107, 1114 (9th Cir. 28 2004)).

14 1 This history shows that Congress invented the concept of 2 “core proceedings” to address the constitutional problem 3 identified in Marathon. Therefore, in case of doubt, the 4 statutory definition of “core proceedings” should be interpreted 5 to exclude proceedings in which the constitution precludes a 6 bankruptcy judge from entering final judgment under Marathon, 7 i.e., claims by representatives of the estate against 8 non-consenting third parties to recover money or property for the 9 estate on non-bankruptcy law grounds. 10 We agree with the bankruptcy court that Mr. Szanto’s 11 adversary proceeding is a non-core proceeding. He brought his 12 adversary proceeding against a non-consenting third party 13 allegedly in order to bring into the estate property in which his 14 leasehold interest had terminated by its terms. His claims are 15 based solely on state law and not bankruptcy law. None of his 16 claims depend on the Bankruptcy Code for their existence, and 17 they could be brought independently in state court. Thus, even 18 construing Mr. Szanto’s arguments liberally, the sixth and 19 seventh Tucson Estates factors do not weigh in his favor. 20 3. Neither equitable considerations nor the court’s supposed “mandate” gives rise to any error. 21 22 Mr. Szanto spends the bulk of his briefs arguing that the 23 court should not have abstained for equitable reasons. He 24 contends that (1) Mr. Bistritz has unclean hands; (2) Mr. Szanto 25 has been mistreated by the court6 and his opponent; and (3) the 26 6 27 Mr. Szanto overstates his case. He claims that the court’s admonition to “sit down or I will have you removed” meant 28 (continued...)

15 1 court ignored a “mandate” to adjudicate his claims. 2 The first two arguments are not among the Tucson Estates 3 factors and are not relevant to the question of abstention. 4 The third claim is patently incorrect. Mr. Szanto offers no 5 authority for the proposition that the bankruptcy court has a 6 “mandate” to adjudicate every issue raised by a party. To the 7 contrary, the statutory abstention provisions make clear that a 8 bankruptcy court can decline to decide controversies that are 9 within its jurisdiction. 10 Moreover, it is unclear whether Mr. Szanto presented any of 11 these arguments before the bankruptcy court. 12 4. The automatic stay does not preclude abstention. 13 Mr. Szanto argues that the bankruptcy court erred when it 14 decided to abstain before lifting the automatic stay. “The 15 existence of the automatic stay, however, is not relevant to the 16 question of whether bankruptcy courts should exercise 17 jurisdiction over a matter.” Bowen Corp., Inc. v. Sec. Pac. Bank 18 Idaho, F.S.B., 150 B.R. 777, 784 (Bankr. D. Idaho 1993) 19 (citations omitted). It is true that, even after the bankruptcy 20 court abstains in favor of a proceeding in another court, the 21 other proceeding may not resume until the bankruptcy court lifts 22 the automatic stay. It does not follow, however, that the 23 bankruptcy court must lift the stay before abstaining. 24 25 6 (...continued) 26 that “if he did not sit down, he would be removed from existence, that is - that he would be killed/exterminated - his right to 27 live would be removed!” (Emphasis in original.) The bankruptcy judge may have been annoyed, but there is no indication that he 28 was in a murderous rage.

16 1 In any event, subsequent developments have mooted this 2 argument. The automatic stay terminated when the court dismissed 3 the underlying bankruptcy case in May 2014. See § 362(c)(2)(B). 4 Thus, the automatic stay no longer bars prosecution of the 5 Florida litigation. 6 5. Jurisdiction is not exclusive to the bankruptcy court. 7 Mr. Szanto also argues that the federal courts have 8 exclusive jurisdiction of his dispute with Mr. Bistritz because 9 he and Mr. Bistritz are of diverse citizenship. Even assuming 10 that Mr. Szanto’s representations about citizenship are correct, 11 this argument is wrong. 12 First, diversity jurisdiction is not exclusive. Diversity 13 of citizenship does not preclude state court jurisdiction. See 14 Jones v. Sheehan, Young & Culp, P.C., 82 F.3d 1334, 1338 n.3 (5th 15 Cir. 1996) (“federal diversity jurisdiction permits state and 16 federal courts to exercise concurrent jurisdiction” (emphasis in 17 original) (citing Colo. River Water Conservation Dist. v. United 18 States, 424 U.S. 800, 809 (1976))); Zora Analytics, LLC v. 19 Sakhamuri, No. 13-CV-00639 JM (WMC), 2014 WL 1289450, at *5 (S.D. 20 Cal. Mar. 27, 2014) (“plaintiffs are not required to file cases 21 in federal court simply because diversity exists”). 22 Second, diversity jurisdiction does not apply to the 23 bankruptcy court. The district court can refer to the bankruptcy 24 court only matters that are within its bankruptcy jurisdiction. 25 See 28 U.S.C. § 157(b)(1). No statute permits a district court 26 to refer to the bankruptcy court matters covered by diversity 27 jurisdiction. Thus, diversity would not give the bankruptcy 28 court any power over the adversary proceeding.

17 1 6. Mr. Bistritz was not required to bring his claims in bankruptcy court. 2 3 Finally, Mr. Szanto argues that the bankruptcy court should 4 not have forced him to bring his claims as counterclaims in 5 Florida state court, but rather should have waited until 6 Mr. Bistritz filed his claims in bankruptcy court.7 We reject 7 this argument for three reasons. 8 First, Mr. Szanto incorrectly assumes that Mr. Bistritz has 9 a duty to file a claim in the bankruptcy case. Creditors 10 generally must file claims in order to receive distributions from 11 the estate, but they are not required to submit themselves to the 12 bankruptcy court’s jurisdiction. 13 Second, there are limits on the bankruptcy court’s 14 constitutional power to decide counterclaims brought against 15 persons filing claims against the estate. See Stern, 564 U.S. at 16 487. Abstention permitted the bankruptcy court to avoid this 17 constitutional problem. 18 Third, as discussed above, the dismissal of the underlying 19 bankruptcy case moots this argument. See section B.4, supra. 20 C. The court properly denied the Motion for Reconsideration. 21 Civil Rule 60(b), made applicable through Rule 9024, 22 23 7 Relatedly, Mr. Szanto also argues that he has a 24 constitutional right to bankruptcy protection. He is wrong. See In re Kane, 336 B.R. 477, 481 (Bankr. D. Nev. 2006) (“there is no 25 constitutional right to file for bankruptcy”); In re Golden State 26 Capital Corp., 317 B.R. 144, 149 (Bankr. E.D. Cal. 2004) (“A debtor does not have a constitutional or fundamental right to a 27 discharge in bankruptcy. Similarly, the automatic stay should not be viewed as a ‘right,’ but more as a ‘privilege’ which may 28 be denied to petitioners who abuse it.” (citations omitted)).

18 1 provides: 2 On motion and just terms, the court may relieve a party or its legal representative from a final judgment, 3 order, or proceeding for the following reasons: 4 (1) mistake, inadvertence, surprise, or excusable neglect; 5 (2) newly discovered evidence that, with 6 reasonable diligence, could not have been discovered in time to move for a new trial under 7 Rule 59(b); 8 (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an 9 opposing party; 10 (4) the judgment is void; 11 (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment 12 that has been reversed or vacated; or applying it prospectively is no longer equitable; or 13 (6) any other reason that justifies relief. 14 15 Mr. Szanto argues that “surprise” and “misconduct by an 16 opposing party” regarding the language of the order warrant 17 striking the order under Civil Rule 60(b) for three reasons. 18 First, he argues that the written order improperly deviated 19 from the court’s oral ruling. He contends that “most of the 20 proposed language of the ORDER was neither discussed nor analyzed 21 by the Court nor ever stated on the record.” But there is no 22 requirement that written orders conform to oral rulings. Courts 23 enter written orders partly in order to permit the judge to 24 consider the form and substance of the ruling more carefully than 25 is possible during a hearing. See Rawson v. Calmar S.S. Corp., 26 304 F.2d 202, 206 (9th Cir. 1962) (“The trial judge is not to be 27 lashed to the mast on his off-hand remarks in announcing decision 28 prior to the presumably more carefully considered deliberate

19 1 findings of fact.” (citations omitted)). 2 Second, Mr. Szanto argues that the written order improperly 3 decided unnecessary issues. Mr. Szanto contends that “[t]his 4 Court, having abstained from jurisdiction, has thereby ended all 5 of its ability to adjudicate any matter, issue or law in this 6 case” and should not have analyzed its jurisdiction over the 7 adversary proceeding. (Emphasis omitted.) 8 We reject this argument. The bankruptcy court properly 9 stated the reasons for its decision to abstain, including (as 10 Tucson Estates requires) doubts about the bankruptcy court’s 11 jurisdiction. Mr. Szanto disagrees with the court’s reasoning, 12 but he was not entitled to prevent the court from stating its 13 reasoning. 14 Third, Mr. Szanto also argues that the order contained 15 erroneous statements about his possible forum shopping. In its 16 consideration of the Tucson Estates factors, the court did not 17 make any final finding on this issue, but stated during the 18 hearing that it was suspicious of Mr. Szanto’s motives. The 19 order adequately reflected the court’s statements at the hearing, 20 and the record supports the bankruptcy court’s suspicions. 21 Because possible forum shopping is one of the Tucson Estates 22 factors, the bankruptcy court did not err in noting its 23 suspicions in its order. 24 CONCLUSION 25 For the foregoing reasons, we conclude that the bankruptcy 26 court did not err in abstaining from hearing the adversary 27 proceeding or denying the Motion for Reconsideration. 28 Accordingly, we AFFIRM.