                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-22-2004

Binder v. Price Waterhouse
Precedential or Non-Precedential: Precedential

Docket No. 03-1857




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                       PRECEDENTIAL     ALAN E. KRAUS, ESQUIRE (Argued)
                                        Latham & Watkins
      UNITED STATES                     P.O. Box 10174
     COURT OF APPEALS                   One Newark Center, 16th Floor
   FOR THE THIRD CIRCUIT                Newark, New Jersey 07101
                                              Attorney for Appellant

            No. 03-1857                 DAVID H. PIKUS, ESQUIRE (Argued)
                                        Bressler, Amery & Ross, P.C.
                                        325 Columbia Turnpike
       IN RE: RESORTS                   Florham Park, New Jersey 07932
    INTERNATIONAL, INC.,                       Attorney for Appellee,
  RESORTS INTERNATIONAL                        J. Louis Binder, as Trustee
      FINANCING, INC.,                         of the Resorts International, Inc.
    GRIFFIN RESORTS, INC.,                      Litigation Trust
   RESORTS HOLDING, INC.,
                       Debtors
                                              OPINION OF THE COURT
        J. LOUIS BINDER,
      as Trustee of the Resorts
 International, Inc. Litigation Trust   SCIRICA, Chief Judge.

                  v.                            This appeal addresses the scope of
                                        “related to” jurisdiction of the bankruptcy
PRICE WATERHOUSE & CO., LLP,            court for post-confirmation claims brought
                    Appellant           on behalf of a litigation trust against an
                                        accounting firm. The trustee sued the
                                        accounting firm for p r of e ssional
        On Appeal from the              negligence and breach of contract for work
 United States District Court for the   it performed for the trust. The Bankruptcy
       District of New Jersey           Court declined to hear the claim, finding it
  D.C. Civil Action 02-cv-01333         lacked subject matter jurisdiction. The
(Honorable Dickinson R. Debevoise)      District Court disagreed and reversed. We
                                        will reverse the order of the District Court
                                        and remand for proceedings consistent
     Argued October 29, 2003            with this opinion.
                                                             I.
  Before: SCIRICA, Chief Judge,
    NYGAARD and AMBRO,                  A. Overview of Affected Parties
          Circuit Judges                       The underlying matter in this appeal
                                        is an accounting malpractice action. J.
       (Filed June 22, 2004)
Louis Binder, the Trustee for the Resorts           beneficiaries of the Litigation Trust, who
International, Inc. Litigation Trust, brought       were former creditors of the debtor’s
a claim in excess of $500,000 against               estate.
accounting firm Price Waterhouse & Co.
                                                            Price Waterhouse responds that the
for professional malpractice and breach of
                                                    Litigation Trust, a legally distinct entity, is
contract in connection with accounting
                                                    not a continuation of the bankruptcy estate
services performed for the Litigation
                                                    for jurisdictional purposes. Moreover,
Trust. The Trustee’s principal allegation is
                                                    Price Waterhouse contends the debtor is
that Price Waterhouse erroneously
                                                    only tangentially affected by this
reported in its audit that accrued interest
                                                    malpractice action after it assigned away
on Litigation Trust accounts belonged to
                                                    its interests in the litigation claims, and the
the debtor rather than to the Litigation
                                                    Litigation Trust beneficiaries traded their
Trust. Underlying this claim was a suit
                                                    creditor status to attain rights to the Trust’s
between the Litigation Trust and the
                                                    assets.
debtor, Resorts International, Inc., over
entitlement to the accrued interest.                B. Facts
A ccording to the T rustee , Price
                                                           On November 12, 1989, creditors of
Waterhouse’s erroneous reports were
                                                    Resorts International, Inc.1 and Resorts
relied on by the bankruptcy court to the
                                                    International Financing, Inc. filed against
Litigation Trust’s detriment.
                                                    t h e m C h a p t e r 1 1 i n v o l u n ta r y
        The debtor, Resorts International,          reorganization petitions in the United
Inc., is not a party to the malpractice             States Bankruptcy Court for the District of
action.     The debtor assigned to the              New Jersey. On December 22, 1989,
Litigation Trustee all its rights, title, and       Griffin Resorts and Griffin Resorts
interest in the Litigation Trust’s primary          Holding, Inc., affiliates of Resorts
asset, its claim against Donald Trump and           International, filed separate voluntary
affiliated entities. Because the Bankruptcy         petitions under Chapter 11. All of the
Court confirmed the Reorganization Plan,            cases were consolidated.
the debtor’s estate no longer exists.
                                                           On August 28, 1990, the
        Nonetheless, the Trustee alleges the        Bankruptcy Court issued an Order
debtor’s estate would still be affected by          confirming the Second Amended Joint
the malpractice suit because the Litigation         Plan of Reorganization. On September 17,
Trust is effectively a continuation of the
bankruptcy estate. Furthermore, contends
the Trustee, any recovery obtained in this             1
                                                        Resorts International, Inc. changed its
action would necessarily become Trust
                                                    name on June 30, 1995, to Griffin Gaming
assets, available to cover any liability that
                                                    & Entertainment, Inc. For sake of clarity,
might arise in the accrued interest lawsuit
                                                    we will continue to refer to it as Resorts
or available for possible distribution to the
                                                    International, Inc.

                                                2
1990, the parties entered into a Final Plan         the amount of $5,000,000 to the Litigation
and Litigation Trust Agreement. The Final           Trust to enable it to pursue the litigation
Plan created a Litigation Trust for the             claims.
benefit of certain creditors.       Section
                                                            On May 28, 1991, the Trustee
7.10(a) of the Plan provided: “Litigation
                                                    entered into an agreement with Trump and
Trustee shall retain and preserve the
                                                    his affiliates and the debtor settling the
Litigation Claims for enforcement, as
                                                    litigation claims on behalf of the Trust’s
representative of and successor to the
                                                    Unitholders in the amount of $12,000,000,
Reorganizing Entities in accordance with
                                                    subject to approval by the Unitholders.
Bankruptcy Code §§ 1123(b)(3)(B) and
                                                    Approval was solicited and received by
1145(a).” The beneficial interests in the
                                                    July 15, 1991. The Settlement Agreement
Litigation Trust were divided into ten
                                                    proceeds became assets of the Litigation
million Litigation Trust Units and
                                                    Trust.
allocated to certain creditors, the
Unitholders,2 under a formula set forth in                  The Litigation Trust Agreement
section 7.10(b) of the Plan. Under section          contained several provisions affecting
7.10(d), each Unitholder was entitled to a          Price Waterhouse, though it was never
pro rata share of any distribution from the         named in the document. Section 3.2 of the
Litigation Trust.                                   Litigation Trust Agreement provided that
                                                    “[t]he Trustee shall retain an independent
        The assets assigned to the Litigation
                                                    public accounting firm to audit the
Trust were claims originally held by the
                                                    financial books and records of the Trust
debtor, Resorts International, Inc., against
                                                    and to perform such other reviews or
Donald J. Trump and affiliated entities,
                                                    audits as may be appropriate in the
arising from Trump’s 1988 leveraged
                                                    Trustee’s sole discretion,” and that the
buyout of the Taj Mahal Resort. Upon
                                                    Trustee “shall pay such accounting firm
formation of the Litigation Trust, the
                                                    reasonable compensation from the Trust
litigation claims were assigned to the
                                                    Assets” for its services. Section 5.5 of the
Trustee. The Plan authorized the Trustee
                                                    Litigation Trust Agreement required the
to prosecute the claims against the Trump
                                                    Trustee to report to all Unitholders the
entities. The Plan and Litigation Trust
                                                    details of the Trust’s transactions and
Agreement also required the debtor to
                                                    disbursements at least annually and to have
provide an irrevocable letter of credit in
                                                    these reports “audited by the independent
                                                    accounting firm retained by the Trustee . .
    2                                               . not less frequently than annually.”
     The Unitholders were the holders of
allowed Class 3B Claims, allowed Resorts                   On April 17, 1990, representatives
International, Inc. Debenture Claims, and           of the Litigation Trust’s Unitholders
allowed Other Class 3C Claims as defined            elected Kenneth R. Feinberg as Litigation
by the Plan. In re Resorts Int’l, Inc., 199         Trustee. On November 1, 1990, after
B.R. 113, 115 n.2 (Bankr. D.N.J. 1996).

                                                3
confirmation of the Plan, the Trustee              Trustee alleged that to the extent the
retained Price Waterhouse to provide               Bankruptcy Court approved the debtor’s
auditing and tax-related services to the           claim to the interest, it relied on Price
Litigation Trust. Subsequently, under an           Waterhouse’s audit reports, so that its
order dated August 17, 1994, J. Louis              “errors” injured the Litigation Trust. The
Binder replaced Feinberg as Trustee.               Trustee alleged that even though the Trust
Shortly thereafter, the Trustee terminated         partially prevailed in the interest dispute,
the services of Price Waterhouse. On               P r i c e W a t e r h o us e ’ s e rr o n e o us
April 15, 1997, the Trustee filed this             characterization caused the Trust to incur
adversary proceeding against Price
Waterhouse alleging pro f e s s ional
negligence and breach of contract.
                                                          $ 5 million deposit became a
       The Trustee allege d Price                         “Trust Asset” as defined by
Waterhouse committed professional                         Article II of the Litigation
malpractice by making several errors in its               Trust Agreement, and any
accounting and tax advice. His principal                  interest earned on such
allegation is that Price Waterhouse                       “Trust Asset” also became a
erroneously reported in its audit reports                 “Trust Asset.” Accordingly,
that certain accrued interest on the                      the Litigation Trust is
Litigation Trust accounts belonged to the                 entitled to interest earned on
debtor rather than to the Trust. The                      the balance of the initial $ 5
accrued interest was the subject of a                     million deposit for the
dispute between the debtor and the                        period beginning May 28,
Litigation Trust—a dispute the Bankruptcy                 1991 through the present
Court decided in part in favor of the debtor              date. To the extent that the
and in part in favor of the Trust. See In re              Settlement Agreement dated
Resorts Int’l, 199 B.R. at 118-19.3 The                   May 28, 1991 between the
                                                          former Litigation Trustee
                                                          F e i n berg a nd Re sorts
    3
     The Bankruptcy Court allocated the                   provided for interest income
interest between the Litigation Trust and                 earned on the Expense
the debtor in the following manner:                       Account for the period
       Interest income earned on                          March 16, 1991 through
       the Expense Account for the                        May 28, 1991 to be paid to
       period beginning on or                             Resorts, the Litigation
       about October 3, 1990                              Trus t’s e ntitlemen t to
       through May 28, 1991                               interest shall accrue from
       belongs to Resorts. Upon                           the post-settlement period
       settlement of the Litigation                       following May 28, 1991.
       Claims, the balance of the                  In re Resorts Int’l, 199 B.R. at 125.

                                               4
unnecessary litigation costs in defending                  (internal quotations omitted). But the
its entitlement. The Trustee also alleged                  Bankruptcy Court rejected “related to”
certain errors in tax advice and auditing                  jurisdiction because the claims could not
provided to the Trustee and faulted Price                  have had any “conceivable effect on the
Waterhouse for failing to review and                       administration of the estate,” and because
interpret certain Litigation Trust                         the dispute would not significantly affect
documents. The Trustee sought damages                      consummation of the Reorganization Plan.
and disgorgement of fees in excess of                      See id. at 29-32. It also found that none of
$500,000.                                                  the Plan’s retention provisions were
                                                           intended to serve as a basis for jurisdiction
C. Procedural History
                                                           over the Litigation Trust and third-party
          On April 15, 1997, almost seven                  accountants; nor could the Plan language
y e a r s a f ter R eo rgan ization Pla n                  create jurisdiction greater than that granted
confirmation, the Trustee filed the                        by Congress. Id. at 13-14.
underlying professional malpractice action
                                                                  The Trustee appealed to the District
against Price Waterhouse in the United
                                                           Court, which reversed and remanded.
States Bankruptcy Court for the District of
                                                           Binder v. Price Waterhouse & Co. (In re
New Jersey. On January 4, 2002, the
                                                           Resorts Int’l, Inc.), No. 02-1333, slip op. at
B a n k r u p t c y C o urt gra nted P rice
                                                           19 (D.N.J. Dec. 18, 2002). The District
Waterhouse’s motion to dismiss for lack of
                                                           Court held “the terms on which the
subject matter jurisdiction finding there
                                                           Litigation Trust was created and its
was no “related to” or “core” jurisdiction.
                                                           practical role in the Plan lead to the
Binder v. Price Waterhouse & Co. (In re
                                                           conclusion that claims arising from
Resorts Int’l, Inc.), Adv. No. 97-2283, slip
                                                           professional misconduct in the Trust’s
op. at 22, 30, 35 (Bankr. D.N.J. Jan. 4,
                                                           affairs are sufficiently related to the
2002). Disagreeing with the Trustee that
                                                           bankruptcy case to be within the
this was a “core” proceeding, the
                                                           jurisdiction of the Bankruptcy Court.” Id.
Bankruptcy Court characterized the matter
                                                           at 7. The Court explained:
as a post-confirmation dispute between
two non-debtors involving state law claims                        [C]onfirmation did not
that did not affect the “administration of                        terminate the estate with
the estate, property of the estate, or                            respect to the property
liquidation of assets of the estate.” Id. at                      vested in the Litigation
21. Although finding its post-confirmation                        Trus t; and th e Trust
jurisdiction to be “extremely limited,” the                       r e p r e se n t e d a p a r t i a l
Bankruptcy Court recognized that it                               continuation of the estate.
retained post-confirmation jurisdiction                           Consequently,               the
over disputes that potentially “affect the                        j u r i s d ic t i o n o f t h e
s u c c e s s f u l i m p l e m e n t a t io n a n d              bankru ptcy court over
consummation of the plan.” Id. at 28                              proceedings arising from the

                                                       5
       affairs of the Litigation                    Court’s order under 28 U.S.C. § 158. We
       Trust is not substantially                   have jurisdiction under 28 U.S.C. §
       different from its                           1292(b). Our review of the District
       jurisdiction over similar                    Court’s order on jurisdiction is de novo.
       matters pre-confirmation,                    Resolution Trust Corp. v. Swedeland Dev.
       and it should have the power                 Group (In re Swedeland Dev. Group), 16
       to hear claims of                            F.3d 552, 559 (3d Cir. 1994).4
       professional malpractice in
                                                                         II.
       the administration of the
       Trust.                                              Both the Reorganization Plan and
                                                    Litigation Trust Agreement contain
Id. at 12. But in light of the “uncertainties
                                                    retention of jurisdiction provisions.
surrounding the exercise of Bankruptcy
                                                    Article XI of the Plan provides in part:
Court jurisdiction post-confirmation,” the
District Court certified its ruling for                    The Bankruptcy Court will
immediate appeal under 28 U.S.C. §                         retain jurisdiction of the
1292(b). Id. at 17-18. Price Waterhouse                    Reorganizing Cases for the
petitioned for leave to appeal. The Trustee                following purposes: . . . (c)
chose not to contest the petition. We                      To ensure that the
granted leave to appeal.                                   distribution of Holders of
                                                           Claims and Interests are
        Price Waterhouse claims the
                                                           [sic ] a c c omplished as
District Court erred in upholding “related
                                                           provided herein; . . . (h) To
to” bankruptcy jurisdiction because there
                                                           hear and determine disputes
can be no conceivable effect on the
                                                           arising in connection with
administration of the estate. Furthermore,
                                                           the     Plan      or      its
it contends, the District Court’s judgment,
                                                           implementation including
if permitted to stand, threatens unending
                                                           disputes arising under
jurisdiction in the Bankruptcy Court well
                                                           agreements, documents or
after dissolution of the debtor’s estate.
                                                           instrument executed in
The Trustee counters that this professional
                                                           connection with this Plan; .
malpractice cause of action involves
                                                           . . (i) To construe and to
parties, assets, and issues central to the
                                                           take any action to enforce
Reorganization Plan and is “related to” the
bankruptcy, especially given the sweeping
jurisdictional retention provisions in the             4
                                                         We agree with the District Court that
Plan and Litigation Trust Agreement.
                                                    the challenge is a facial attack regarding an
       The jurisdiction of the Bankruptcy           issue of law rather than a factual attack
Court is at issue. The District Court had           and accordingly will assume the truth of
jurisdiction to review the Bankruptcy               the allegations in the Complaint. See
                                                    Binder, No. 02-1333, slip op. at 7-8.

                                                6
       the Plan and issue such                    according to the Agreement was “not only
       orders as may be necessary                 comprehensive it was exclusive.”
       for the implementation,                    Appellee’s Br. at 9 (emphasis in original).
       e x e c u t i o n ,      a n d
                                                            Retention of jurisdiction provisions
       consummation of the Plan; .
                                                  will be given effect, assuming there is
       . . (o) To hear and determine
                                                  bankruptcy court jurisdiction. But neither
       any other matters not
                                                  the bankruptcy court nor the parties can
       inconsistent with Chapter 11
                                                  write their own jurisdictional ticket.
       of the Bankruptcy Code.
                                                  Subject matter jurisdiction “cannot be
Article VIII of the Litigation Trust              conferred by consent” of the parties.
Agreement provides:                               Coffin v. Malvern Fed. Sav. Bank, 90 F.3d
                                                  851, 854 (3d Cir. 1996). Where a court
       The Bankruptcy Court shall
                                                  lacks subject matter jurisdiction over a
       retain exclusive jurisdiction
                                                  dispute, the parties cannot create it by
       over the Litigation Claims
                                                  a g r e e m e n t e v e n i n a p l a n of
       and Counterclaims, the
                                                  reorganization. In re Continental Airlines,
       Trust, the Trustee, and the
                                                  Inc., 236 B.R. 318, 323 (Bankr. D. Del.
       Trust Assets, as provided for
                                                  1999), aff’d, 2000 WL 1425751 (D. Del.
       in the Plan, including,
                                                  September 12, 2000), aff’d, 279 F.3d 226
       without limitation, the
                                                  (3rd Cir. 2002). Similarly, if a court lacks
       d e t e r m i n at i o n o f a l l
                                                  jurisdiction over a dispute, it cannot create
       controversies and disputes
                                                  that jurisdiction by simply stating it has
       a r i si n g u n d e r o r i n
                                                  jurisdiction in a confirmation or other
       connection with this Trust
                                                  order. Id.; accord United States Trustee v.
       Agreement.
                                                  Gryphon at the Stone Mansion, 216 B.R.
        The Trustee contends these                764, 769 (W.D. Pa. 1997) (“A retention of
provisions confer bankruptcy court                jurisdiction provision within a confirmed
jurisdiction over this dispute because the        plan does not grant a bankruptcy court
Litigation Trust Agreement falls within the       jurisdiction.”), aff’d, 166 F.3d 552 (3d Cir.
definition of agreements, documents, or           1999). Bankruptcy courts can only act in
instruments executed in connection with           proceedings within their jurisdiction.
the Plan.      Furthermore, the Trustee           Donaldson v. Bernstein, 104 F.3d 547, 552
contends the dispute involves the                 (3d Cir. 1997). If there is no jurisdiction
performance of professionals whose                under 28 U.S.C. § 1334 or 28 U.S.C. §
retention was mandated and whose duties           157, retention of jurisdiction provisions in
were specified by the Litigation Trust            a plan of reorganization or trust agreement
Agreement. The Trustee stresses that,             are fundamentally irrelevant. But if there
under the Agreement, the Bankruptcy               is jurisdiction, we will give effect to
Court’s retention over any dispute                retention of jurisdiction provisions.


                                              7
Consequently, we will examine whether                that any or all cases under title 11 and any
this dispute falls within the Bankruptcy             or all proceedings arising under title 11 or
Court’s subject matter jurisdiction.                 arising in or related to a case under title 11
                                                     shall be referred to the bankruptcy judges
                     III.
                                                     for the district.” Id. The district courts’
       Congress has vested “limited                  power to refer is discretionary, but courts
authority” in bankruptcy courts. Bd. of              “routinely refer” most bankruptcy cases to
Governors v. MCorp Fin., Inc., 502 U.S.              the bankruptcy court. Torkelsen v. Maggio
32, 40 (1991). Bankruptcy courts fall                (In re Guild & Gallery Plus, Inc.), 72 F.3d
outside of the constitutional authority of           1171, 1175 (3d Cir. 1996).
Article III and derive their authority from
                                                             Bankruptcy court jurisdiction
federal statutes. See N. Pipeline Constr.
                                                     potentially extends to four types of title 11
Co. v. Marathon Pipe Line Co., 458 U.S.
                                                     matters, pending referral from the district
50, 60-87 (1982) (plurality opinion).
                                                     court: “‘(1) cases under title 11, (2)
There are significant restrictions on what
                                                     proceeding arising under title 11, (3)
functions can be constitutionally delegated
                                                     proceedings arising in a case under title
to these courts. See id. at 63-87. “[T]he
                                                     11, and (4) proceedings related to a case
source of the bankruptcy court’s subject
                                                     under title 11.’” In re Guild & Gallery
matter jurisdiction is neither the
                                                     Plus, 72 F.3d at 1175 (quoting In re
Bankruptcy Code nor the express terms of
                                                     Marcus Hook Dev. Park, Inc., 943 F.2d
the Plan. The source of the bankruptcy
                                                     261, 264 (3d Cir. 1991)). Cases under title
court’s jurisdiction is 28 U.S.C. §§ 1334
                                                     11, proceedings arising under title 11, and
and 157.” United States Brass Corp. v.
                                                     proceedings arising in a case under title 11
Travelers Ins. Group, Inc. (In re United
                                                     are referred to as “core” proceedings;
States Brass Corp.), 301 F.3d 296, 303
                                                     whereas proceedings “related to” a case
(5th Cir. 2002).
                                                     under title 11 are referred to as “non-core”
        28 U.S.C. § 1334 grants jurisdiction         proceedings. See 1 Collier on Bankruptcy,
over bankruptcy cases and proceedings to             P3.02[2], at 3-35 (15th ed. rev. 2003).
the district court: the district courts “shall       Congress vested the bankruptcy courts
have original and exclusive jurisdiction of          with full adjudicative power with regard to
all cases under title 11,” and “original but         “core” proceedings, subject to appellate
not exclusive jurisdiction of all civil              review by the district courts. 28 U.S.C. §§
proceedings arising under title 11, or               157(b)(1), 158(a), (c). At the same time, it
arising in or related to cases under title           provided that, for “non-core” proceedings
11.” Id. at (a)-(b). Procedurally, a district        that are otherwise related to a case under
court may refer all cases and proceedings            title 11, the bankruptcy court “shall submit
that fall within this section to the                 proposed findings of fact and conclusions
bankruptcy court. 28 U.S.C. § 157(a)                 of law to the district court” subject to de
provides: “Each district court may provide


                                                 8
novo review by that court. 28 U.S.C. §
157(c)(1).
A. Core Proceedings                                  personal injury tort or
                                                     wrongful death claim s
        28 U.S.C. § 157(b)(1) provides that
                                                     against the estate for
“[b]ankruptcy judges may hear and
                                                     purposes of distribution in a
determine all cases under title 11 and all
                                                     case under title 11; (C)
core proceedings arising under title 11, or
                                                     counterclaims by the estate
arising in a case under title 11, referred
                                                     against persons filing claims
under subsection (a) of this section, and
                                                     against the estate; (D) orders
may enter appropriate orders and
                                                     in respect to obtaining
judgments, subject to review under section
                                                     credit; (E) orders to turn
158 of this title.” Id. 28 U.S.C. §
                                                     over property of the estate;
157(b)(2) provides a non-exhaustive list of
                                                     (F) proceedings to
examples of core proceedings such as
                                                     determine, avoid, or recover
“matters concerning the administration of
                                                     preferences; (G) motions to
the estate,” “orders to turn over property of
                                                     terminate, annul, or modify
the estate,” or “other proceedings affecting
                                                     the automatic stay; (H)
the liquidation of the assets of the estate or
                                                     proceedings to determine,
the adjustment of the debtor-creditor or the
                                                     avoid, or recover fraudulent
equity security holder relationship, except
                                                     conveyances;              (I)
personal injury tort or wrongful death
                                                     determinations as to the
claims.” Id.5 We have held that a core
                                                     dischargeability of particular
                                                     debts; (J) objections to
                                                     discharges;              (K)
      5
      The full list of examples of core              de te r mina tions of th e
proceedings follows:                                 validity, extent, or priority
      (A) matters concerning the                     of liens; (L) confirmations
      administration of the estate;                  of plans; (M ) orders
      (B) allowance             or                   approving the use or lease of
      disallowance of claims                         property, including the use
      against the estate or                          of cash collateral; (N) orders
      exemptions from property of                    approving the sale of
      the estate, and estimation of                  property other than property
      claims or interests for the                    r e sulting f ro m claim s
      purposes of confirming a                       brought by the estate against
      plan under chapter 11, 12, or                  persons who have not filed
      13 of title 11 but not the                     claims against the estate;
      liquidation or estimation of                   and (O) other proceedings
      contingent or unliquidated                     affecting the liquidation of

                                                 9
proceeding under section 157 is one that             “core” proceeding. It is not a proceeding
“‘invokes a substantive right provided by            that invokes a substantive right provided
title 11’” or one that “‘by its nature, could        by title 11 or a proceeding that, by its
arise only in the context of a bankruptcy            nature, could arise only in the context of a
case.’” In re Guild & Gallery Plus, 72               bankruptcy case. In re Guild and Gallery
F.3d at 1178 (quoting In re Marcus Hook,             Plus, 72 F.3d at 1178.
943 F.2d at 267).
                                                             Unlike in Southmark, this claim
        The Trustee argues this matter               arose post-plan confirmation. It does not
qualifies as a “core” proceeding, relying            directly affect the debtor or the liquidation
on Southmark Corp. v. Coopers &                      of the estate’s assets. Furthermore, the
Lybrand (In re Southmark Corp.), 163                 accounting firm’s alleged malpractice in
F.3d 925 (5th Cir. 1999). In Southmark,              Southmark implicated the integrity of the
the court concluded that a debtor’s suit             entire bankruptcy process. Southmark’s
against an accounting firm was a core                bankruptcy arose out of its involvement in
proceeding in bankruptcy, observing that             Drexel Burnham Lambert, Inc.’s ill-fated
the bankruptcy court must be able to                 junk bond investments. Southmark, 163
ensure “that court-approved managers of              F.3d at 927-28. Southmark sought the
the debtor’s estate are performing their             appointment of an accounting firm to
work cons cie n t i o u sl y, a nd cost-             provide an objective, independent
effectively.” Id. at 931. The court also             assessment of potential legal claims
noted that supervising court-appointed               against third-parties. Id. Unbeknownst to
professionals “bears directly on the                 Southmark, Drexel was one of the
distribution of the debtor’s estate. If the          accounting firm’s largest clients. Id. at
estate is not marshaled and liquidated or            927-28. According to Southmark, the
reorganized expeditiously, there will be far         accounting firm committed malpractice by
less money available to pay creditors’               failing to satisfactorily investigate
claims.” Id.                                         potential claims against Drexel.           Id.
                                                     Southmark alleged the accounting firm’s
      Notwithstanding the Trustee’s
                                                     breach of its court-appointed fiduciary
arguments, it is difficult to see how this
                                                     duty prevented the estate from recovering
malpractice matter could be considered a
                                                     from Drexel. Id. at 928. The accounting
                                                     firms’s failure to investigate Drexel
                                                     implicated the core of the bankruptcy
      the assets of the estate or the                process. Its alleged malpractice was
      adjustment of the debtor-                      inseparable from the bankruptcy context.
      creditor or the equity                         Here, Price W aterho use’s a lleged
      security holder relationship,                  malpractice, erroneously reporting that
      except personal injury tort                    certain accrued interest belonged to one
      or wrongful death claims.                      entity rather than to another and
28 U.S.C. § 157(b)(2).

                                                10
committing other errors in auditing and tax         boundaries of “related to” jurisdiction in
advice, even if true, is not a proceeding           Pacor, 743 F.2d at 994.6
that could arise only in the bankruptcy
                                                            Under Pacor, bankruptcy courts
context.
                                                    have jurisdiction to hear a proceeding if
        Regardless, we need not resolve             “the outcome of that proceeding could
whether this is a “core” proceeding for             conceivably have any effect on the estate
subject matter jurisdictional purposes              being administered in bankruptcy.” Id. In
because “[w]hether a particular proceeding          In re Marcus Hook, 943 F.2d 261, we
is core represents a question wholly                emphasized that a key word in this test is
separate from that of subject-matter                “conceivable” and that “[c]ertainty, or
jurisdiction.” In re Marcus Hook, 943               even likelihood, is not a requirement.” Id.
F.2d at 266. Under 28 U.S.C. § 157, a               at 264. In Pacor, we observed: “[T]he
bankruptcy court might have jurisdiction            proceeding need not necessarily be against
over a proceeding but still might not be            the debtor or against the debtor’s property.
able to enter final judgments and orders.           An action is related to bankruptcy if the
Id. Non-core “related to” jurisdiction is           outcome could alter the debtor’s rights,
the broadest of the potential paths to              liabilities, options, or freedom of action
bankruptcy jurisdiction, so we need only            (either positively or negatively) and which
determine whether a matter is at least              in any way impacts upon the handling and
“related to” the bankruptcy. Donaldson,             administration of the bankrupt estate.”
104 F.3d at 552.                                    743 F.2d at 994. The Supreme Court has
                                                    explained that the critical component of
B. Non-Core “Related To” Proceedings
                                                    the Pacor test is that “bankruptcy courts
       1. The Pacor Test
       With “related to” jurisdiction,                  6
                                                          The Supreme Court effectively has
Congress intended to grant bankruptcy
                                                    overruled Pacor with respect to its holding
courts “comprehensive jurisdiction” so
                                                    that the prohibition against review of a
that they could “‘deal efficiently and
                                                    remand order in 28 U.S.C. § 1447(d) is not
expeditiously’” with matters connected
                                                    applicable in a bankruptcy case. See
with the bankruptcy estate. Celotex Corp.
                                                    Things Remembered, Inc. v. Petrarca, 516
v. Edwards, 514 U.S. 300, 308 (1995)
                                                    U.S. 124 (1995). But Things Remembered
(quoting Pacor, Inc. v. Higgins, 743 F.2d
                                                    does not disturb the authority of Pacor on
984, 994 (3d Cir. 1984)). Nonetheless, a
                                                    the points for which we cite it. In fact, the
bankruptcy court’s “related to” jurisdiction
                                                    Pacor test “has been enormously
“cannot be limitless.” Id. We set forth the
                                                    influential” as a “cogent analytical
seminal test for determining the
                                                    framework” relied upon by our sister
                                                    circuits more than any other case in this
                                                    area of the law. In re Guild & Gallery
                                                    Plus, 72 F.3d at 1181.

                                               11
have no jurisdiction over proceedings that                      confirmation of a reorganization plan,
have no effect on the estate of the debtor.”                    retention of bankruptcy jurisdiction may be
Celotex, 514 U.S. at 308 n.6.                                   problematic. See Bank of La. v. Craig’s
                                                                Stores of Tex., Inc. (In re Craig’s Stores of
          2. T h e  Post-Co nfirm atio n
                                                                Tex., Inc.), 266 F.3d 388, 391 (5th Cir.
             Context of the “Related To”
                                                                2001); In re Fairfield Cmtys., Inc., 142
             Inquiry
                                                                F.3d 1093, 1095-96 (8th Cir. 1998). This
        As noted, Pacor and its progeny                         is so because, under traditional Pacor
provide the analytical framework for                            analysis, bankruptcy jurisdiction will not
determining “related to” jurisdiction. But                      extend to a dispute between non-debtors
most of the cases decided under Pacor do                        unless the dispute creates “the logical
not arise post-confirmation or even after                       possibility that the estate will be affected.”
the creation of a litigation trust. Litigation                  In re Federal-Mogul Global, Inc., 300
trusts, which serve a valid purpose in the                      F.3d 368, 380 (3d Cir. 2002) (internal
bankruptcy process, may continue long                           quotations omitted), cert. denied 537 U.S.
after a reorganization plan has been                            1148 (2003). At the most literal level, it is
confirmed and the debtor has emerged                            impossible for the bankrupt debtor’s estate
from bankruptcy. And yet bankruptcy                             to be affected by a post-confirmation
jurisdiction may still obtain if there is                       dispute because the debtor’s estate ceases
sufficient connection to the bankruptcy.                        to exist once confirmation has occurred.
                                                                See In re Fairfield Cmtys., 142 F.3d at
        The post-confirmation context of
                                                                1095 (holding that once a bankrupt
this dispute affects our “related to” inquiry
                                                                debtor’s plan has been confirmed the
because bankruptcy court jurisdiction
                                                                debtor’s estate ceases to exist). Unless
“must be confined within appropriate
                                                                otherwise provided by the plan or order
limits and does not extend indefinitely,
                                                                confirming the plan, “the confirmation of
particularly after the confirmation of a
plan and the closing of a case.”
Donaldson, 104 F.3d at 553. 7 After
                                                                litigation trusts. See H & L Developers v.
                                                                Arvida/JMB Partners (In re H & L
      7
         The District Court recognized that                     Developers), 178 B.R. 71, 76 (Bankr. E.D.
“special considerations dictate that the                        Pa. 1994) (“[O]nce a plan has been
application of the Pacor test provides                          confirmed, the court’s jurisdiction begins
jurisdiction over a narrower range of cases                     to weaken.”) (internal quotations omitted);
post-confirmation than pre-confirmation.”                       Eastland Partners Ltd. v. Brown (In re
Binder, No. 02-1333, slip op. at 10. Other                      Eastland Partners Ltd.), 199 B.R. 917,
courts have also recognized how                                 919-20 (Bankr. E.D. Mich. 1996)
c o n f i r m a ti o n a f f e c t s b a n k r u p t c y        (“Following confirmation of a chapter 11
jurisdiction, though they have not                              debtor’s plan, a bankruptcy court has a
specifically done so in cases involving                         fairly narrow jurisdiction.”).

                                                           12
a plan vests all of the property of the              the bankruptcy court. See Gryphon, 166
estate” in the reorganized debtor. 11                F.3d at 555-56 (holding that the
U.S.C. § 1141(b). See also NVF Co. v.                bankruptcy court had post-confirmation
New Castle County, 276 B.R. 340, 348 (D.             jurisdiction because a trustee’s action to
Del. 2002) (holding that the confirmation            enforce a fee provision was related to and
of a plan revests the estate’s property in           arising in the bankruptcy); Donaldson, 104
the reorganized debtor, and accordingly,             F.3d at 552-54 (upholding post-
the bankruptcy estate “no longer existed”),          confirmation bankruptcy court jurisdiction
aff’d 2003 WL 328428 (3d Cir. Jan. 21,               where the debtors failed to fund the
2003).                                               reorganization plan and failed to pay
                                                     unsecured creditors as required by the
        But courts do not usually apply
                                                     plan). And courts have upheld post-
Pacor’s “effect on the bankruptcy estate”
                                                     confirmation jurisdiction in situations
test so literally as to entirely bar post-
                                                     involving trusts and similar entities. See
confirmation bankruptcy jurisdiction. As
                                                     Bergstrom v. Dalkon Shield Claimants
the District Court correctly noted, though
                                                     Trust (In re A.H. Robins Co.), 86 F.3d 364,
the scope of bankruptcy court jurisdiction
                                                     372-73 (4th Cir. 1996) (upholding
diminishes with plan confirmation,
                                                     bankruptcy jurisdiction over a professional
bankruptcy court jurisdiction does not
                                                     fees dispute between a claimants’ trust and
disappear entirely. Binder, No. 02-1333,
                                                     attorneys representing claimants on the
slip op. at 9.             Post-confirmation
                                                     trust).8
jurisdiction is assumed by statute and rule:
11 U.S.C. § 1142(b) authorizes the
bankruptcy court to “direct the debtor and
                                                         8
any other necessary party . . . to perform                 Other courts have also upheld post-
any other act . . . that is necessary for the        confirmation bankruptcy jurisdiction over
consummation of the plan,” id., and Fed.             continuing trusts. See New Nat’l Gypsum
R. Bankr. P. 3020(d) provides that                   Co. v. Nat’l Gypsum Co. Settlement Trust
“[n]otwithstanding the entry of the order            (In re Nat’l Gypsum Co.), 219 F.3d 478,
of confirmation, the court may issue any             479, 493 (5th Cir. 2001) (assuming
other order necessary to administer the              bankruptcy court jurisdiction over a post-
estate.” Id. Although § 1142(b) assumes              confirmation proceeding involving a
that post-confirmation jurisdiction exists           settlement trust where the court had to
for disputes concerning the consummation             interpret the plan of reorganization in
of a confirmed plan, 28 U.S.C. § 1334                order to resolve a dispute); Plotner v.
remains the source of this jurisdiction. In          AT&T Corp., 224 F.3d 1161, 1171 (10th
re United States Brass Corp., 301 F.3d at            Cir. 2000) (holding that a post-
306.                                                 confirmation fraud action involving a plan-
                                                     created trust was related to the bankruptcy
       Moreover, several courts have
                                                     proceeding); United States v. Unger, 949
preserved post-confirmation jurisdiction in
                                                     F.2d 231, 233-35 (8th Cir. 1991) (holding

                                                13
       Courts have applied varying                 determine the “precise standard” to apply
standards to determine whether “related            post-confirmation. First W. SBLC, Inc. v.
to” jurisdiction should be upheld post-            Mac-Tav, Inc., 231 B.R. 878, 882 (D.N.J.
confirmation. We noted in Donaldson,               1999). Subsequently, in Gryphon, 166
104 F.3d 547, that some courts have held
that the act of plan confirmation changes
the Pacor test from “whether the outcome
                                                   with the Bankruptcy Court to the extent
of the proceeding could conceivably have
                                                   that those disputes might affect the
any effe ct on th e estate bein g
                                                   s u c c e s s fu l im p l e m e n t a ti o n a nd
administered” to “whether the outcome
                                                   consummation of the confirmed plan.”);
could ‘significantly affect[] consummation
                                                   Eubanks v. Esenjay Petroleum Corp., 152
of the plan as confirmed.’” Id. at 553
                                                   B.R. 459, 464 (E.D. La. 1993)
(quoting Grimes v. Graue (In re Haws),
                                                   (Bankruptcy courts maintain jurisdiction if
158 B.R. 965, 970 (Bankr. S.D. Tex.
                                                   the proceeding has “a conceivable effect
1993)). 9 In Donaldson, we declined to
                                                   on the debtor’s ability to consummate the
                                                   confirmed plan.”). Some courts have been
a bankruptcy court had post-confirmation           reluctant to apply such a broad standard
jurisdiction when a representative of the          post-confirmation but have nonetheless
creditors committee deposited trust funds          found that bankruptcy court jurisdiction
into his personal account in contravention         continues post-confirmation. See In re
of the plan); Mayor v. W. Va. (In re Eagle-        Craig’s Stores of Tex., 266 F.3d at 391
Picher Indus., Inc.), 285 F.3d 522, 524            (holding that a bankruptcy court has
(6th Cir. 2002) (assuming without analysis         jurisdiction over a civil proceeding if the
post-confirmation bankruptcy jurisdiction          litigated matter “bear[s] on the
over a dispute involving a settlement              interpretation or execution of the debtor’s
trust).                                            plan”); I n re Dilbert’s Qu ality
                                                   Supermarkets, Inc., 368 F.2d 922, 924 (2d
  9
    Other courts have applied similar tests        Cir. 1966) (holding that bankruptcy court
that assess whether the dispute could              jurisdiction continues post-confirmation at
conceivably affect the implementation or           least “to protect its decree, to prevent
consummation of the confirmed plan. See            interference with the execution of the plan
Trans World Airlines, Inc. v. Karabu               and to aid otherwise in its operation”); In
Corp., 196 B.R. 711, 714 (Bankr. D. Del.           re Leeds Bldg. Prod., Inc., 160 B.R. 689,
1996) (“[T]his court has subject matter            691 (Bankr. N.D. Ga. 1993) (concluding
jurisdiction over any proceeding that              that the bankruptcy court’s role post-
conceivably could affect [the debtor’s]            confirmation “is limited to matters
ability to consummate the confirmed                involving the execution, implementation,
plan.”); In re Walker, 198 B.R. 476, 482           or interpretation of the plan’s provisions,
(Bankr. E.D. Va. 1996) (“Jurisdiction over         and to disputes requiring the application of
certain post-confirmation disputes remains         bankruptcy law”).

                                              14
F.3d 552, we applied the Pacor test to               jurisdiction, we found significant the fact
resolve a claim for post-confirmation fees           that the case did “not involve a dispute
brought by a United States Trustee,                  essentially collateral to the bankruptcy
querying whether the dispute “could                  case.” Id. Rather, the action “implicat[ed]
conceivably have any effect on the estate            the integrity of the bankruptcy process”
being administered in bankruptcy” and                because one party’s actions impaired the
holding that the matter satisfies the Pacor          other party’s ability to act in accordance
test “because it directly relates to the             with the plan. Id. The post-confirmation
debtor’s liabilities— in fact it creates a           fee dispute in Gryphon, 166 F.3d 552, also
liability—and could impact the handling              had a close nexus to the bankruptcy
and administration of the estate.” Id. at            proceeding because it involved a U.S.
556. And in Gryphon, we held that though             Trustee’s action to enforce a post-
11 U.S.C. § 114210 provides that the                 confirmation fee provision and created a
bankruptcy court may take action to ensure           liability for the debtor. Id. at 555. At the
the consummation of a confirmed plan, the            post-confirmation stage, the claim must
bankruptcy court may entertain other post-           affect an integral aspect of the bankruptcy
confirmation actions as well. 166 F.3d at            process— there must be a close nexus to
556.                                                 the bankruptcy plan or proceeding.
       Though courts have varied the                         Whether a matter has a close nexus
standard they apply post-confirmation, the           to a bankruptcy plan or proceeding is
essential inquiry appears to be whether              particularly relevant to situations involving
there is a close nexus to the bankruptcy             continuing trusts, like litigation trusts,
plan or proceeding sufficient to uphold              where the plan has been confirmed, but
bankruptcy court jurisdiction over the               former creditors are relegated to the trust
matter. For example, in Donaldson, 104               res for payment on account of their claims.
F.3d 547, we upheld bankruptcy court                 To a certain extent, litigation trusts by their
jurisdiction because the trustee through the         nature maintain a connection to the
lawsuit was “basically . . . seeking to carry        bankruptcy even after the plan has been
out the intent of the reorganization plan.”          confirmed. The question is how close a
Id. at 553. We distinguished the matter              connection warrants post-confirmation
from other cases denying jurisdiction                bankruptcy jurisdiction.        Matters that
because it had a “much closer nexus to the           affect the interpretation, implementation,
bankruptcy case.” Id. In upholding                   con s u m m a t i o n , e x e c u t io n , or
                                                     administration of the confirmed plan will
                                                     typically have the requisite close nexus.
    10
     11 U.S.C. § 1142(b) authorizes the              Under those circumstances, bankruptcy
bankruptcy court to “direct the debtor and           court jurisdiction would not raise the
any other necessary party . . . to perform           specter of “unending jurisdiction” over
any other act . . . that is necessary for the        continuing trusts.
consummation of the plan.” Id.

                                                15
        An example of a dispute in which              jurisdiction, the court explained why the
there was a sufficiently close nexus to the           dispute was central to the bankruptcy
plan or proceeding to uphold bankruptcy               proceeding: “The Trust was created to
court jurisdiction post-confirmation was an           protect and pay those persons who had
earlier proceeding involving the Resorts              been damaged by use of the Dalkon
International, Inc. bankruptcy. See In re             Shield. The efforts of the Trust to settle
Resorts Int’l, 199 B.R. 113. There, unlike            the remaining claims could easily be
here, the Bankruptcy Court was required to            affected if the remaining claimants are
construe and enforce provisions of the                aware that any attorneys’ fees out of the
Plan to resolve a post-confirmation dispute           pro rata distribution will be limited to ten
over whether the Litigation Trust or the              percent.” Id. at 372. Accordingly, the
debtor was entitled to accrued interest. Id.          dispute integrally affected the bankruptcy
at 120-25. The court correctly held that it           plan and proceeding, and it was
retained jurisdiction to enter appropriate            appropriate for the district court, sitting in
orders to enforce the intent and specific             bankruptcy, to exercise jurisdiction over
provisions of the Plan. Id. at 118-19.                that proceeding.
            Bergstrom, 86 F.3d 364, and Falise                In contrast, this kind of close nexus
v. Am. Tobacco Co., 241 B.R. 48                       to the bankruptcy plan or proceeding was
(E.D.N.Y. 1999), are useful for illustrating          absent in Falise, 241 B.R. 48. Falise
when there is a sufficiently close nexus to           involved a dispute between tobacco
the bankruptcy plan or proceeding to                  manufacturers and a trust created as a
uphold bankruptcy jurisdiction in post-               result of the bankruptcy of an asbestos
c o n f i r m a tion situations invo lv ing           products producer. Id. at 51. The trust
continuing trusts. In Bergstrom, 86 F.3d              sought to recover from the tobacco
364, the dispute implicated an integral               companies for their role in contributing to
aspect of the bankruptcy process. The                 asbestos-related illnesses. Id. Noting that
plan-created trust intended to distribute             the resolution of the dispute would require
surplus funds to tort claimants on a pro              more than merely interpreting the plan’s
rata basis. Id. at 367. But certain                   terms, the court held that bankruptcy court
attorneys claimed entitlement to contingent           jurisdiction does not extend to a “major
fees. Id. The district court, sitting in              suit” brought by the trust against non-
bankruptcy, limited attorneys’ fees to ten            parties to the bankruptcy or to any closely
percent of the amounts distributed. Id. To            related proceeding. Id. at 52, 55. In
resolve the dispute, it was necessary to              Falise, the resolution of the dispute would
interpret the pla n’s accom panying                   have had no impact on any integral aspect
documents to determine whether it was                 of the bankruptcy plan or proceeding.
unreasonable to charge standard attorneys’            Accordingly, it was appropriate to find no
fees out of the pro rata distribution. See            bankruptcy jurisdiction over that collateral
id. at 368-71. In upholding “related to”              matter.


                                                 16
        In re Haws, 158 B.R. 965, similarly          They brought suit, alleging Montana
illustrates when a proceeding lacks a                breached the agreement by hiring a
sufficiently close nexus to the bankruptcy           competitor to perform the reclamation
plan or proceeding to uphold post-                   work. Id. The court upheld bankruptcy
confirmation jurisdiction.        There, the         court jurisdiction because RSC’s failure,
action was brought by a trustee for a                and its inability to retain the debtors’
liquidating trust against a partner of the           employees on account of Montana’s
debtor for breach of fiduciary duty. Id. at          breach, “undermine[d] the Plan’s
967-68. In holding the matter to be                  objectives for reorganization and the
outside bankruptcy court jurisdiction, the           payment of creditors.” Id. at 233-35. The
court noted the plaintiff had failed to              court held that the “facts demonstrate the
demonstrate how any damages recovered                necessary close nexus between appellees’
from the defendant were “necessary to                tort and contract claims and the bankruptcy
effectuate the terms of the” plan. Id. at            proceeding.” Id. at 235.
971. The court recognized that “[n]owhere
                                                             As stated, the jurisdiction of the
in the lawsuit is the bankruptcy court being
                                                     non-Article III bankruptcy courts is limited
asked to construe or interpret the
                                                     after confirmation of a plan. But where
confirmed plan or to see that federal
                                                     there is a close nexus to the bankruptcy
bankruptcy laws are complied with in the
                                                     plan or proceeding, as when a matter
face of violations.” Id. It concluded: “The
                                                     affects the interpretation, implementation,
only nexus to this bankruptcy case is that
                                                     consummation, exe cutio n, or
the plaintiff in this matter is a liquidating
                                                     administration of a confirmed plan or
trustee representing a group of creditors
                                                     incorporated litigation trust agreement,
appointed pursuant to the confirmed plan
                                                     retention of post-confirmation bankruptcy
of reorganization.” Id.
                                                     court jurisdiction is normally appropriate.
        Montana v. Goldin (In re Pegasus
                                                                         IV.
Gold Corp.), 296 B.R. 227 (D. Nev. 2003),
is also instructive. A reclamation services                 We now assess whether the
corporation (“RSC”) was created under a              Bankruptcy Court can exercise “related to”
reorganization plan for the purpose of               jurisdiction over these malpractice claims.
performing short-term reclamation work               As noted, the Trustee’s principal allegation
“in order to benefit the overall Plan goal of        was that Price Waterhouse erroneously
preserving the jobs of Debtors’ employees            reported in its audit reports that accrued
to thereby maximize the possibility of               interest on Litigation Trust accounts
creditor recovery.” Id. at 231. The                  belonged to the debtor rather than to the
Trustee and RSC contended the state of               Litigation Trust. The Trustee also alleged
Montana had represented that RSC would               other errors in auditing and tax advice.
be given preference in the bidding for               Price Waterhouse’s errors, according to
long-term reclamation work. Id. at 232.


                                                17
the Trustee, constituted professional                         The Trustee argues the estate is
negligence and breach of contract.                    affected because the Litigation Trust is a
                                                      continuation of the estate. The District
       The Trustee has made several
                                                      Court agreed, reasoning that the affairs of
arguments why the malpractice claims are
                                                      post-confirmation trusts are “effectively
sufficiently connected to the bankruptcy
                                                      those of the estate (or at least analogous to
process to uphold bankruptcy court
                                                      those of the estate) for jurisdictional
jurisdiction: the claims affect the
                                                      purposes.” Binder, No. 02-1333, slip op.
Litigation Trust, which is a continuation of
                                                      at 12-13. Though the Litigation Trust’s
the estate; the claims affect the debtor; the
                                                      assets, the proceeds from the litigation
claims affect the operation of the
                                                      claims, were once assets of the estate, that
Reorganization Plan; the claims affect the
                                                      alone does not create a close nexus to the
former creditors as beneficiaries of the
                                                      bankruptcy plan or proceeding sufficient to
Litigation Trust; and the jurisdictional
                                                      confer bankruptcy jurisdiction.          The
retention provisions confer continued
                                                      Litigation Trust’s connection to the
jurisdiction. The jurisdictional import of
                                                      bankruptcy is not identical to that of the
these arguments is not easily resolved.
                                                      estate. Under section 1.1 of the Litigation
          Nonetheless, we believe this                Trust, the debtor “absolutely assigned to
proceeding lacks a close nexus to the                 the Trustee and to its successors and
bankruptcy plan or proceeding and affects             assigns, all right, title and interest of the
only matters collateral to the bankruptcy             Reorganizing Entities in and to the
process.           The resolution of these            Litigation Claims.”          Moreover, the
malpractice claims will not affect the                Litigation Trust was created in part so that
estate; it will have only incidental effect on        the Plan could be confirmed and the debtor
the reorganized debtor; it will not interfere         freed from bankruptcy court oversight
with the im plem entatio n of the                     without waiting for the resolution of the
Reorganization Plan; though it will affect            litigation claims. The deliberate act to
the former creditors as Litigation Trust              separate the litigation claims from the
beneficiaries, they no longer have a close            bankruptcy estate weakens the Trustee’s
nexus to bankruptcy plan or proceeding                claim that the Litigation Trust has the
because they exchanged their creditor                 same jurisdictional nexus as that of the
status to attain rights to the litigation             estate. Given the limited jurisdiction of
claims; and as stated, the jurisdictional             non-Article III bankru ptcy cou rts,
retention plans cannot confer jurisdiction            jurisdiction does not extend necessarily to
greater than that granted under 28 U.S.C.             all matters involving litigation trusts.
§ 1334 or 28 U.S.C. § 157. For these
                                                             The Trustee also contends the
reasons, the malpractice claims here lack
                                                      resolution of the malpractice claim will
the requisite close nexus to be within the
                                                      affect the debtor, Resorts International,
B a n k r u p t c y C ourt’s “related to”
                                                      Inc. The debtor is not a party to this
jurisdiction post-confirmation.

                                                 18
litigation because, as stated, under section        “essential to the integrity of the Plan and
1.1 of the Litigation Trust Agreement, it           its implementation.” Appellee’s Br. at 2.
assigned away its right, title, and interest        We disagree. It is true that accounting
in the litigation claims. But the Trustee           services are essential in administering
argues Resorts would still be affected by           trusts, and in certain circumstances,
this dispute because it “is claiming to be a        accounting errors could have a sufficiently
continuing creditor of the estate” due to           close nexus to the bankruptcy plan or
the litigation over the accrued interest.           proceeding to warrant exercising “related
Oral Argument Transcript at 32. Should              to” jurisdiction post-confirmation. But the
Resorts prevail in that ongoing dispute,11          resolution of the claims here will have no
the Trustee contends Resorts may have a             substantial effect on the success of the
claim against the Litigation Trust, and an          Plan.
award in the malpractice action could be
                                                            Resolution of this matter will not
distributed back to Resorts to pay on that
                                                    require a court to interpret or construe the
claim. Such attenuated effect on the
                                                    Plan or the incorporated Litigation Trust
reorganized debtor does not create a close
                                                    Agreement. Whether Price Waterhouse
nexus to the bankruptcy plan or proceeding
                                                    was negligent or breached its contract will
sufficient to confer bankruptcy court
                                                    not be determined by reference to those
jurisdiction. After assigning away its
                                                    documents. There is no dispute over their
right, title, and interest in the Litigation
                                                    intent.      The Trustee’s claims are
Trust’s litigation claims, the reorganized
                                                    “ordinary” professional negligence and
debtor would have no greater claim to the
                                                    breach of contract claims that arise under
proceeds from this malpractice action than
                                                    state common law. Though the Plan and
any other Litigation Trust creditor. Any
                                                    Trust Agreement provide the context of
funds eventually received by the debtor as
                                                    the case, this bare factual nexus is
a result of the malpractice dispute would
                                                    insuf ficie nt to con fer ba nkru ptcy
be incidental to the bankruptcy process.
                                                    jurisdiction.
      The Trustee maintains that
                                                            The malpractice action could result
continuing jurisdiction over the matter is
                                                    in an increase in the Litigation Trust’s
                                                    finite assets. But the potential to increase
    11                                              assets of the Litigation Trust and its
      Even though the Bankruptcy Court
                                                    beneficiaries does not necessarily create a
resolved the interest dispute in In re
                                                    close nexus sufficient to confer “related
Resorts Int’l, 199 B.R. 113, according to
                                                    to” bankruptcy court jurisdiction post-
the Trustee’s Complaint, the dispute is
                                                    confirmation. The Trust beneficiaries here
“ongoing” because Resorts International,
                                                    no longer have the same connection to the
Inc. and the Litigation Trust “remain
                                                    bankruptcy proceeding as when they were
engaged in negotiations over the form of
                                                    creditors of the estate. For reasons they
the order and settlement of other issues.”
                                                    believed financially prudent, they traded
Joint Appendix at 76.

                                               19
their creditor status as claimants to gain                                   V.
rights to the Litigation Trust’s assets.
                                                                For these reasons, there is no
Thus, their connection to the bankruptcy
                                                         “related to” jurisdiction over the
plan or proceeding is more attenuated.
                                                         malpractice dispute, and it cannot find a
Furthermore, if the mere possibility of a
                                                         home in the Bankruptcy Court. We will
gain or loss of trust assets sufficed to
                                                         reverse the order of the District Court and
confer bankruptcy court jurisdiction, any
                                                         remand for proceedings consistent with
lawsuit involving a continuing trust would
                                                         this opinion.
fall under the “related to” grant. Such a
result would widen the scope of
bankruptcy court jurisdiction beyond what
Congress intended for non-Article III
bankruptcy courts.           Accord ingly,
resolution of these malpractice claims will
n o t a f f e c t th e i n t er p r e ta t i o n,
implementation, consummation, execution,
or administration of the Plan.12


    12
      Price Waterhouse argues the matter
turns in part on the fact that it was not
explicitly named in the Litigation Trust
Agreement or the Reorganization Plan and
that the Bankruptcy Court did not approve
its retention or dismissal.      In some
circumstances, these factors may affect the
jurisdictional inquiry. But they are not
significant here.
        Price Waterhouse also argues the
lapse of time since confirmation factors
against bankruptcy jurisdiction.      The
Bankruptcy Court issued an Order
confirming the Plan on August 28, 1990.
The Trustee filed this malpractice action                belonged to the Debtor in 1992.
on April 15, 1997. The Trustee responds                  Appellee’s Br. at 12-13. Though in some
that Price Waterhouse’s malpractice                      circumstances, the lapse of time since
“began barely after the ink dried on the                 confirmation may be relevant to whether a
confirmation order,” and notes that Price                matter has a “close nexus” to a bankruptcy
Waterhouse released its allegedly                        plan or proceeding, we do not find it to be
erroneous report that the interest income                so here.

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