Juannelious Murray, Sr. v. Safir Law P.L.C., 20-1910

Background

In 2015 Murray sued his insurer; Safir Law represented him and negotiated a $61,000 settlement (about $20,298.55 in attorney fees). Murray had earlier listed the claim in a Chapter 13 bankruptcy filed in 2016.
Safir Law received the settlement check allegedly without informing the 2016 trustee or getting bankruptcy-court approval; the 2016 Chapter 13 was later dismissed for failure to comply with plan/trustee requirements.
Murray filed a new Chapter 13 in 2019 and filed an adversary complaint against Safir Law seeking, inter alia, turnover of the settlement, disgorgement of fees, stay-violation relief, and several state-law claims.
The bankruptcy court dismissed the 2019 Chapter 13 and, in a one-sentence order, dismissed the adversary proceeding "as a result" of that dismissal. Murray appealed to the district court, which affirmed; Murray appealed to the Sixth Circuit.
The Sixth Circuit affirmed dismissal of counts 1 and 3–6 (state-law and procedural claims) but vacated and remanded as to count 2 (turnover, stay-violation, and fee claims) for the bankruptcy court to exercise its discretion whether to retain residual jurisdiction over those core claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the bankruptcy court had subject-matter jurisdiction over the adversary proceeding after dismissal of the 2019 Chapter 13	Murray: bankruptcy court retained jurisdiction to adjudicate the adversary (core) claims despite the dismissal	Safir: adversary lacked necessary nexus to the 2019 case; dismissal removed jurisdiction	Court: dismissal of underlying case does not automatically divest jurisdiction; court must exercise discretion to retain jurisdiction (remand on count 2)
Whether the bankruptcy court abused its discretion by dismissing count two without considering residual-jurisdiction factors	Murray: dismissal was improper; count two involves core bankruptcy matters (turnover, stay, fees) so court should retain jurisdiction	Safir: dismissal was proper because underlying case dismissed and adversary unrelated	Court: count two involves core matters, so bankruptcy court had power to retain jurisdiction but abused discretion by not showing it considered factors; remand to decide retention
Whether the state-law claims (counts 3–6) were within bankruptcy jurisdiction	Murray: state claims are integrally related to turnover/fee issues and thus within bankruptcy jurisdiction	Safir: state-law claims lack sufficient nexus to bankruptcy estate	Court: Murray failed to show subject-matter jurisdiction over state-law claims; affirmed dismissal of counts 3–6
Whether Murray forfeited challenge to count one (request to set aside 2016 dismissal)	Murray: (did not meaningfully brief)	Safir: dismissal proper or not sufficiently challenged	Court: Murray forfeited appellate review of count one; affirmed dismissal

Key Cases Cited

In re 5900 Assocs., Inc., 468 F.3d 326 (6th Cir. 2006) (bankruptcy court may retain jurisdiction to resolve fee disputes after underlying case dismissal)
In re Javens, 107 F.3d 359 (6th Cir. 1997) (exercise of residual jurisdiction after dismissal is discretionary)
In re Lee, 530 F.3d 458 (6th Cir. 2008) (standard of review on bankruptcy appeals to district court)
Celotex Corp. v. Edwards, 514 U.S. 300 (U.S. 1995) (bankruptcy courts are federal courts of limited jurisdiction)
Wolverine Radio Co. v. (In re Wolverine Radio Co.), 930 F.2d 1132 (6th Cir. 1991) (framework for bankruptcy subject-matter jurisdiction inquiry)
In re Millennium Seacarriers, Inc., 458 F.3d 92 (2d Cir. 2006) (factors and contours for retaining jurisdiction post-dismissal)
In re Valdez Fisheries Dev. Ass'n, Inc., 439 F.3d 545 (9th Cir. 2006) (analysis of residual jurisdiction factors)
In re Querner, 7 F.3d 1199 (5th Cir. 1993) (economy, convenience, fairness, and comity guide retention decision)
In re Airspect Air, Inc., 385 F.3d 915 (6th Cir. 2004) (standard for abuse of discretion review)
In re Kisseberth, 273 F.3d 714 (6th Cir. 2001) (bankruptcy authority to order disgorgement of fees charged "in connection with" a case)