In re: Antonio Alejandro Gutierrez

FILED
MAR 2 2022
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. ID-21-1156-SGB
ANTONIO ALEJANDRO GUTIERREZ,
Debtor. Bk. No. 19-00416-JMM
ANTONIO ALEJANDRO GUTIERREZ, Adv. No. 20-06023-JMM
Appellant,
v. MEMORANDUM*
STATE OF OREGON, DEPARTMENT
OF CORRECTIONS,
Appellee.
Appeal from the United States Bankruptcy Court
for the District of Idaho
Joseph M. Meier, Chief Bankruptcy Judge, Presiding
Before: SPRAKER, GAN, and BRAND, Bankruptcy Judges.
INTRODUCTION
Antonio Alejandro Gutierrez is a former chapter 7 1 debtor and is an
inmate at the Snake River Correctional Institution, run by the Oregon
Department of Corrections (“ODOC”). After he received his discharge and
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
1 Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532.
1
his case was fully administered, Gutierrez filed a complaint stating two
claims for relief. One claim challenged the method used by the ODOC to
collect court filing fees he owed under 28 U.S.C. § 1915(b). The other claim
concerned the dischargeability of those debts under § 523(a)(17).
The bankruptcy court first dismissed the dischargeability claim on
the merits. The court then dismissed the sole surviving claim challenging
ODOC’s collection methods for lack of subject matter jurisdiction.
Gutierrez has not appealed the dismissal of his dischargeability claim. He
only has appealed the dismissal of his remaining claim.
Gutierrez insists that the bankruptcy court had “related to”
jurisdiction over the claim regarding ODOC’s collection methods.
Alternately, he contends that the bankruptcy court should have exercised
its discretion to “retain” jurisdiction over that claim. But the bankruptcy
court never had any jurisdiction over this claim to retain.
Neither of Gutierrez’s arguments on appeal have any merit.
Accordingly, we AFFIRM.
FACTS
In April 2019, Gutierrez commenced his bankruptcy case by filing a
voluntary chapter 7 petition. In August 2019, the bankruptcy court entered
orders discharging debtor and closing Gutierrez’s no-asset case. 2
2
We exercise our discretion to take judicial notice of documents electronically
filed in Gutierrez’s bankruptcy case and the related adversary proceeding. See Atwood v.
Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
2
In October 2019, the bankruptcy court reopened the case at
Gutierrez’s request. The purpose of reopening the case was to permit the
debtor to commence an adversary proceeding challenging the
dischargeability of debts he owed for federal court filing fees he incurred
under 28 U.S.C. § 1915(b). Under the statute, such fees are owed to the
federal courts but typically are collected from an inmate’s prisoner trust
account by the applicable correctional institution. See 28 U.S.C. § 1915(b)(2).
In this case, that institution was ODOC.
Gutierrez filed his adversary complaint seeking two forms of relief.
First, he challenged the dischargeability of the federal court filing fees. He
admitted in his complaint that his court fees were the type of debt that fell
within the scope of § 523(a)(17), but he asserted that the statute should not
be applied to his fees because none of the cases he filed were frivolous.
Second, Gutierrez challenged ODOC’s method of collecting the fees.
Gutierrez alleged that pursuant to 28 U.S.C. § 1915(b)(2), ODOC
historically capped its collections at “20 percent of the preceding month’s
income credited to the prisoner’s account” regardless of the number of
cases for which the inmate owed filing fees. However, Gutierrez claimed
that after he received his bankruptcy discharge, ODOC notified him for the
first time that it would collect from his prisoner trust account 20% of his
income per lawsuit filed, instead of 20% total regardless of the number of
cases filed. According to Gutierrez, the changes in the ODOC’s collection
methods were both contractually and constitutionally prohibited.
3
The bankruptcy court partially granted ODOC’s motion to dismiss
the complaint. It dismissed Gutierrez’s dischargeability claim but declined
to dismiss the collection method claim, holding that this claim was not yet
ripe for consideration. 3
Gutierrez then filed a motion seeking entry of a default judgment
against ODOC or alternately seeking entry of summary judgment on his
surviving claim challenging ODOC’s collection method. In support of his
default judgment motion, Gutierrez asserted that ODOC had not timely
complied with the court’s directions regarding further proceedings in the
adversary proceeding. As for his summary judgment motion, Gutierrez
contended that he was entitled to judgment as a matter of law on his
collection method claim.
ODOC opposed Gutierrez’s motions and filed its own motion
seeking to dismiss the remaining claim for lack of jurisdiction. ODOC in
relevant part pointed out that Gutierrez’s collection method claim would
not have any conceivable effect on his no asset chapter 7 case. The
bankruptcy case had been fully administered back in August 2019, well
before Gutierrez commenced his adversary proceeding.
The bankruptcy court held a hearing on the parties’ motions. The
court determined that it lacked jurisdiction over the surviving claim
3 Gutierrez has not challenged on appeal the dismissal of his dischargeability
claim. In fact, he later admitted to the bankruptcy court that he “didn’t think [the fees]
were going to be discharged.” Hr’g Tr. (June 21, 2021) at 4:5-7.
4
because the outcome would not affect Gutierrez’s bankruptcy case or the
bankruptcy estate. Based on that determination, the bankruptcy court held
that it lacked jurisdiction to decide the collection method claim, denied
Gutierrez’s motions, and dismissed the adversary proceeding.
On June 24, 2021, the bankruptcy court entered its order dismissing
the collection method claim and denying Gutierrez’s motions for default
judgment or for summary judgment. Gutierrez timely appealed.
JURISDICTION
The bankruptcy court’s jurisdiction is addressed in the discussion
section, below. We have jurisdiction under 28 U.S.C. § 158.
ISSUES
1. Did the bankruptcy court have jurisdiction over Gutierrez’s collection
method claim?
2. Did the bankruptcy court abuse its discretion by not retaining
jurisdiction over the collection method claim?
STANDARDS OF REVIEW
We review de novo whether the bankruptcy court had subject matter
jurisdiction over Gutierrez’s adversary proceeding. Wilshire Courtyard v.
Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729 F.3d 1279, 1284 (9th Cir.
2013); Alonso v. Summerville (In re Summerville), 361 B.R. 133, 139 (9th Cir.
BAP 2007).
5
We review for an abuse of discretion bankruptcy court decisions
concerning retention of jurisdiction after case dismissal. See Linkway Inv. Co.
v. Olsen (In re Casamont Invs., Ltd.), 196 B.R. 517, 521 (9th Cir. BAP 1996).
The bankruptcy court abuses its discretion when it applies an
incorrect legal rule or when its factual findings are illogical, implausible, or
without support in the record. TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d
820, 832 (9th Cir. 2011).
DISCUSSION
Gutierrez has asserted two arguments on appeal. First, he argues that
the bankruptcy court had “related to” jurisdiction over his claim
challenging ODOC’s debt collection methods. And second, he argues that
even if the bankruptcy court lacked “related to” jurisdiction over that
claim, the court should have “retained” jurisdiction to determine whether
ODOC was properly collecting the nondischargeable court fees.
Gutierrez acknowledges that the bankruptcy case was fully
administered long before he filed his adversary proceeding. He also
concedes that his claim regarding the dischargeability of the underlying
debt already had been dismissed. Yet he insists the bankruptcy court
should have exercised its discretion to keep and decide the collection
method claim because the court was “almost finished” adjudicating the
claim.
We address each of these arguments in turn.
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A. The bankruptcy court did not have subject matter jurisdiction over
Gutierrez’s collection method claim.
“Bankruptcy courts have subject matter jurisdiction over proceedings
‘arising under title 11, or arising in or related to cases under title 11.’” In re
Wilshire Courtyard, 729 F.3d at 1285 (quoting 28 U.S.C. § 1334(b)). Gutierrez
has conceded that his collection method claim did not arise under or arise
in the Bankruptcy Code. However, as he notes, the bankruptcy court also
has jurisdiction over “those proceedings that are ‘related to’ a bankruptcy
case.” Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1193 (9th
Cir. 2005). The bankruptcy court typically has “related to” jurisdiction over
the claims stated in an adversary proceeding when “the outcome could
alter the debtor’s rights, liabilities, options, or freedom of action (either
positively or negatively) and which in any way impacts upon the handling
and administration of the bankrupt estate.” Fietz v. Great W. Sav. (In re
Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (cleaned up) (quoting Pacor, Inc. v.
Higgins, 743 F.2d 984, 994 (3d Cir. 1984)).
Notwithstanding the broad scope of “related to” jurisdiction,
“bankruptcy courts have no jurisdiction over proceedings that have no
effect on the estate of the debtor.” Celotex Corp. v. Edwards, 514 U.S. 300, 308
& n.6 (1995). Once a chapter 7 bankruptcy estate has been fully
administered, most new adversary proceedings brought after that point fall
beyond the scope of “related to” jurisdiction precisely because there is no
bankruptcy estate left for the new adversary proceeding to impact. See, e.g.,
7
Holcomb v. Altagen (In re Holcomb), BAP No. CC-17-1268-KuTaS, 2018 WL
1976526, at *7 (9th Cir. BAP Apr. 25, 2018); In re Ketscher, Case No. 12-17088,
2014 WL 2615177, at *1-2 (Bankr. E.D. Cal. June 5, 2014); Ng v. Sterling Pac.
Lending, Inc. (In re Ng), Case No. 10-61392 RLE, 2011 WL 6133183, at *8
(Bankr. N.D. Cal. Dec. 8, 2011).4
Gutierrez’s collection method claim had absolutely no impact on his
fully administered and formerly closed bankruptcy case. He merely sought
to invoke non-bankruptcy law to restrict or prohibit the manner in which
ODOC collected a nondischargeable debt.
Gutierrez attempts to argue that the bankruptcy court’s “related to”
jurisdiction should be measured at an earlier time — before the full
administration of his bankruptcy case. But the law is settled that
jurisdiction is measured at the time the adversary proceeding is
commenced. See In re Casamont Invs., Ltd., 196 B.R. at 521 (citing In re Fietz,
852 F.2d at 457 at n.2).
In short, the bankruptcy court correctly determined that it did not
have “related to” jurisdiction over the surviving collection method claim
Gutierrez asserted in his adversary proceeding.
4There are exceptions to this rule. See, e.g., McCowan v. Fraley (In re McCowan),
296 B.R. 1, 3–4 (9th Cir. BAP 2003); see also § 554(d) (providing that estate assets neither
abandoned nor administered before closure of the case remain property of the estate).
But none of these exceptions apply to Gutierrez’s adversary proceeding.
8
B. The bankruptcy court did not abuse its discretion by not retaining
jurisdiction over the collection method claim.
Gutierrez also argues that the bankruptcy court should have
“retained” jurisdiction over his non-bankruptcy claim. See Aplt’s Opn. Br.
at 4-5. Citing Rodriguez v. Volpentesta (In re Volpentesta), 187 B.R. 261, 270
(Bankr. N.D. Ill. 1995), he contends that the bankruptcy court was obligated
to consider judicial economy, fairness and convenience to the parties, and
the degree of difficulty of the related legal issue involved. See also In re
Casamont Invs., Ltd., 196 B.R. at 521.
These decisions consider whether to retain jurisdiction over an
existing adversary case after the underlying bankruptcy case is dismissed.
But Gutierrez’s bankruptcy case was not dismissed. It was fully
administered and closed well before he filed the adversary proceeding.
Casamont, and similar cases, do not apply when the bankruptcy case has
been fully disposed of before the adversary proceeding is commenced. See
Sea Hawk Seafoods, Inc. v. Alaska (In re Valdez Fisheries Dev. Ass’n), 439 F.3d
545, 547-49 (9th Cir. 2006). Because Gutierrez’s bankruptcy was closed
when he commenced his adversary proceeding, the bankruptcy court never
had jurisdiction over the collection method claim. Put bluntly, there never
was any jurisdiction over that claim for the court to retain, so it did not
abuse its discretion by dismissing the claim.
Gutierrez seems to argue that the bankruptcy court should have
considered retaining jurisdiction over the collection method claim because
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it indisputably had jurisdiction over his dischargeability claim. Assuming
without deciding that the bankruptcy court had the discretion to retain
jurisdiction over the collection method claim based on some sort of theory
of supplemental jurisdiction, Gutierrez has not persuaded us that the
bankruptcy court abused that discretion. Applying the factors considered
in Casamont as suggested by Gutierrez, the record abundantly
demonstrates that dismissal was warranted. Litigants cannot manufacture
bankruptcy jurisdiction over a non-bankruptcy claim by including that
claim together with a specious bankruptcy claim well after the underlying
bankruptcy case has been administered.
CONCLUSION
For the reasons set forth above, we AFFIRM the bankruptcy court’s
adversary proceeding dismissal order.
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