In re: Anita Holcomb

FILED
APR 25 2018
1 NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
4
5 In re: ) BAP No. CC-17-1268-KuTaS
)
6 ANITA HOLCOMB, ) Bk. No. 2:11-bk-56326-BB
)
7 Debtor. ) Adv. No. 2:17-ap-01283-BB
______________________________)
8 )
ANITA HOLCOMB, )
9 )
Appellant, )
10 v. ) M E M O R A N D U M*
)
11 ROBERT ALTAGEN, )
)
12 Appellee. )
______________________________)
13
Argued and Submitted on March 22, 2018
14 at Pasadena, California
15 Filed - April 25, 2018
16 Appeal from the United States Bankruptcy Court
for the Central District of California
17
Honorable Sheri Bluebond, Bankruptcy Judge, Presiding
18 _____________________________________
19 Appearances: Blake Joseph Lindemann of Lindemann Law Group PLC
argued for appellant Anita Holcomb; James D.
20 Hepworth of Nemecek & Cole argued for appellee
Robert Altagen.
21 ______________________________________
22
Before: KURTZ, TAYLOR, and SPRAKER, Bankruptcy Judges.
23
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.
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1 I. INTRODUCTION
2 After her surplus bankruptcy estate was fully administered
3 and closed Anita Holcomb (Debtor) filed a state court complaint
4 against her former chapter 71 bankruptcy attorney, Robert
5 Altagen (Altagen), alleging claims for malpractice. The state
6 court dismissed the action for lack of subject matter
7 jurisdiction because Debtor had failed to seek leave from the
8 bankruptcy court before suing Altagen. Debtor later sought
9 leave from the bankruptcy court which the court denied on the
10 basis that it had jurisdiction over the matter. The bankruptcy
11 court reopened Debtor’s bankruptcy case; and Debtor filed an
12 adversary proceeding against Altagen. Altagen moved to dismiss
13 the complaint under Civil Rule 12(b)(6). Taking judicial notice
14 of its prior rulings in the bankruptcy case, the court granted
15 Altagen’s motion and dismissed Debtor’s complaint with
16 prejudice. Debtor appeals from this ruling.
17 For the reasons discussed below, we vacate the bankruptcy
18 court’s order dismissing Debtor’s adversary complaint with
19 prejudice and remand with instructions to dismiss the adversary
20 proceeding without prejudice for lack of subject matter
21 jurisdiction.
22 II. FACTS
23 Debtor filed a chapter 11 petition in 2011 with the
24 assistance of Altagen for the purpose of preventing the
25
1
26 Unless otherwise indicated, all chapter and section
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
27 Rule references are to the Federal Rules of Bankruptcy Procedure,
and Civil Rule references are to the Federal Rules of Civil
28 Procedure.
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1 foreclosure of her home (Property). The bankruptcy court
2 approved Altagen’s employment as Debtor’s chapter 11 counsel.
3 Debtor had no income and the substantial equity in the
4 Property represented her “retirement.” Her plan of
5 reorganization was to remodel the home, employ a broker to
6 market and sell the Property, pay off her creditors, and then
7 reap the benefits of a surplus due to increasing values in the
8 real estate market. About a year after the filing, Debtor’s
9 plan had still not been confirmed.
10 The bankruptcy court converted Debtor’s case to one under
11 chapter 7, and Edward M. Wolkowitz was appointed the chapter 7
12 trustee (Trustee). Debtor executed a retainer agreement with
13 Altagen to represent her in the converted chapter 7. Debtor
14 then adopted a “scorched-earth” strategy aimed at saving the
15 Property from liquidation by Trustee.
16 A. The Sale Of The Property
17 With bankruptcy court approval, Trustee employed a real
18 estate broker to market the Property for sale. Debtor refused
19 to allow Trustee or his professionals access to the Property.
20 Trustee filed a motion requiring Debtor to, among other things,
21 turn over the Property and remove her exempt property from the
22 premises. In June 2013, the bankruptcy court entered an order
23 granting Trustee’s motion, in part, which allowed Debtor to
24 remain in the Property until Trustee opened a sale escrow for
25 the Property (June Order). The June Order provided that Debtor
26 was to vacate the Property no later than 5:00 p.m. on the second
27 business day after Trustee informed Debtor’s counsel in writing,
28 including e-mail, that Trustee had opened a sale escrow for the
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1 Property. The bankruptcy court also ordered Debtor to cooperate
2 with Trustee.
3 Cooperate she did not. Debtor filed an amended Schedule A,
4 showing that from the time her chapter 11 petition was filed
5 until the time her case was converted, the Property increased in
6 value from $1.3 million to approximately $3 million. On
7 numerous occasions she sought to enjoin the sale and remove
8 Trustee and his professionals due to their alleged misconduct
9 and gross undervaluation of the Property. She also refused to
10 vacate the Property after escrow was opened. After Trustee
11 obtained a writ of possession, Debtor sought to enjoin him from
12 executing on it.
13 Debtor also filed several motions to dismiss her bankruptcy
14 case. In August 2013, Debtor filed a pro se motion to
15 voluntarily dismiss her bankruptcy case. There, Debtor
16 disclosed that she had obtained refinancing for the Property for
17 an amount sufficient to cover the secured debt and
18 administrative costs of her bankruptcy proceeding. Attached to
19 her motion as Exhibit “A” was an email purporting to evidence
20 refinancing of the Property was forthcoming. But such evidence
21 it was not; it was not an approval, but a communication stating
22 information that must be provided by Debtor for an application
23 process to begin.
24 In November 2013, Trustee filed a motion to sell the
25 Property by auction (Motion to Sell). Debtor objected to the
26 motion, and this time Altagen, on behalf of Debtor, filed an
27 emergency motion to dismiss her case. Again, Debtor represented
28 that she had obtained pre-approval for a refinancing loan in the
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1 amount of $1.2 million. She also asserted that all existing
2 liens on the Property would be paid in full and monies would be
3 held in escrow to pay any and all fees or amounts that the
4 bankruptcy court ordered to be paid upon dismissal of her case.
5 Finally, Debtor contended that dismissal was in the best
6 interests of her creditors. Debtor also submitted a pre-
7 approval certificate dated November 25, 2013, from 1st Point
8 Lending, Inc., which was signed by Alex Nelson, a broker/loan
9 officer.
10 Altagen re-filed the emergency motion to dismiss on
11 December 2, 2013 (December 2013 MTD) because an incorrect event
12 code was used for docketing the motion. On the same date,
13 Altagen filed the declaration of Mr. Nelson. Mr. Nelson
14 declared that he was the owner of 1st Point Lending, Inc. and
15 that he had a lender who agreed to fund a $1.2 million loan to
16 Debtor which was pending at Greater LA Escrow Inc., bearing
17 Escrow No. 4128-MB. Mr. Nelson also stated that he spoke to
18 Greater LA Escrow Inc., which indicated that the money was
19 available to fund the loan subject to bankruptcy court approval.
20 Attached to his declaration was proof of funding in the form of
21 a statement from Charles Schwab in the name of an individual
22 lender.
23 On December 4, 2013, the bankruptcy court held a hearing on
24 the Motion to Sell and Debtor’s December 2013 MTD. Altagen
25 appeared and stated that he was apprised of the refinancing for
26 Debtor’s Property and spoke to Mr. Nelson about the loan. He
27 told the court that the escrow was about to close and that there
28 was a one year interest reserve built into the loan. Still, the
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1 court had concerns:
2 THE COURT: Un-huh. And then what happens?
3 MR. ALTAGEN: If the loan is not paid off within one
year, they would have all the rights that they would
4 have, I assume as any other lender would.
5 THE COURT: How is she going to pay interest payments
in a year? From what I understand, she’s not --
6
MR. ALTAGEN: The money is built into the loan.
7
THE COURT: No. I get that. But that’s for a year.
8 Then what happens? I mean, I’m saying, isn’t she
going to be back in bankruptcy then or is she going to
9 be losing the property again at that point? How is
she going to service the debt?
10
MR. ALTAGEN: your Honor, I’m not a fortune teller. I
11 don’t know what’s going to happen in a year. But her
intention would be to market the property in a proper
12 way as the owner of a piece of real estate that’s been
approved and allowed to be sold in the normal course
13 of selling real estate. That’s her objective. That’s
her goal. That’s what she’s been trying to do, as the
14 Court so ably, aptly pointed out, since November of
2011. Okay.
15
THE COURT: . . . I mean, she’s pretty much said
16 repeatedly that she didn’t have any source of income.
I don’t have any reason to think that’s going to
17 change. I mean, maybe it will. I hope it will. But
she’s been telling us that this is the money she’s
18 going to live on. You know. Whatever she gets out of
this property is what she’s going to live on for the
19 rest of, you know, her natural life.
20 So I wouldn’t be able to do this, to confirm this if
this were -- if this were in Chapter 11 if this were a
21 plan because I don’t think it’s feasible. So it’s at
best a band-aid that kicks this can down the road
22 . . . . So I’m going to deny the motion to dismiss.
23 Over Debtor’s objection, the bankruptcy court allowed
24 Trustee to proceed with the sale of the Property by auction at
25 the hearing. The Property sold for $1.85 million to the highest
26 bidder, and the bankruptcy court entered an order approving the
27 sale (Sale Order).
28
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1 B. Debtor’s Appeal Of The Sale Order And Request For A Stay
Pending Appeal
2
3 Acting pro se, Debtor filed a notice of appeal of the Sale
4 Order in the United States District Court for the Central
5 District of California.
6 Debtor also filed in the bankruptcy court a pro se motion
7 to stay the Sale Order pending appeal (Motion For Stay). Debtor
8 again reiterated that her primary goal was to retain the
9 Property. Attached as Exhibit “A” was a commitment letter from
10 Mr. Nelson. Debtor stated that the lender would be taking a
11 first trust deed on the Property, all existing liens on the
12 Property would be paid in full, and monies would be held to pay
13 the fees for Debtor’s attorney and other amounts that the court
14 approved. Also attached was proof of funding in the form of a
15 statement from Charles Schwab bearing the name of the individual
16 lender.
17 The bankruptcy court denied her motion for a stay pending
18 appeal finding that she would not prevail on the merits (Stay
19 Order). The order provides in relevant part:
20 Debtor’s only basis for the Motion is her contention
that she will be able to borrow $1.2 [million] to
21 refinance her property; however, the debtor has never
presented any admissible evidence showing that a
22 lender has agreed to lend this amount or any other
amount.
23
As the Court explained on the record at the time of
24 hearing on the debtor’s last motion to dismiss the
above bankruptcy case, even if the debtor were able to
25 borrow $1.2 million, the debtor has repeatedly
represented on the record in open court that she has
26 no income and no ability to make debt service payments
on the loan (which is why the alleged loan included a
27 year’s reserve for interest payments). Therefore, the
debtor’s need for liquidation or reorganization would
28 not be resolved by the proffered financing. It would
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1 merely (further) delay the inevitable.
2 Debtor later requested and obtained dismissal of her appeal
3 of the Sale Order because the sale closed on December 12, 2013.
4 C. The Bankruptcy Case Is Closed
5 After paying administrative costs and secured and unsecured
6 creditors, Trustee paid surplus funds to Debtor in the amount of
7 $594,779, which included her $175,000 homestead exemption.
8 Debtor obtained her § 727 discharge, and her bankruptcy case was
9 closed.
10 D. The State Court Malpractice Action Against Altagen
11 A year after the closing of her bankruptcy case, Debtor
12 filed a state court lawsuit against Altagen for malpractice,
13 alleging that he failed to (1) timely secure the needed
14 paperwork to stop the bankruptcy court’s ordered sale of the
15 Property; (2) properly advise the bankruptcy court that Debtor
16 had obtained appropriate financing to forestall the sale of her
17 home; and (3) advise the bankruptcy court as to the value of her
18 home. Debtor alleged that as a result of Altagen’s negligence,
19 her home was sold at a price far below market value resulting in
20 damages between $1.5 to $2.5 million.
21 Altagen filed a motion for judgment on the pleadings
22 seeking to dismiss the state court action for lack of
23 jurisdiction. Altagen alleged that Debtor had not sought leave
24 from the bankruptcy court to file the state court action as
25 required under the Barton Doctrine.2 The state court granted
26
2
27 In Blixseth v. Brown, 470 B.R. 562, 565 (D. Mont. 2012),
the court explained the Barton Doctrine as follows:
28 (continued...)
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1 Altagen’s motion for judgment on the pleadings on the ground
2 that the bankruptcy court had exclusive jurisdiction over
3 Debtor’s legal malpractice claim against Altagen. Debtor sought
4 to reopen her bankruptcy case and filed a motion seeking leave
5 to pursue the state court action. Meanwhile, the state court
6 dismissed the matter. Debtor did not appeal the state court’s
7 ruling.
8 The bankruptcy court later denied Debtor’s motion for leave
9 to sue Altagen in the state court. During the hearing, Debtor’s
10 counsel argued that the Barton Doctrine did not apply to Altagen
11 because he was Debtor’s attorney in her chapter 7 case and thus
12 not appointed by the court. Counsel further argued that the
13 creditors had been satisfied, the chapter 7 trustee’s duties
14 were over, and Debtor was the sole beneficiary of the
15 malpractice action. Therefore, he asserted, the matter should
16 proceed in state court.
17 In its ruling, the bankruptcy court agreed that the
18 malpractice action did not affect the bankruptcy estate but
19 found that it did affect the administration of the bankruptcy
20 system. The court noted that Altagen had been appointed as
21
2
(...continued)
22
The Barton Doctrine is derived from the United States
23 Supreme Court’s decision in Barton v. Barbour, 104 U.S.
126 (1881). It requires a party to ‘first obtain leave
24 of the bankruptcy court before it initiates an action
in another forum against a bankruptcy trustee or other
25 officer appointed by the bankruptcy court for acts done
26 in the officer’s official capacity.’ Jeffrey v. Fort
James Corp., 421 F.3d 963, 970 (9th Cir. 2005)
27 (discussing Barton). If the Bankruptcy Court has not
granted leave, then other courts do not have subject
28 matter jurisdiction. Id. at 971.
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1 chapter 11 debtor-in-possession counsel and continued as
2 Debtor’s attorney when the case was converted. The court found
3 that whether or not the Barton Doctrine applied, it was
4 appropriate for the court to police how attorneys behaved in
5 front of it. The court denied Debtor’s motion for leave and
6 found that Debtor’s claims for malpractice were properly brought
7 in the bankruptcy court.
8 The court granted Debtor’s motion to reopen her bankruptcy
9 case.
10 E. The Adversary Complaint
11 On May 26, 2017, Debtor filed an adversary complaint
12 against Altagen alleging California state law claims for
13 fraudulent concealment, fraudulent misrepresentation, and
14 constructive fraud in connection with Altagen’s representation
15 of Debtor in her converted chapter 7 bankruptcy case. Debtor
16 alleged the state law fraud claims because the statute of
17 limitations had run on her malpractice claims.
18 Debtor alleged that Altagen had concealed from the
19 bankruptcy court the fact that Debtor had secured refinancing of
20 her residence. She further asserted Altagen concealed from her
21 that Trustee’s counsel had agreed to continue the auction of the
22 Property so that counsel could review the documentation relating
23 to the refinance loan. Finally, Debtor complained that Altagen
24 had not filed the declaration of Mr. Nelson who verified the
25 financing, although Altagen had filed it. Debtor contended that
26 her residence would not have been sold at the court-ordered
27 auction if all the information regarding her refinancing loan
28 had been given to the bankruptcy court. Debtor requested
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1 compensatory damages in a sum of not less than $2.5 million and
2 punitive damages in an amount to be determined.
3 In August 2017, Altagen moved to dismiss the complaint
4 under Civil Rule 12(b)(6), contending that the allegations of
5 fraud and concealment were contradicted by facts of which the
6 bankruptcy court could take judicial notice. The bankruptcy
7 court stated in the Stay Order that the refinancing loan would
8 not have changed the court’s decision to approve the sale
9 because Debtor had no ability to service the debt. As a result,
10 Altagen alleged that nothing he was accused of doing caused
11 Debtor any damage.
12 At the hearing on Altagen’s motion to dismiss the
13 complaint, the bankruptcy court took judicial notice of its
14 ruling in the Stay Order and then read from its tentative
15 ruling:
16 The text of the order made clear that the result would
not have been different if Defendant had told the
17 Court any of the things that Plaintiff claims he
should have told the Court or provided any of the
18 documents that Plaintiff alleges should have been
provided to the Court. The Debtor had no ability to
19 service any debt on the property and could not afford
to retain the property. The only way to resolve
20 Debtor’s financial problems was to have the property
sold. Any proposed financing would have merely kicked
21 the can down the road, and Debtor would have lost her
property once the interest reserve had been exhausted.
22 The Trustee’s willingness to agree to a postponement
[of the auction] would not have changed this result.
23
24 According to the bankruptcy court, the liquidation of the
25 Property was inevitable. The bankruptcy court granted Altagen’s
26 motion and dismissed Debtor’s adversary complaint with
27 prejudice. Debtor filed a timely notice of appeal.
28
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1 III. JURISDICTION
2 We have jurisdiction under 28 U.S.C. § 158. We discuss the
3 bankruptcy court’s jurisdiction below.
4 IV. ISSUE
5 Whether the bankruptcy court had subject matter
6 jurisdiction over this adversary proceeding.
7 V. STANDARD OF REVIEW
8 We review the bankruptcy court’s jurisdiction over Debtor’s
9 adversary complaint de novo. Harris v. Wittman (In re Harris),
10 590 F.3d 730, 736 (9th Cir. 2009).
11 VI. DISCUSSION
12 A. Bankruptcy Court Jurisdiction
13 We may raise the question of subject matter jurisdiction
14 sua sponte at any time during the pendency of the action, even
15 on appeal and when not raised by the parties. See Snell v.
16 Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002).
17 A bankruptcy court’s subject matter jurisdiction is
18 established by statute. Under 28 U.S.C. § 1334(b), a bankruptcy
19 court has jurisdiction over “all civil proceedings arising under
20 title 11, or arising in or related to cases under title 11.”
21 “Arising under title 11” describes those proceedings that
22 involve a cause of action created or determined by a statutory
23 provision in the bankruptcy code. In re Harris, 590 F.3d at
24 737. “Proceedings ‘arising in’ a bankruptcy are generally
25 referred to as ‘core’ proceedings, and essentially are
26 proceedings that would not exist outside of bankruptcy. . . .”
27 Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189,
28 1193 (9th Cir. 2005); see also Battleground Plaza, LLC v. Ray
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1 (In re Ray), 624 F.3d 1124, 1131 (9th Cir. 2010). A
2 nonexhaustive list of core proceedings is set out in 28 U.S.C.
3 § 157, which includes “matters concerning the administration of
4 the estate.” 28 U.S.C. § 157(b)(2)(A).
5 The bankruptcy court also has jurisdiction over “those
6 proceedings that are ‘related to’ a bankruptcy case.” In re
7 Pegasus Gold Corp., 394 F.3d at 1193.
8 [T]he test is whether . . . the outcome of the
proceeding could conceivably have any effect on the
9 estate being administered in bankruptcy. Thus, the
proceeding need not necessarily be against the debtor
10 or against the debtor’s property. An action is
related to bankruptcy if the outcome could alter the
11 debtor’s rights, liabilities, options, or freedom of
action (either positively or negatively) and which in
12 any way impacts upon the handling and administration
of the bankrupt estate.
13
14 Id. (quoting Fietz v. Great W. Savings (In re Fietz), 852 F.2d
15 455, 457 (9th Cir. 1988) (adopting the “Pacor test” derived from
16 Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). The
17 United States Supreme Court endorsed Pacor’s conceivability
18 standard with the caveats that “related to” jurisdiction “cannot
19 be limitless,” and that the critical component of the Pacor test
20 is that “bankruptcy courts have no jurisdiction over proceedings
21 that have no effect on the estate of the debtor.” Celotex Corp.
22 v. Edwards, 514 U.S. 300, 308 & n. 6 (1995).
23 We consider whether the bankruptcy court properly exercised
24 its jurisdiction over this proceeding under one of these three
25 categories.
26 B. Analysis
27 It is indisputable that this adversary proceeding, which
28 contains postpetition claims for state law fraud/malpractice
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1 against Altagen acting in his capacity as Debtor’s chapter 7
2 attorney, does not arise under Title 11. The claims alleged do
3 not depend upon a substantive provision of bankruptcy law. In
4 re Ray, 624 F.3d at 1130.
5 Nor do the allegations constitute any of the core
6 jurisdiction matters listed in 28 U.S.C. § 157(b) which “arise
7 in” a case under Title 11 and essentially are proceedings that
8 would not exist outside of bankruptcy. In re Pegasus Gold
9 Corp., 394 F.3d at 1193; In re Ray, 624 F.3d at 1131. The Ninth
10 Circuit has held that some claims for professional malpractice
11 based on services rendered in a bankruptcy case may be
12 considered core proceedings because they arose during the
13 administration of a bankruptcy case. Schultze v. Chandler, 765
14 F.3d 945 (9th Cir. 2014). In Schultze, members of an unsecured
15 creditors’ committee sued their court-appointed attorney for
16 committing legal malpractice while representing them in a debtor
17 business’s bankruptcy proceeding. Id. at 947. The Ninth
18 Circuit stated that “[w]here a post-petition claim was brought
19 against a court-appointed professional, we have held the suit to
20 be a core proceeding,” because
21 ‘[a] sine qua non in restructuring the debtor-creditor
relationship is the court’s ability to police the
22 fiduciaries, whether trustees or debtors-in-possession
and other court-appointed professionals, who are
23 responsible for managing the debtor’s estate in the
best interest of creditors. The bankruptcy court must
24 be able to assure itself and the creditors who rely on
the process that court-approved managers of the
25 debtor’s estate are performing their work,
conscientiously and cost-effectively. Bankruptcy Code
26 provisions describe the basis for compensation,
appointment and removal of court-appointed
27 professionals, their conflict-of-interest standards,
and the duties they must perform. See generally §§
28 321, 322, 324, 326-331.’
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1 Id. at 949 (quoting Southmark Corp. v. Coopers & Lybrand (In re
2 Southmark Corp.), 163 F.3d 925, 931-32 (5th Cir. 1999)).
3 The court noted that (1) the attorney’s employment was
4 approved by the bankruptcy court under § 1103, (2) his
5 compensation was approved by the bankruptcy court under § 328,
6 330, and 331, (3) his duties pertained solely to the
7 administration of the bankruptcy estate, and (4) the claim
8 asserted by the plaintiffs was based solely on acts that
9 occurred in the administration of the estate. In the end, the
10 court found that “this particular legal malpractice claim is
11 inseparable from the bankruptcy case” and thus “falls easily
12 within the definition of a core proceeding.” Id.
13 Debtor’s claims against Altagen do not fall within the
14 scope of Schultze. Although Debtor’s claims would not exist
15 without the bankruptcy case insofar as her claims against
16 Altagen concern his handling of her bankruptcy case, it is not
17 an “administrative” matter peculiar to the bankruptcy context
18 involving, for instance, a court-appointed attorney such as in
19 Schultze. Debtor’s allegations against Altagen pertain solely
20 to his representation as her chapter 7 private attorney. As
21 such, Altagen’s duties and representation of Debtor did not
22 involve the administration of the bankruptcy estate as that was
23 the chapter 7 trustee’s role. Accordingly, Debtor’s claims
24 against Altagen do not impact the handling and administration of
25 her estate and thus are easily separable from the bankruptcy
26 case.
27 In short, Debtor’s relationship with Altagen is governed by
28 the same state-law rules of professional conduct regardless of
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1 whether Altagen represented Debtor in a bankruptcy case or some
2 state real estate matter. Therefore, her claims exist outside
3 of bankruptcy and could be (and were) brought in the state
4 court. The claims alleged against Altagen do not fall within
5 “arising in” jurisdiction.
6 The claims also do not fall within the “related to”
7 category for noncore proceedings. Debtor’s fraud/malpractice
8 claims against Altagen could not have any conceivable effect on
9 her estate. The claims belong to Debtor personally and are not
10 property of her estate, creditors have been paid in full, debtor
11 received her discharge, and the chapter 7 estate has been fully
12 administered and closed. Regardless of whether Debtor is
13 successful or not with her claims against Altagen, her estate
14 would receive no assets. No administration would occur and no
15 distributions would be made. In the end, the critical component
16 of the Pacor test is not met here: “bankruptcy courts have no
17 jurisdiction over proceedings that have no effect on the estate
18 of the debtor.” Celotex Corp., 514 U.S. at 300, 308 & n. 6.
19 Accordingly, the bankruptcy court lacked subject matter
20 jurisdiction over the underlying adversary proceeding.
21 VII. CONCLUSION
22 For the reasons stated, we vacate the bankruptcy court’s
23 order dismissing Debtor’s adversary complaint with prejudice
24 and remand with instructions to dismiss this adversary
25 proceeding without prejudice based on lack of subject matter
26 jurisdiction.
27
28
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