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case was closed. After these subsequent events, the defendants moved to dismiss the stillpending adversary proceedings, arguing that the court no longer had subject matter jurisdiction over them because the estate ceased to exist. And, the district court agreed! Said the court, not only was there no longer "related to" jurisdiction, but, under principles of comity, the court should not exercise its discretion and retain the matters. The motions to dismiss were granted. This opinion, while not appealed, goes to show that not everyone understands subject matter jurisdiction under section 1334(a).
* Bosiger v. U.S. Airways, Inc., 510 F.3d 442 (4th Cir. Dec. 2007) (Wilkinson, J.)
Confirmation of a plan in the debtor's second bankruptcy case discharged the debtor's liability on a creditor's potential claim arising from the first case. During the course of the debtor's first bankruptcy case, the debtor terminated a qualified plan under the "distressed termination" provisions of ERISA. The bankruptcy court also approved of the termination of a "top hat" plan under an agreement between the debtor and the union representing the retirees. Years later, the debtor filed a second bankruptcy case, and a plan was subsequently confirmed in the latter case. Six months after the confirmation of the plan in the second case, a retiree commenced an action against the reorganized chapter 11 debtor for wrongful termination of the pension plans from the first case. The district court dismissed the action under Rule 12(b)(6) because the retiree failed to file a proof of claim in the second bankruptcy case. The retiree appealed, claiming that he never received notice of the second bankruptcy case. That denial, argued the retire, should at least have been enough to overcome a Rule 12(b)(6) motion. The Fourth Circuit disagreed and affirmed the dismissal. Said the court of appeals, the district court properly converted the 12(b)(6) motion to a motion for summary judgment.63 Because the retiree was presumed to have received notice of the filing of the second bankruptcy case but never filed a proof of claim for the alleged wrongful termination of the debtor's pension plan in the first bankruptcy case, the retiree's potential claim was discharged by the effect of confirmation in the second case.
* Elixir Indus., Inc. v. City Bank & Trust Co. (In re Ahern Enters., Inc.), 507 F.3d 817 (5th Cir. Nov. 2007) (Jolly, J.)
Section 1141(c) stripped the judgment creditor's lien, despite the debtor's failure to consummate the plan. A bank holding an interest in property previously held by the debtor commenced an action seeking a declaratory judgment regarding the validity of a lien on the same property held by a judgment creditor who had abstracted its judgment prior to the bankruptcy case. The judgment creditor filed a proof of claim in the bankruptcy case as an
63 On appeal, the retiree argued that the court improperly dismissed his case under Rule 12(b)(6) because his general denial of notice should have been sufficient to overcome the motion (the plaintiff argued that rulings on motions to dismiss are supposed to be based only on pleadings). However, generally denying notice of the case, said the Fourth Circuit, would frustrate the effect of confirmation of a plan. In this case, the retiree's general denial of notice failed to overcome the presumption of adequate notice distributed to all potential claimants in the second case.
