Margaret M. Good, as Liquidation Agent of the Liquidation Trust of Heartland Steel, Inc. v. Voest-Alpine Industries, Inc.

398 F.3d 918, 2005 U.S. App. LEXIS 3010, 44 Bankr. Ct. Dec. (CRR) 79, 2005 WL 405889
CourtCourt of Appeals for the Seventh Circuit
DecidedFebruary 22, 2005
Docket03-3289
StatusPublished
Cited by12 cases

This text of 398 F.3d 918 (Margaret M. Good, as Liquidation Agent of the Liquidation Trust of Heartland Steel, Inc. v. Voest-Alpine Industries, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Margaret M. Good, as Liquidation Agent of the Liquidation Trust of Heartland Steel, Inc. v. Voest-Alpine Industries, Inc., 398 F.3d 918, 2005 U.S. App. LEXIS 3010, 44 Bankr. Ct. Dec. (CRR) 79, 2005 WL 405889 (7th Cir. 2005).

Opinion

WOOD, Circuit Judge.

This case begins and ends with our lack of appellate jurisdiction, though the path to that conclusion is not as straightforward as one might wish. After Heartland Steel, Inc., filed for bankruptcy, Voesh-Alpine Industries, Inc., submitted a proof of claim seeking payment for services that it had provided to Heartland. Following some procedural finagling, Heartland’s trustee in bankruptcy sued Voest in Indiana state court alleging breach of contract and con *920 structive fraud in relation to the provision of those services. Voest promptly removed the case to the bankruptcy court. At the trustee’s motion, the district court withdrew the reference from the bankruptcy court and remanded the trustee’s claims to state court. Voest asks that we reverse the district court, offering a clever but ultimately unpersuasive justification for why the jurisdictional bars imposed by 28 U.S.C. §§ 1452(b) and 1291 do not preclude our review of either aspect of the court’s order. Because we conclude that § 1452(b) and § 1291 govern, we dismiss Voest’s appeal for lack of jurisdiction.

I

Heartland set out to become the largest independent flatrolled steel processor in the United States, with a target capacity of 1.1 million tons per year. To achieve this goal, Heartland entered into a contract with Kvaerner U.S., Inc., which did business under the name Kvaerner Metals, under which the latter would provide equipment for Heartland’s facility in Terre Haute, Indiana. Kvaerner also contracted with Heartland to provide software for an information system known as “Level 3,” which was intended to coordinate the automated production information from each of Heartland’s steel processing lines. Voest is the successor-in-interest to Kvaerner with respect to these contractual obligations.

Heartland voluntarily filed for bankruptcy under Chapter 11 on January 24, 2001. Voest subsequently filed a proof of claim in the amount of $20,471,242.94, plus interest and attorneys’ fees. According to Voest, approximately $10.2 million of that claim was secured by mechanics’ liens and the remainder was unsecured. On November 20, 2001, the bankruptcy court entered an order confirming Heartland’s Chapter 11 plan. Almost four months later, on March 11, 2002, Heartland’s trustee in bankruptcy, Margaret Good, filed an objection to Voest’s assertion that valid mechanics’ liens secured the $10.2 million claim. Voest filed a motion to strike the objection, and on July 30, 2002, the bankruptcy court issued an order rejecting Good’s objection as untimely and further denying her request to extend the deadline to file additional objections. The district court reversed in part, finding that Good’s objection to the secured status of Voest’s claim was timely filed, but affirming the bankruptcy court’s denial of her motion for an extension of time to file other objections.

On January 17, 2003, six months after the bankruptcy court’s order, Good filed a complaint against Voest in state court in Indiana, alleging that “Kvaerner and/or Voest was unable to cause the software system to operate according to Heartland’s performance requirements and, as a direct and foreseeable consequence, Heartland lost its major customers and its funding and was forced to file for bankruptcy.” On February 21, 2003, Voest removed the case to the bankruptcy court pursuant to 28 U.S.C. § 1452(a). Shortly thereafter, Good filed two motions in district court. First, Good moved to withdraw the reference on the grounds that the state court action was noncore and that “Plaintiff has requested a jury trial, the bankruptcy court cannot hold a jury trial without the parties’ consent, and Plaintiff has not and will not provide such consent.” Second, Good asked the district court either to abstain or to remand the case to state court. She argued that the requirements for mandatory abstention under 28 U.S.C. § 1334(c)(2) were satisfied or, in the alternative, that the district court should exercise its discretion to abstain under 28 U.S.C. § 1334(c)(1) or to remand under 28 U.S.C. § 1452(b).

The district court granted both of Good’s motions. The court took note of *921 the fact that, under 28 U.S.C. § 157(d), a “district court may withdraw, in whole or in part, any case or proceeding referred [to the bankruptcy court] under this section, on its own motion or on timely motion of any party, for cause shown.” Although the court found that the bankruptcy court had jurisdiction over Good’s state-law claim because it was “related to a case under title 11,” it nonetheless concluded that Good’s “right to a jury trial dictates that the reference should be withdrawn.” Turning to Good’s motion to abstain or to remand, the court observed that, under 28 U.S.C. § 1452(b), a district court to which a state “claim or cause of action is removed may remand such claim or cause of action on any equitable ground.” The court concluded that “[b]eeause the case at bar involves claims based entirely on state law, and because the claims fall within ‘related to’ jurisdiction, remand will have minimal effects on the administration of the bankruptcy. The state court can adequately address the state law issues based on its expertise.” On this basis, it remanded the case to state court. After unsuccessfully moving for the district court to certify its order withdrawing the reference for interlocutory appeal pursuant to 28 U.S.C. § 1292(b), Voest appealed directly to this court, asking that we reverse the district court’s order.

II

There are really two orders of the district court that Voest would like this court to consider: first, the order under § 157(d) withdrawing the reference to the bankruptcy court, and second, the order under § 1452(b) remanding the entire proceeding to the state court. Good argues that § 1452(b) bars our review of both of these orders. Even if her position is correct in the end, however, we find it useful to consider the orders separately. We look first at the district court’s decision to withdraw the reference to the bankruptcy court, and then at the order of remand.

A

According to Good, § 1452(b) bars our review of both the district court’s withdrawal of the reference and its remand of the case to state court. Voest counters that under the Supreme Court’s decision in City of Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 55 S.Ct. 6, 79 L.Ed.

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398 F.3d 918, 2005 U.S. App. LEXIS 3010, 44 Bankr. Ct. Dec. (CRR) 79, 2005 WL 405889, Counsel Stack Legal Research, https://law.counselstack.com/opinion/margaret-m-good-as-liquidation-agent-of-the-liquidation-trust-of-ca7-2005.