HENRY J. BOROFF, Bankruptcy Judge.
Before the Court is a Motion to Dismiss a Third Party Complaint (the "Motion to Dismiss") filed by Holly Hines and Morrison Rousseau, LLP ("Attorney Hines" and "Morrison Rousseau;" together the "Third Party Defendants") for failure to state a claim upon which relief can be granted. Because this Court concludes that it does not have subject matter jurisdiction over the Third Party Complaint, this Court must dismiss the Third Party Complaint sua sponte before reaching any of the legal issues raised in the Motion to Dismiss.
Judith and Donald Surprise ("Judith" and "Donald;" together the "Surprises") are spouses residing at 120 Wheeler Avenue in Springfield, Massachusetts (the "Property"). The Property was jointly owned by the Surprises until 2006. At that time, the Surprises separated. In contemplation of divorce, they orally agreed that Donald would transfer his interest in the Property to Judith in exchange for Judith's waiver of her interest in his employment retirement plan. On August 15, 2006, Donald executed a quitclaim deed transferring all of his right, title, and interest in the Property to Judith for consideration of $10.00 (the "2006 Transfer"). The deed was duly recorded in the Massachusetts Hampden County Registry of Deeds. Three months later, Judith executed a spousal consent for the distribution of Donald's retirement benefits, which moneys were distributed to Donald shortly thereafter. However, in 2007, the Surprises reconciled and ultimately never sought any relief from the Massachusetts Probate and Family Court nor privately divided their other assets.
On August 17, 2009, Donald, represented by Attorney Hines with the firm of Morrison Rousseau, filed a case in this Court under Chapter 7 of the Bankruptcy Code. Judith did not join in that bankruptcy
Shortly thereafter, Judith filed the instant third party complaint (the "Third Party Complaint") against Attorney Hines and Morrison Rousseau alleging malpractice and breach of contract. Under the Third Party Complaint, Judith alleges that Donald told Attorney Hines explicitly that he wanted Judith and the Property unaffected by his bankruptcy case filing and that Attorney Hines provided him with the requested assurance. Judith also claims that Attorney Hines either failed to conduct a proper investigation into the state of the title of the Property or its history and/or failed to advise Donald that the Trustee might seek to avoid the 2006 Transfer and how to undertake a course of action to better defend against the Trustee's actions. Judith also alleges that Attorney Hines knew that Donald expected that Attorney Hines would represent Judith's legal interests as well as his own and that Attorney Hines either agreed or acquiesced to that representation.
The Third Party Defendants argue that the Third Party Complaint should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6)
Judith opposes the Motion to Dismiss, arguing that, because all of her allegations must—in the face of a motion to dismiss— be assumed true, she makes plausible claims upon which relief can be granted. Judith further insists that these facts can serve as a basis for a claim of negligent malpractice against Attorney Hines (and Morrison Rousseau under the doctrine of respondeat superior) because Attorney Hines knew that Judith would rely on her services and representations to Donald. Judith also argues that she was an intended third party beneficiary of the contract between Attorney Hines and Donald, a critical component of which was that Judith's interests would not be impacted by Donald's bankruptcy case filing.
"The jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute." Celotex Corp. v. Edwards, 514 U.S. 300,
The jurisdiction of the bankruptcy courts is derived from 28 U.S.C. § 1334 and 28 U.S.C. § 157. Celotex Corp., 514 U.S. at 307, 115 S.Ct. 1493; In re Deceder, 351 B.R. 261, 265 (Bankr.D.Mass.2006). Section 1334 delineates the United States district courts' jurisdiction over "bankruptcy cases and proceedings." Section 1334 reads, in relevant part:
28 U.S.C. § 1334 (2006).
And pursuant to § 157, the district courts may "refer" bankruptcy cases "to the bankruptcy judges for the district." 28 U.S.C. § 157 (2006).
28 U.S.C. § 157 (2006) (emphasis added).
Judith's claims do not "arise under" Title 11 because they occurred prepetition and derive from state law, rather than under Title 11 of the United States Code and could be brought in the Massachusetts state courts. For the same reason, Judith's claims do not "arise in" Donald's bankruptcy case. See Boyajian v. DeLuca (In re Remington Dev. Grp., Inc.), 180 B.R. 365, 368 (Bankr.D.R.I.1995). All that remains, therefore, is the possibility that this Court's jurisdiction falls within the "related to" grant set out in § 1334(b).
Though the words "related to" suggest "a grant of some breadth," the Supreme Court has noted that "a bankruptcy court's `related to' jurisdiction cannot be limitless." Celotex Corp., 514 U.S. at 307-08, 115 S.Ct. 1493. And the First Circuit has ruled that "related to" actions must:
In re G.S.F. Corp., 938 F.2d 1467, 1475 (1st Cir.1991). See also Celotex Corp., 514 U.S. at 307, n. 5, 115 S.Ct. 1493 (stating "[p]roceedings `related to' the bankruptcy include (1) causes of action owned by the debtor which become property of the estate pursuant to 11 U.S.C. § 541, and (2) suits between third parties which have an effect on the bankruptcy estate."); In re Deceder, 351 B.R. at 266 (collecting cases).
To show "related to" jurisdiction, Judith must show an "impact upon the handling and administration of the bankrupt estate" or that the outcome of her claims "could conceivably have any effect on the estate." In re G.S.F. Corp., 938 F.2d at 1475. Judith's claims against the Third Party Defendants, without question, are not property of Donald's bankruptcy estate. Any recovery thereon would go to Judith alone. No rights would be created for the benefit of the estate or would impact the claims against the estate. Accordingly, this Court has no "related to" jurisdiction, and the Third Party Complaint must be dismissed. Boyajian, 180 B.R. at 370.
For the foregoing reasons, the Court concludes that it lacks jurisdiction over the dispute between Judith and the Third Party Defendants. Accordingly, the Third Party Complaint will be DISMISSED.
A separate order consistent with this Memorandum will issue accordingly.