Thursday, November 29, 2012

Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 41

Problem Set 41, p.833
  • Claims: Want to file bankruptcy, also have defective goods claim against creditor. Who takes the case? Would the D judge or the bankruptcy judge take this?
  • Seems like B judge takes it because this counterclaim against a creditor it is a core proceeding. BUT NO, Atlantic has not filed a claim so this does not meant (b)(2)(C).
  • What about (b)(2)(O)? the catchall provision about the core proceedings
  • Do we have an abstention issue here? Not mandatory. Not already in state court.
(2) The second part:
  • If this was a Chapter 11, still no mandatory abstention. It cannot be adjudicated timely in a state court (18 months).
  • Independent federal jurisdiction? Yes, if there is the antitrust claim too. And then supplementary jurisdiction for the defective goods claim.
  • Does it depend when the breach occurs? Seems like any post-petition breach would be a core proceeding. Remember Calabresi opinion.
  • If you want to solve it quickly, you can settle or drop it; sell the claim?
  • Title VII is federal jurisdiction. D judge case?
  • Related to bankruptcy (broad interpretation from Dow Corning), but core or non-core proceeding. Is this a personal injury claim excepted from core proceedings in (b)(2)(B), (O)? What about the assault claim?
  • Mandatory abstention for any of this? None of these have already been commenced in state action. Could still have discretionary abstention.
  • §544(b). It is avoidable
  • Is it a state cause or a federal cause of action? It is a state law. But is it also a federal cause of action? The policy reasons. §157(b)(3).
  • The federal court can hear the case.
  • Before a district judge or district judge? Core proceeding under §157(b)(2)(H).
  • Is it subject to mandatory abstention? No. It cannot be timely adjudicated; get to trial for at least two years; not commenced in state court (and is arising under Title 11); §1334(c)(2).
  • How about the discretionary abstention under §1334(c)(1)? Comity with state courts. The judge should not abstain. It is a core proceeding.
  • If the opponent seeks delay, she can bring a motion for abstention. She might get the Supreme Court’s review by challenging unconstitutionality of the jurisdiction rules of the Bankruptcy Code.
  • §523(a)(6): Willful and malicious injury is not dischargeable, but it is still a claim of the bankruptcy.
  • Ethel's lawsuit can't go forward because of the automatic stay.
  • Is it a core proceeding? §157(b)(2)(B). The personal injury is not a core proceeding.
  • Is it subject to the mandatory jurisdiction under §1334(c)(2)?
    • Five requirements: (1) it is a state law cause of action-torts; (2) only related to the Title 11; (3) lack of a federal JRX basis absent the bankruptcy; (4) the action is commenced; and (5) it can be timely adjudicated.
    • All conditions are met.
  • But §157(b)(4) clearly states that it is not subject to the mandatory abstention; but can be discretionary abstention.
  • Can you appeal the order about the abstention? No. See §1334(d). By the way, the decision can only be appealed when it becomes a judgment or order.
  • If we conclude no abstention, is it subject the district judge or bankruptcy judges? At least in a capacity where he passes findings of fact to the district judge? (c)(1). No. It should be adjudicated in the district court under §157(b)(5).

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