The Debtor, Darick Patrice Williams, appeals from the May 21, 2000, Order of the Bankruptcy Court denying the Debt- or’s Motion to Compel Turnover of Funds (“Motion”). Because we find that the Bankruptcy Court had jurisdiction to hear the Debtor’s Motion, that abstention was not appropriate under the circumstances, and that the doctrine of equitable mootness does not prevent us from granting the appropriate relief in the present appeal, the order below will be reversed.
The factual background of this case is set forth in detail in our prior opinion
Williams v. IMC Mortgage Co. (In re
Williams),
BACKGROUND
The Debtor filed a Chapter 13 bankruptcy case on October 15, 1998, in which he proposed to pay the arrearages on his residential mortgage over the course of a sixty-month Plan. The contractual monthly mortgage payments that came due post-petition were also to be paid through the Plan. Other than file a proof of claim, the mortgagee, Citifinancial Mortgage Co., fik/a IMC Mortgage Co. (“IMC”), took no action during the pendency of the bankruptcy and did not request adequate protection payments at any time. On April 13, 1999, the Bankruptcy Court dismissed the Debtor’s bankruptcy case as a result of the Debtor’s failure to cure the Chapter 13 trustee’s objections to confirmation. As of the date of dismissal, the trustee held $6,397.00 of the Debtor’s money, which had not been distributed to any creditors. The dismissal order directed the trustee to pay claims “as allowed under section 503(b) ... and then he [the trustee] is to return any remaining funds to the debtor.”
On June 7, 1999, IMC filed an application for administrative expenses in the amount of $5,889.00, representing $5,264.00 in postpetition mortgage payments collected by the trustee but never disbursed because the Plan had never been confirmed, and $625.00 in attorney’s fees. After a brief hearing at which no evidence was offered, the Bankruptcy Court entered an order granting IMC’s application for administrative expenses on July 22, 1999, and the trustee gave IMC a check for the full amount of its application the following day. The Debtor appealed the Bankruptcy Court’s order to the Bankruptcy Appellate Panel for the Eighth Circuit on August 6, 1999, and we reversed.
See Williams I.
We held that IMC did not have an administrative claim for the post-petition mortgage payments and that, under the clear language of the Bankruptcy Code, the funds held by IMC were required to be returned to the debtor.
Williams I,
While the Debtor’s appeal was pending and in the absence of any stay pending appeal, IMC applied the funds received from the trustee against the balance still
Shortly thereafter, on February 23, 2000, the Debtor filed a motion in the Bankruptcy Court seeking the turnover of the funds received by IMC from the trustee. IMC opposed the motion, and an initial hearing was held on March 28, 2000. Then, on April 11, 2000, a second hearing was held on the Motion and at that time the Bankruptcy Court announced orally that it was denying the Debtor’s Motion. On May 31, 2000, the Bankruptcy Court entered a short, written order denying the Motion and incorporating the findings of fact and conclusions of law that the Court had announced from the bench on April 11, 2000. 2
Meanwhile, on April 27, 2000, the Circuit Court for the City of St. Louis entered judgment in favor of IMC granting it a judgment for the mortgage deficiency, reduced by the amount of the set-off it had requested, namely the $5,889.00 received from the Chapter 13 trustee.
The Debtor now appeals the Bankruptcy Court’s denial of his Motion to Compel Turnover of Funds.
ISSUES
The first issue on appeal is whether the Bankruptcy Court erred when it denied the Debtor’s Motion on the basis that the bankruptcy court lacked jurisdiction. As an alternative basis for its denial of the Motion, the Bankruptcy Court also determined that it was appropriate to abstain. Thus, the second issue on appeal is whether the bankruptcy court erred when it abstained from hearing the Debtor’s Motion. Finally, the third issue, which has been raised by the Appellee, is whether the instant appeal is moot under the doctrine of equitable mootness.
STANDARD OF REVIEW
In general, we review the findings of fact of the bankruptcy court for clear error and its legal determinations
de novo. See O’Neal v. Southwest Missouri Bank (In re Broadview Lumber Co.),
I.
The Debtor’s first argument is that the Bankruptcy Court erred when it determined that it was without jurisdiction to hear the Debtor’s Motion. Specifically, he argues that the Motion to Compel Turnover was not, as the Bankruptcy Court determined, a non-core proceeding that would have no effect on the bankruptcy estate, but rather, it was a core proceeding, and as such, would clearly be within the jurisdiction of the Bankruptcy Court. We agree.
Reviewing the scope of bankruptcy court jurisdiction, we begin with the Congressional grant of jurisdiction in 28 U.S.C. §§ 1334 and 157. Section 1334 confers jurisdiction on the district court to hear “all civil proceedings arising under title 11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). Section 157 provides for the referral of those matters to the bankruptcy courts and sets up the well known framework of core and non-core, related proceedings.
Core proceedings consist of “any or all proceedings arising under title 11 or arising in a case under title 11.” 28 U.S.C. § 157(b). The phrase “arising under” applies to proceedings that involve causes of action expressly created or determined by title 11, such as causes of action to recover fraudulent conveyances and preferential transfers, section 544 avoidance actions, dischargeability proceedings, and similar rights that would not exist had there been no bankruptcy.
Specialty Mills, Inc. v. Citizens State Bank
Non-core, related proceedings are civil proceedings which do not invoke a substantive right created by bankruptcy but nonetheless fall within the jurisdiction of the bankruptcy court because they share a nexus with the bankruptcy case and will have some “conceivable effect” on the administration of the debtor’s estate.
In re Dogpatch U.S.A., Inc.,
As a general rule, the dismissal of a bankruptcy case results in the dismissal of non-core, related proceedings, because the bankruptcy court’s jurisdiction over the related proceeding depends on its nexus with the underlying bankruptcy case.
Tim Wargo & Sons, Inc. v. Mankin Farms, Inc. (In re Tim Wargo & Sons, Inc.),
On the other hand, there is much support for the proposition that bankruptcy courts retain jurisdiction over core proceedings beyond the dismissal or closure of the underlying bankruptcy case.
See Post v. Ewing (In re Post),
It is also well established that bankruptcy courts retain jurisdiction after a case has been dismissed or closed to interpret or enforce previously entered orders.
See Menk,
Although this appeal presents a slightly different issue, inasmuch as the Bankruptcy Court is not actually construing or enforcing its own orders, but enforcing the reversal of one of its orders, the principle is the same; the latter is merely a corollary of the first. Therefore, the Bankruptcy Court would have jurisdiction to hear the Debtor’s Motion to Compel Turnover because it would be directly related to the “enforcement” of the reversal
Basic principles of restitution and appellate procedure which dictate that a lower court always has the jurisdiction to order the restitution of an award overturned on appeal, even without a remand from the appellate court, also support our conclusion that the Bankruptcy Court had jurisdiction to rule on the Debtor’s Motion.
See Caldwell v. Puget Sound Elec. Apprenticeship and Training Trust,
Therefore, for the reasons stated above, we find that the Debtor’s Motion constituted a core proceeding over which the Bankruptcy Court had jurisdiction. Accordingly, the Bankruptcy Court is reversed on the issue of jurisdiction.
II.
As an alternative basis for its holding, the Bankruptcy Court determined that it was appropriate to abstain from ruling on the Debtor’s Motion. The Debt- or contends, however, that abstention was inappropriate in this case. We agree.
Based on our determination that the Debtor’s Motion was a core proceeding, 4 and on the record below, 5 the Bankruptcy Court’s decision to abstain will be analyzed as a permissive, or “discretionary,” abstention under 28 U.S.C. § 1334(c)(1). Under that statute a court may abstain from hearing a proceeding whether the proceeding is core or non-core. Section 1334(c)(1) provides:
Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11.
28 U.S.C. § 1334(c)(1).
Because the statute provides only general standards for determining whether abstention is appropriate,
ie.,
“in the interest of justice, or ... comity,” courts have been guided by “well developed notions of judicial abstention,” which
(1) the effect or lack thereof on the efficient administration of the estate if a Court recommends abstention,
(2) the extent to which state law issues predominate over bankruptcy issues,
(3) the difficult or unsettled nature of the applicable law,
(4) the presence of a related proceeding commenced in state court or other non-bankruptcy court,
(5) the jurisdictional basis, if any, other than 28 U.S.C. § 1334,
(6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case,
(7) the substance rather than the form of an asserted ‘core’ proceeding,
(8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court,
(9) the burden [on] the bankruptcy court’s docket,
(10) the likelihood that the commencement of the proceeding involves forum shopping by one of the parties,
(11) the existence of a right to a jury trial, and
(12) the presence in the proceeding of nondebtor parties.
In re Phelps Technologies,
Applying these factors, we conclude that abstention was not warranted in this case. Of particular relevance to our determination are: (1) the fact that the Motion was a core proceeding, and therefore, all of the factors pertaining to non-core proceedings are inapplicable; (2) the likelihood that IMC’s commencement of the state court suit was an attempt to shop for a forum that would find some basis for IMC to retain funds that the Bankruptcy Appellate Panel of the Eighth Circuit had already determined should be returned; and, perhaps most importantly, (3) contrary to the protestations of IMC, there was, in fact, no state law issue to be decided, and therefore, there was no “interest of comity” favoring abstention. We elaborate.
In light of our decision in
Williams I,
the only basis IMC had for claiming that a set-off issue existed was that it had filed a state court action in which it raised set-off,
7
and that fact alone is insufficient to warrant abstention. For purposes of discretionary abstention in the interest of comity, a state law issue must have some modicum of validity, and in this case, it did not. At the time IMC filed its state court action and the Debtor filed his Motion, the Bankruptcy Appellate Panel for the Eighth Circuit had already determined, unequivocally, that IMC was not entitled to keep the funds it received from the trustee and that those funds were “re
Another factor that prohibits abstention in this case concerns the appellate mandate. IMC maintains that, in the absence of language specifically remanding the matter to the Bankruptcy Court or ordering the return of the funds, the mandate from Williams I did not require or allow the Bankruptcy Court to order the return of the money. This argument, however, fails to appreciate the scope of the appellate mandate.
When a case has been decided by an appellate court or panel, “every question decided by the appellate court, whether expressly or by implication, is finally settled and determined, thus creating a mandate for the lower court.”
In re Usery,
In this case, not only was the Bankruptcy Court free to order IMC to return the Debtor’s money, since that would be consistent with the mandate of Williams I, it was incumbent on the Bankruptcy Court to grant the relief requested in the Debt- or’s Motion. Abstaining from doing so violated both the letter and spirit of the Bankruptcy Appellate Panel’s mandate.
Therefore, for the reasons stated above, we find that abstention was not appropriate and reverse the Bankruptcy Court on this issue.
III.
Finally, we address IMC’s contention that the instant appeal is equitably moot. For the following reasons, we determine that it is not.
Fundamentally, mootness is a constitutionally imposed limit on the jurisdiction of federal courts; a federal court may only exercise its jurisdiction over cases or controversies.
U.S. Const., Art. III,
§ 2, cl. 1. “ ‘[A] case is moot when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.’ ”
County of Los Angeles v. Davis,
Finally, there is equitable mootness. Also called “prudential” or “pragmatic” mootness,
10
it is a doctrine developed by appellate courts reviewing bankruptcy cases which allows an appellate court to dismiss a case as moot, based on equitable grounds, even though effective relief could conceivably be fashioned.
Blackwell v. Little (In re
Little),
The doctrine of equitable mootness is most often applied in the context of a reorganization bankruptcy where the bankruptcy court has confirmed a plan, the plan has been substantially consummated, and then a party seeks appellate review of an issue that, if upset, would unduly disturb the plan.
11
See e.g., In re Long Shot Drilling, Inc.,
In this instance, we need not decide whether the doctrine of equitable mootness applies when there is no plan of reorganization to disturb, because the instant appeal cannot be considered equitably moot under any circumstance. If equitable mootness is indeed a doctrine limited to preventing the imprudent upset of a substantially consummated plan of reorganization, as it has been in most of the cases, the doctrine would not apply, because this case presents an inapposite factual context. The Chapter 13 case was dismissed prior to the confirmation of a plan; therefore, an appeal, whatever the substance, cannot disturb “the plan,” cannot impede the success of implementing the plan, and cannot adversely affect third parties who have relied on the plan and are not before the court at this time. If we view the doctrine broadly, applying it to all appeals in which there has been a “comprehensive change of circumstances” 12 that makes granting the relief requested by the appellant inequitable, the instant appeal falls far short of warranting the equitable mootness doctrine’s application.
As stated above, the doctrine of equitable mootness focuses on equitable or prudential concerns rather than the impossibility of granting relief.
In re Roberts Farms, Inc.,
In Williams I, we stated:
Under the Bankruptcy Code, the funds are required to be returned to the debtor, and the debtor may then pay those funds over to his mortgagee.... Section 1326 ... establishes a clear and explicit command to the trustee that, upon dismissal, if there is no confirmed plan funds will be returned to the debtor less any unpaid claims allowed under § 503.... [Because IMC’s claim was not] an actual, necessary cost or expense of preserving the estate after the commencement of the case, the bankruptcy court erred in allowing this application for administrative expenses.
Williams I,
IMC’s actions can be viewed in this instance as nothing more than disingenuous and duplicitous. They are disingenuous because they represent a position that was obviously contrary to the express intent of the Bankruptcy Appellate Panel, set forth in
Williams I,
regardless of their technical possibility. And, the duplicity of IMC’s actions was belied by IMC’s comments in oral argument before us when it stated that it would have repaid the money if the
Even if we were to address the merits of IMC’s equitable mootness argument, it would fail because no inequity will result if the Debtor’s money is returned. IMC argues that returning the money to the Debtor at this point would create a windfall for the Debtor because the state court’s determination of the deficiency included the funds received by IMC from the Chapter 13, the Debtor has since filed for protection under Chapter 7 of the Bankruptcy Code and the Chapter 7 trustee has abandoned his interest in the outcome of this appeal. We reject this argument.
First of all, IMC has no one to blame but itself for including the funds received from the Chapter 13 trustee in its petition for a determination of the deficiency. IMC knew that it was not entitled to those funds at the time Williams I was issued and therefore should not be surprised that it will have to part with those funds now. Second, the Debtor’s ability to keep the funds at this point may have been caused, in part, by IMC’s reluctance to abide by our decision in Williams I. If IMC had turned over the funds immediately, and the Debtor had filed for Chapter 7 bankruptcy at that point, the funds would have become part of the bankruptcy estate, subject only to the exemptions claimed by the Debtor. Third, and perhaps most importantly, the Debtor’s receipt of the $5,889.00 at this point is the result of the legitimate use of the Bankruptcy Code and bankruptcy process; there has been no allegation that the Debtor has engaged in any dishonest or bad faith conduct, nor do we think that he has.
Therefore, based on the reasons stated above we find that the doctrine of equitable mootness is inapplicable to this appeal.
CONCLUSION
Because we conclude that the bankruptcy court had jurisdiction to hear the Debt- or’s Motion, that abstention was not appropriate in these circumstances, and that the doctrine of equitable mootness does not prevent us from granting the appropriate relief, the Bankruptcy Court’s judgment entered on May 21, 2000, is reversed and IMC is hereby ordered to pay the Debtor $5,889.00 within 20 days of the entry of this decision.
Notes
. The record is unclear was to why a second hearing was necessary on April 11 and why a written order was not entered until May 31.
. Rule 8013 of the Federal Rules of Bankruptcy Procedure provides, in pertinent part, as follows: "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.” Fed. R. Bankr.P. 8013.
. By its terms, the mandatory abstention provision of 28 U.S.C. § 1334(c)(2) does not apply to core proceedings. The statute provides:
Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.
28 U.S.C. § 1334(c)(2) (emphasis added).
. The language used by the Bankruptcy Court to express its decision to abstain indicates that it was exercising permissive abstention. (Transcript of April 11, 2000, hearing before the Bankruptcy Court.)
.
See In re Phelps Technologies,
. We note that the set-off issue was only raised in the state law action to the extent that IMC included the $5,889.00 as "Proceeds from Bankruptcy Case," in its explanation of how the deficiency was calculated in its state court petition. (Appellee's Appendix, p. 3)
. To hold otherwise would be, in effect, saying that someone who found a watch belonging to another can keep that watch if the watch's true owner owed the finder some money. And that result would be both unlawful and absurd.
.Section 363(m) states:
The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.
11 U.S.C. § 363(m). Section 364(e) states:
The reversal or modification on appeal of an authorization under this section to obtain credit or incur debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the incurring of such debt, or the granting of such priority or lien, were stayed pending appeal.
11 U.S.C. § 364(e).
.
Southwestern Bell Telephone Co. v. Long Shot Drilling, Inc. (In re Long Shot Drilling, Inc.),
. Factors considered by courts to determine whether an appeal is equitably moot in the context of a reorganization bankruptcy include: (1) whether the reorganization plan has been substantially consummated; (2) whether a stay has been obtained; (3) whether the relief requested would affect the rights of parties not before the court; (4) whether the relief requested would affect the success of the plan; and (5) the public policy of affording finality to bankruptcy judgments.
See In re Continental Airlines,
.
In re Roberts Farms, Inc.,
. In retrospect, an explicit direction to IMC to turn over the funds or to the Bankruptcy Court to effectuate that turnover might have been appropriate — appropriate, perhaps, but unnecessary. It was unnecessary because, as we have discussed above, the mandate of the Bankruptcy Appellate Panel was clear.