15‐746‐bk
In re: Indicon, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 4th day of April, two thousand sixteen.
PRESENT: CHESTER J. STRAUB,
DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges.
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IN RE: INDICON, INC.,
Debtor.
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VANGUARD PRODUCTS CORPORATION,
Plaintiff‐Appellant,
v. 15‐746‐bk
KIM CITRIN, STEPHEN JAMES CURLEY, DYMAX
CORPORATION, INDICON, INC., OMNI SOLO, INC.,
TRIDAK, LLC, MARIE DESALVO,
Defendants‐Appellees,
JOSEPH TESORIERE,
Defendant.
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FOR PLAINTIFF‐APPELLANT: IRVE J. GOLDMAN, Pullman & Comley LLC,
Bridgeport, Connecticut.
FOR DEFENDANT‐APPELLEE Stephen J. Curley, Law Offices of Stephen J.
STEPHEN J. CURLEY: Curley, Stamford, Connecticut.
FOR DEFENDANTS‐APPELLEES Gerald T. Giaimo, Daniel J. Krisch, Halloran &
DYMAX CORPORATION AND Sage, LLP, Hartford, Connecticut.
TRIDAK, LLC:
FOR DEFENDANT‐APPELLEE ROBERT ALAN SCHRAGE, Law Offices of
OMNI SOLO, INC.: Robert Alan Schrage, Westport, Connecticut.
FOR DEFENDANT‐APPELLEE Maria DeSalvo, pro se, Wilson, Connecticut.
MARIE DESALVO:
Appeal from the United States District Court for the District of
Connecticut (Underhill, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiff‐appellant Vanguard Products Corporation (ʺVanguardʺ) appeals
from the district courtʹs September 30, 2013 judgment affirming an order of the United
States Bankruptcy Court for the District of Connecticut (Schiff, B.J.) entered March 20,
2012 granting defendant Joseph Tesoriereʹs letter motion to dismiss Vanguardʹs
adversary proceeding for lack of subject matter jurisdiction. Vanguard also appeals the
district courtʹs February 9, 2015 denial of Vanguardʹs motion for rehearing. We assume
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the partiesʹ familiarity with the underlying facts, the procedural history of the case, and
the issues on appeal.
Indicon, Inc. (ʺIndiconʺ) filed for Chapter 11 reorganization on November
30, 2004. It did so without notifying Vanguard, its landlord at the time, or listing
Vanguard as a creditor. Indicon filed a plan of reorganization in July 2008, the plan was
confirmed by the bankruptcy court in August 2008, and a final decree was entered on
February 10, 2009, terminating the bankruptcy proceeding. The plan provided that the
ʺBankruptcy Court retains jurisdiction of this Case, pursuant to the provisions of the
Bankruptcy Code, until entry of a final Decree.ʺ
Vanguard did not learn of the bankruptcy until after the reorganization
plan was confirmed. In February 2010, Vanguard successfully moved to reopen the
bankruptcy case and obtain discovery. It then brought an adversary proceeding in the
bankruptcy court against Indicon and its former principal, counsel, and financial
advisors alleging breach of its lease agreement and fraud, including fraud on the
bankruptcy court. The bankruptcy court entered a default judgment against Indicon
and granted Vanguard an administrative expense for damages for the breach of the
lease agreement plus attorneysʹ fees and costs. The default judgment determined that
Vanguardʹs claim was not discharged by the bankruptcy. As for the claims against the
remaining defendants, the bankruptcy court granted Tesoriereʹs motion to dismiss for
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lack of subject matter jurisdiction and sua sponte dismissed claims against the remaining
defendants as well. The district court affirmed. Vanguard appealed.
We conclude that the bankruptcy court below correctly held that it lacked
jurisdiction over the claims against the remaining defendants. United States
bankruptcy courts are courts of limited jurisdiction: they may hear only proceedings
ʺarising under title 11, or arising in or related to cases under title 11.ʺ 28 U.S.C. § 1334.
This limitation may not be bypassed ʺsimply because a proceeding may have some
bearing on a bankruptcy case; the question is whether the action at issue stems from the
bankruptcy itself or would necessarily be resolved in the claims allowance process.ʺ
Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011). ʺ[B]ankruptcy courts have no jurisdiction
over proceedings that have no effect on the estate of the debtor.ʺ Celotex Corp. v.
Edwards, 514 U.S. 300, 308 n.6 (1995).
Vanguardʹs claims against the non‐debtor defendants for, inter alia, breach
of fiduciary duty, fraudulent transfers, and violation of the Connecticut Unfair Trade
Practices Act, Conn. Gen. St. § 42‐110a et seq., would have had ʺno effect on the estate of
the debtor.ʺ Celotex, 514 U.S. at 308 n.6. Vanguard sought to recover damages,
including punitive damages, from the other defendants to satisfy the default judgment
that it had against Indicon. But the bankruptcy proceeding was over, Indicon was
dissolved, and, as its counsel conceded at oral argument, Vanguard does not seek to
reopen the bankruptcy case to redistribute the proceeds that were paid through the
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plan. If it were successful in its adversary proceeding, the recovery would go not to the
estate but to itself. In short, Vanguardʹs claims have nothing to do with the
administered estate. The bankruptcy court therefore does not have subject matter
jurisdiction over these claims.1
We have considered Vanguardʹs remaining arguments and conclude they
are without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
1 The district court found that the bankruptcy court did not have subject matter
jurisdiction because the claims did not meet the close nexus test. The district court noted a
dispute among the circuits over whether the close nexus test applies to both core and non‐core
post‐confirmation proceedings, see e.g., In re Seven Fields Dev. Corp., 505 F.3d 237, 260 (3d Cir.
2007) (ʺ[T]he ʹclose nexusʹ standard only applies for the purposes of determining whether a
federal court has jurisdiction over a non‐core ʹrelated toʹ proceeding in the post‐confirmation
context.ʺ), and that our circuit in particular has applied it, in two summary orders, to both core
and non‐core post‐confirmation proceedings, see In re Euro‐Am. Lodging Corp., 549 F. Appʹx 52
(2d Cir. 2014); In re DPH Holdings Corp., 448 F. Appʹx 134 (2d Cir. 2011). We need not reach the
issue in light of our disposition above.
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