In Re: William Morschauser v. Continental Capital LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 16, 2024
• Docket: 22-60038
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 16 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: DEVORE STOP, a General No. 22-60038 Partnership, BAP No. 21-1226 Debtor,

------------------------------ MEMORANDUM*

WILLIAM MORSCHAUSER,

Appellant,

v.

CONTINENTAL CAPITAL LLC; et al.,

Appellees.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Lafferty III, Spraker, and Taylor, Bankruptcy Judges, Presiding

Argued and Submitted January 22, 2024 Pasadena, California

Before: COLLINS, MENDOZA, and DESAI, Circuit Judges.

William Morschauser appeals a Bankruptcy Appellate Panel (“BAP”)

decision affirming the bankruptcy court’s dismissal of his quiet title action for lack

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. of jurisdiction. A bankruptcy court’s determination of its jurisdiction is reviewed de

novo. In re Valdez Fisheries Dev. Ass’n, Inc., 439 F.3d 545, 547 (9th Cir. 2006). The

party asserting that the bankruptcy court has jurisdiction bears the burden of

establishing subject matter jurisdiction. In re Ray, 624 F.3d 1124, 1136 n.8 (9th Cir.

2010). We affirm.

Bankruptcy courts have jurisdiction over “all civil proceedings arising under

title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b); see also

id. § 157(b)(1). These categories are further divided into “core” and “noncore”

proceedings: “claims that arise under or in Title 11 are deemed to be ‘core’

proceedings, while claims that are related to Title 11 are ‘noncore’ proceedings.”

Maitland v. Mitchell (In re Harris Pine Mills), 44 F.3d 1431, 1435 (9th Cir. 1995).

Even if a bankruptcy court no longer has “arising under,” “arising in,” or “related

to” jurisdiction, it can retain ancillary jurisdiction to “vindicate its authority and

effectuate its decrees.” In re Ray, 624 F.3d at 1130. In this case, there is no basis for

the bankruptcy court to exercise jurisdiction.

1. The adversary proceeding is not a core proceeding arising under or in

the underlying bankruptcy case. Mr. Morschauser’s claims arise under state law, and

thus do not arise under Title 11. See In re Harris Pine Mills, 44 F.3d at 1435. Mr.

Morschauser’s claims to quiet title also do not arise in a case under Title 11 because

they could exist independent of the bankruptcy case. See In re Ray, 624 F.3d at 1131

2 22-60038 (“A proceeding ‘arises in’ a case under the Bankruptcy Code if it is an administrative

matter unique to the bankruptcy process that has no independent existence outside

of bankruptcy and could not be brought in another forum.”). Indeed, Mr.

Morschauser does not claim that the enforceability and ownership of Note 2 and

Deed of Trust 2 will have any effect on the debtor or the bankruptcy estate.

2. The adversary proceeding is not a non-core proceeding related to the

underlying bankruptcy case because the Chapter 7 estate has been fully administered

and closed, and whether or not Mr. Morschauser succeeds in his state-law claims,

the estate will receive no assets. Mr. Morschauser fails to explain how his claims

could “conceivably have [an] effect on the estate being administered in bankruptcy”

to bring this action within the statutory grant of related-to jurisdiction. In re

Marshall, 600 F.3d 1037, 1055 (9th Cir. 2010) (quoting In re Fietz, 852 F.2d 455,

457 (9th Cir. 1988)).

3. The bankruptcy court did not have ancillary jurisdiction over the

adversary proceeding. The adversary complaint does not include allegations that

require the bankruptcy court to interpret or effectuate its prior rulings. See In re Ray,

624 F.3d at 1136 (holding that “hearing a breach of contract claim predicated on

evidence that came to light after a bankruptcy case had closed, its creditors paid, and

the debtor discharged, stretche[d] the limits of the bankruptcy court’s ancillary

jurisdiction too far, going beyond what is necessary for the bankruptcy court to

3 22-60038 ‘effectuate its decrees.’” (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511

U.S. 375, 380 (1994))). “Nor does the bankruptcy court’s express retention of

jurisdiction, alone, bring this case within its ancillary jurisdiction.” Id. n.8.

Mr. Morschauser fails to meet his burden to establish that the bankruptcy court

had jurisdiction over his claims. We therefore affirm the BAP’s decision affirming

the bankruptcy court’s dismissal.

AFFIRMED.

4 22-60038