448 F. App'x 134
2d Cir.2011Background
- Adversary proceeding filed in bankruptcy court by Ace American Insurance Co. and Pacific Employers Insurance Co. against Delphi (DPH) Holdings Corp. and Michigan agencies/ Funds, regarding workers’ compensation liabilities.
- Core issue: whether the proceeding is core or non-core for purposes of bankruptcy jurisdiction; 28 U.S.C. § 157(b)(1) governs core status with § 157(b)(2) listing core proceedings.
- District Court denied some relief; Michigan Defendants appeal the denial arguing lack of core jurisdiction and sovereign immunity defenses.
- Court concludes the adversary proceeding is core, as the contract questions affect administration of the estate and liquidation of assets.
- Post-confirmation posture does not defeat core jurisdiction where matters have a close nexus to the bankruptcy plan and the plan provides retention of jurisdiction.
- Adversary involves contracts that are part of Delphi’s estate, with potential implications for liability, estate size, claims allowance, and creditor priority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the adversary proceeding is core jurisdiction. | Insurers argue core status under 28 U.S.C. §157(b)(2) as contract disputes affecting estate. | Michigan Defendants contend not core and rely on non-core/sovereign-immunity grounds. | Core jurisdiction established; proceeding falls within estate administration and liquidation. |
| Whether the in rem/estate implications bring the Michigan immunities into play. | Resolution affects the estate and in rem rights of Delphi’s property. | States argue sovereign immunity limits bankruptcy court’s reach. | In rem/estate nexus supports jurisdiction; sovereign immunity not offended. |
| Whether post-confirmation status negates core jurisdiction. | Post-confirmation enforcement can retain jurisdiction if tied to plan administration. | Post-confirmation disputes are beyond core unquestioned authority. | Post-confirmation nexus to the plan sustains core jurisdiction. |
| Whether the dispute is truly about Form 400 notices or contract liabilities. | Dispute centers on contractual obligations, not independent Form 400 claims. | Alternative theories (Form 400) could govern merits but not the core issue. | Dispute primarily contract-based, implicating in rem jurisdiction over the estate. |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (core/source of subject-matter jurisdiction distinctions under bankruptcy law?)
- U.S. Lines, Inc. v. American S.S. Owners Mut. Prot. & Indem. Ass’n, 197 F.3d 631 (2d Cir. 1999) (broad interpretation of core proceedings in bankruptcy)
- In re S.G. Phillips Constructors, Inc., 45 F.3d 702 (2d Cir. 1995) (nature of proceeding determines core status)
- In re Ben Cooper, Inc., 896 F.2d 1394 (2d Cir.) (contract matters can be core where tied to estate)
- In re PSINet, Inc., 271 B.R. 1 (Bankr. S.D.N.Y. 2001) (core/administration of the estate under bankruptcy)
- In re Johns-Manville Corp., 600 F.3d 135 (2d Cir. 2010) (in rem jurisdiction and bankruptcy plan retention)
- Cent. Va. Comm. Coll. v. Katz, 546 U.S. 356 (2006) (sovereign immunity waivers in bankruptcy)
- Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) (limits of state sovereign immunity in bankruptcy)