As first noted here, I’ve been posting nearly daily on Twitter a bankruptcy case highlight or development that I don’t want to clutter this blog with.  RSS Feeds are also available, so you don’t need a Twitter account to access them.

Here are my posts for the week ended 3/22/2010:

  • Valukis report’s glaring omission-E&Y’s fate depends on how NY Ct of Appeals decides questions certified in Refco & AIG-http://bit.ly/buw6Z4
  • Oral argument set before Judge Buchwald in GM Tort Claimants’ appeal for 3/24/10, 10:30 am, Rm 21A, SDNY, 500 Pearl St. http://bit.ly/ajh2Mk
  • 9th Cir reverses jdgmt for Anna Nicole, finding that TX probate ct’s earlier findings & legal conclusions were binding. http://bit.ly/bWaMFu
  • New blog post on Anna Nicole Smith’s loss on preclusion grounds in fight with Pierce over rights to J. Howard’s money. http://bit.ly/99Ia8Q
  • 3d Cir rules 2-1 that Secured Lender has no absolute right to credit bid in a cramdown. Spirited dissent by Ambro, J. http://ow.ly/1pvau

© Steve Jakubowski 2010

6/24/11 Update:  Here’s my blog post providing an early analysis of the US Supreme Court’s final 5-4 decision in favor of Pierce’s estate, entitled US Supreme Court’s Bombshell Opinion in Stern v. Marshall Draws the Line Against Incremental Erosion of Article III Judicial Power.

*          *          *          *

6/23/11 Update:  5-4 decision delivered affirming 9th Circuit’s ruling and handing Pierce Marshall’s estate a complete and final victory.  Justice Roberts with an extremely well written opinion; Justice Breyer dissenting. Opinion here.  Pre-opinion writeup here.

*          *          *          *

And so, it appears, 19 years of hell for the remaining surviving heirs of J. Howard Marshall II come near an end.  Here’s the chronology:

  • First, in October 1991, the so-called "courtship" between J. Howard and Anna begins.
  • In April 1995, Anna sues J. Howard’s son and guardian, Pierce, in Texas Probate Court (amended several times after J. Howard’s death) for, among other things, tortious interference with her expectation of support during the marriage and after his death and for fraud and undue influence in connection with J. Howard’s estate planning.
  • In August 1995, J. Howard dies, leaving her nothing.
  • In January 1996, Anna files bankruptcy. 
  • In May 1996, Pierce brings a non-dischargeability adversary for defamation.
  • In June 1996, Pierce files a corresponding proof of claim in Anna’s bankruptcy case. 
  • In June 1996, Anna counterclaims in bankruptcy, asserting the same claims she made in probate court.
  • In October 2000, the bankruptcy court rules against Pierce on the defamation claims and, in December 2000, it enters a $475 million judgment in favor of Anna on the counterclaims.  Marshall v. Marshall, 253 B.R. 550 (Bankr. C.D. Cal. 2001).
  • In January 2001, Pierce appeals. 
  • In January 2001, Anna nonsuits her claims against J. Howard’s estate and Pierce individually in probate court.
  • In February 2001, Pierce files an amended counterclaim against Anna in probate court for declaratory relief to determine her rights to the estate and property of J. Howard and a complaint for a declaratory judgment against Anna and J. Howard’s estate that J. Howard’s Living Trust reflected his intentions and were valid.
  • In March 2001, after a five month jury trial in the Texas Probate Court, the jury unanimously finds that the Living Trust and will were valid and had not been forged or altered, that J. Howard wasn’t the victim of fraud or undue influence, that J. Howard had the requisite mental capacity at all relevant times, and that J. Howard had no agreement with Anna to give her 1/2 of all his property.
  • In December 2001, the probate court enters final judgment in favor of Pierce on all claims, holding that Pierce was entitled to his inheritance, free from all claims by Anna or Pierce’s older brother.
  • After the jury verdict in probate court, Pierce moved to dismiss Anna’s claims against him in district court on the appeal of the bankruptcy court ruling on grounds of claim and issue preclusion, but the district court denied this motion in December 2001.  Marshall v. Marshall, 271 B.R. 858 (C.D. Cal. 2001).
  • In March 2002, the district court entered judgment in favor of Anna, finding that "J. Howard always intended to give [Anna] … half of his ‘new community’" (i.e., the appreciation of his estate during their marriage) and that Pierce "backdated documents, altered documents, destroyed documents, suborned falsified notary statements, presented documents to [J. Howard] under false pretenses, and committed perjury,” in order to deny any distributions to Anna from J. Howard’s estate.  In re Marshall, 275 B.R. 5 (C.D. Cal. 2002).
  • In 2004, the 9th Circuit vacated the judgment against Pierce on the basis that the so-called probate exception to federal subject matter jurisdiction precluded consideration of the case.  Marshall v. Marshall (In re Marshall), 392 F.3d 1118 (9th Cir. 2004).
  • In 2005, the US Supreme Court granted Anna’s petition for certiorari, as I discussed here, here, here, and here.
  • On May 1, 2006, as discussed here, here, here, and here, the US Supreme Court reversed the 9th Circuit’s decision, concluding that the probate exception did not apply to Anna’s in personam counterclaims against Pierce.  The 9th Circuit only considered the issue of federal subject-matter jurisdiction.  The Supreme Court remanded for consideration of whether Anna’s claims were "core" and whether Anna’s claims were barred under principles of claim and issue preclusion based on the earlier judgment entered in the Texas Probate Court.  Marshall v. Marshall, 547 U.S. 293 (2006).
  • Finally, and that’s the purpose of this post, the 9th Circuit concludes on March 19, 2010, that Anna’s counterclaim is not a core proceeding but, at most, "related to" her bankruptcy case.  As a result, the earlier judgment entered in her favor by the bankruptcy court was not final at the time that the Texas Probate Court entered its judgment in favor of Pierce, and so the Texas Probate Court judgment was the earliest final judgment that precludes all of Anna’s claims.  Marshall v. Stern (In re Marshall), No. 02-56002, 2010 WL 986781 (9th Cir. Mar 19, 2010) (NO. 02-56002) (pdf).

The 9th Circuit’s opinion is certainly worth reading for many reasons.  First, it provides an excellent review of "the evolution of the current bankruptcy regime in order to appreciate the important distinctions between ‘arising under,’ ‘arising in,’ and ‘related to’ proceedings and how the notion of ‘core’ proceedings came to exist."  (Id. at p. 4508).  The case also is interesting in its analysis of how "counterclaims by the estate against persons filing claims against the estate"―that by statute (28 U.S.C. § 157(b)(2)(C)) are defined as "core"―can still be narrowly construed as non-core "in order to avoid potential constitutional problems arising from having Article I judges issue final orders in cases requiring an Article III judge."  (Id. at p. 4521).  Even compulsory counterclaims may not be "core" proceedings, the Court held, writing:

Continue Reading 9th Circuit Declares Anna Nicole Smith’s Estate the Big Loser on Preclusion Grounds in Dispute with Pierce’s Estate Over Her Right to Money from J. Howard Marshall’s Estate

As noted in this post, last week I started posting on Twitter, which has a 140 character limit per post.  These are my posts for the week ended 3/14/2010:

  • Judge Wedoff to decide on confirmability of a plan where the crammed-down lender can’t credit bid. Briefs here: http://tinyurl.com/yg3mwbe
  • New blog post on SCOTUS’ free speech decision in Milavetz on this169th anniversary of Justice OW Holmes’ birthday. http://tiny.cc/OZdy2
  • 7th Cir-BK standing narrower than Art. III. "Person aggrieved" in BK must appear, object, & have pecuniary interest. http://tiny.cc/f7voh
  • Judge Wedoff says he’d reject a plan denying a crammed down lender a right to credit bid, but the issue was moot bec the plan was withdrawn.
  • KERP denied on remand in MD BK Ct. bec of lack of competing employment offers. Asset purchaser’s offer doesn’t count. http://tiny.cc/pG1Py

Thanks as always for reading.

© Steve Jakubowski 2010

Back in the good old days when bashing BAPCPA was in vogue, I posited here that BAPCPA’s "debt relief agency" provisions "look more like an effort to create a consumer bankruptcy lawyer clone who, much like the ever-multiplying Agent Smith from The Matrix-Reloaded, speaks and does precisely as directed with ruthless efficiency."  Today’s unanimous opinion from Justice Sonia Sotomayor (with concurrences from Justices Scalia and Thomas) tells us not to worry because while attorneys in fact are "debt relief agents" under the Code, §526(a)(4) "prohibits a debt relief agency only from advising a debtor to incur more debt when the impelling reason for the advice is the anticipation of bankruptcy."  Milavetz, Gallop & Milavetz, P.A., v. United States, No. 08-1119 (Op. at 13). 

As with most bankruptcy decisions from the Supreme Court, the path taken to the holding is more interesting than the actual holding itself.  This post examines two aspects of that road:

  • First, the Court’s discussion of the application of the "plain meaning" rule and the relevance of legislative history; and
  • Second, the Court’s recognition of the ethical boundaries of the attorney-client relationship and, in particular, the line where advice crosses into conspiracy. 

1.     Attorneys as "Debt Relief Agents" and Footnote 3’s "Bridge Too Far"

This first conclusion comes as no surprise as the attorneys’ arguments "failed to persuade [the Court] to disregard the statute’s plain language."  (Op. at 7).  But rather than stop at plain meaning, the Court dropped a footnote finding support for the plain meaning in BAPCPA’s legislative history (Op. at 6, n. 3).  This single footnote prompted Justice Scalia to write a separate concurring opinion just so that he could attack the premise of Footnote 3.

In Part II, Section B of my BAPCPA outline, entitled BAPCPA’s "Plain Meaning" Not Followed, I reviewed five cases in the first year following BAPCPA’s enactment where bankruptcy judges were so confounded by BAPCPA that they felt compelled to deviate from its "plain meaning" in order to avoid virtually nullifying certain of its key provisions.  Justice Scalia’s concurrence highlights the problem facing bankruptcy lawyers who attempt to rely upon the legislative history of BAPCPA for interpreting an ambiguous statutory provision.  He wrote:

I join the opinion of the Court, except for footnote 3, which notes that the legislative history supports what the statute unambiguously says.  The Court first notes that statements in the Report of the House Committee on the Judiciary “indicate concern with abusive practices undertaken by attorneys.”  Ante, at 6, n. 3.  Perhaps, but only the concern of the author of the Report.  Such statements tell us nothing about what the statute means, since (1) we do not know that the members of the Committee read the Report, (2) it is almost certain that they did not vote on the Report (that is not the practice), and (3) even if they did read and vote on it, they were not, after all, those who made this law.  The statute before us is a law because its text was approved by a majority vote of the House and the Senate, and was signed by the President.  Even indulging the extravagant assumption that Members of the House other than members of its Committee on the Judiciary read the Report (and the further extravagant assumption that they agreed with it), the Members of the Senate could not possibly have read it, since it did not exist when the Senate passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.  And the President surely had more important things to do.

The Court acknowledges that nothing can be gained by this superfluous citation (it admits the footnote is “unnecessary in light of the statute’s unambiguous language,” ante, at 6, n. 3).  But much can be lost.  Our cases have said that legislative history is irrelevant when the statutory text is clear. See, e.g., United States v. Gonzales, 520 U.S. 1, 6 (1997); Connecticut Nat. Bank v. Germain, 503 U.S. 249, 254 (1992).  The footnote advises conscientious attorneys that this is not true, and that they must spend time and their clients’ treasure combing the annals of legislative history in all cases:  To buttress their case where the statutory text is unambiguously in their favor; and to attack an unambiguous text that is against them.  If legislative history is relevant to confirm that a clear text means what it says, it is presumably relevant to show that an apparently clear text does not mean what it seems to say.  Even for those who believe in the legal fiction that committee reports reflect congressional intent, footnote 3 is a bridge too far.

2.     § 526(a)(4)’s Narrow Scope Does Not Impair the Attorney-Client Relationship

Here, the Justices unanimously agree that § 526(a)(4)’s prohibition against a debt relief agent’s "advis[ing] an assisted person … to incur more debt in contemplation of" filing for bankruptcy is limited to "advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather than for a valid purpose."  (Op. at 13).  To the Court, the "controlling question … is whether the impelling reason for ‘advis[ing] an assisted person … to incur more debt" was the prospect of filing for bankruptcy."  Additionally, the Court held, "’load[ing] up’ on debt with the expectation of obtaining its discharge … is abusive per se"  (Op. at 14) (emphasis added).  (That should seal the fate of those debtors fighting dischargeability under Sections 523(a)(2), (4), and (6) who "loaded up on debt" in advance of the filing).
 
Equally important for those looking for guidance on the Court’s tools of statutory interpretation in bankruptcy is the Court’s statement, citing United States v. Granderson, 511 U.S. 39, 55 (1994):  "That ‘[n]o other solution yields as sensible a’ result further persuades us of the correctness of this narrow reading."  (Op. at 15).  The Court reasoned:

Continue Reading US Supreme Court on Justice Holmes’ 169th B-day Holds in Milavetz that the Bankruptcy Code’s Speech Restrictions on Attorneys Do Not Turn Them into Ruthless Drones

Listening to Kevin O’Keefe at the Emory Symposium describe twittering as perhaps the most important branding tool since the advent of television (an obvious exaggeration, but point taken), I decided to finally start Twittering as a complement to blogging.  I started this blog in 2005 as an alternative to pointless, incessant barking, and I’ve tried to maintain it as a resource of substance, not triviality.  Still, it’s clear there’s a definite place for barking in bankruptcy, and that’s where Twitter, with its 140 character limit, fits in.  So, last Thursday, I started twittering.  Here are my latest two posts:

The past 4 years of blogging have generated over 500,000 page views.  Today I have just 21 followers on Twitter, but you’ve got to start somewhere.  Those interested in hearing me bark on bankruptcy should click here and "Follow Me on Twitter."  Here’s the RSS Feed link to my Twitter posts.

Thanks for reading and following!

© Steve Jakubowski 2010

[9/3/2010 Update:  Here’s a transcript of the panel discussion published in the Emory Bankruptcy Developments Journal.]

Thanks to Emory University Law School, host of the 7th Annual Symposium of the Bankruptcy Developments Journal, for generously sponsoring my trip to Atlanta yesterday to participate in a panel discussion, moderated by my friend Mark Duedall, entitled Ethics 2.0–The Ethical Challenges and Pitfalls of Web 2.0.  The panel included Kevin O’Keefe, founder of LexBlog (and purveyor of this blog and that of an amazing 3,000 other authors–I think I was in the first 30), and Scott Riddle, founder of the Georgia Bankruptcy Blog.  Kevin even twittered a picture of me during my part of the presentation.

Drawing upon this fantastic 1996 essay by Chief Judge Easterbrook entitled Cyberspace and the Law of the Horse, my main point was that analyzing the ethical challenges of web 2.0 is like analyzing the "Law of the Horse."  What is the "Law of the Horse," you ask?  Here’s how Chief Judge Easterbrook described it:

When he was dean of this law school, Gerhard Casper was proud that the University of Chicago did not offer a course in "The Law of the Horse."  He did not mean by this that Illinois specializes in grain rather than livestock.  His point, rather, was that "Law and . . . " courses should be limited to subjects that could illuminate the entire law….  We are at risk of multidisciplinary dilettantism, or, as one of my mentors called it, the cross-sterilization of ideas.  Put together two fields about which you know little and get the worst of both worlds.

Dean Casper’s remark had a second meaning–that the best way to learn the law applicable to specialized endeavors is to study general rules.  Lots of cases deal with sales of horses; others deal with people kicked by horses; still more deal with the licensing and racing of horses, or with the care veterinarians give to horses, or with prizes at horse shows.  Any effort to collect these strands into a course on "The Law of the Horse" is doomed to be shallow and to miss unifying principles. Teaching 100 percent of the cases on people kicked by horses will not convey the law of torts very well.  Far better for most students–better, even, for those who plan to go into the horse trade–to take courses in property, torts, commercial transactions, and the like, adding to the diet of horse cases a smattering of transactions in cucumbers, cats, coal, and cribs.  Only by putting the law of the horse in the context of broader rules about commercial endeavors could one really understand the law about horses. 

Now you can see the meaning of my title. When asked to talk about "Property in Cyberspace," my immediate reaction was, "Isn’t this just the law of the horse?"  I don’t know much about cyberspace; what I do know will be outdated in five years (if not five months!); and my predictions about the direction of change are worthless, making any effort to tailor the law to the subject futile. And if I did know something about computer networks, all I could do in discussing "Property in Cyberspace" would be to isolate the subject from the rest of the law of intellectual property, making the assessment weaker.

For a contrary view, be sure to read Professor Lessig’s 1999 commentary published in the Harvard Law Review entitled, The Law of the Horse: What Cyberlaw Might Teach.

Late last year, the ABA announced the formation of ABA Commission on Ethics 20/20, whose purpose is "to perform a thorough review of the ABA Model Rules of Professional Conduct and the U.S. system of lawyer regulation in the context of advances in technology and global legal practice developments, to study these issues and, with 20/20 vision, [to] propose policy recommendations that will allow lawyers to better serve their clients, the courts and the public now and well into the future." 

The panel is filled with brilliant thinkers, including the inspirational future (I pray) Supreme Court nominee Judge Diane Wood and the leading ethics maven, Professor Stephen Gillers. 

The Commission’s preliminary outline (at pp. 7-9) suggests it won’t generate a “Law of the Horse,” but instead a thoughtful analysis of how existing rules should be modified to address the unique issues raised by burgeoning technology and its many applications.  I highly recommend reviewing the outline for insight into the complexity of the issues being examined.

Meanwhile, to avoid suffering a "Woodsian" fall from grace, from which you’ll never fully recover, be sure to review existing ethics rules before you plunge into Web 2.0, for when it comes to legal ethics, the old saying "look before you leap" most assuredly trumps its counterpart, "he who hesitates is lost."

Kevin’s take on yesterday’s symposium is in his post entitled Focus on the Possibilities of Blogging and Social Media, Not the Challenges.  Kevin’s focus is certainly rightly placed, though every blogger I know will tell you that–ethics aside–blogging on a consistent basis is an unquestionable challenge.

© Steve Jakubowski 2010

Whatever you may think about the fact that Refco’s outside corporate counsel, Joe Collins, was convicted on 5 criminal counts and sentenced today to 7 years in prison, one has to wonder how the system got so turned upside down on the civil side that while the law firm’s lead lawyer is torched in criminal court, his firm is summarily dismissed from a civil case for precisely the same conduct on a simple motion to dismiss (based on a theory that the Refco trustee lacked standing to bring suit to recover for damages arising from a fraudulent scheme devised and carried out by Refco’s own senior management).  One could argue that this result is unique to the Second Circuit (and the Seventh) because of the Wagoner decision and its progeny (which are not followed in the First, Third, Fifth, Eighth, or Eleventh Circuits).  Even in those circuits, however, management’s wrongful conduct has been imputed to the corporation under the in pari delicto doctrine to just as effectively knock the props out from civil actions involving some of the most spectacular commercial frauds of the century.  Of course, all this may change if the NY Court of Appeals has an epiphany and, in response to the Second Circuit’s 8 question-long certification of 12/28/09 in the Refco trustee’s appeal, completely rewrites the Wagoner rule (and the in pari delicto doctrine too).

DSI’s Cathy Vance has long been this blog’s resident guru.  In her first post, she unlocked the mystery behind the origin of BAPCPA’s section 1102(b)(3).  On BAPCPA’s second birthday, she surveyed BAPCPA’s unruly landscape as it entered its terrible two’s and drove record numbers of readers here.  The next year, on the third anniversary of BAPCPA’s passage, as anger and frustration turned to resignation, she untangled the purpose and application of the new Bankruptcy Rule 6003. 

Recently, Cathy has turned her attention to understanding how the in pari delicto defense morphed into one of the more powerful and complete defenses to professionals that are complicit–through their negligence–in a company’s wrongdoing.  In last November’s issue of the ABI Journal, Cathy wrote an article entitled, In Pari Delicto, Reconsidered, in which she posited–as none had before–that the in pari delicto doctrine is being inappropriately used by federal courts to supplant traditional tort law defenses that derive from state, not federal, law.

Cathy has graciously expanded upon the theme of her ABI article and written exclusively for this blog a follow up piece entitled In Pari Delicto and a Jurisprudential House of Cards, for which I am very grateful.  So without further ado, heeeeeeerrrrrreeee’s Cathy! ……..

© Steve Jakubowski 2010

Continue Reading Cathy Vance, Resident Guru, Calls Expansive Invocation of the In Pari Delicto Defense a “Jurisprudential House of Cards”

[1/13/10 Update:  Thanks to Steve Sather from A Texas Bankruptcy Lawyer’s Blog for his comment below.  In his post today, he discusses in greater length the opinion of Judge Edith Jones in holding that "related to" jurisdiction exists over a non-debtor dispute if the indemnity right is contractually based, and hence had already "accrued."  Lone Star Fund V (US), LP v. Barclays Bank, PLC, No. 08-11038 (5th Cir. 1/11/10) (pdf).

To further complicate matters, take a look at a recent decision of Judge Laurel Isicoff, who held that regardless of whether the Pacor test was satisfied, the court had "related to" jurisdiction over a third party franchisor’s claims against the debtor’s principal where the proceeding arose out of same core of facts as one whose outcome could have a Pacor-type effect, and thus the prerequisites for exercise of "supplemental jurisdiction" were satisfied. Century 21 Real Estate, LLC v. Prestige Realty Group of Ohio & Florida, LLC (In re Prestige Realty Group of Ohio & Florida, LLC), 2009 WL 3817297 (Bankr. S.D. Fla. 11/13/2009).  Respectfully, Judge Isicoff’s ruling is not the law in the 7th Circuit, however, so be sure to check your local practice first.  See, Banc of America Inv. Servs., Inc. v. Fraiberg (In re Conseco, Inc.), 305 B.R. 281 (Bankr. N.D. Ill. 2004) (bankruptcy court cannot exercise supplemental jurisdiction under § 1367(a) because it is not a district court.and such exercise would amount to "related to related to" jurisdiction).  It’s also a position at odds with 3rd Circuit’s decision in In re Exide Techs., 544 F.3d 196 (3d Cir. 2008), which expressly rejected the “intertwinement” theory under which otherwise non-core disputes among non-debtors could be treated as core bankruptcy matters based on the extent of their "intertwinement" with core disputes between those parties and the debtor.]

***

As noted in this post last June, it is fair to assume that the U.S. Supreme Court would not permit a bankruptcy court to adjudicate, settle, or enjoin claims against nondebtors that do not affect the debtor’s estate.  In perhaps the final bankruptcy decision of 2009, the Third Circuit rang in the new year with yet another important case–consistent with this general principle– interpreting the scope of a bankruptcy court’s subject matter jurisdiction.  W.R. Grace & Co. v. Chakarian (In re W.R. Grace & Co.), 2009 WL 5151089 (3d Cir. 12/31/09) (pdf).  In it, the Third Circuit both reaffirmed its previous holdings on the limited scope of a bankruptcy court’s "related to" jurisdiction and further held that Code section 105(a) does not expand a bankruptcy court’s subject matter jurisdiction beyond its statutory boundaries in 28 U.S.C. § 1334(b) (which grants bankruptcy courts "original but not exclusive jurisdiction of all civil proceedings arising under [the Bankruptcy Code] or arising in or related to a case under [the Bankruptcy Code]").

The Third Circuit’s seminal opinion in Pacor, Inc. v. Higgins, 743 F.2d 984 (1984), is the most often cited case on the scope of a bankruptcy court’s so-called "related to" jurisdiction under 28 U.S.C. § 1334(b). The "Pacor test," which has been nearly universally adopted by federal Courts of Appeal around the country, provides:

[In] determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.  Thus, the proceeding need not necessarily be against the debtor or against the debtor’s property.  An action is related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.  Pacor, 743 F.2d 994.

The U.S. Supreme Court, too, looked to Pacor in its first discussion of the scope of a bankruptcy court’s "related to" jurisdiction and agreed with Pacor that a bankruptcy court’s "related to" jurisdiction is broad, but "cannot be limitless."  Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995).

The Third Circuit fine-tuned the Pacor test in In re Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir. 2002), stating that “[t]he test articulated in Pacor for whether a lawsuit could ‘conceivably’ have an effect on the bankruptcy proceeding inquires whether the allegedly related lawsuit would affect the bankruptcy proceeding without the intervention of yet another lawsuit.”  Id. at 382.  Put another way, there’s no "related to" jurisdiction over a third-party claim "if there would need to be another lawsuit before the third-party claim could have any impact on the bankruptcy proceedings."  W.R. Grace, 2009 WL 5151089 at *5 (Op. at 15). 

The Third Circuit further refined the boundaries of the Pacor test in In re Combustion Engineering, Inc., 391 F.3d 190, 225 (3d Cir. 2004), when it held that consideration of additional elements like "unity of interest," "shared production," and "shared insurance" among the debtor and its non-debtor affiliates failed to establish "related to" jurisdiction over third party claims against the non-debtor affiliates "when the third party claim did not directly result in liability for the debtor," but only a potential claim for contribution that "would require the intervention of another lawsuit to affect the bankruptcy estate."  Id. at 231-32.  (Op. at 16-17).

In the recently decided W.R. Grace case, the Third Circuit reaffirmed its holdings in Pacor, Federal-Mogul, and Combustion Engineering, and held that an injunction granted in 2001 (shortly after Grace filed for bankruptcy) against  further prosecution of a lawsuit against Grace for injuries caused by exposure to asbestos at a Montana mine over a 37 year period would not be extended to the State of Montana, who had also been sued by the same plaintiffs for negligence in failing to warn them of the asbestos risks at the mine.  The Montana Supreme Court held that the State of Montana in fact owed the plaintiffs a duty of disclosure of potentially adverse health risks, and so remanded the case back to the trial court for a "determination by the fact-finder of whether the State breached its duty to the [plaintiffs], and if so, whether such breach caused the damages claimed by them."  (Op. at 7).  Grace subsequently moved in the Bankruptcy Court to expand the 2001 injunction to include the plaintiffs’ now remanded actions against the State of Montana.  The bankruptcy court refused to so extend the injunction, and the Third Circuit affirmed, holding:

In short, our recently reaffirmed precedent dictates that a bankruptcy court lacks subject matter jurisdiction over a third-party action if the only way in which that third-party action could have an impact on the debtor’s estate is through the intervention of yet another lawsuit. Here, we are presented with state court actions that have only the potential to give rise to a separate lawsuit seeking indemnification from the debtor. Accordingly, we must affirm the Bankruptcy and District Courts’ conclusion that subject matter jurisdiction does not exist for the purpose of expanding the § 105(a) injunction to preclude the Montana Actions.  (Op. at 18).

Significantly, the Third Circuit also rejected an alternative ground for expansion of the bankruptcy court’s subject matter jurisdiction on the basis that "a bankruptcy court has subject-matter jurisdiction to adjudicate a motion in an adversary proceeding initiated by a debtor in its own bankruptcy case, regardless of the subject matter of that motion."  (Op. at 21).  Citing Celotex, the Third Circuit flatly rejected this opportunity to expand upon the bankruptcy court’s subject-matter jurisdiction, stating:

Continue Reading 3d Circuit Further Explains the Limited Scope of a Bankruptcy Court’s Subject Matter Jurisdiction

[12/29/09 Update:  Be sure to read Tony Prada’s comment at the end of the post. His initial thought, he wrote, was to move on to the next blog but once he started, he "became engulfed with the memoirs" and his "normal 5 minute stop at the blog morphed into 3 hours."  Tony shared with us some very important "takeaway" messages that I commend to you.]

As incredible as my Mother’s story of survival is, as related in this previous post, my Father’s stories stand apart.  In his 1995 interview with the USC Shoah Foundation, just two years before he died, he vividly retells his experiences before, during, and after the Holocaust.  Born in 1911, he was the first in his family to pursue secular study.  He graduated from Univ. of Krakow medical school, experienced violent antisemitism at many turns along the way, and was enlisted as a physician and captain in the Polish army when the war broke out.  He tended to hundreds of Polish soldiers while on the frontlines during the Nazi blitzkrieg and to thousands in the Warsaw Ghetto through the uprising of 1943.  He survived 5 Nazi concentration camps following the Warsaw Ghetto uprising. The "death march" to Dachau in 1945 put him "one step, not even that, ahead of the angel of death."  Following his liberation, he worked closely with teams from the US Armed Forces to establish and manage a number of hospitals and TB clinics for survivors. His hard and selfless work earned him not only accolades, but a Visa to the US, where he immigrated in 1949.  He eventually settled in Syracuse, NY, and built a medical practice that thrived–notwithstanding a severe heart attack that nearly killed him in 1961–until he finally retired in 1984.

My Dad’s proud, fighting spirit is on magnificent display in this interview, which is split into eight segments (video links embedded at the end of this post):

For those seeking excellent educational tools to teach about the experiences of those who lived through the Holocaust, you’ll find them in the oral testimonies of my parents. I hope this personalizes the survivors’ experiences in a way that provides additional insight into their indomitable spirit, as this University of Texas at Austin "forgiveness and resilience study" proves. 

One theme that resonates throughout their interviews is how they viewed their survival as a result of not just one "miracle," but many. As we ponder in this holiday season of miracles the meaning of life, I hope my parents’ stories inspire you to find meaning and purpose each day. 

Happy holidays to all!

[The embedded photo is, of course, the famous "ARBEIT MACHT FREI" sign that was recently stolen from the entrance to the Auschwitz death camp.  According to this Wikipedia source, the political prisoners who constructed the sign made the upper bowl in the "B" of "ARBEIT" wider than the lower bowl as an act of defiance and to signal what was really going on there.]

Here are embedded links to each of the eight parts of my Dad’s interview:

Continue Reading Surviving with Dignity – Part II: My Father’s Reflections on the Holocaust, Pre-War Poland, and a Life Rebuilt from the Ashes

[12/24/09 Update:  Part II – My Father’s Reflections on the Holocaust, Pre-War Poland, and a Life Rebuilt from the Ashes]

To most Americans, this month is a reminder of miracles, great and small.  For Christians, Christmas lights are a reminder that "[a]t the moment when the darkness of human society is at its deepest, the Light of the World will come."  For Jews, Chanukah’s lights are a reminder of the miracles of creation (light), of Mt. Sinai (where the Torah–likened to light–was delivered), and of the Second Temple’s restoration and rededication in 164 BCE.  Chanukah’s most conspicuous tradition–the Menorah–provides a simple, yet effective, reminder of the importance of rekindling and rededicating within ourselves the moral values represented by the light of creation (representing our partnership with the Almighty) and the light of the Torah (representing the moral precepts for everyday living).

This year, more than ever, my thoughts turn to two miracles that are very personal to me: those being both my parents’ survival from the hell known as the Holocaust.  These thoughts were triggered this year by this recent short film from Richard Bloom and Karen Lynne Bloom that retells, through clips taken from the survivors’ oral histories on file at the USC Shoah Foundation library (including my Dad’s), the story of the Warsaw Ghetto uprising of Passover, 1943.  So this year, I decided to dedicate two blog posts in remembrance of the miracle of their survival.

This first post features my Mom’s oral history, split into four parts (video links embedded at the end of this post):

Long time followers of this blog may remember my Mom’s sudden passing in August, 2006 and this post of the eulogy I delivered where I summed up her essence (or Emes) as follows:

The proof of my mother’s greatness is not readily apparent, is it?  She received no awards.  No inscribed silver chalices or platters.  No dinners were sponsored in her honor.  No buildings named after her.  No honorariums established in her name. Seems quite an ordinary life. Yet, when we closely examine her life story, even in a brief eulogy, it resonates with a feeling that somehow, it was “meant to be,” as she often liked to say….

The first chapter, the “Formative Years,” were pastoral; indeed, idyllic.  Her memories are only happy and positive.  And the optimism and independence her parents and grandparents nurtured within her during the enlightened interwar period remained with her to the end, and very much defined the Emes of who she was.  

But those idyllic days passed quickly, and war overtook them, and imprinted within her an indelible mark… that of a survivor.  And to listen to her stories, and few have done so, is something you have to do.  They are stories you have to hear to believe, for there are none others like them.  But let me sum it up this way.  When my mother reached the fork in the road, to quote the famous philosopher Yogi Berra, she took it.  She didn’t turn around, she didn’t freeze.  She didn’t second guess herself and run.  No, she knew when there was a fork in the road, and she took it, wherever it may lead.  And it was by making those tough, smart, spontaneous decisions, by choosing a path and not looking back, when coupled with the ample blessings with which G-d protected her, that her choices were transformed into something that seemed “meant to be.”

In a world of fallen heroes, my Mom’s story of survival proves that there’s a potential hero in all of us.  And for the millions out there feeling despondent, I hope her story (and my Dad’s soon to follow) proves the importance of maintaining dignity and hope in the face of seemingly insurmountable odds.

Happy holidays to all! 

[The inset picture is a fused glass, entitled "Remember—One for Each Million."  It’s origin is described in this feature story about The University of Texas at Austin’s "forgiveness and resilience study" for the 10th anniversary of the Holocaust Museum Houston.  In it, Professor Roberta Greene studied the lives of 133 survivors and concluded (no surprise here) :

Amazingly, this unique group of older adults—who experienced unprecedented separation and loss during the Holocaust, living through horrors most of us cannot imagine—built new productive lives. They are resilient survivors who were able to move into a better place, raise families, develop careers and contribute to their communities.]

Here are embedded links to each of the four-parts of my Mom’s interview:

Continue Reading Surviving With Dignity – Part I: Reflections of My Mother on How She Miraculously Survived the Holocaust and Rebuilt Her Life