                                                            FILED
                                                             SEP 23 2013
 1                                                       SUSAN M. SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 2                                                         OF THE NINTH CIRCUIT


 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )       BAP No.    MT-13-1097-TaPaJu
                                   )
 6   JOHN PATRICK STOKES,          )       Bk. No.    09-60265-RBK
                                   )
 7                  Debtor.        )       Adv. No.   12-00052-RBK
     ______________________________)
 8                                 )
     JOHN PATRICK STOKES,          )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )       MEMORANDUM*
11                                 )
     GREGORY W. DUNCAN;            )
12   KATHLEEN M. GLOVER,           )
                                   )
13                  Appellees.     )
                                   )
14
                     Argued and Submitted on July 25, 2013
15                              at Butte, Montana
16                         Filed - September 23, 2013
17             Appeal from the United States Bankruptcy Court
                         for the District of Montana
18
         Honorable Ralph B. Kirscher, Bankruptcy Judge, Presiding
19
20   Appearances:     Edward Albert Murphy of Murphy Law Offices, PLLC
                      argued for appellant John Patrick Stokes; Denny
21                    Kevin Palmer of McMahon, Wall & Hubley, PLLC
                      argued for appellees Gregory W. Duncan and
22                    Kathleen M. Glover.
23
     Before:   TAYLOR, PAPPAS, and JURY, Bankruptcy Judges.
24
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8013-1.

                                       1
 1                               INTRODUCTION
 2        The bankruptcy court denied debtor and defendant John
 3   Patrick Stokes’ motion seeking to dismiss an adversary proceeding
 4   for lack of subject matter jurisdiction and granted summary
 5   judgment on the merits in favor of plaintiffs Gregory W. Duncan
 6   (“Duncan”) and Kathleen M. Glover (“Glover”) (collectively,
 7   “Appellees”).    The Debtor appeals from both the related order and
 8   judgment.   For the reasons discussed below, we vacate the
 9   bankruptcy court’s order and judgment and remand with
10   instructions to dismiss the adversary proceeding.
11                                   FACTS
12        In February 2009, the Debtor retained Duncan as bankruptcy
13   counsel; Duncan filed a chapter 111 petition on behalf of Debtor
14   the following month.   Duncan neither requested nor received
15   authorization to represent the Debtor in the chapter 11 case.
16   Notwithstanding, the attorney-client relationship between Debtor
17   and Duncan continued, but apparently not smoothly.   Duncan, thus,
18   moved to withdraw as counsel shortly after the petition date; the
19   bankruptcy court granted his request in June of 2009.   Duncan
20   never requested approval of compensation from the bankruptcy
21   court, and there is no evidence that he received payment from
22   estate assets.
23        The Debtor’s bankruptcy case also floundered; eventually the
24   bankruptcy court granted the United States Trustee’s motion and
25
26        1
            Unless otherwise indicated, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532
     (“Code”). “Rule” references are to the Federal Rules of
28   Bankruptcy Procedure.

                                       2
 1   converted the Debtor's bankruptcy case to one under chapter 7.
 2   Richard J. Samson was appointed as the chapter 7 trustee
 3   (“Trustee”).    The Trustee actively administered the case over the
 4   next two years.
 5        On February 28, 2012, while the chapter 7 case was still
 6   pending, the Debtor commenced an action against Duncan and
 7   Glover, Duncan's paralegal, in Montana state court (the “State
 8   Court Action”).   The State Court Action involved claims for legal
 9   malpractice, breach of contract, and breach of fiduciary duty
10   (collectively, “Malpractice Claims”).   After he became aware of
11   this litigation, the Trustee claimed the Malpractice Claims as
12   assets of the Debtor’s estate and obtained a stay of the State
13   Court Action.
14        The Trustee attempted to recover on the Malpractice Claims
15   for the benefit of the estate.   Thus, he agreed to sell the
16   estate’s interest in the Malpractice Claims, if any, to the
17   Debtor.   This would free Debtor to control the State Court Action
18   and would end the dispute between the estate and Debtor over
19   ownership of the claims.   After Trustee filed a notice of intent
20   to sell, however, Duncan and Glover submitted a counter-offer;
21   obviously, they hoped to gain a controlling interest in the
22   Malpractice Claims and, thereby, to terminate the State Court
23   Action.   In response, the Trustee withdrew the notice of intent
24   to sell and, instead, moved for an order establishing bidding
25   procedures in anticipation of an auction; the bankruptcy court
26   granted this motion.
27        The bankruptcy court subsequently approved the sale of the
28   Malpractice Claims by auction (“Sale Order”).   The Sale Order

                                       3
 1   described the assets to be sold as “the estate’s interest, if
 2   any, in the Malpractice Claims.”       It also contained language
 3   protecting the estate from post-sale claims; in particular, it
 4   provided that the sale was “as is, where is” and that “the
 5   Trustee [made] no representations or warranties regarding the
 6   validity or sufficiency of the claims and/or whether the claims
 7   are property of this bankruptcy estate.”       (Dkt# 419) (emphasis
 8   added).   The protective language protected the estate from a
 9   not-so-hypothetical litigation risk as the Debtor asserted that
10   the Malpractice Claims accrued entirely post-petition and that
11   the estate had no interest in them.      No one challenged the Sale
12   Order, and it is now final.
13        At the auction, Duncan submitted the winning bid.       After the
14   sale was finalized, Duncan and Glover commenced an adversary
15   proceeding seeking a declaratory judgment that the Malpractice
16   Claims were property of the estate at the time of Duncan’s
17   purchase (“Declaratory Relief Action”).      Duncan and Glover
18   clearly intended the Declaratory Relief Action to remove any
19   doubt regarding the extent of their interest in the Malpractice
20   Claims and to act as a bar to any resumption of the State Court
21   Action.   Duncan and Glover promptly filed a summary judgment
22   motion (“MSJ”).
23        The Debtor opposed the MSJ, but also moved to dismiss the
24   Declaratory Relief Action based on lack of subject matter
25   jurisdiction (“Dismissal Motion”).      In the Dismissal Motion, he
26   argued that the bankruptcy court no longer had jurisdiction as a
27   result of the sale of the estate’s interest, if any, in the
28

                                        4
 1   Malpractice Claims.2   He bolstered this argument by noting that
 2   the sale was made expressly without warranty of title.
 3        On February 9, 2013, the bankruptcy court entered:    (1) an
 4   order granting the MSJ and denying the Dismissal Motion; (2) an
 5   accompanying memorandum decision; and (3) a declaratory judgment
 6   providing that the Malpractice Claims were property of the estate
 7   and that the Trustee sold them to Duncan pursuant to the Sale
 8   Order.
 9        The Debtor timely appealed from this order and judgment.
10                              JURISDICTION
11        We have jurisdiction over this appeal pursuant to 28 U.S.C.
12   § 158.   We discuss the bankruptcy court's jurisdiction below.
13                                  ISSUE
14        Did the bankruptcy court lack subject matter jurisdiction
15   and, therefore, err when it adjudicated ownership issues related
16   to assets previously sold by the Trustee without warranty of
17   title?
18                           STANDARD OF REVIEW
19        The existence of subject matter jurisdiction is a question
20   of law reviewed de novo.   See Atwood v. Fort Peck Tribal Ct.
21   Assiniboine, 513 F.3d 943, 946 (9th Cir. 2008).     Findings of fact
22   relevant to the bankruptcy court’s determination of subject
23   matter jurisdiction are reviewed for clear error.    See Coyle v.
24   P.T. Garuda Indonesia, 363 F.3d 979, 984 n.7 (9th Cir. 2004).       A
25
26        2
            We exercise our discretion to take judicial notice of
27   documents filed in the underlying bankruptcy case and adversary
     proceeding. See O’Rourke v. Seaboard Sur. Co. (In re E.R.
28   Fegert, Inc.), 887 F.2d 955, 957–58 (9th Cir. 1989).

                                      5
 1   factual finding is clearly erroneous if illogical, implausible,
 2   or without support in the record.       See United States v. Hinkson,
 3   585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).
 4                                  DISCUSSION
 5             The jurisdiction of bankruptcy courts is grounded in, and
 6   limited by, statute.     Kirton v. Valley Health Sys. (In re Valley
 7   Health Sys.), 471 B.R. 555, 563 (9th Cir. BAP 2012) (citation
 8   omitted).     One relevant statute limits bankruptcy jurisdiction to
 9   civil proceedings “arising under” the Bankruptcy Code and
10   “arising in” or “related to” a bankruptcy case.      See 28 U.S.C.
11   § 1334(b); see also 28 U.S.C. § 157(b)(1), (2) (describing “core”
12   bankruptcy proceedings in relation to “arising under” and
13   “arising in” jurisdiction).3     Significantly, this statutory grant
14   of jurisdiction is not exclusive in many respects.      See 28 U.S.C.
15   § 1334(b).     The bankruptcy court also has exclusive jurisdiction
16   over all assets of the debtor and property of the estate.
17   28 U.S.C. § 1334(e)(1).
18         Here we analyze statutory jurisdiction to consider the
19   Declaratory Relief Action against the background of the Sale
20   Order and the subsequent sale of the Malpractice Claims.
21   ///
22   ///
23
           3
24          Jurisdiction is initially conferred on the district
     courts. 28 U.S.C. § 1334. The district courts, in turn, may
25   refer bankruptcy cases and proceedings to the bankruptcy courts.
     28 U.S.C. § 157(a). Although the language in § 157(a) is
26   permissive, “each district court has provided by rule for
27   automatic reference to bankruptcy judges.” 1 Collier on
     Bankruptcy ¶ 3.02[1] (Alan N. Resnick and Henry J. Sommer, eds.,
28   16th ed. 2013).

                                         6
 1   A.   The Sale Of The Malpractice Claims Terminated Jurisdiction
 2        Under 28 U.S.C. § 1334(e)(1).
 3        The bankruptcy court has jurisdiction over all property of a
 4   debtor as of the commencement of a bankruptcy case and all
 5   property of the estate.   28 U.S.C. § 1334(e)(1); see also
 6   H.K. & Shanghai Banking Corp., Ltd. v. Simon (In re Simon),
 7   153 F.3d 991, 996 (9th Cir. 1998) (commencement of a bankruptcy
 8   case gives the court “exclusive in rem jurisdiction over all of
 9   the property in the estate” pursuant to 28 U.S.C. § 1334(e));
10   cf. Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 369 (2006)
11   (“Bankruptcy jurisdiction, as understood today and at the time of
12   the framing, is principally in rem jurisdiction.”) (emphasis in
13   original).   This aspect of bankruptcy jurisdiction is a
14   continuation of the in rem bankruptcy jurisdiction that existed
15   under the Bankruptcy Act of 1898 (“Act”), ch. 541, 30 Stat. 544
16   (1898).
17        It is axiomatic that in rem jurisdiction over an asset
18   terminates once the bankruptcy estate relinquishes all rights and
19   interests in the asset.   See In re Hall's Motor Transit Co.,
20   889 F.2d 520, 522 (3d Cir. 1989) (“The bankruptcy court's
21   jurisdiction does not follow the property, but rather, it lapses
22   when the property leaves the debtor's estate.”); Elscint, Inc. v.
23   First Wis. Fin. Corp. (Matter of Xonics, Inc.), 813 F.2d 127, 131
24   (7th Cir. 1987) (once property of the estate is sold, the
25   bankruptcy court must obtain a new source of federal
26   jurisdiction); see also Gardner v. United States (In re Gardner),
27   913 F.2d 1515, 1518 (10th Cir. 1990) (“A bankruptcy court has
28   jurisdiction over disputes regarding alleged property of the

                                      7
 1   bankruptcy estate at the outset of the case.   When property
 2   leaves the bankruptcy estate, however, the bankruptcy court's
 3   jurisdiction typically lapses, and the property's relationship to
 4   the bankruptcy proceeding comes to an end.”) (citation omitted).
 5        Consequently, as was true under the Act, a bankruptcy court
 6   ordinarily lacks jurisdiction to adjudicate ownership disputes
 7   involving former property of the estate.   See McQuaid v. Owners
 8   of NW 20 Real Estate (Matter of Fed. Shopping Way, Inc.),
 9   717 F.2d 1264, 1272 (9th Cir. 1983) (decided under the Bankruptcy
10   Act)4 (“[W]here property is outside the possession of the
11   bankruptcy court and is held adversely to the trustee, the court,
12   absent consent, has no jurisdiction to adjudicate conflicting
13   claims of title to the property, even where one of the claims is
14   asserted by the trustee himself.”); see also Rodeo Canon Dev.
15   Corp. v. Goodrich (In re Rodeo Canon Dev. Corp.), 392 F. App'x
16   576, 579 (9th Cir. 2010) (citing Matter of Fed. Shopping Way,
17   Inc. and determining that the bankruptcy court lacked
18   jurisdiction to adjudicate ownership of property when the subject
19   property was sold, and, thus, was no longer property of the
20   estate); see also In re Gardner, 913 F.2d at 1519 (also citing
21   Matter of Fed. Shopping Way, Inc. in support of its determination
22   that a bankruptcy court lacks jurisdiction to resolve disputes
23
24        4
            Unless Congress expressly manifests its intent to change
25   well-established judicial interpretation of the bankruptcy laws
     as they existed prior to enactment of the Bankruptcy Code in
26   1978, we must presume that pre-Code interpretations of the Act
27   have survived the enactment. See generally United States v. Ron
     Pair Enter., Inc., 489 U.S. 235, 244–45 (1989); Rodriguez v.
28   United States, 480 U.S. 522, 525 (1987) (per curiam).

                                     8
 1   between third-parties as to non-estate property).
 2           Federal Shopping Way involved most directly a bankruptcy
 3   court’s injunction barring state court action under facts very
 4   similar to those in this case.    There, the trustee sold property,
 5   but the deed and order did not convey more than whatever the
 6   trustee had and did not decide title questions.       717 F.2d at
 7   1270.    The Ninth Circuit, thus, determined that an injunction was
 8   not necessary to enforce an order that the bankruptcy court did
 9   not make.    Id.   And it further held that once the property left
10   the actual or constructive possession of the bankruptcy court,
11   the bankruptcy court lacked jurisdiction to adjudicate
12   conflicting claims of ownership.       Id. at 1272.
13           Here, the Declaratory Relief Action squarely and singularly
14   sought a determination of pre-sale ownership and property rights
15   in the Malpractice Claims.    Under the rule articulated in Federal
16   Shopping Way (and reaffirmed in Rodeo Canon), however, the
17   bankruptcy court lacked jurisdiction under 28 U.S.C. § 1334(e) to
18   adjudicate disputes as to ownership and property rights in the
19   Malpractice Claims once the asset was sold and transferred from
20   the estate.    The bankruptcy court’s in rem jurisdiction over the
21   Malpractice Claims lapsed after the sale.      Thus, because the
22   estate no longer had any interest in these claims, 28 U.S.C.
23   § 1334(e)(1) could not be a source of jurisdiction.
24   B.      The Bankruptcy Court Did Not Have Jurisdiction Under
25           28 U.S.C. § 1334(b) To Decide The Declaratory Relief Action.
26           Having concluded that jurisdiction under 28 U.S.C. § 1334(e)
27   terminated upon sale of the Malpractice Claims, the Panel must
28   determine whether jurisdiction otherwise exists for bankruptcy

                                        9
 1   court consideration of the Declaratory Relief Action.       Here, the
 2   sale of the Malpractice Claims significantly altered the
 3   jurisdictional analysis.    Ultimately, bankruptcy jurisdiction is
 4   designed to provide a single forum for dealing with all claims to
 5   the bankrupt’s assets and extends no further than its purpose.
 6   In re Xonics, Inc., 813 F.2d at 131.     This general description of
 7   jurisdiction suggests there was no basis for bankruptcy
 8   jurisdiction to decide the Declaratory Relief Action; judicial
 9   resolution of the Declaratory Relief Action no longer had any
10   direct relationship to the estate.
11           The only issue before the bankruptcy court in the
12   Declaratory Relief Action was the dispute as to ownership and
13   property rights in the Malpractice Claims at the time of the
14   sale.    A resolution of this dispute necessarily involved
15   exclusively a consideration of state law.    See Butner v. United
16   States, 440 U.S. 48, 55 (1979) (“Property interests are created
17   and defined by state law.    Unless some federal interest requires
18   a different result, there is no reason why such interests should
19   be analyzed differently simply because an interested party is
20   involved in a bankruptcy proceeding.”).    The parties do not argue
21   that a federal interest compels a different result here, and we
22   do not independently discern one.
23           The Sale Order explicitly made clear that as a result of the
24   sale, a buyer had no further recourse against the estate.      The
25   Sale Order sold the estate’s interest, if any, in the Malpractice
26   Claims on an “as-is where-is” basis and expressly disclaimed
27   any warranty of title.    Thus, the estate not only transferred its
28   rights, if any, in the Malpractice Claims, but it also insulated

                                       10
 1   itself from the consequences of a subsequent determination that
 2   all it sold was a valueless claim.
 3        The Sale Order left open the issue of ownership, but nothing
 4   in the record states or even suggests that the bankruptcy court
 5   would make this determination.   The bankruptcy court did not
 6   expressly retain jurisdiction.   Against this background, we
 7   evaluate jurisdiction under 28 U.S.C. § 1334(b).
 8        1.   Asset Resolution Issues Generally Are Not Core Unless
 9             They Affect Estate Administration or Involve
10             Liquidation of the Estate’s Assets or Adjustment of the
11             Debtor-Creditor Relationship.
12        The Appellees correctly note that issues involving estate
13   assets are central to the bankruptcy process and that proceedings
14   determining the extent of estate assets are typically core
15   proceedings where bankruptcy court jurisdiction clearly exists.
16   On this platform they claim, jurisdiction firmly stands.    An
17   examination of the statute defining core jurisdiction, however,
18   makes clear that, under the facts of this case, this matter was
19   far from clearly core.
20        The statutory law defining core matters does not include a
21   specific reference to estate asset ownership disputes.    See
22   28 U.S.C. § 157(b).   Instead, jurisdiction in relation to estate
23   assets typically arises under 28 U.S.C. § 1334(e) and the
24   bankruptcy court’s in rem jurisdiction in assets, while
25   jurisdiction over a particular dispute arises under the catch-all
26   provisions of 28 U.S.C. § 157 to the extent the dispute affects
27   estate administration or involves liquidation of these assets or
28   adjustment of the debtor-creditor relationship.    See 28 U.S.C.

                                      11
 1   § 157(b)(2)(A) & (O).   Thus, the stated categories of core
 2   matters encompassed the Declaratory Relief Action only to the
 3   extent it involved current liquidation of assets, a current
 4   adjustment of debtor-creditor relationship, or current
 5   administration of the bankruptcy estate.
 6        Here, the Declaratory Relief Action achieved none of these
 7   goals.    As a result of the language in the Sale Order, the
 8   Declaratory Relief Action was completely estate neutral.     It did
 9   not result in a transfer of an estate asset; it did not create a
10   claim against the estate; it did not relieve the estate from a
11   claim; and, thus, it in no way impacted administration of the
12   estate.   Neither the Trustee nor estate creditors had a stake in
13   the action.
14        The fact that the Debtor was involved is irrelevant as the
15   Debtor’s recovery or expenses, again, would not impact the
16   estate.   If the Debtor prevailed, the estate would not be
17   enhanced.   If he was unsuccessful, the estate was not lessened.
18   The Declaratory Relief Action was far from clearly core.
19   Section 157(b), however, does not include a comprehensive list of
20   core matters; a matter may still be core if jurisdiction “arises
21   under” the Code or “arises in” the bankruptcy case.   Thus, we
22   look more closely at these possible bases for jurisdiction.
23        2.     The Bankruptcy Court Did Not Have “Arising Under”
24               Jurisdiction Over the Declaratory Relief Action.
25        Neither party argues that the Declaratory Relief Action was
26   a proceeding “arising under” the Code.   Nonetheless, on de novo
27   review, we conclude that it was not.
28        A civil proceeding “arises under” the Code if it “depends on

                                      12
 1   a substantive provision of bankruptcy law, that is, if it
 2   involves a cause of action created or determined by a statutory
 3   provision of the Bankruptcy Code.”   Battleground Plaza, LLC v.
 4   Ray (In re Ray), 624 F.3d 1124, 1130 (9th Cir. 2010); see also
 5   In re Valley Health Sys., 471 B.R. at 563 (“A proceeding to
 6   enforce a right to relief created by [the Code] "arises under"
 7   [the Code].”).
 8        Here, the only arguably applicable Code provision is § 541;
 9   the Declaratory Relief Action contained a single ground for
10   relief: a determination as to whether the assets sold to Duncan
11   were property of the estate under § 541.   While this request
12   seemingly implicates and, indeed, requires application of § 541,
13   on closer inquiry, there exists a subtle yet important
14   distinction.   Section 541 defines property of the estate, but
15   does not create a right to relief.   It, therefore, follows that
16   an action to enforce a right thereunder cannot exist.    See, e.g.,
17   Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire
18   Courtyard), --- F.3d ---, 2013 WL 4797288, at *5 (9th Cir.
19   Sept. 10, 2013) (fact that bankruptcy statute was implicated did
20   not transform statute into substantive right to relief for the
21   purposes of bankruptcy jurisdiction).
22        Appellees seek a determination as to ownership of the
23   Malpractice Claims, and in their petition for declaratory relief,
24   state that: “[a]n actual controversy has arisen and now exists
25   relating to the rights and duties of the parties to this action.”
26   (Emphasis added).   The Malpractice Claims are claims arising
27   under Montana law and whether they were assets of the bankruptcy
28   estate is a function of timing that is also determined under

                                     13
 1   Montana law.     See Butner, 440 U.S. at 55.    Under these particular
 2   facts, then, whether the assets sold were property of the estate
 3   under § 541 was a secondary (and perfunctory) issue in contrast
 4   to the actual and substantive issue: ownership of and rights in
 5   the Malpractice Claims for the purposes of the State Court
 6   Action.      See generally In re Wilshire Courtyard, 2013 WL 4797288,
 7   at *4 (merits question that does not rest on substantive portion
 8   of the Code does not “arise under” the Code).      Here, the
 9   Declaratory Relief Action could not “arise under” the Code.
10           3.    The Bankruptcy Court Did Not Have “Arising In”
11                 Jurisdiction Over the Declaratory Relief Action.
12           Proceedings “arising in” a bankruptcy case are those that
13   would not exist outside the case, such as matters involving the
14   administration of the bankruptcy estate.       In re Ray, 624 F.3d at
15   1130.    Moreover, “that a matter would not have arisen had there
16   not been a bankruptcy case does not ipso facto mean that the
17   proceeding qualifies as an ‘arising in’ proceeding.”
18   In re Wilshire Courtyard, 2013 WL 4797288, at *5 (citation
19   omitted).
20           Such jurisdiction does not support consideration of the
21   Declaratory Relief Action.     Here, because of the protective
22   language in the Sale Order, the dispute did not involve estate
23   administration or the actions of the Trustee in any respect.      As
24   a result of the protective language in the Sale Order, the estate
25   was insulated from any administrative impact.
26           Appellees cite multiple cases for the proposition that
27   jurisdiction existed because the Malpractice Claims “arose in”
28   the Debtor's bankruptcy case.     See, e.g., Grausz v. Englander,

                                        14
 1   321 F.3d 467 (4th Cir. 2003); Matter of Wheeler, 137 F.3d 299
 2   (5th Cir. 1998); Kaiser Group Holdings, Inc. v. Squire Sanders &
 3   Dempsey LLP (In re Kaiser Group Int'l, Inc.), 421 B.R. 1 (Bankr.
 4   D.D.C. 2009); Simmons v. Johnson, Curney & Fields, P.C.
 5   (In re Simmons), 205 B.R. 834 (Bankr. W.D. Tex. 1997); In re SPI
 6   Commc'ns & Mktg., Inc., 114 B.R. 14 (Bankr. N.D.N.Y. 1990);
 7   Smith-Canfield v. Spencer (In re Smith-Canfield), 2011 WL 1883833
 8   (Bankr. D. Or. May 17, 2011).     These cases are distinguishable
 9   first because the Malpractice Claims were filed in state court
10   and remained there; the merits of these claims were not before
11   the bankruptcy court.      Also, none of these cases involved a
12   situation where the estate’s interest was sold prior to
13   initiation of the action at issue.
14           More importantly, however, reliance on the Malpractice
15   Claims for “arising in” jurisdiction misses the point;
16   jurisdiction over the Declaratory Relief Action is the issue
17   here.    Whether the bankruptcy court has or had jurisdiction to
18   decide the Malpractice Claims themselves is irrelevant.     The
19   Declaratory Relief Action sought only an ownership determination
20   in the State Court Action.     Clearly, it was not a determination
21   that was limited to a bankruptcy forum; instead it involved state
22   law issues that could be determined by a state court.     Here, the
23   issue is temporal - jurisdiction may have existed - but as a
24   result of the Sale Order, it terminated.
25           4.   The Declaratory Relief Action Was Not Otherwise a Core
26                Proceeding.
27           Core proceedings are matters that “arise under” the Code or
28   “arise in” a bankruptcy case.     Stern v. Marshall, 131 S. Ct.

                                        15
 1   2594, 2605 (2011).    Whether a proceeding is core or non-core does
 2   not denote or confer a separate basis of bankruptcy jurisdiction;
 3   rather, a core proceeding refers to matters that the bankruptcy
 4   court may hear and determine, as opposed to non-core matters,
 5   where, absent consent, the bankruptcy court may hear but not
 6   finally adjudicate.    See 28 U.S.C. § 157(c)(1).    Accordingly,
 7   when a proceeding is “core,” it necessarily indicates that the
 8   proceeding “arises under” the Code or “arises in” the bankruptcy
 9   case.    See Stern, 131 S. Ct. at 2605.
10           As previously discussed, the Declaratory Relief Action did
11   not implicate either “arising under” or “arising in”
12   jurisdiction.    Therefore, it follows that the Declaratory Relief
13   Action cannot constitute a core proceeding.    Also as previously
14   discussed, a facial review of 28 U.S.C. § 157 does not suggest a
15   different result.
16           Prior to consummation of the sale, the dispute as to
17   ownership of the assets could have been core as a matter
18   concerning administration of the estate or as a matter affecting
19   liquidation of estate assets or adjustment of the debtor-creditor
20   relationship.    28 U.S.C. § 157(b)(2)(A) & (O).    Indeed,
21   “[p]roceedings to determine the nature and extent of property of
22   the estate are fundamental to the administration of a bankruptcy
23   case,” and, thus, are “core” proceedings.    See Watson v. Kincaid
24   (In re Kincaid), 96 B.R. 1014, 1017 (9th Cir. BAP 1989), rev'd on
25   other grounds, 917 F.2d 1162 (9th Cir. 1990).      After the sale,
26   however, there was no estate need or bankruptcy related basis for
27   any determination in relation to ownership of the Malpractice
28   Claims.    Nor was there a bankruptcy or estate-related need for

                                       16
 1   adjudication of issues related to liquidation of an estate asset
 2   or adjustment of the debtor-creditor relationship.   Once again,
 3   post sale the estate had no interest in the dispute.
 4        5.   The Bankruptcy Court Did Not Have “Related To”
 5             Jurisdiction Over the Declaratory Relief Action.
 6        “Related to” jurisdiction exists when “the outcome of the
 7   proceeding could conceivably have any effect on the estate being
 8   administered in bankruptcy.”   Fietz v. Great W. Sav.
 9   (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (adopting the
10   test in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.
11   1984)).
12        Here, the Sale Order sold all of the estate’s interest in
13   the Malpractice Claims and expressly provided that the sale was
14   made without warranty of title.    Once again, the express
15   disclaimer insured that the estate was insulated from the outcome
16   of any subsequent dispute with respect to the assets sold.    Thus,
17   it mattered not, from the estate’s perspective, what the Trustee
18   sold to Duncan.   The outcome of the Declaratory Relief Action
19   could not impact the bankruptcy estate, could not impact creditor
20   recoveries, and could not impact or involve the Trustee.     Thus,
21   the bankruptcy court did not have “related to” jurisdiction.     See
22   Matter of Xonics, Inc., 813 F.2d at 131 (“[I]t is the relation of
23   dispute to [the] estate, and not of party to [the] estate, that
24   establishes jurisdiction.”).
25   C.   Ancillary Jurisdiction Does Not Exist In Relation To The
26        Declaratory Relief Action.
27        Finally, Appellees assert that the bankruptcy court
28   possessed inherent or ancillary jurisdiction to interpret and

                                       17
 1   enforce the Sale Order, independent of 28 U.S.C. § 1334
 2   jurisdiction.   A bankruptcy court, indeed, has “jurisdiction to
 3   interpret and enforce its own prior orders.”   See Travelers
 4   Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009); see also
 5   In re Ray, 624 F.3d at 1130 (bankruptcy court has ancillary
 6   jurisdiction to vindicate its authority and effectuate its
 7   decrees).
 8        Here, however, the bankruptcy court authorized the sale with
 9   “no representations or warranties regarding the validity or
10   sufficiency of the claims and/or whether the claims are property
11   of this bankruptcy estate.”   This was not a situation where the
12   parties disputed the estate’s interest in the assets sold before
13   the sale.   In fact, had they disputed the estate’s interest
14   before the sale, the bankruptcy court would have been required to
15   adjudicate the dispute.   See Darby v. Zimmerman (In re Popp),
16   323 B.R. 260, 268-70 (9th Cir. BAP 2005).   Nor was this a case
17   where the bankruptcy court authorized the sale of specific rights
18   or adjudicated issues where its determinations were attacked
19   subsequently.
20        Moreover, because of the express disclaimer in the Sale
21   Order, it was unnecessary for the bankruptcy court to determine
22   ownership of the claims as a means of preserving a benefit that
23   the parties bargained for prior to the sale.   See In re Wilshire
24   Courtyard, 2013 WL 4797288, at *8-9 (“[A]ncillary jurisdiction
25   exists where necessary to preserve a benefit the parties
26   initially bargained for.”).   Under these circumstances, the
27   Declaratory Relief Action was not a request for the bankruptcy
28   court to enforce, clarify, interpret, or otherwise vindicate the

                                     18
 1   Sale Order.
 2        Certainly, a bankruptcy court would have jurisdiction where
 3   it purported to sell an asset and judicial action was necessary
 4   to bar subsequent activity inconsistent with the sale order.    But
 5   here, the Declaratory Relief Action itself is inconsistent with
 6   the Sale Order.   The Sale Order, in effect, washed the estate’s
 7   hands of any responsibility for decisions involving the
 8   Malpractice Claims, including subsequent determinations of
 9   ownership.    In this sense, it is Appellees who collaterally
10   attack the Sale Order by requesting findings of ownership,
11   despite a final order’s express disclaimers of warranty.
12   Questioning the bankruptcy court’s jurisdiction over the
13   Declaratory Relief Action, thus, is far from an attack on a prior
14   bankruptcy court order.
15        Thus, based on the foregoing discussion, we conclude that
16   the bankruptcy court lacked subject matter jurisdiction to
17   resolve the Declaratory Relief Action.    It, thus, erred when it
18   granted the MSJ and denied the Dismissal Motion.5
19                                CONCLUSION
20        For the reasons set forth above, we VACATE the bankruptcy
21   court's order and judgment and REMAND to the bankruptcy court
22   with instructions to dismiss the adversary proceeding for lack of
23   jurisdiction.
24
25
26
27        5
            As a result, we need not and do not consider the parties’
28   remaining arguments on appeal.

                                      19
