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USCA1 Opinion
May 7, 1996
[Not for Publication] [Not for Publication]
United States Court of Appeals United States Court of Appeals
For the First Circuit For the First Circuit
____________________
No. 95-1736
CHERYL ADAMS, RICHARD WAUGH, BRENT ADAMS, RONALD RING,
PATRICIA ADAMS, ROBERT RAVITZ, CARRIE BURKE, WELDON ADAMS,
ELIZABETH TARGEE, TINA LEVESQUE AND MELISSA SMITH RAPA,
Plaintiffs - Appellants,
v.
CUMBERLAND FARMS, INC.
AND LANCE CURLEY, ET AL.,
Defendants - Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Stanley R. Cohen for appellant. ________________
Barbara D. Gilmore, with whom Kathleen Provost and Sullivan & ___________________ ________________ ___________
Worcester, were on brief for appellee. _________
____________________
____________________
STAHL, Circuit Judge. This appeal involves the STAHL, Circuit Judge. ______________
review of an order entered by the bankruptcy court that
effectively estimated and discharged the appellants' claims.
The appellants, Cheryl Adams and ten other former employees
of the debtor (collectively "Adams"), claim that the
bankruptcy court lacked authority to enter the order because
the claims constituted "personal injury tort claims." We
affirm.
I. I. __
Background Background __________
Cheryl Adams and ten other former employees of
Cumberland Farms, Inc. ("CFI"), filed proofs of claim against
CFI in the bankruptcy court for the District of
Massachusetts. The claims stemmed from a pending civil
action in which Adams alleged that various CFI officers and
supervisors had conspired to recoup inventory losses by
falsely accusing Adams and other low-level CFI employees of
stealing money and merchandise from CFI stores. Adams
further alleged that these same CFI officials had knowingly
coerced Adams and other employees into confessing to the
alleged thefts notwithstanding that Adams and the other
employees had not committed them. The complaint in the case
asserted claims of false imprisonment, wrongful termination,
malicious prosecution, abuse of process, defamation,
intentional infliction of emotional distress, and violation
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of Massachusetts civil rights laws (collectively the "loss
prevention claims").
In 1993, CFI reached a tentative settlement in a
separate class action suit involving similar loss prevention
claims (the "Curley suit"). The Curley suit had been brought
in New Jersey federal district court by a different group of
former CFI employees that did not include Adams. As part of
the proposed Curley settlement, the parties to that agreement
filed a joint motion in the Massachusetts bankruptcy court
requesting the creation of a mandatory class that would
include all loss prevention claimants who had filed proofs of
claim in the Massachusetts bankruptcy proceeding (e.g., ____
Adams). Moreover, the parties further requested that the
Massachusetts bankruptcy court use the Curley settlement
agreement as a vehicle for estimating and discharging all of
the loss prevention claims alleged by individuals in this
newly created class. Adams objected to this motion. On
August 30, 1993, the bankruptcy court granted the motion.
Adams appealed to the Massachusetts federal district court,
and the district court affirmed. Additionally, the New
Jersey district court ultimately approved, and the Third
Circuit affirmed, the proposed settlement agreement in the
Curley suit. See Curley v. Cumberland Farms, Inc., 27 F.3d ___ ______ ______________________
556 (3d Cir. 1994).
II. II. ___
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Discussion Discussion __________
On appeal to this court, Adams's principal
complaint is that the bankruptcy court lacked the authority
to enter a final order discharging her claims. Adams also
raises several additional arguments including an attack on
the bankruptcy court's estimation of her claims and an
assertion that the bankruptcy court's order violated her
Seventh Amendment right to a jury trial. We begin with a
brief overview of the statutory framework and follow with a
discussion of Adams's assignments of error.
A. Statutory Overview ______________________
Title 28 U.S.C. 1334 vests in the district court
a broad grant of subject-matter jurisdiction over all
bankruptcy-related matters, expressly providing that the
"district court shall have original and exclusive
jurisdiction of all cases under title 11" and "original but
not exclusive jurisdiction of all civil proceedings arising
under title 11, or arising in or related to cases under title
11." 28 U.S.C. 1334(a), (b); see also Celotex Corp. v. ___ ____ _____________
Edwards, 115 S. Ct. 1493, 1498-99 (1995) (discussing _______
comprehensive scope of 1334 jurisdictional grant). The
bankruptcy court, in turn, is authorized to hear matters, not
as an independent entity, but as "a unit of the district
court." 28 U.S.C. 151. Subject-matter jurisdiction
remains in the district court, which is authorized, in
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appropriate circumstances, to refer matters "to the
bankruptcy judges of th[at] district." Id. 157; cf. ___ ___
Northern Pipeline Const. Co. v. Marathon Pipe Line Co., 458 _____________________________ _______________________
U.S. 50 (1982) (holding unconstitutional previous statutory
scheme that authorized bankruptcy courts to exercise
independently all jurisdiction conferred to the district
courts under the bankruptcy laws). The district court's
power of referral extends to any case or proceeding for which
it has subject-matter jurisdiction under 1334. See 28 ___
U.S.C. 157. The district court, however, may withdraw any
matter referred under this provision for cause shown on its
own motion or by the request of either party. Id. 157(d). ___
While the district court may refer all matters for
which it has jurisdiction under 1334, the power of the
bankruptcy judge to enter final orders in a referred
proceeding is limited. See 28 U.S.C. 157. In general, a ___
bankruptcy judge may hear and finally determine only core
bankruptcy proceedings. Id. 157(a). Core proceedings are ___
those that involve rights that are created by, and depend on,
the bankruptcy laws for their existence. In re G.S.F. Corp., __________________
938 F.2d 1467, 1475 (1st Cir. 1991); see also In re Arnold ___ ____ ____________
Print Works, Inc., 815 F.2d 165, 166-67 (1st Cir. 1987) ___________________
(reading the legislative history as indicating that a
bankruptcy court's core authority should be interpreted
broadly). Section 157 sets forth a nonexhaustive list of
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"core proceedings" that includes such obvious matters as
"allowance or disallowance of claims against the estate," 28
U.S.C. 157(b)(2)(B), as well as a final broadly-phrased
catchall covering most "other proceedings affecting the
liquidation of the assets of the estate," id. 157(b)(2)(O). ___
A bankruptcy judge may also hear a properly
referred non-core proceeding otherwise falling within the
district court's bankruptcy jurisdiction, but, in general,
may only issue proposed findings of fact and recommended
conclusions of law subject to the district court's de novo __ ____
review. Id. 157(c)(1). This non-core authority extends to ___
those matters that, while not directly dependent on the
bankruptcy laws for their existence, are nonetheless
sufficiently connected to the restructuring of the
debtor/creditor relationship to come within the district
court's broad jurisdictional grant. The bankruptcy court is
authorized, on its own motion or on the "timely motion of a
party," to determine whether a proceeding comes within the
court's core or non-core authority. Id. 157(b)(3). ___
Finally, with the consent of the parties, a bankruptcy court
may hear and finally determine non-core proceedings within
the district court's bankruptcy jurisdiction. Id. ___
157(c)(2).
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Significantly, personal injury tort and wrongful
death claims are afforded special status under the bankruptcy
laws. Several express exceptions address and limit the
authority of the bankruptcy court over such claims. See, ___
e.g., 28 U.S.C. 157(b)(2)(B), (O), and 157(b)(5).1 For ____
example, the estimation of unliquidated or contingent
personal injury tort claims for the purposes of distribution
____________________
1. Subsection 157(b)(2) provides, in relevant part, that
core proceedings include:
(B) allowance or disallowance of claims
against the estate or exemptions from
property of the estate, and estimation of
claims or interest for the purposes of
confirming a plan under chapter 11, 12 or
13 of title 11 but not the liquidation or ___ ___
estimation of contingent or unliquidated
personal injury tort or wrongful death ________ ______ ____ ________ _____
claims against the estate for purposes of
distribution in a case under title 11
. . .
(O) other proceedings affecting the
liquidation of the assets of the estate
or the adjustment of the debtor-creditor
or the equity security holder
relationship, except personal injury tort ______ ________ ______ ____
or wrongful death claims. ________ _____
28 U.S.C. 157(b)(2) (emphasis added). Subsection 157(b)(5)
provides that:
The district court shall order that
personal injury tort and wrongful death ________ ______ ____ ________ _____
claims shall be tried in the district
court in which the bankruptcy case is
pending, or in the district court in the
district in which the claim arose, as
determined by the district court in which
the bankruptcy case is pending.
28 U.S.C. 157(b)(5) (emphasis added).
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is explicitly excluded from 157's list of core proceedings.
Id. 157(b)(2)(B). Moreover, the district court is ___
instructed to order that personal injury tort and wrongful
death claims shall be tried in the district court in which
the bankruptcy case is pending or in the district in which
the claims arose. Id. 157(b)(5). This special status ___
apparently stems from Congress's recognition that most
personal injury tort and wrongful death victims stand in a
somewhat different relationship with the bankruptcy debtor
because they did not voluntarily enter into dealings with the
debtor (and accept the risk of loss) in the same sense as
traditional bankruptcy claimants. See Matter of Poole ___ _________________
Funeral Chapel, Inc., 63 B.R. 527, 530 (Bankr. N.D. Ala. _____________________
1986) (quoting statements of Sen. DeConcini).
B. Personal Injury Torts _________________________
Adams challenges the bankruptcy court's authority
to enter a final order with respect to her claims.
Essentially, she contests the bankruptcy court's implicit
determination that her claims constituted core proceedings.
Adams argues that her claims are non-core because they fall
within at least one of several specific exceptions provided
for "personal injury tort" claims. Therefore, she contends
that, because the proceeding was non-core, the bankruptcy
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court lacked the authority to enter a final order effectively
estimating and discharging her claims.2
Whether or not Adams's claims constitute personal
injury tort claims is a close question. Compare In re Atron _______ ____________
Inc. of Michigan, 172 B.R. 541, 542-45 (Bankr. W.D. Mich. _________________
1994) ("personal injury tort" should be read narrowly to
exclude emotional distress and other nontraditional personal
injury claims), with Poole, 63 B.R. at 529-30 ("personal ____ _____
injury tort" should be read broadly to include claims for
emotional and mental distress). We decline, however, to
reach the issue in this case. Adams failed to argue that her
claims constituted personal injury tort claims in her
objection to the joint motion before the bankruptcy court
and, again, in her opening brief before the district court.
Accordingly, she has waived consideration of the issue on
appeal to this court. See, e.g., Fish Market Nominee Corp. ___ ____ __________________________
____________________
2. Adams does not contend that her claims against the estate
were outside the district court's broad grant of subject-
matter jurisdiction under 28 U.S.C. 1334. This is not
surprising. The district court's "related to" jurisdiction
under 1334(b) is expansive. See Celotex Corp. v. Edwards, ___ _____________ _______
115 S. Ct. 1493, 1499 (1995) ("Congress did not delineate the
scope of ``related to' jurisdiction, but its choice of words
suggests a grant of some breadth."). "``The usual
articulation of the test for determining whether a civil
proceeding is related to bankruptcy is whether the outcome of
that proceeding could conceivably have any effect on the
estate being administered in bankruptcy.'" In re G.S.F., 938 ____________
at 1475 (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 ___________ _______
(3d Cir. 1984)). We have little doubt that proceedings, such
as this one, involving the estimation and discharge of proofs
of claim filed against the estate by a bankruptcy creditor
come within this broad range.
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v. Pelofsky, 72 F.3d 4, 6 (1st Cir. 1995) (arguments not ________
raised in bankruptcy court are waived on appeal); In re Mark __________
Bell Furniture Warehouse, Inc., 992 F.2d 7, 9 (1st Cir. 1993) ______________________________
(same).
At bottom, Adams's claim is that she was denied her
right to an Article III judge. That right, which derives
from the language of Article III, 1, is a personal right
and is subject to waiver upon a party's failure to assert it.
See Commodity Future Trading Comm'n v. Schor, 478 U.S. 833, ___ ________________________________ _____
848-50 (1986). Schor, however, makes clear that Article III, _____
1, protects other non-waivable institutional interests by
barring "congressional attempts to transfer jurisdiction [to
non-Article III tribunals] for the purpose of emasculating
constitutional courts." Id. at 850 (citations and quotation ___
marks omitted). No such concerns are at issue in this case.
The present appeal does not involve a challenge to Congress's
allocation of authority to a non-Article III bankruptcy judge
to resolve personal injury and wrongful death claims.
Indeed, the specific provisions in question, viz 28 U.S.C. ___
157(b)(2)(B) and 157(b)(5), strictly limit the authority of
bankruptcy judges with respect to personal injury and
wrongful death claims.
Though, in extraordinary cases, we may make an
exception to the raise-or-waive rule where our failure to do
so would result in a gross miscarriage of justice, see ___
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Credit Francais Int'l v. Bio-Vita, Ltd., 78 F.3d 698, 709 _____________________ _______________
(1st Cir. 1996), Adams has not persuaded us that such an
exception is warranted in this case. The effect of the
bankruptcy court's order did not completely deprive Adams of
a remedy for her alleged injuries. Instead, the ruling
simply had the effect of estimating the value of her
unliquidated tort claims by ordering her to participate in
the Curley settlement agreement. Because, as we explain
infra, Adams has failed to persuade us that the Curley _____
settlement will provide an unreasonable estimation, we are
likewise unpersuaded that giving effect to the bankruptcy
court's order will result in a substantial miscarriage of
justice.
C. Other Matters _________________
In her reply brief, Adams directly attacks the
bankruptcy court's use of the class action settlement as a
vehicle for estimating her claims. While title 11 authorizes
the bankruptcy court to estimate unliquidated and contingent
claims when necessary for the prompt administration of the
bankruptcy estate, see 11 U.S.C. 502(c), it does not ___
provide methods for conducting such estimations. Therefore,
in estimating claims, "bankruptcy courts should use whatever
method is best suited to the particular circumstances."
Lawrence P. King, 3 Collier on Bankruptcy 502.03, at 502-76 _____________________
(15th ed. 1995). The bankruptcy courts are afforded
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substantial deference in this area, and errors assigned both
to its estimates and its methods for achieving such estimates
generally will be reviewed only for an abuse of discretion.
Matter of Continental Airlines, 981 F.2d 1450, 1461 (5th Cir. ______________________________
1993); Bittner v. Borne Chem. Co., 691 F.2d 134, 136 (3d Cir. _______ _______________
1982). Moreover, in this case, because Adams did not attack
the actual estimates in her opening brief, she has, in fact,
waived consideration of this issue absent a showing that the
estimates would result in a clear miscarriage of justice.
See Indian Motocycle Assocs. v. Massachusetts Hous. Fin. ___ _________________________ __________________________
Agency, 66 F.3d 1246, 1253 n.12 (1st Cir. 1995). ______
On the particulars of this case, Adams has failed
to convince us that the bankruptcy court's decision to order
her participation in the Curley settlement constituted an
abuse of discretion, much less a clear miscarriage of
justice. The claims asserted in the Curley action were
brought by employees similarly situated to Adams, and arose
from essentially the same scheme that Adams alleges. In
general, we find no reason to think that a court-approved
settlement in such a strikingly parallel proceeding would not
provide a reasonable benchmark for estimating the value of
Adams's claims. Though there may be reasons that such a
method for estimation would not be appropriate in other
cases, Adams has not provided us with any compelling reason
for finding it inappropriate here.
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Adams raises several additional issues, including a
claim that the bankruptcy court's order deprived her of her
Seventh Amendment right to a jury trial. We find these
additional claims either waived, substantially without merit,
or both. Specifically, with respect to Adams's Seventh
Amendment argument, filing a proof of claim in a bankruptcy
proceeding, as Adams has done, generally waives any right to
a jury trial. See Langenkamp v. Culp, 490 U.S. 42, 44-45 ___ __________ ____
(1990) (filing proof of claim invokes bankruptcy court's
equitable jurisdiction and generally waives jury trial
right). We do note, however, that 28 U.S.C. 1411(a), may
restrict this general rule with respect to personal injury
and wrongful death claims.3 Nonetheless, Adams has
forfeited the application of this provision by failing to
argue that her claims constituted personal injury tort claims
to the courts below. See, e.g., In re Mark Bell, 992 F.2d at ___ ____ _______________
9.
III. III. ____
Conclusion Conclusion __________
For the foregoing reasons, we affirm the decision
of the district court.
____________________
3. 28 U.S.C. 1411(a) provides in relevant part that
this chapter and title 11 do not affect
any right to trial by jury that an
individual has under applicable non-
bankruptcy law with regard to a personal
injury or wrongful death tort claim.
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Document Info
Docket Number： 95-1736
Filed Date： 5/7/1996
Precedential Status： Precedential
Modified Date： 3/3/2016