REVISED OCTOBER 10, 2001
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 00-20383
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CRAIG’S STORES OF TEXAS, INC.,
Debtor.
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BANK OF LOUISIANA,
Appellant,
versus
CRAIG’S STORES OF TEXAS, INC.,
Appellee.
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Appeal from the United States District Court
for the Southern District of Texas
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October 3, 2001
Before JONES, DeMOSS, and BENAVIDES, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The district court perceptively concluded that the
exercise of bankruptcy court jurisdiction over this contract
dispute, which arose after the debtor’s Chapter 11 plan was
confirmed, was improper. Agreeing with other circuit courts that
bankruptcy court jurisdiction does not last forever, we affirm the
vacation and dismissal of the bankruptcy court judgment.
The debtor, Craig’s Stores, has done business with Bank
of Louisiana since 1989, using the Bank to administer Craig’s in-
house private label credit card program and thus to assist in
financing Craig’s operations by buying the company’s receivables.
The parties’ complex arrangement continued after Craig’s sought
Chapter 11 bankruptcy protection in 1993, and their contract was
assumed as part of the debtor’s reorganization plan confirmed in
December 1994.1
Eighteen months later, in mid-1996, Craig’s sued the Bank
in the bankruptcy court, asserting state law claims for damages
alleged to have arisen in 1994 and 1995. Neither the Bank nor the
bankruptcy court questioned the court’s jurisdiction. The case
moved forward, culminating in a 12-day trial that aired the
parties’ mutual grievances and resulted in a quarter-million dollar
judgment for Craig’s.
The Bank appealed to the district court on several
points, none of which touched on jurisdiction. At a 1998 hearing
convened to discuss the merits of the appeal, the district court
inquired sua sponte how the bankruptcy court could exercise
1
The confirmation order retained bankruptcy court jurisdiction, but
only to the extent of matters regarding confirmation and completion of the
debtor’s plan.
2
jurisdiction over a post-confirmation, state law-based contract
dispute. Further briefing by the parties failed to persuade the
district court that jurisdiction originally existed over the
adversary proceeding in bankruptcy court, and the district court
dismissed it for lack of jurisdiction.2 Craig’s appealed.
Craig’s contends that the bankruptcy court had
jurisdiction to resolve its dispute with the Bank because (a) the
parties’ contract existed before confirmation; (b) the contract was
assumed in the plan of reorganization; (c) the resolution of the
claim could affect Craig’s ability to make payments under the plan;
and if all else fails, (d) the Bank’s “counter-claim” to convert
the confirmed case to Chapter 7 invoked jurisdiction sufficient to
include Craig’s original suit against the Bank.
The first three factors are subsumed in Craig’s theory
that so long as a bankruptcy case remains open, jurisdiction exists
if a dispute is “related to” the bankruptcy, 28 U.S.C. § 1334(b),
that is, if the outcome of the proceeding could conceivably have an
effect on the debtor’s estate. See In re Wood, 825 F.2d 90, 93
(5th Cir. 1987). Some circuits have utilized this theory, which
originated to describe the scope of bankruptcy jurisdiction during
the pendency of the case, to assess jurisdiction after confirmation
2
The court alternatively reversed because the bankruptcy court
erroneously admitted expert witness testimony for Craig’s, and because Craig’s
failed to prove that its losses were caused by the Bank.
3
of a reorganization plan, but they have not applied it on post-
confirmation facts like those before us. See, e.g., In re C F & I
Fabricators of Utah, Inc., 150 F.3d 1233, 1237 (10th Cir. 1998);
U.S. Trustee v. Gryphon at the Stone Mansion, Inc., 166 F.3d 552,
555-56 (3d Cir. 1999); In re Wolverine Radio Co., 930 F.2d 1132,
1140-43 (6th Cir. 1991).
The more persuasive theory of post-confirmation
jurisdiction, however, attaches critical significance to the
debtor’s emergence from bankruptcy protection. As the Seventh
Circuit put it,
Once the bankruptcy court confirms a plan of
reorganization, the debtor may go about its business
without further supervision or approval. The firm also
is without the protection of the bankruptcy court. It
may not come running to the bankruptcy judge every time
something unpleasant happens.
Pettibone Corp. v. Easley, 935 F.2d 120, 122 (7th Cir. 1991).
After a debtor’s reorganization plan has been confirmed, the
debtor’s estate, and thus bankruptcy jurisdiction, ceases to exist,
other than for matters pertaining to the implementation or
execution of the plan. In re Fairfield Communities, Inc., 142 F.3d
1093, 1095 (8th Cir. 1998); In re Johns-Manville Corp., 7 F.3d 32,
34 (2d Cir. 1993). No longer is expansive bankruptcy court
jurisdiction required to facilitate “administration” of the
debtor’s estate, for there is no estate left to reorganize. This
theory has antecedents in our court’s jurisprudence, which has
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observed that the reorganization provisions of the former
Bankruptcy Act “envisage[] that out of the proceedings will come a
newly reorganized company capable of sailing forth in the cold,
cruel business world with no longer the protective wraps of the
federal Bankruptcy Court.” In re Seminole Park & Fairgrounds,
Inc., 502 F.2d 1011, 1014 (5th Cir. 1974). Because it comports
more closely with the effect of a successful reorganization under
the Bankruptcy Code than the expansive jurisdiction cases, we adopt
this more exacting theory of post-confirmation bankruptcy
jurisdiction.
Viewed from the narrower perspective, it is clear that
Craig’s claim against the Bank principally dealt with post-
confirmation relations between the parties. There was no
antagonism or claim pending between the parties as of the date of
the reorganization. The fact that the account management contract
existed throughout the reorganization and was, by implication,
assumed as part of the plan is of no special significance. And
even if such circumstances might bear on post-confirmation
bankruptcy court jurisdiction, no facts or law deriving from the
reorganization or the plan was necessary to the claim asserted by
Craig’s against the Bank. Finally, while Craig’s insists that the
status of its contract with the Bank will affect its distribution
to creditors under the plan, the same could be said of any other
post-confirmation contractual relations in which Craig’s is
5
engaged. In sum, the state law causes of action asserted by
Craig’s against the Bank do not bear on the interpretation or
execution of the debtor’s plan and therefore do not fall within the
bankruptcy court’s post-confirmation jurisdiction. See 11 U.S.C.
§ 1142(b).
In re Case, 937 F.2d 1014 (5th Cir. 1991), is not to the
contrary. In Case, this court held that a post-confirmation
dispute over a promissory note provided for in the debtor’s
reorganization plan was a core proceeding under 28 U.S.C. § 157.
See id. at 1017, 1019-20. The note was executed in settlement of
a creditor’s claim as part of the reorganization plan itself. See
id. at 1017. Unlike the dispute in Case, the post-confirmation
dispute at issue in this appeal has nothing to do with any
obligation created by the debtor’s reorganization plan. Compare In
re Nat’l Gypsum Co., 118 F.3d 1056, 1064 (5th Cir. 1997) (holding
that action seeking declaratory judgment as to whether confirmation
order bars collection of asserted preconfirmation liability is core
proceeding under 28 U.S.C. § 157).
In a last-ditch effort to bootstrap jurisdiction, Craig’s
relies on a separate post-confirmation adversary proceeding that
the Bank commenced in bankruptcy court two months after Craig’s
filed the contract-based lawsuit. The Bank sought to require the
debtor to cure defaults in the parties’ contract or, in the
alternative, to convert the case to Chapter 7. Craig’s asserts
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that this adversary proceeding was consolidated with its contract
claim, and that the two were tried together. This is not entirely
accurate. The Bank withdrew its motion to convert after Craig’s
placed certain disputed sums in escrow. The court never considered
or ruled upon the withdrawn motion to convert. That motion cannot
be used to establish, retroactively, the bankruptcy court’s
jurisdiction.
For the foregoing reasons, the judgment of the district
court, which vacated and dismissed the adversary proceeding in
bankruptcy court, is AFFIRMED.
7