In re: IMMC Corporation f/k/a Immunicon Corporation et al.,
Filing
27
MEMORANDUM OPINION. Signed by Judge Gregory M. Sleet on 1/2/2018. (asw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
IN RE: IMMC CORPORATION,
f/k/a IMMUNICON CORPORATION, et al.,
Banla. Case No. 08-11178 (KJC)
Debtors.
ROBERT F. TROISIO, as Liquidating Trustee
ofIMMC CORPORATION,
Adv. Proc. No. 10-53063 (KJC)
Civ. No. 15-1043 (GMS)
Appellant,
v.
EDWARD L. ERICKSON, BYRON HEWETT,
LEONTERSTAPPEN, JAMES L. WILCOX,
ELIZABETH E. TALLETT, J. WILLIAM
FREYTAG, ZOLA P. HOROVITZ, JAMES
G. MURPHY, BRIAN GEIGER, JONATHAN
COOL, and ALLEN J. LAUER,
Appellees.
MEMORANDUM OPINION
I.
INTRODUCTION
Presently before the court is the appeal (D.I. 1) of Robert F. Troisio ("Appellant"),
liquidating trustee of IMMC Corporation (f/k/a Immunicon Corporation), of the Bankruptcy
Court's decision denying Appellant's motion to transfer an adversary proceeding, 1 pursuant to 28
U.S.C. § 1631, to the United States District Court for the Eastern District of.Pennsylvania (the
"E.D.Pa. Court"), and denying Appellant's renewed motion regarding same, based on the
Bankruptcy Court's conclusion that it lacked authority under 28 U.S.C. § 1631 to transfer the
proceeding. For the reasons set forth below, the court will affirm the Banlauptcy Court's decision.
1
The docket of the adversary proceeding, Troisio v. Erickson (In re !MMC Corp.), Adv. No. 10-53063-KJC (Bankr.
D. Del.), is cited herein as "B.D.I. _."
1
II.
BACKGROUND
On June 11, 2008, the above-captioned debtors filed a petition for relief under Chapter 11
of the Bankruptcy Code. On November 7, 2008, the Bankruptcy Court confirmed the debtors'
plan of liquidation.
Pursuant to the plan, Appellant was appointed as liquidating trustee to
implement wind-down of the debtors' affairs and liquidation of the debtors' property, and also to
pursue certain causes of action. On September 18, 2010, Appellant filed a complaint initiating the
adversary proceeding and asserting breach of fiduciary duty claims against the debtors' former
officers and directors ("Appellees"). (See B.D.I. 1.)
By Memorandum Order dated December 29, 2011, the Bankruptcy Court determined that
it was without jurisdiction to decide the claims asserted in the adversary proceeding but scheduled
a further hearing to consider Appellant's request that the Bankruptcy Court transfer the adversary
proceeding to the E.D.Pa. Court pursuant to 28 U.S.C. § 1631, rather than dismiss the case for
want of jurisdiction. See Troisio v. Erickson (In re IMMC Corp.), 2011 WL 6832900, *4 (Bankr.
D. Del. Dec. 29, 2011). Whether the Bankruptcy Court has authority to transfer the adversary
proceeding to the E.D.Pa. Court is governed by 28 U.S.C. § 1631, which provides:
Whenever a civil action is filed in a court as defined in section 610 of this title
or an appeal, including a petition for review of administrative action, is noticed
for or filed with such a court and that court finds that there is a want of
jurisdiction, the court shall, if it is in the interest of justice, transfer such action
or appeal to any other such court in which the action or appeal could have been
brought at the time it was filed or noticed, and the action or appeal shall proceed
as if it had been filed in or noticed for the court to which it is transferred on the
date upon which it was actually filed in or noticed for the court from which it
is transferred.
28 U.S.C. § 1631 (emphasis added); see also McLaughlin v. Arco Polymers, Inc., 721 F.2d 426,
428 n.2 (3d Cir. 1983) (quoting statute with same emphasis)). In response to Appellant's transfer
request, Appellees argued that the Bankruptcy Court lacked authority to transfer the adversary
proceeding under § 1631 because a bankruptcy court is not a "court" as defined in 28 U.S.C. §
2
610, which provides:
As used in this chapter the word "courts" includes the courts of appeals and
district courts of the United States, the United States District Court for the
District of the Canal Zone, the District Court of Guam, the District Court of the
Virgin Islands, the United States Court of Federal Claims, and the Court of
International Trade.
28 U.S.C. § 610. Appellees argued that bankruptcy courts are not included in the express language
of 28 U.S.C. § 610. Appellees further asserted that a review of legislative history demonstrates
Congressional intent to limit the transfer power of § 1631 and likewise to exclude bankruptcy
courts from the definition of "courts" under § 610. Conversely, Appellant argued that the Third
Circuit has recognized a bankruptcy court's authority to transfer cases pursuant to § 1631 in the
Seven Fields case, which included a footnote stating: "[W]hen a civil action is filed with a district
court (of which the bankruptcy court is a unit) with a want of jurisdiction the court shall in the
interest of justice transfer the case to a comi in which it could have been filed originally." See
Seven Fields Dev. Corp., 505 F.3d 237, 247 n.8 (3d Cir. 2007).
A.
The 2012 Decision
Following briefing and oral argument, the Bankruptcy Court denied the request to transfer
the adversary proceeding to the E.D.Pa. Court. See Troisio v. Erickson (Jn re !MMC Liquidating
Estate), 2012 WL 523632, at *4 (Bankr. D. Del. Feb. 14, 2012) (the "2012 Decision"). In reaching
its conclusion, the Bankruptcy Court noted the exclusion of bankruptcy courts from the statute and
rejected the argument that the statute should be construed broadly based on legislative intent:
The Defendants contend that the legislative history demonstrates Congressional
intent to limit the transfer power of § 1631, since an early draft of the proposed
language allowed for a transfer between any two courts of the United States to cure
defects in venue as well as jurisdiction; but "[t]he final version enacted by Congress
is more narrow and permits transfer between any two federal courts, as defined in
28 U.S.C. § 610 (1986), to cure a defect in jurisdiction, and eliminates any reference
to a transfer to cure a defect in venue."
!MMC, 2012 WL 523632, *2 (quoting J. Tayon, The Federal Transfer Statute: 28 USC §
3
1631, 29 S. Tex. L. Rev. 189, 199 n. 58 (1987) (emphasis in original)). The Bankruptcy Court
found that a review of legislative history of § 610 likewise demonstrated Congressional intent to
exclude bankmptcy courts from its definition of "courts":
The "Historical and Statutory Notes" to 28 U.S.C. § 610 advise that Congress
amended § 610 in 1978 by substituting "district courts, and bankruptcy courts" for
the phrase "and district courts" (the "1978 Amendment"). However, due to
extensions of this provision's effective date, the 1978 Amendment was valid for
only a 12-day period (from June 28, 1984 to July 10, 1984) because a 1984 statute
provided that the 1978 Amendment "shall not be effective." These legislative
gymnastics ultimately kept bankruptcy courts from express inclusion in § 610,
supporting the view that the failure to include bankruptcy courts in§ 610 was not
an oversight, but a purposeful act.
!MMC, 2012 WL 523632, at *2 (citations and footnotes omitted). The Bankruptcy Court further
concluded that the footnote in Seven Fields was dicta and that the exclusion of bankruptcy courts
from the express language of§§ 1631 and 610, together with the legislative history of those
sections, cast doubt on the Bankruptcy Court's authority to transfer the adversary proceeding. See
id at *2. 2
B.
The 2015 Decision
On Febmary 19, 2015, Appellant filed with the Bankruptcy Court a renewed motion to
transfer the adversary proceeding to the E.D.Pa. Court, which cited In re DMW Marine, LLC, 509
B.R. 497 (Bankr. E.D. Pa. 2014) in support. (See B.D.I. 58.) In support of the renewed motion,
Appellant also submitted a Notice of Supplemental Authority, which cited Wellness Int 'l Network,
Ltd v. Sharif, 135 S. Ct. 1932 (2015). (See B.D.I. 64.) Following oral argument (see B.D.I. 65),
2
As part of the 2012 Decision, however, the Bankruptcy Court granted Appellant's request for an opportunity to file
a motion with this court to withdraw the reference, as district courts are among the courts with transfer authority under
§ 1631. See id. at *4. On February 9, 2015, the court denied Appellant's motion to withdraw the reference, concluding
that because bankruptcy jurisdiction was lacking, the action was never properly "referred" to the Bankruptcy Court,
and this court could not withdraw a reference that never existed. See Troisio v. Erickson, Civ. No. 12-406-GMS (D.
Del. Feb. 9, 2015) (citing 28 U.S.C. § 157(d) ("The district court may withdraw, in whole or in part, any case or
proceeding referred under this section ... ")(emphasis added)). The court further held that federal jurisdiction was
otherwise lacking because Appellant's complaint alleged jurisdiction based solely on 28 U.S.C. §§ 157 and 1334 and
did not plead diversity jurisdiction. (Id.)
4
the Bankruptcy Court denied the renewed motion, finding that neither of the decisions cited by
Appellant changed the law or addressed the authority of a bankruptcy court to transfer a case
pursuant to § 1631; rather, the Bankruptcy Court concluded, those cases were "offered in support
of [Appellant's] initial position - that this Court is a 'court' within the meaning of 28 U.S.C. §
610." See Troisio v. Erickson (Jn re !MMC Corp.), 2015 WL 6684638, at *2 (Bankr. D. Del. Oct.
30, 2015) (the "2015 Decision"). The Bankruptcy Court denied the renewed motion as it
"remain[ed] convinced that the express language and legislative history of § 610 supports the
proposition that Congress did not intend to include bankruptcy courts in the definition of' courts.'"
Id.
C.
Request for Certification of Direct Appeal to the Third Circuit
On November 11, 2015, Appellant filed a notice of appeal with respect to both the 2012
Decision and the 2015 Decision. (See D .I. 1.) On the same day, Appellant filed a motion seeking
certification of the appeal directly to the United States Court of Appeals for the Third Circuit
pursuant to 28 U.S.C. § 158(d)(2)(A). (See D.I. 2.) According to the Certification Motion, the
appeal presented the following issue: "Whether bankruptcy judges have the authority to order a
transfer of an adversary proceeding pursuant to 28 U.S.C. § 1631." (D.I. 2 at 1.) On January 28,
2016, the court certified the issue for direct appeal to the Third Circuit, pursuant to 28 U.S.C. §
158(d)(2)(A)(i), on the basis that the appeal raised a question of law as to which there is no
controlling decision of the Third Circuit or of the Supreme Court. Troisio v. Erickson (In re !MMC
Corp.), 2016 WL 356026 (D. Del. Jan. 28, 2016). However, Appellant subsequently failed to
perfect the appeal by filing a petition for permission with the circuit clerk as required by Federal
Rule of Bankruptcy Procedure 8006(g). Consequently, on April 12, 2016, Appellant filed a motion
to reopen and proceed with the appeal in this court (D.I. 9) ("Motion to Reopen"). On May 17,
2016, the court granted the Motion to ·Reopen. Troisio v. Erickson (In re !MMC Corp.), 2016 WL
5
2899247 (D. Del. May 17, 2016). Briefing on the merits of the appeal concluded on June 19, 2017.
(See D.I. 24, 25, 26.)
III.
PARTIES' CONTENTIONS
Appellant argues that bankruptcy courts should be deemed one of the "courts" with transfer
authority because § 610 includes the "district courts of the United States." (See D.I. 24 at 5
(quoting 28 U.S.C. § 610)) Appellant primarily relies on language in 28 U.S.C. § 151, which
describes bankruptcy judges as a "unit" of the district court. (See id at 7.) Appellant further
argues that the Bankruptcy Court's interpretation is at odds with legislative intent behind § 1631,
which is to ensure that litigants have their day in court unimpeded by technicalities of procedure.
(See id. at 5, 11-12.) Appellant further argues that the Bankruptcy Court's conclusion ignored the
Third Circuit's statement in Seven Fields, as well as the reasoning set forth in Schaefer Salt
Recovery, Inc., 542 F.3d 90, 105 (3d Cir. 2008). (See id. at 10.) In Schaefer, Appellant contends,
"[t]he Third Circuit held unequivocally that bankruptcy courts, as units of the district court, come
within the definition of 'courts' in 28 U.S.C. § 451 and therefore have the authority to impose
sanctions under Rule 11 [of the Federal Rules of Civil Procedure]," and that this reasoning should
"appl[y] equally to 28 U.S.C. §§ 610 and 1631." (See id at 5) Finally, Appellant argues that, even
if the Bankruptcy Court was not authorized under section 1631 to transfer the adversary proceeding
to the E.D.Pa. Court, the Bankruptcy Court was authorized under§ 105(a) of the Bankruptcy Code3
and/or 28 U.S.C. §§ 1574 or 1412. 5 (See id at 12-14.) On this basis, Appellant urges the court to
3
Appellant argues that the Bankruptcy Court had authority to transfer the adversary proceeding pursuant to§ 105(a)
of the Bankruptcy Code, which enables it to issue "any order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title." 11 U.S.C. § 105(a). (See D.I. 24 at 5.)
4
Appellant cites § 157(a), which provides that "[e]ach district court may provide that any or all cases under title 11
and any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the
bankruptcy judges for the district." 28 U.S.C. § 157(a). Appellant asserts that the delegation of authority from district
courts to bankruptcy courts "must be deemed to include transferring cases pursuant to [§] 1631." (See D.I. 24 at 13 .)
5
Section 1412 provides "a district court may transfer a case or proceeding under title 11 to a district court for another
district ... " 28 U.S.C. § 1412 (emphasis added). Citing this provision, Appellant simply posits that conferring transfer
authority on bankruptcy courts would be consistent with the general venue statutes and rules. (See D.I. 24 at 13.)
6
reverse the Bankruptcy Court's 2012 and 2015 Decisions, reinstate the adversary proceeding, and
transfer same to the E.D.Pa. Court. (Id. at 15.)
Conversely, Appellees argue that the plain language of the statute is dispositive of the issue
on appeal and that legislative history of both sections demonstrates Congressional intent to limit
courts with tr~sfer authority. (See D.I 25 at 6-11.) While early drafts of the Federal Courts
Improvement Act of 1984, which enacted § 1631, proposed language that would have allowed
transfer between any two courts of the United States to cure defects in venue and jurisdiction, the
final version as enacted did not. According to Appellees, the legislative history of§ 610 further
supports the Bankruptcy Court's conclusion that "the failure to include bankruptcy courts in§ 610
was not an oversight, but a purposeful act." !MMC, 2012 WL 523632 at *2. Appellees argue that
the Bankruptcy Court was correct not to give any weight to the Third Circuit's dicta in Seven
Fields in this case, and that because the Schaefer decision did not address a bankruptcy court's
transfer authority, its reasoning does not control on this issue either. (Id. at 13-17.) Appellant's
alternative arguments - that the Bankruptcy Court erred in denying transfer because transfer was
authorized under 11 U.S.C. § 105(a), 28 U.S.C. § 157, and/or 28 U.S.C. § 1412 - must be denied,
according to Appellees, because those arguments were waived, are outside of the scope of this
appeal, and are otherwise meritless. (See id. at 19-22.)
IV.
JURISDICTION AND STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 158(a), district courts have mandatory jurisdiction to hear appeals
"from final judgments, orders and decrees" and discretionary jurisdiction over appeals "from other
interlocutory orders and decrees." 28 U.S.C. § 158(a)(l), (3). Because the Bankruptcy Court's
decision is based on statutory interpretation, the court's review is de nova. See In re FederalMogul Global, Inc., 526 B.R. 571, 574 (D. Del. 2015).
7
V.
DISCUSSION
A.
Plain Language of the Statute Supports the Bankruptcy Court's Conclusion
While not addressed in Appellant's opening brief, Appellees argue that § 1631 is
unambiguous and urge the court to begin with the statute's plain language. (See D.I. 25 at 6-7.)
The court agrees that any analysis must start with the language of the statute itself.
"It is
elementary that the meaning of a statute must, in the first instance, be sought in the language in
which the act is framed, and if that is plain . . . the sole function of the courts is to enforce it
according to its terms." Fogleman v. Mercy Hosp., Inc., 283 F.3d 561, 569 (3d Cir. 2002) (quoting
Caminetti v. United States, 242 U.S. 470, 485 (1917). "The preference for plain meaning is based
on the constitutional separation of powers - Congress makes the law and the judiciary interprets
it. In doing so we generally assume that the best evidence of Congress's intent is what it says in
the texts of the statutes." Id. (citing 2A Norman J. Singer, STATUTES AND STATUTORY
CONSTRUCTION 135, § 46:03 (6th ed. 2000)).
Section 1631 limits transfer power to only those courts listed in§ 610. 28 U.S.C. § 1631
("Whenever a civil action is filed in a court as defined in section 610 of this title ... ") (emphasis
added). Clearly, bankruptcy courts are not one of the "courts" identified in§ 610. Section 610 is
very specific about those courts that are "courts" as "used in this chapter" and lists only the
following:
the courts of appeals and district courts of the United States, the United States
District Court for the District of the Canal Zone, the District Court of Guam, the
District Court of the Virgin Islands, the United States Court of Federal Claims, and
the Court of International Trade.
28 U.S.C. § 610. Appellees argue that this select list of courts is not comprised of any single
category of courts or even of all of the courts in a single category. (D.I. 25 at 8.) "Rather, Section
610 includes only certain Article III tribunals (Courts of Appeals, District Courts, and the U.S.
8
Court oflnternational Trade), one Article I tribunal (the Court of Federal Claims), and three Article
IV tribunals (the district courts of the Canal Zone, or Guam, and of the Virgin Islands)." (Id.)
Along with bankruptcy courts, Appellees argue, there are a number of other Article I tribunals that
were not selected for inclusion in§ 610. 6 (See id.) Section 610 also does not include one Article
IV court - the District Court for the Northern Mariana Islands.
The court is persuaded by
Appellees' argument that, in adopting § 610, Congress selectively enumerated these courts, which
controverts Appellant's argument that bankruptcy courts fall within the "penumbra" of§ 610. 7
The plain language of §§ 1631 and 610 supports the Bankruptcy Court's conclusion that
bankruptcy courts are not among the "courts" granted transfer authority.
B.
Bankruptcy Courts Are Not Deemed Authorized Based on§ 610's Inclusion
of "District Courts of the United States"
The main argument on appeal is that bankruptcy courts should be deemed one of the
"courts" with transfer authority included in§ 610 based on the statute's inclusion of"district courts
of the United States." Appellant further argues this interpretation finds support in Third Circuit
case law. Appellant's statutory argument is based on 28 U.S.C. § 151, which describes bankruptcy
judges as a "unit" of the district court. (See D.I. 24 at 7.) Appellant posits that Congress had no
need to include bankruptcy courts in § 610's list of authorized courts because bankruptcy judges
6
Article I tribunals not selected for inclusion in § 610 include: the United States Court of Appeals for the Armed
Forces, the United States Court of Appeals for Veterans Claims, the Board oflmmigration Appeals, the Patent Trial
and Appeal Board, the Trademark Trial and Appeal Board, the United States International Trade Commission, the
United States Tax Court, the Social Security Administration's Office of Disability Adjudication and Review, the
United States Immigration Courts, and the United States Merit Systems Protection Board. Article III courts omitted
from Section 610 include the Supreme Court of the United States, the United States Foreign Intelligence Surveillance
Court of Review, the United States Foreign Intelligence Surveillance Court, the United States Alien Terrorist Removal
Court, and the Judicial Panel on Multidistrict Litigation.
7
In further support of this argument, Appellees point out that Congress has added to, and subtracted from, the list over
time. (See id. at 9 & n. 3 (citing Skillo v. United States, 68 Fed. Cl. 734, 747 (2005) (citing Pub. L. No. 82-248, 65
Stat. 725 (1951) (inserting "the District Court of Guam"); Pub. L. No. 85-508, § 12(e), 72 Stat. 348 (1958) (deleting
"the District Court for the Territory of Alaska"); Pub. L. No. 95-598, Title II, § 226, 92 Stat. 2665 (1978) (deleting
"bankruptcy courts"); Pub. L. No. 96-417, Title V, § 501(15), 94 Stat. 1742 (1980)(substituting "Court oflntemational
Trade" for "Customs Court"); Pub. L. No. 97-164, Title I, Part A, § 120(a), 96 Stat. 33 (1982) (substituting "United
States Claims Court" for "Court of Claims, the Court of Customs and Patent Appeals")).
9
are units of the district court under§ 151, and are thus already included in "district courts of the
United States." (See id.) Appellant's case law argument is based on language found in the Third
Circuit's Shaefer and Seven Fields cases. As set forth below, the court finds no support in the
statute or limited case law for Appellant's argument that bankruptcy courts are deemed included
among the "courts" with transfer authority under§ 610 because they are units of the district courts.
Appellees contend, and the court agrees, that Appellant's statutory argument must fail.
(See D.I. 25 at 11-13.) Bankruptcy courts are constituted under a different chapter than, and their
source of authority is different from, district courts. The scope of the bankruptcy courts' authority
is different from - and much more circumscribed than - that of district courts. District courts, as
Article III courts, have broad authority to exercise the judicial power of the United States.
U.S.C.A. Const. Art. III§ 1. In contrast, Article I bankruptcy courts are creatures of statute, created
by Congressional legislation, and their power is limited. See 28 U.S.C. § 151. Section 151
authorizes bankruptcy judges to exercise the authority conferred only under Part I, Chapter 6 of
Title 28:
In each judicial district, the bankruptcy judges in regular active service shall
constitute a unit of the district court to be known as the bankruptcy court for that
district. Each bankruptcy judge, as a judicial officer of the district court, may
exercise the authority conferred under this chapter with respect to any action,
suit, or proceeding and may preside alone and hold a regular or special session of the
court, except as otherwise provided by law or by rule or order of the district court.
28 U.S.C. § 151 (emphasis added). Because§ 151 authorizes bankruptcy judges to exercise the
authority conferred only under Part I, Chapter 6 of Title 28, a bankruptcy judge's authority does
not extend to § 1631 because § 1631 neither appears in Chapter 6 nor is incorporated into Chapter
6 by some other statute. Rather,§ 1631 appears in Part IV, Chapter 99 of Title 28. The Bankruptcy
Court's conclusion is consistent with the statutory authority conferred by Congress.
Case law provides little support for Appellant's argument that bankruptcy courts are
10
deemed authorized based on § 610's inclusion of "district courts of the United States." The
Supreme Court cases cited by the parties do not address a bankruptcy court's transfer authority
under§§ 1631 and 610. 8 While conceding that "the Third Circuit has not adjudicated the issue
[of] whether bankruptcy courts have jurisdiction to transfer cases under section 1631" (D .I. 24 at
10), Appellant argues that the Third Circuit's analysis in Schaefer, together with its statement in
Seven Fields, provided the Bankruptcy Court with ample authority to order a transfer pursuant to
§ 1631. However, neither case is on point.
In Schaefer, the Third Circuit stated: "We find that although a bankruptcy court is not a
'court of the United States' within the meaning of§ 451, it is a unit of the district court, which is
a 'court of the United States' and thus the bankruptcy court comes within the scope of§ 451." See
Schaefer, 542 F.3d at 105. The Schaefer decision did not concern either§ 1631 or§ 610 at all.
Rather, Schaefer addressed the different issue of whether bankruptcy courts are considered "courts
of the United States" under 28 U.S.C. § 451 for purposes of sanctioning powers authorized under
28 U.S.C. § 1927. 9 See id. at 105. Appellant argues that this analysis should have applied equally
to the Bankruptcy Court's consideration of its transfer authority under § 1631. (See D .I. 24 at 5.)
However, the source and nature of the authority granted under§ 1927 clearly differ from that of§
1631. See In re Prosser, 777 F.3d 154, 161-62 (3d Cir. 2015) ("The language and purpose of the
statute reflect that[§ 1927] sanctions are aimed at deterring lawyers' bad faith conduct that disrupts
the administration of justice by multiplying proceedings in 'any court of the United States.' 28
8
Appellant previously cited Wellness in support of the renewed motion to transfer (B.D.I. 64), but that case does not
address the transfer authority ofa bankruptcy court under§§ 1631or610. Appellees cite Stern and Northern Pipeline
in arguing that "[t]he Supreme Court has rejected the contention that bankruptcy courts are "district courts of the
United States" as well as their characterization as "adjuncts" of the district courts (see D.I. 5 at 10), but neither case
addressed the issue on appeal.
9
Section 1927 governs counsel's liability for excessive costs and provides: "Any attorney or other person admitted to
conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and
attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927.
11
U.S.C. § 1927. A bankruptcy court is a unit of a district court, and as a result, it may impose §
1927 sanctions.") (emphasis added).
Section § 451, as a definitional statute, also differs in
language from that of§ 610. Section 451 defines a "court of the United States" as follows:
The term "court of the United States" includes the Supreme Court of the United
States, courts of appeals, district courts constituted by chapter 5 of this title, including
the Court of International Trade and any court created by Act of Congress the judges
of which are entitled to hold office during good behavior.
28 U.S.C. § 451. By contrast,§ 610 does not include a broad category of courts "created by Act
of Congress," but rather provides a specific list:
As used in this chapter the word 'courts' includes the courts of appeals and district
courts of the United States, the United States District Court for the District of the
Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, the
United States Court of Federal Claims, and the Court oflnternational Trade.
28 U.S.C. § 610. Perhaps most important, as Appellees point out, in defining courts, Congress
specifically elected § 610 - not § 451 - to incorporate into § 1631:
With these two definitional statutes available to it - Section 451 and Section 610 Congress chose Section 610 to cross-reference in Section 1631 to define the "courts"
with authority to transfer. Far from supporting Appellant's position, Section 451
illustrates that language was readily available to Congress - e.g., "any court created
by Act of Congress" -if it had intended to include bankruptcy courts in Section 61 O's
definition of "courts." In choosing not to use that language, or indeed the language
"and bankruptcy courts" in Section 610, Congress necessarily excluded bankruptcy
courts from "courts" authorized to make a transfer under Section 1631.
(D.I. 25 at 15-16.) The court is persuaded that Schaefer is inapposite in this case and therefore
cannot conclude that the Bankruptcy Court should have applied Schaefer's reasoning to decide its
transfer authority under §§ 1631 and 610.
Seven Fields is not persuasive in this case either. The appellant in Seven Fields argued that
the bankruptcy court erred in denying a motion for remand where the defendant filed the notice of
removal with the bankruptcy court rather than the district court.
See Seven Fields, 505 F.3d at
246. The Third Circuit held that the bankruptcy court's denial of remand was not reviewable
12
pursuant to 28 U.S.C. § 1452(b). Id. The Third Circuit also suggested in a footnote that, even if
it could review the decision denying remand, and even if it were to reverse the decision on the
basis that the filing with the bankruptcy clerk was procedurally improper, its ruling could be
meaningless:
[W]hen a civil action is filed with a district court (of which the bankruptcy court is
a unit) with a want of jurisdiction the court shall in the interest of justice transfer
the case to a court in which it could have been filed originally. Thus, if the
bankruptcy clerk thought that the removal should have been to the district court, he
almost certainly would have sent the removal notice to that court which then would
have referred it back to the bankruptcy court pursuant to the general referral order.
Seven Fields, 505 F.3d at 247 n.8. Thus, the Third Circuit appeared to theorize that, even if it
remanded the case back to the bankruptcy court, the bankruptcy court would likely transfer the
removal notice to the district court (presumably under § 1631 ), the district court would then refer
it back to the bankruptcy court, and the bankruptcy court and district court would reinstate their
vacated orders. Id. The Bankruptcy Court noted that although dicta in the higher court's opinion
is often instructive and persuasive, in this case, the exclusion of bankruptcy courts from the express
language of§§ 1631 and 610, together with the legislative history, cast a doubt about its authority
to transfer the action. See !MMC, 2012 WL 523632 at *2. Appellees argue that the Bankruptcy
Court was correct not to give any weight to the Seven Fields footnote in this case because, among
other reasons: "(1) the footnote is pure dicta; (2) the issue of whether bankruptcy courts have
authority to transfer cases under section 1631 was not raised by the parties or addressed by the
Seven Fields court; and (3) the hypothetical transfer in Seven Fields would not have gone across
district boundaries, as requested in this case." (D.I. 25 at 14-15 n. 7.) The court agrees that the
Seven Fields discussion is not controlling on this issue. See In re Friedman's, 738 F.3d 547, 552
(3d Cir. 2013) (a determination not necessary to ultimate holding is dictum). Other decisions by
13
and within the Third Circuit require no different conclusion. 10
C.
Legislative History Supports the 2012 and 2015 Decisions
While the plain language of §§ 1631 and 63 0 should be dispositive of the issue on appeal,
the Bankruptcy Court's decision to deny transfer did not rest entirely on the plain meaning of the
statute. Rather, the Bankruptcy Court's holding considered the legislative history of both statutes.
See !MMC, 2012 WL 523632 at *2 ("the express language of§§ 1631 and 610, together with the
legislative history, casts doubt about this Court's authority to transfer an action."); !MMC, 2015
WL 668463 8 at *2 ("I remain convinced that the express language and legislative history of§ 610
support the proposition that Congress did not intend to include bankruptcy courts in its definition
of 'courts"'). Appellant argues determining whether bankruptcy courts fall within§ 610 requires
a more thorough analysis of the legislative history than that accorded by the Bankruptcy Court (see
10
The only other Third Circuit case cited by Appellant is Oscar v. Bank One. (See D.I. 24 at 9.) In that case, the
Third Circuit simply noted that a bankruptcy court had transferred an adversary proceeding to the district court
pursuant to 28 U.S.C. § 1631 after dismissing the underlying bankruptcy proceeding. See Oscar v. Bank One, NA.,
223 Fed. Appx. 164, 165 (3d Cir. 2007). However, the Third Circuit did not address the merits of whether the transfer
was appropriate because the Third Circuit determined that it lacked appellate jurisdiction. See id. at 166. As Appellees
also point out, the underlying district court decision did not analyze the issue either. See In re Oscar, No. 04-00812
at D.I. 60, pp. 2-2, n. I (Bankr. E.D. Pa. Nov. 8, 2005). Additionally, the district court docket reflects that it was
subsequent withdrawal of the reference that caused the case to proceed before the district court. See In re Oscar, No.
05-05928-JP at D.I. I (E.D. Pa. Nov. 10, 2005). Oscar is also unreported and nonprecedential. See In re Goody's
Family Clothing, Inc., 2009 WL 2355705, *2 (D. Del. July 30, 2009) (noting that unreported, nonprecedential opinion
applied only to parties of that particular case).
Appellant cited DMW Marine in support of the renewed motion to transfer, wherein the Bankruptcy Court
for the Eastern District of Pennsylvania stated: "While § 1631 does not expressly authorize bankruptcy courts to
transfer cases, see 28 U.S.C. § 610, under the logic of Schaefer[,] the bankruptcy court may possess that authority in
its capacity as a unit of the district court." In re DMW Marine, LLC, 509 B.R. 497, 512 n.28 (Bankr. E.D. Pa. 2014).
However, a review of that case shows that the court there merely considered the § 1631 issue in dicta, querying
whether it had had authority to transfer the case under Seven Fields and Schaefer, but ultimately decided not to invoke
that statute. See id Other decisions within this circuit, while noting the issue, merely reflect uncertainty among the
bankruptcy courts regarding their authority, if any, to transfer a case pursuant to § 1631. See e.g., In re Grocott, 507
B.R. 816, 823, n.25 (E.D. Pa. 2014) ("The Third Circuit has discussed a bankruptcy court's authority to transfer cases
... in dicta only. For this reason, bankruptcy courts have been hesitant to use § 1631 to permit a transfer to federal
court. This alone would be a valid reason for a bankruptcy court to decline to transfer a case pursuant to § 1631. ")
(footnotes omitted); In re Vicente, 260 B.R. 354, 360 n.11 (Bankr. E.D. Pa. 2001) ("While the Third Circuit Court of
Appeals in McLaughlin v. ARCO Polymers, Inc., 721 F.2d 426, 429 (3d Cir. 1983), noted legislative history which
states that § 1631 'is broadly drafted to allow transfer between any two federal courts,' ... my research failed to
uncover any case where the bankruptcy court was the transferor court. Section 1631 speaks of a court within the
definition of28 U.S.C. § 610. Whether the bankruptcy court is a court within the definition of§ 610 for the purposes
of§ 1631 is not readily answered and beyond the scope of this opinion.") (internal citations omitted).
14
D.I. 24 at 6-7) and that while the Bankruptcy Court "rested its decision to deny the [Appellant's]
motion to transfer upon its interpretation of the legislative history of section 610, ... what is more
important is the legislative history of section 1631" (id. at 11-12).
Section 1631 was enacted as part of the Federal Courts Improvement Act of 1982 11
("FCIA"), and the legislative history provides:
In recent years much confusion has been engendered by provisions of existing law
that leave unclear which of two or more federal courts including courts at both the
trial and appellate level-have subject matter jurisdiction over certain categories of
civil actions. The problem has been particularly acute in the area of administrative
law where misfilings and dual filings have become commonplace. The uncertainty
in some statutes regarding which court has review authority creates an unnecessary
risk that a litigant may find himself without a remedy because of a lawyer's error
or a technicality of procedures.
At present, the litigant's main protective device, absent an adequate transfer statute,
is the wasteful and costly one of filing in two or more courts at the same time. This
puts increased burdens on the courts as well as on the parties.
Although most problems in this regard relate to controversies involving the district
courts and the court of appeals, there also have been cases involving the Court of
International Trade, and the Temporary Emergency Court of Appeals. Therefore,
the language of Part A of Title III is broadly drafted to permit transfer between any
two federal courts.
S. Rep. No. 275, 97th Cong., 1st Sess. 30, reprinted in 1982 U.S. Code Cong. & Ad. News 11, 21.
Based on this language, Appellant argues the statute "is broadly drafted to permit transfer between
any two federal courts" which must therefore include the bankruptcy courts. (See D.I. 24 at 11
(emphasis added)) According to Appellant, "Congress certainly must have intended to permit
bankruptcy courts to transfer adversary proceedings to the proper court upon determination that
they lack subject matter jurisdiction" and that it is "inconsistent with the general purpose of the
FCIA and the specific purpose of section 1631 to construe 610 as restrictively as did the
Bankruptcy Court." (Id. at 11-12.) Conversely, Appellees argue that this general policy statement
11
Pub. L. No. 97-164, April 2, 1982, 96 Stat. 25.
15
was superseded by the statute as enacted. (See D.I. 25 at 11 (citing Mobley v. CIR, 532 F.3d 491,
496 (6 1h Cir. 2008) ("[T]his isolated statement cannot alter the statute's unambiguous reference
only to 'a court as defined in section 610 of this title."'))) Appellees argue that "the fact that the
statute as enacted does not permit transfer 'between any two courts' has been lamented, but
recognized." (Id. (quoting Tayan, 29 S. Tex. L. Rev. at 225 (characterizing this limitation as a
"flagrant failing" but nevertheless recognizing that "[u]nlike the statute [as originally] proposed .
. . , which provided for a transfer between any two courts of the United States, the statute as enacted
permits a transfer only between courts as defined by section 610.")).
The court agrees that the legislative history supports the Bankruptcy Court's analysis and
conclusion that Congress intended to limit the courts with transfer power under § 1631. "An early
draft of [FCIA], which enacted § 1631, proposed language that allowed for a transfer between any
two courts of the United States to cure defects in jurisdiction or venue. However, '[t]he final
version enacted by Congress is more narrow and permits transfer between any two federal courts,
as defined in 28 USC.§ 610 (1986), to cure a defect in jurisdiction, and eliminates any reference
to a transfer to cure a defect in venue."' !MMC, 2012 WL 523632, at *2 (quoting J. Tayon, 29 S.
Tex. L. Rev. at 199 n. 58) (emphasis added by the Bankruptcy Court)). The court agrees with the
Bankruptcy Court's conclusion that, at least with respect to the transfer authority of bankruptcy
courts, the general policy statement cited by Appellant was superseded by the statute as enacted.
See id.
The Bankruptcy Court concluded that the legislative history of§ 610 also demonstrates
Congressional intent to exclude bankruptcy courts from its definition of "courts." !MMC, 2012
WL 523632 at *2. As previously noted, Appellant argues that determining whether bankruptcy
courts fall within the "penumbra of section 61 O" required a more thorough analysis of the
legislative history than that accorded by the Bankruptcy Court, and that the statute's legislative
16
history clearly supports a broader interpretation. (D.I. 24 at 6-7.) The Bankruptcy Court indeed
considered the legislative history of§ 610 and concluded that the failure to include bankruptcy
courts in the statute was purposeful. !MMC, 2012 WL 523632 at *2; 2015 WL 6684638 at *2.
The collrt's review of the legislative history supports the Bankruptcy Court's conclusion.
In 1978, Congress enacted legislation ("1978 Amendment") creating a separate bankruptcy
court and confen-ing upon it extensive subject matter jurisdiction over the bankruptcy process. 12
The 1978 Amendment, which was set to be effective on June 28, 1984, included amending§ 610
by substituting "district courts, and bankruptcy courts" for the phrase "and district courts."
!MMC, 2012 WL 523632, at *2 (citing 28 U.S.C.A. § 610 "Historical and Statutory Notes,"
referencing Pub. L. 95-598, Title II,§ 226, Nov. 6, 1978, 92 Stat. 2665 (emphasis added)). Before
the 1978 Amendment became effective, however, the Supreme Court issued its 1982 decision in
Northern Pipeline, which invalidated Congress's broad grant of jurisdiction to bankruptcy judges.
See Northern Pipeline, 458 U.S. 50 at 87. In response, Congress passed further legislation ("1984
Amendment"), which provided that the 1978 Amendment, including the amendment to § 610 to
include bankruptcy courts, "shall not be effective." 13 Appellant contends that "Congress' post-
Northern Pipeline amendments to other statutes must not be interpreted to mean that Congress
intended to strip the bankruptcy court of the power to enter appropriate orders." (D.I. 24 at 8.)
This legislative history supports the view that, by enacting the 1984 Amendment, Congress did
not mistakenly "strip" the bankruptcy court's transfer authority, but rather acted with an intent to
rescind or invalidate an amendment that would have granted transfer authority to bankruptcy courts
in direct response to the Supreme Court's decision in Northern Pipeline. The court agrees that
12
Pub. L. No. 95-598, Title II,§ 226, November 6, 1978, 92 Stat. 2665 (establishing a uniform bankruptcy law).
Pub. L. No. 98-353, Title I,§ 113, July 10, 1984, 98 Stat. 343 (eliminating the 1978 Amendment by substituting the
language "shall not be effective" for "shall take effect on June 28, 1984"). The 1984 Amendment became effective
on July IO, 1984. Id. As a result, the 1978 Amendment and its inclusion of"bankruptcy courts" as "courts" under§
610 was only valid for a 12-day period from June 28, 1984 to July 10, 1984.
13
17
such definitive legislative steps support the Bankruptcy Court's conclusion that "the failure to
include bankruptcy courts in§ 610 was not an oversight, but a purposeful act." !MMC, 2012 WL
523632 at *2.
Simply put, § 610's definition of "courts" clearly excludes certain courts. Where a case
"presents a conflict between a statute's plain meaning and its general policy objectives," in general,
the "conflict ought to be resolved in favor of the statute's plain meaning." See Fogleman, 283
F.3d at 569 (citing Caminetti, 242 U.S. at 485). The court agrees that "the express legislative
intent to provide a provision which 'is broadly drafted to permit transfer between any two federal
courts' has not been realized." J. Tayan, 29 S. Tex. L. Rev. at 225.
D.
Other Statutory Bases for Transfer
Appellant argues that transfer was authorized under § 105(a) of the Bankruptcy Code
and/or 28 U.S.C. §§ 157 or 1412 but does not cite to any such arguments made below. Appellant
has consistently identified only one issue on appeal: "whether bankruptcy judges have the authority
to transfer an adversary proceeding to another court pursuant to 28 U.S.C. § 1631." (See D.I. 251 at SAl-2 (Bankruptcy Rule 8009 designations); D.I. 2 at 1 (certification request); D.I. 24 at 3
(opening brief)). The court will not consider Appellant's assertion that the Bankruptcy Court was
authorized to transfer the adversary proceeding on these other statutory bases.
VI.
CONCLUSION
Based upon the plain language of the statutes, the Bankruptcy Court properly ruled that it
lacked transfer authority under § 1631 because a bankruptcy court is not a "court" as defined by §
610. For the foregoing reasons, the 2012 and 2015 Decisions are AFFIRMED.
shall follow.
Dated: January
L, 2018
18
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