TJOFLAT, Circuit Judge:
The threshold issue this appeal presents is whether a bankruptcy court in one federal district has jurisdiction to determine whether a debt was discharged in a bankruptcy case litigated in another federal district. We hold that the court lacks jurisdiction and therefore do not reach the other issues the appeal presents.
The debt at issue consists of claims of tort liability possessed by relatives of people buried in a Miami, Florida cemetery, known as Graceland. The claims are set out in the class action complaint filed in the Circuit Court for Miami-Dade County, Florida ("State Court") by Reyvis Garcia, Ramona Johnson, and Mercedes Woodberry ("Creditors") in March 2008.
Debtors contend that Creditors' claims were discharged in a Chapter 11 bankruptcy case in the United States Bankruptcy Court for the District of Delaware ("Delaware Bankruptcy Court"), a case they initiated on June 1, 1999, when they petitioned that court for Chapter 11 relief ("Chapter 11 Case") under the Bankruptcy Code.
On December 5, 2001, the Delaware Bankruptcy Court entered an Order confirming Debtors' plan of reorganization ("Confirmation Order") and fixing January 2, 2002, as the plan's "Effective Date." The Confirmation Order discharged all claims against Debtors, including unknown claims such as those Creditors asserted in the State Court case, that arose on or before the Effective Date and provided that the court retained jurisdiction over the reorganization after the Effective Date.
On April 7, 2008, Debtors filed a "complaint" against Creditors in the United States Bankruptcy Court for the Southern District of Florida ("Florida Bankruptcy Court"). The complaint invoked that court's jurisdiction under 28 U.S.C. §§ 157 and 1334
In response, Creditors moved the Florida Bankruptcy Court to dismiss the Debtors' complaint for lack of subject matter jurisdiction or, in the alternative, to abstain from exercising jurisdiction and/or to remand the case to state court.
On June 9, 2008, Creditors answered Debtors' complaint. Creditors alleged that the notice to unknown creditors published in the Chapter 11 Case pursuant to the Bar Date Order was constitutionally inadequate; therefore, their claims had not been discharged.
After the pleadings closed, the parties filed cross-motions for summary judgment.
Debtors appealed the court's decision to the United States District Court for the Southern District of Florida,
In its brief to this court, Debtors raise four issues: (1) whether the Florida Bankruptcy Court had subject matter jurisdiction to consider Creditors' due process defense; (2) whether the District Court erred in denying Debtors' motion to alter or amend judgment; (3) whether the Florida Bankruptcy Court erred in granting Creditors summary judgment; and (4) whether the Florida Bankruptcy Court erred in denying Debtors' motion for summary judgment. We do not address these issues because we conclude that the Florida Bankruptcy Court lacked jurisdiction to entertain Debtors' complaint for declaratory relief.
The Bankruptcy Code provides that "the confirmation of a plan ... discharges the debtor from any debt that arose before the date of such confirmation" and that "after confirmation of a plan, the property dealt with by the plan is free and clear of all claims and interests of creditors." 11 U.S.C. § 1141(c), (d)(1)(A). Moreover, the discharge "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor." Id. § 524(a)(2). "[The] court that enters an order confirming a plan of reorganization under chapter 11 may issue, in connection with such order, an injunction in accordance with this subsection to supplement the injunctive effect of a discharge under [§ 524]." Id. § 524(g)(1)(A). Indeed, the Confirmation Order so provided: "as of the Effective Date, all entities that ... hold a Claim or other debt or liability that is discharged ... are permanently enjoined from ... commencing or continuing in any manner any action ... against the Debtors." In re Loewen Grp. Int'l, Jointly Administered Case No. 99-1244(PJW), slip op. at 60-61 (Bankr.D.Del. Dec. 5, 2001) (Confirmation Order).
Once Debtors were served with Creditors' complaint in the State Court case, they had four options to challenge Creditors' prosecution of that case. Debtors could (1) assert the discharge provided by the Confirmation Order as an affirmative defense in the State Court case; (2) remove the case to the United States District Court for the Southern District of Florida under 28 U.S.C. § 1452(a); (3) move the Delaware Bankruptcy Court to reopen the Chapter 11 Case pursuant to 11 U.S.C. § 350(b);
Bankruptcy judges, like district judges, have the power to coerce compliance with injunctive orders. In the bankruptcy context, "the creditor who attempts to collect a discharged debt is violating not only a statute but also an injunction and is therefore in contempt of the bankruptcy court that issued the order of discharge." Cox v. Zale Del., Inc., 239 F.3d 910, 915 (7th Cir.2001) (citing Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 421 (6th Cir.2000); Ins. Co. of N. Am. v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp. (In re Nat'l Gypsum Co.), 118 F.3d 1056, 1063 (5th Cir.1997)); accord Hardy v. United States ex rel. I.R.S. (In re Hardy), 97 F.3d 1384, 1390 (11th Cir.1996) ("[Creditor] may be liable for contempt ... if it willfully violated the permanent injunction of § 524." (emphasis omitted)). In addition to the traditional sanctions for coercing compliance with an injunction — incarceration or financial penalty, see Newman v. Alabama, 683 F.2d 1312, 1318 (11th Cir.1982) — a bankruptcy court may issue orders to obviate conduct that stands to frustrate administration of the Bankruptcy Code, see In re Hardy, 97 F.3d at 1389 (explaining that a bankruptcy court may issue "any type of order, whether injunctive, compensative or punitive, as long as it is necessary or appropriate to
In this case, Debtors seek to prevent Creditors from pursuing in State Court claims purportedly discharged in the Chapter 11 Case. If the claims were discharged, Creditors may be in contempt of the discharge injunction for maintaining the State Court action. See Cox, 239 F.3d at 915; In re Hardy, 97 F.3d at 1390. But Debtors, in drafting their complaint for declaratory relief, did not frame the pleading as a motion for an order to show cause why Creditors should not be held in contempt for violating the discharge injunction. Instead, Debtors moved the court to declare that Creditors' claims had been discharged in the Chapter 11 Case pursuant to § 1141 of the Bankruptcy Code, Compl. for Declaratory Relief ¶ 27, Alderwoods Grp. v. Garcia, No. 08-1266-BKC-RAM-A (Bankr.S.D.Fla. Apr. 7, 2008), and to enjoin Creditors "from continuing the [State Court action], pursuant to § 524 of the Bankruptcy Code." Id. at 5-6. Debtors requested relief is either a misguided attempt to have the court sanction Creditors purported contempt of the Chapter 11 Case's discharge provision by enjoining Creditors from prosecuting their State Court action,
We think it unnecessary to distill any further the relief Debtors' complaint seeks. What Debtors want is the enforcement of their discharge injunction. If they meant to obtain it by having a bankruptcy court sanction Creditors' contempt for disregarding the injunction by, for example, enjoining Creditors from prosecuting the State Court action, then the Florida Bankruptcy Court was not the court with the power to do so.
The ultimate question in a case like this one is which court has the power to enforce the discharge injunction. To answer this question, we must understand the relationship
As a matter of basic policy, "[b]ankruptcy jurisdiction, as understood today and at the time of the framing, is principally in rem jurisdiction." Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 369, 126 S.Ct. 990, 1000, 163 L.Ed.2d 945 (2006). "[T]he jurisdiction of courts adjudicating rights in the bankrupt estate included the power to issue compulsory orders to facilitate the administration and distribution of the res." Id. at 362, 126 S.Ct. at 996. A court, however, must have possession of the res in order to obtain in rem jurisdiction over its distribution. For example, by analogy to in rem admiralty cases
The Bankruptcy Code provides that "[t]he district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate." 28 U.S.C. § 1334(e)(1). Because "[b]ankruptcy courts have exclusive jurisdiction over a debtor's property, wherever located, and over the estate," it follows that "the court's jurisdiction is premised on the debtor and his estate." Hood, 541 U.S. at 447, 124 S.Ct. at 1910 (citing 28 U.S.C. § 1334(e)). It is this aspect of a bankruptcy court's jurisdiction that "permits it to `determin[e] all claims that anyone, whether named in the action or not, has to the property or thing in question,'" in that "`[t]he proceeding is "one against the world."'" Id. at 448, 124 S.Ct. at 1911 (quoting 16 J. Moore et al., Moore's Federal Practice § 108.70[1] (3d ed. 2004)) (alteration in original). Accordingly, the court administering the bankrupt's estate — the res — is the court with the power to enter orders effecting its distribution and to "adjudicate rights in it that are binding against the world." Odyssey Marine, 657 F.3d at 1171 (quoting R.M.S. Titanic, 171 F.3d at 964) (internal quotation marks omitted).
Logically, then, a bankruptcy court necessarily has power to enforce its own orders regarding its administration of the estate. Local Loan Co., 292 U.S. at 241, 54 S.Ct. at 697-98. When, in a Chapter 11 case, a bankruptcy court issues an order confirming a reorganization plan, that court "retains postconfirmation jurisdiction to complete any action pertinent to the plan." 9D Am.Jur. 2d Bankruptcy § 3014 (2012); see also 28 U.S.C. §§ 157, 1334 (providing the bankruptcy courts — by operation of referral under § 157 — "original but not exclusive jurisdiction of all civil
Moreover, the court that enters an injunctive order retains jurisdiction to enforce its order. In this respect, a bankruptcy court is no different than any other federal court, which possesses the inherent power to sanction contempt of its orders. See Chambers v. NASCO, Inc., 501 U.S. 32, 50, 111 S.Ct. 2123, 2136, 115 L.Ed.2d 27 (1991). The bankruptcy court that confirms a reorganization plan thus enters an injunctive order — the confirmation order, see 11 U.S.C. §§ 524, 1141 — the violation of which it can sanction. That said, although a federal court's injunction applies nationwide, "[v]iolation of an injunctive order is cognizable in the court which issued the injunction." Waffenschmidt v. MacKay, 763 F.2d 711, 716 (5th Cir.1985) (quoting Stiller v. Hardman, 324 F.2d 626, 628 (2d Cir.1963)) (alteration in original) (emphasis added) (quotation marks omitted); see also Cox, 239 F.3d at 915 ("the creditor who attempts to collect a discharged debt is violating not only a statute but also an injunction and is therefore in contempt of the bankruptcy court that issued the order of discharge." (emphasis added)).
Perhaps most importantly, then, the power to sanction contempt is jurisdictional.
In re Debs, 158 U.S. 564, 594-95, 15 S.Ct. 900, 910, 39 L.Ed. 1092 (1895) (citation omitted) (internal quotation marks omitted), abrogated on other grounds by Bloom v. Illinois, 391 U.S. 194, 88 S.Ct. 1477, 20 L.Ed.2d 522 (1968); see also Baker ex rel. Thomas v. Gen. Motors Corp., 522 U.S. 222, 118 S.Ct. 657, 139 L.Ed.2d 580 (1998) ("[The] nonrendition forum enforces the monetary relief portion of a judgment but leaves enforcement of the injunctive portion to the rendition forum." (citing Stiller v. Hardman, 324 F.2d 626, 628 (2d Cir. 1963))).
Thus, the court that issued the injunctive order alone possesses the power to enforce compliance with and punish contempt of that order. In re Debs, 158 U.S. at 595, 15 S.Ct. at 910; see also Waffenschmidt, 763 F.2d at 716 ("Enforcement of an injunction through a contempt proceeding must occur in the issuing jurisdiction because contempt is an affront to the court issuing the order."); Suntex Dairy v. Bergland, 591 F.2d 1063, 1068 (5th Cir. 1979) ("If [conduct] is found by the Missouri court to be in violation of its injunction, it may be in contempt of that court. The appropriate response to such contempt, if it exists, is a matter for the
In the case at hand, it is apparent that if Creditors' filing of the State Court action indeed violated the discharge injunction contained in the Confirmation Order, then it was the Delaware Bankruptcy Court's injunction to enforce — not the Florida Bankruptcy Court's. The Chapter 11 Case was administered by the Delaware Bankruptcy Court; that court confirmed Debtors' reorganization plan and entered the order discharging Debtors' preconfirmation liabilities. As the court that controlled the res of Debtors' estate, the Delaware Bankruptcy Court retained jurisdiction to effectuate and enforce the discharge injunction. This is even more apparent considering that the Confirmation Order explicitly enjoined suits to collect on discharged debts and vested continuing jurisdiction in the Delaware Bankruptcy Court to enforce violations of the discharge injunction. See In re Chateaugay Corp., 201 B.R. at 66. If Creditors' claims were discharged, then the Delaware Bankruptcy Court alone had the power to sanction Creditors' alleged contempt for prosecuting discharged claims in violation of the injunction. See, e.g., Waffenschmidt, 763 F.2d at 716. Thus, regardless of how Debtors framed the allegations of the complaint they filed in the Florida Bankruptcy Court — as seeking the sanctioning of Creditors' alleged contempt, an injunction against further violation of the discharge injunction, or an order enjoining the State Court case from proceeding further — the Florida Bankruptcy Court lacked jurisdiction to entertain the complaint because the discharge injunction was never its to enforce.
That alleged contemnors are without the territorial jurisdiction of the rendition forum is of no moment. As a general principle, the Due Process Clause requires that a federal court have jurisdiction over a person in order to bind that person through judgment. See U.S. Const. amend. V; Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104, 108 S.Ct. 404, 409, 98 L.Ed.2d 415 (1987) ("The requirement that a court have personal jurisdiction flows ... from the Due Process Clause .... It represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty." (quotation omitted) (second alteration in original)). Notwithstanding this general requirement, nonparties who engage in enjoined conduct can be sanctioned when their conduct would frustrate the court's "ability to render a binding judgment." United States v. Hall, 472 F.2d 261, 267 (11th Cir.1972). Accordingly, the courts that have considered the issue generally agree that this sanction power extends to a person outside the territorial limits of the court that issued the injunctive order, provided that the person had actual notice of the order and acted in concert with the party explicitly enjoined. ClearOne Communications, Inc. v. Bowers, 651 F.3d 1200, 1215-16 (10th Cir.2011); Sec. & Exch. Comm'n v. Homa, 514 F.3d 661, 673-75 (7th Cir.2008); Waffenschmidt, 763 F.2d at 714. Analogously,
In the bankruptcy context, a bar-date notice, published to unknown creditors, suffices to bring creditors within the power of the bankruptcy court administering the estate. This is true regardless of whether actual notice is received — provided that the means of publication are those "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950); see also City of New York v. N.Y., N.H. & H.R. Co., 344 U.S. 293, 296, 73 S.Ct. 299, 301, 97 L.Ed. 333 (1953) ("[W]hen the names, interests and addresses of [creditors] are unknown, plain necessity may cause a resort to publication."). Because the bankruptcy court has exclusive jurisdiction over the debtor's estate, 28 U.S.C. § 1334(e), the published notice gives potential creditors sufficient "contact" with the debtor's estate such that the court may properly enjoin those who are not present within the court's federal district consistent with Fifth Amendment due process. That court, then, may properly sanction those without the district when their conduct violates or frustrates the court's injunctive orders. So, too, could the Delaware Bankruptcy Court adjudicate the rights of Creditors and the members of their class, notwithstanding that Creditors and those similarly situated may or may not have independent jurisdictional ties to the District of Delaware.
This conclusion does not fully resolve the matter at hand, for there remains the issue of how we are to dispose of this appeal. Above all, the Delaware Bankruptcy Court should be the court to consider the merits of Debtors' assertion that Creditors are pursuing discharged claims. The simplest option would be to remand the case with the instruction that Debtors' complaint be dismissed without prejudice. If that were the disposition, Debtors presumably would turn to the Delaware Bankruptcy Court for relief. Taking that course, however, would seem unnecessarily cumbersome and wasteful of judicial resources.
Instead, we believe that transferring the case to the United States District Court for the District of Delaware would be more efficient. The bankruptcy jurisdiction and venue statutes provide that "[a] district court may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties." 28 U.S.C. § 1412. First, if characterized as an attempt to enforce the Confirmation Order's discharge injunction, Debtors' complaint initiated a "proceeding under title 11," 28 U.S.C. § 1412, that triggered the Florida Bankruptcy Court's statutory transfer power, see Cont'l Nat'l Bank of Miami v. Sanchez (In re Toledo), 170 F.3d 1340, 1345 (11th Cir.1999) ("`Arising under' proceedings are matters invoking a substantive right created by the Bankruptcy Code." (citing Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir.1987))); see also 28 U.S.C. § 1334(b) (giving the district courts original jurisdiction "of all civil proceedings arising under title 11"); Ins. Co. of N. Am. v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp. (In re Nat'l Gypsum Co.), 118 F.3d 1056, 1063-64 (5th Cir.1997) ("[An] action to enforce the discharge injunction ... is a federal cause of action, asserting a statutory right under the Bankruptcy Code."). Thus, § 1412's case-or-proceeding prerequisite is satisfied.
Second, although courts cite myriad factors in determining whether to transfer a case under § 1412 "in the interest
For the foregoing reasons, the judgment of the District Court is VACATED, and the case is REMANDED to the District Court for the disposition set out above.
SO ORDERED.
Osiris purchased Graceland in 1991. Four years later, Alderwoods acquired Osiris. On December 19, 2006, Northstar Graceland, LLC ("Northstar") acquired Graceland from Osiris. Northstar is included in the term Debtors even though it was not a debtor in any of the consolidated Chapter 11 cases referred to in note 2, supra.
28 U.S.C. § 157(a)-(b)(1).
Section 1334 states, in pertinent part: "[T]he district courts shall have 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(b).
11 U.S.C. § 524(a)(2), (g)(1)(A).
As for option (2), 28 U.S.C. § 1452 gives the district courts removal jurisdiction for "claims related to bankruptcy cases":
28 U.S.C. § 1452(a). Removal of cases under § 1452(a) is possible only within "30 days after receipt, through service or otherwise, of a copy of the initial pleading setting forth the claim or cause of action sought to be removed." Fed. R. Bankr.P. 9027(a)(3)(A); see also 28 U.S.C. § 1446(b) ("The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based."). Section 1334 refers to 28 U.S.C. § 1334, "Bankruptcy Cases and Proceedings," which gives "the district courts... original and exclusive jurisdiction of all cases under [the Bankruptcy Code]," id. § 1334(a), and for "original but not exclusive jurisdiction of all civil proceedings arising under [the Bankruptcy Code], or arising in or related to cases under [the Bankruptcy Code]," id. § 1334(b).
Debtors did not choose option (2) by timely removing the State Court case — in whole or in part — to federal court. Debtors did not file their complaint for declaratory relief in the Florida Bankruptcy Court until April 2008, nearly four years after Creditors filed the State Court action, in December 2004. Thus, even if the Florida Bankruptcy Court had treated the complaint as a de facto removal under 28 U.S.C. § 1452(a), that removal would have been untimely. And the general removal statute, 28 U.S.C. § 1441, would not have applied; the State Court case, consisting only of state-law claims, was not one "of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a).
As for option (3), 11 U.S.C. § 350 provides for the bankruptcy courts' administrative powers to open and close bankruptcy cases:
11 U.S.C. § 350. "[U]nder Bankruptcy Rule 4007(b) either the debtor or the creditor can move to reopen the case for the purpose of filing a complaint to determine dischargeability." In re James, 184 B.R. 147, 150-51 (Bankr.N.D.Ala.1995) (quoting In re Mendiola, 99 B.R. 864, 870 (Bankr.N.D.Ill.1989) (internal quotation marks omitted)). Bankruptcy Rule 4007 provides that "[a] debtor or any creditor may file a complaint to obtain a determination of the dischargeability of any debt." Fed. R. Bankr.P. 4007(a). "This rule prescribes the procedure to be followed when a party requests the court to determine dischargeability of a debt pursuant to § 523 of the Code," id. note, which in turn lists exceptions to discharge under, inter alia, 11 U.S.C. § 1141, see 11 U.S.C. § 523. Thus, § 350(b) provides a mechanism whereby, after an estate has been administered according to a confirmed reorganization plan, the debtor or a creditor may reopen a bankruptcy case to obtain a determination of whether the creditor's claim is of a type exempted from discharge pursuant to 11 U.S.C. § 523.
Debtors did not choose option (3) because they did not — and could not — move the Florida Bankruptcy Court to reopen the Chapter 11 Case. The case would have to be reopened, if at all, by the Delaware Bankruptcy Court which had administered the case. See 11 U.S.C. § 350(b) ("A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.").
Bankruptcy-court power in this respect is given also by § 105(a) of the Bankruptcy Code:
11 U.S.C. § 105(a); see also Hardy v. United States ex rel. I.R.S. (In re Hardy), 97 F.3d 1384, 1389 (11th Cir.1996) ("Section 105 creates a statutory contempt power, distinct from the court's inherent contempt powers in bankruptcy proceedings."). "While a defendant may be cited for contempt under the court's inherent powers only upon a showing of `bad faith,' [Creditor] may be liable for contempt under § 105 if it willfully violated the permanent injunction of § 524." In re Hardy, 97 F.3d at 1390 (quoting Glatter v. Mroz (In re Mroz), 65 F.3d 1567, 1575 (11th Cir.1995)) (emphasis omitted).
Reynolds v. Roberts, 207 F.3d 1288, 1298 (11th Cir.2000) (footnote omitted) (citations omitted).
11 U.S.C. § 523(a)(3). This is because in an in rem proceeding, the enforceability of an in rem judgment is premised upon either actual or constructive notice to any persons who may have a claim to the res. See, e.g., Betty K Agencies, Ltd. v. M/V MONADA, 432 F.3d 1333, 1342 (11th Cir.2005).
