Turner, In re

• Decision Date: 21 December 1983
• Docket Number: No. 179,D,179
• Citation: 11 BCD 728,724 F.2d 338
• Parties: 10 Collier Bankr.Cas.2d 782, 11 Bankr.Ct.Dec. 728, Bankr. L. Rep. P 69,539 In re Burneice TURNER, d/b/a Bunni's Diamond Inn and f/d/b/a Bunni's Casbar, Bunni's Andy C's, Debtor. Burneice TURNER, Plaintiff-Appellee, v. Kenneth ERMIGER, Defendant-Appellant. ocket 83-5027.
• Court: U.S. Court of Appeals — Second Circuit

Page 338

724 F.2d 338

10 Collier Bankr.Cas.2d 782, 11 Bankr.Ct.Dec. 728,

Bankr. L. Rep. P 69,539

In re Burneice TURNER, d/b/a Bunni's Diamond Inn and f/d/b/a

Bunni's Casbar, Bunni's Andy C's, Debtor.

Burneice TURNER, Plaintiff-Appellee, v. Kenneth ERMIGER, Defendant-Appellant.

No. 179, Docket 83-5027.

United States Court of Appeals, Second Circuit.

Argued Oct. 20, 1983.

Decided Dec. 21, 1983.

Goldberg, Sanders & Talev, Harold P. Goldberg, Syracuse, N.Y., for plaintiff-appellee.

Bruce B. Roswig, Counsel of Record on Appeal, Dirk J. Oudemool, Syracuse, N.Y., for defendant-appellant.

Before FRIENDLY, VAN GRAAFEILAND and MESKILL, Circuit Judges.

FRIENDLY, Circuit Judge:

This is an appeal from an order of the District Court for the Northern District of New York affirming, with a slight modification, an order of a bankruptcy judge which awarded a debtor, Burneice Turner, damages against her landlord, Kenneth Ermiger, for the conversion of personal property in the leased premises. We reverse the order of the district court 29 B.R. 419 on the ground that the complaint was not within its jurisdiction. The parties assumed the essential validity of the Emergency Resolution adopted by order in the Northern District to deal with the problem created by the Supreme Court's decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), an assumption now justified, so far as this court is concerned, by In re Gerald Kaiser, 722 F.2d 1574, 1581 (2 Cir.1983), upholding a similar rule of the Southern District of New York.

Turner was the lessee of a bar in Onondaga County, New York, on premises owned by Ermiger. On December 7, 1981, Turner filed a voluntary petition in bankruptcy in the Bankruptcy Court for the Northern District of New York. A trustee was appointed on December 15. On December 23, Turner filed a schedule of property claimed as exempt under Sec. 522(d) of the Bankruptcy Code of 1978. In addition to her interest in anticipated tax refunds for 1981 and various items of business-related equipment and household goods, Turner claimed as exempt a "[c]ontingent cause of action against landlord for conversion of restaurant equipment," which she valued at $1,475. The exemptions having exhausted the modest estate, the trustee filed a "Report of No Distribution [to Creditors]" on March 23, 1982. On April 14, 1982, Turner was granted a discharge from her debts, relieving her of liabilities in excess of $15,000.

On February 23, 1982, two months after she had exempted the cause of action mentioned above, Turner filed a complaint against Ermiger in the bankruptcy court. She alleged that she had been a tenant of Ermiger's; that "sometime [sic ] in the latter part of November or the first week of December 1981", after the service of an execution from a third party judgment creditor, Ermiger had changed the locks and refused to allow her to enter; and that Ermiger had converted various articles of personal property having a reasonable value of $1,733.95, for which Turner demanded payment. Ermiger answered on the merits. On January 7, 1983, the bankruptcy judge rendered a memorandum decision granting judgment to Turner in the amount of $1,475.00. The complaint made no allegation how the action between Turner and Ermiger was related to or could affect Turner's bankruptcy proceeding and the opinion of the bankruptcy judge was equally silent on this subject.

Ermiger appealed to the district court. The first point in his brief was that the bankruptcy judge "did not have jurisdiction over the subject matter of this proceeding". In this connection he noted that the action was "not brought by the trustee nor could the result have benefited the bankrupt estate." Other points concerned the sufficiency of the evidence of the conversion and the value of the property.

The district judge began his discussion of the jurisdictional argument, which he recognized as being properly before him despite Ermiger's failure to raise it before the bankruptcy judge, see 5 Wright & Miller, Federal Practice & Procedure Sec. 1393 (1969), by referring to the provision of 28 U.S.C. Sec. 1471(b), added by the Bankruptcy Reform Act of 1978:

Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11 or arising in or related to cases under title 11. ¹

He went on to say, in apparent disregard of the extract from Ermiger's brief quoted above, that "[i]t is plain, and the appellant does not dispute, that this action to recover converted property of the debtor falls within the scope of the statutory grant of jurisdiction" and that appellant's contention was that Northern Pipeline Construction Co. v. Marathon Pipe Line Co., supra, "disabled the bankruptcy court from assuming jurisdiction over the case."

The district judge answered that argument on the basis of the action taken by district courts throughout the nation, including the Northern District of New York, in adopting an emergency resolution. This provides that "[a]ll cases arising under Title 11 and all civil proceedings coming under Title 11 or arising in or related to cases under Title 11 are referred" to the bankruptcy judges and that the bankruptcy judges "may perform in referred bankruptcy cases and proceedings all acts and duties necessary for the handling of these cases and proceedings" with certain exceptions not here pertinent. It then sets out a definition of "related proceedings", to wit, "those civil proceedings that, in the absence of a petition in bankruptcy, could have been brought in a district court or a state court," and gives numerous examples of what are not "related proceedings".

While the Emergency Resolution permits the bankruptcy courts to conduct "related proceedings", it seeks to avoid problems under Northern Pipeline by stipulating that the bankruptcy judge "may not enter a judgment or definitive order, but shall submit findings, conclusions, and a proposed judgment or order to the district judge." The district judge must then review any such judgment or order, whether or not any notice of appeal or application for leave to appeal has been filed. In conducting his review, the district judge need not defer to the findings of the bankruptcy judge and may...