Unpublished Disposition, 921 F.2d 282 (9th Cir. 1989)

MEMORANDUM^** 

Mal Yerasi appeals the dismissal of his adversary proceeding against Metropolitan Savings & Loan Association ("Metropolitan"). The district court found the bankruptcy court did not have jurisdiction over the proceeding because its outcome could have no conceivable effect on the bankrupt estate. We affirm.

* On December 11, 1981, Yerasi filed a petition under Chapter 11 of the Bankruptcy Code, which stayed a foreclosure proceeding Metropolitan had commenced on Yerasi's Dallas property. When Yerasi failed to comply with the terms of a bankruptcy court order, the stay terminated and Metropolitan recommenced foreclosure proceedings.

Yerasi then applied ex parte for a temporary restraining order to prevent foreclosure. The application was denied, and Yerasi immediately filed a notice of appeal and an "Emergency Motion for Stay Order Pending Appeal," requesting that the foreclosure proceedings be stayed pending appeal to the Ninth Circuit Bankruptcy Appellate Panel (the "Panel" or the "BAP"). The BAP granted a temporary stay "to allow the Panel to consider appellant's emergency motion for stay pending appeal."

Metropolitan sold the property before learning of the Panel's order. The Panel later denied Yerasi's motion for stay pending appeal. Yerasi then brought an adversary proceeding seeking damages incurred by reason of the foreclosure and Metropolitan's violation of the temporary stay. That proceeding was dismissed without prejudice, and Yerasi was discharged from bankruptcy.

Yerasi then commenced the present adversary proceeding, alleging the same damages as in the dismissed proceeding. On cross-motions for summary judgment, the district court dismissed for lack of subject matter jurisdiction.

II

We review de novo the district court's dismissal of an action for lack of subject matter jurisdiction. United States v. $84,740.00 U.S. Currency, 900 F.2d 1402, 1404 (9th Cir. 1990); Marshall Leasing v. United States, 893 F.2d 1096, 1098 (9th Cir. 1990).

III

Federal district courts have subject matter jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b) (1988). Bankruptcy courts are designated as units of the district courts, 28 U.S.C. § 151 (1988), and have jurisdiction over "any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11." 28 U.S.C. § 157(a) (1988) (emphasis added). We must therefore decide whether Yerasi's claim is, at a minimum, "related" to a proceeding under title 11. 28 U.S.C. § 1334(b) (1988); In re American Hardwoods, 885 F.2d 621, 623 (9th Cir. 1989).

This circuit has adopted the Third Circuit's definition of a "related" proceeding under section 1334(b). See Kaonohi Ohana, Ltd. v. Sutherland, 873 F.2d 1302, 1306-07 (9th Cir. 1989); In re Fietz, 852 F.2d 455, 457 (9th Cir. 1988).

[T]he test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of the proceeding could conceivably have any effect on the estate being administered in bankruptcy. ... An action is related to bankruptcy if 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.

Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rd Cir. 1984) (emphasis in original), quoted in Fietz, 852 F.2d at 457. In Fietz, a Chapter 13 plan had been confirmed before the plaintiff filed the adversary proceeding. The court held " [t]he confirmation of the [Chapter 13] plan before the action ... was filed ... destroyed any possible relationship between the outcome of the suit and the administration of the bankruptcy estate." Fietz, 852 F.2d at 458 (emphasis in original).

We find Yerasi's discharge from bankruptcy destroyed any possible relationship between the outcome of this suit and the administration of his bankruptcy estate. Yerasi was discharged from bankruptcy on June 18, 1984 and his bankruptcy estate was closed on August 25, 1989. This adversary proceeding was commenced on September 6, 1984--three months after the discharge. Further, the claims had been abandoned by the trustee, and any damages would be recovered by Yerasi and not the estate.

IV

Yerasi argues Fietz does not apply in this case because his claim "arose in" the bankruptcy proceeding and therefore need not be "related to" the bankruptcy. We reject this argument. A claim for damages cannot "arise in" the bankruptcy unless it is at least "related to" the bankruptcy..

Generally, "causes of action owned by the debtor that [become] part of the estate" are "related proceedings" under section 1334(b). 1 Collier on Bankruptcy Sec. 3.01, 3-26 (15th ed. 1990). "Arising in" proceedings, on the other hand, are administrative matters that could not have been the subject of a lawsuit absent the filing of a bankruptcy case. 1 Collier on Bankruptcy Sec. 3.01, 3-29 (15th ed. 1990). Moreover, a debtor's cause of action for damages must, as a threshold matter, be "related to" a bankruptcy proceeding for the bankruptcy court to have jurisdiction. See American Hardwoods, 885 F.2d at 622 ("We must therefore decide whether American's motion is, at a minimum, 'related' to a proceeding under title 11") (emphasis added); Wood v. Wood (In re Wood), 825 F.2d 90, 93 (5th Cir. 1987) (" [I]t is necessary only to determine whether a matter is at least 'related to' the bankruptcy"). Yerasi's claim is for damages arising from Metropolitan's foreclosure, and must at least be "related to" the administration of a bankruptcy estate. We find it is not.

Yerasi also argues the district court had jurisdiction under In re Balboa Improvements, Ltd., 99 Bankr. 966 (Bankr. 9th Cir. 1989), and Reed v. Philadelphia Hous.Auth. (In re Reed), 94 Bankr. 48 (Bankr.E.D. Pa. 1988). In both of these cases, however, jurisdiction existed only because the outcome of the damage claim could have resulted in recovery by the bankrupt estate. Balboa Improvements, 99 Bankr. at 969; Reed, 94 Bankr. at 53. Again, because Yerasi was already discharged from bankruptcy when his claim was filed, any damages would have been recovered by him and not the estate.

For the foregoing reasons, the district court's dismissal for lack of subject matter jurisdiction is

AFFIRMED.