Alderwoods Grp., Inc. v. Garcia
| Decision Date | 30 May 2012 |
| Docket Number | No. 10–14726.,10–14726. |
| Parties | ALDERWOODS GROUP, INC., Osiris Holding of Florida, Inc., Northstar Graceland, LLC, Plaintiffs–Appellants, v. Reyvis GARCIA, Ramona Johnson, Mercedes Woodberry, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
OPINION TEXT STARTS HERE
Ted Christopher Craig, Gray–Robinson, PA, Samuel Danon, Jamie Zysk Isani, Andrew D. Zaron, Hunton & Williams, LLP, Miami, FL, Robin Corwin Campbell, Kopelowitz Ostrow, PA, Alan J. Perlman, Yoss, LLP, Fort Lauderdale, FL, for Plaintiffs–Appellants.
Charles W. Throckmorton, David Aaron Samole, Kozyak Tropin & Throckmorton, PA, Coral Gables, FL, for Defendants–Appellees.
Appeal from the United States District Court for the Southern District of Florida.
Before TJOFLAT and MARTIN, Circuit Judges, and DAWSON,* District Judge.
The threshold issue this appeal presents is whether a bankruptcy court in one federal district has jurisdiction to determine whether a debt was discharged in a bankruptcy case litigated in another federal district. We hold that the court lacks jurisdiction and therefore do not reach the other issues the appeal presents.
The debt at issue consists of claims of tort liability possessed by relatives of people buried in a Miami, Florida cemetery, known as Graceland. The claims are set out in the class action complaint filed in the Circuit Court for Miami–Dade County, Florida (“State Court”) by Reyvis Garcia, Ramona Johnson, and Mercedes Woodberry (“Creditors”) in March 2008.1 The defendants are Alderwoods Group, Inc., Osiris Holding of Florida, Inc., and Northstar Graceland, LLC (“Debtors”), Graceland's owners.2 Creditors allege that Debtors are liable to them and the members of their class for damages because, due to inadequate record keeping, Debtors are unable to locate upon request the grave sites of family members or close relatives buried in Graceland. This liability is based on the common law theories of tortious interference with dead bodies, intentional or reckless infliction of emotional distress, and gross negligence under Florida tort law.
Debtors contend that Creditors' claims were discharged in a Chapter 11 bankruptcy case in the United States Bankruptcy Court for the District of Delaware (“Delaware Bankruptcy Court”), a case they initiated on June 1, 1999, when they petitioned that court for Chapter 11 relief (“Chapter 11 Case”) under the Bankruptcy Code.3 On October 21, 1999, the Delaware Bankruptcy Court entered an order establishing bar dates for filing proofs of claim and approving the notice of the bankruptcy proceedings to be mailed to all known creditors and published for the benefit of all unknown creditors (the “Bar Date Order”).4 Later that October and in November 1999, Debtors published the notice in the Wall Street Journal, the New York Times, and USA Today.
On December 5, 2001, the Delaware Bankruptcy Court entered an Order confirming Debtors' plan of reorganization (“Confirmation Order”) and fixing January 2, 2002, as the plan's “Effective Date.” The Confirmation Order discharged all claims against Debtors, including unknown claims such as those Creditors asserted in the State Court case, that arose on or before the Effective Date and provided that the court retained jurisdiction over the reorganization after the Effective Date.
On April 7, 2008, Debtors filed a “complaint” against Creditors in the United States Bankruptcy Court for the Southern District of Florida (“Florida Bankruptcy Court”). The complaint invoked that court's jurisdiction under 28 U.S.C. §§ 157 and 13345 and sought (1) a declaration6 that the claims Creditors were attempting to litigate in State Court were discharged in the Chapter 11 Case, as of January 2, 2002, pursuant to § 1141 of the Bankruptcy Code,7 and (2) an order, entered pursuant to § 524 of the Bankruptcy Code,8 enjoining Creditors from pursuing their case in State Court.9
In response, Creditors moved the Florida Bankruptcy Court to dismiss the Debtors' complaint for lack of subject matter jurisdiction or, in the alternative, to abstain from exercising jurisdiction and/or to remand the case to state court.10 The Florida Bankruptcy Court heard Creditors' motion and denied it, concluding that it had subject matter jurisdiction over the dispute and that neither abstention nor remand was required or appropriate.
On June 9, 2008, Creditors answered Debtors' complaint. Creditors alleged that the notice to unknown creditors published in the Chapter 11 Case pursuant to the Bar Date Order was constitutionally inadequate; therefore, their claims had not been discharged.
After the pleadings closed, the parties filed cross-motions for summary judgment.11 Addressing Creditors' assertion concerning the notice to unknown creditors, the Florida Bankruptcy Court ruled that the publication of the notice was inadequate. The publication failed to meet the standard set by the Fifth Amendment's Due Process Clause, as explicated by Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), because it was not “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action.” Alderwoods Grp. v. Garcia, 420 B.R. 609 (Bankr.S.D.Fla.2009) (quoting Mullane, 339 U.S. at 314, 70 S.Ct. at 657) (emphasis omitted) (internal quotation marks omitted). In the court's view, the publication failed to meet this standard because the notice did not contain the name of the Graceland cemetery and its operator at the time the Chapter 11 Case was pending; moreover, the notice was not published in Miami's local newspaper.12 The Florida Bankruptcy Court therefore denied Debtors' motion for summary judgment and granted Creditors' motion, declaring that the claims Creditors were prosecuting in State Court had not been discharged in the Chapter 11 Case.
Debtors appealed the court's decision to the United States District Court for the Southern District of Florida,13 presenting four arguments for reversal: (1) One of the Creditors was a nonresident alien at the time the Chapter 11 Case was being heard and therefore had no right to due process; (2) the published notice comported with due process; (3) even if the notice did not meet Mullane's due process standard, Creditors suffered no prejudice; and (4) the State Court claims should be considered discharged because the notice contained Debtors' names. The District Court rejected all four arguments and affirmed. The District Court thereafter denied Debtors' motion to alter or amend judgment.14SeeFed.R.Civ.P. 59(e). Debtors now appeal the District Court's judgment and the order denying Rule 59(e) relief.15
In its brief to this court, Debtors raise four issues: (1) whether the Florida Bankruptcy Court had subject matter jurisdiction to consider Creditors' due process defense; (2) whether the District Court erred in denying Debtors' motion to alter or amend judgment; (3) whether the Florida Bankruptcy Court erred in granting Creditors summary judgment; and (4) whether the Florida Bankruptcy Court erred in denying Debtors' motion for summary judgment. We do not address these issues because we conclude that the Florida Bankruptcy Court lacked jurisdiction to entertain Debtors' complaint for declaratory relief.
The Bankruptcy Code provides that “the confirmation of a plan ... discharges the debtor from any debt that arose before the date of such confirmation” and that “after confirmation of a plan, the property dealt with by the plan is free and clear of all claims and interests of creditors.” 11 U.S.C. § 1141(c), (d)(1)(A). Moreover, the discharge “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor.” Id. § 524(a)(2). “[The] court that enters an order confirming a plan of reorganization under chapter 11 may issue, in connection with such order, an injunction in accordance with this subsection to supplement the injunctive effect of a discharge under [§ 524].” Id. § 524(g)(1)(A). Indeed, the Confirmation Order so provided: “as of the Effective Date, all entities that ... hold a Claim or other debt or liability that is discharged ... are permanently enjoined from ... commencing or continuing in any manner any action ... against the Debtors.” In re Loewen Grp. Int'l, Jointly Administered Case No. 99–1244(PJW), slip op. at 60–61 (Bankr.D.Del. Dec. 5, 2001) (Confirmation Order).
Once Debtors were served with Creditors' complaint in the State Court case, they had four options to challenge Creditors' prosecution of that case. Debtors could (1) assert the discharge provided by the Confirmation Order as an affirmative defense in the State Court case; (2) remove the case to the United States District Court for the Southern District of Florida under 28 U.S.C. § 1452(a); (3) move the Delaware Bankruptcy Court to reopen the Chapter 11 Case pursuant to 11 U.S.C. § 350(b);16 or (4) initiate a proceeding in the Delaware Bankruptcy Court for the enforcement of the statutory injunction provided by 11 U.S.C. § 524(a)(2), as reflected in the Confirmation Order. In re Kewanee Boiler Corp., 270 B.R. 912, 918 (Bankr.N.D.Ill.2002) (citing Stucker v. Cardinal Bldg. Materials, Inc. ( In re Stucker), 153 B.R. 219, 222 (Bankr.N.D.Ill.1993)); see also In re James, 184 B.R. 147, 150–51 (Bankr.N.D.Ala.1995) (). Debtors eschewed the first three options17 and chose the fourth, except that they initiated the proceeding by filing a complaint for declaratory and injunctive relief in the Florida Bankruptcy Court instead of petitioning the Delaware Bankruptcy Court to enforce the discharge injunction.
Bankruptcy judges, like district judges, have the power to coerce compliance with injunctive orders. In the bankruptcy...
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