ORDER DISMISSING ADVERSARY PROCEEDING FOR LACK OF JURISDICTION

GREGORY F. KISHEL, CHIEF UNITED STATES BANKRUPTCY JUDGE

The plaintiffs in this adversary proceeding are the debtors in the underlying Chapter 13 case.1 The case has been pending since May 7, 2013. The Les' plan was confirmed on May 22, 2014. The Les have appeared pro se throughout the case and the several contested proceedings within it.

This adversary proceeding is the second one the Les have commenced on the same subject matter, against defendants that included Wells Fargo and Schiller & Adam, P.A.

The first, ADV 13-3108, eventually featured 33 pleaded causes of action. It was dismissed in its entirety by the district court on April 28, 2014.2 Le v. Wells Fargo Bank, N.A., 13-cv-1920, Order [Dkt. No. 175] (D.Minn. April 28, 2014), adopting Amended Report and Recommendation on Defendants' Motions to Dismiss and Motions on Bankruptcy References, 13-cv-1920 [Dkt. No. 162] (D.Minn. March 17, 2014).3 The dismissal was affirmed by the Eighth Circuit. Le v. Wells Fargo Bank, N.A., 595 Fed.Appx. 661 (8th Cir.2015).

The Les commenced this adversary proceeding by filing a complaint in the bankruptcy court on March 11, 2015. This complaint reprises most of the factual allegations of the complaint in ADV 13-3108. This time the Les set out only four counts for separately-cast relief. However, they rely on the very same notion of wrongdoing on the part of the defendants: Wells Fargo "committed" "fraud ... against real property in Ramsey County," Minnesota owned by the Les (the house in which the Les had lived), and "the defendants have conspired to defraud and steal property" from the Les. The nexus of the litigation is a recorded mortgage against that real estate, in favor of Wells Fargo.

In the complaint in ADV 13-3108, the Les seemed to characterize Wells Fargo's actions in foreclosing on the mortgage as fraudulent. Midway through that litigation (while the matter was pending in the district court), the Les introduced an alternate notion of fraud, that signatures under their names on the mortgage instrument had been forged. The district court declined to address that theory because the plaintiffs had not pled it in their complaint or presented it on Wells Fargo's motion to dismiss. District Court Dispositive Order, 6.

As noted earlier, the complaint at bar seems to feature four separately-pleaded legal theories. At least in part, the Les seem to rely on the discredited "show me the note" theory, conclusively rejected by the Minnesota Supreme Court and the Eighth Circuit Court of Appeals. See, e.g., Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487 (Minn. 2009); Karnatcheva v. JPMorgan Chase Bank, N.A., 704 F.3d 545 (8th Cir.2013); Murphy v. Aurora Loan Servs., LLC, 699 F.3d 1027 (8th Cir.2012); Stein v. Chase Home Fin., LLC, 662 F.3d 976 (8th Cir. 2011). In conclusory fashion, they brandish the words "fraudulent" and "bogus" in reference to "trustee deeds" and "legal instruments."4 However, they never directly plead that they (the Les) did not sign the mortgage instrument and they never directly plead that Wells Fargo forged their signatures on the recorded mortgage.5

Under their prayer for relief in ADV 15-3037, the Les seek an award of damages against the defendants, in the amount of $15,250,000.00. At one point within the text they characterize Wells Fargo's "transfers and conveyances relative to the subject property" as "fraudulent transfers [that] may be declared unlawful and reversed by this court." However, they never directly request that avoidance remedies be imposed on Wells Fargo toward voiding any mortgage ab initio. Nor do they articulate any theory under which they, as debtors in bankruptcy, would have standing to obtain such relief.6

In lieu of an answer, the Defendants made a joint motion for dismissal styled under Fed. R. Civ. P. 12(b)(6), as incorporated by Fed. R. Bankr. P. 7012(b). The briefing for the motion opens with boilerplate citations to recent Supreme Court jurisprudence under Rule 12(b)(6), Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This suggested that the Defendants were taking the now-common opening tack for the defense of civil litigation in the federal courts, challenging the facial sufficiency of the Plaintiffs' fact-pleading to meet the "plausibility standard" imposed by those two opinions. However, further on the Defendants asserted claim preclusion (also known as res judicata) as an alternate basis for dismissal — i.e., that the grant of judgment against the Plaintiffs on every count of their earlier adversary proceeding against Wells Fargo bars the Plaintiffs from maintaining their present lawsuit, given the common subject matter of both lawsuits (the mortgage against the Plaintiffs' home on which Wells Fargo had gone forward in foreclosure).7

A hearing was convened on the motion for dismissal and on other demands for relief that the Plaintiffs had filed.8 Ellen B. Silverman appeared for Defendant Wells Fargo Bank, N.A. Samuel R. Coleman appeared for himself and Schiller & Adam, P.A., as Defendants. Plaintiffs Nhut Le and Chai Misty Le appeared pro se.

After the parties presented argument as to dismissal on the merits, the court raised an issue that has hovered over this adversary proceeding since its commencement: does the bankruptcy jurisdiction of the federal courts even lie as to the Plaintiffs' request for substantive relief, given the posture of the underlying case?

The parties were directed to brief that issue as well as a refinement of the claim-preclusion issue raised by the Defendants.9 The briefing was submitted and the matter of jurisdiction is now addressed, on the court's own motion.10

28 U.S.C. §§ 1334(a)-(b) confer jurisdiction on the federal courts,11 over bankruptcy cases (28 U.S.C. § 1334(a)) and a variety of "proceedings" associated with bankruptcy cases (28 U.S.C. § 1334(b)). Exclusive jurisdiction is granted over bankruptcy cases. 28 U.S.C. § 1334(a); In re Skyline Woods Country Club, 636 F.3d 467, 471 (8th Cir.2011).12

Within the structure of a bankruptcy case, then, "original but not exclusive" federal jurisdiction is granted, as to "civil proceedings arising under [the Bankruptcy Code], or arising in or related to cases under [the Bankruptcy Code]." 28 U.S.C. § 1334(b). The component "civil proceedings" within a bankruptcy case under federal jurisdiction are divided into core proceedings, 28 U.S.C. §§ 157(b)(1)-(2), and proceedings that are "not a core proceeding but that [are] otherwise related to a case under" the Bankruptcy Code, 28 U.S.C. § 157(c)(1). Specialty Mills, Inc. v. Citizens State Bank, 51 F.3d 770, 773 (8th Cir.1995).

Core proceedings are statutorily enumerated in 28 U.S.C. § 157(b)(2). They all revolve around the two broad classes of relief accorded during the bankruptcy process, to debtors on the one hand and to creditors on the other. In re Barsness, 398 B.R. 655, 658 (Bankr.D.Minn. 2008) (citing facial language of enumeration in 28 U.S.C. §§ 157(b)(2)(A) — (P)).13 Debtors' remedies in bankruptcy revolve around discharge, or other relief from the burden of debt like reorganization under Chapters 11 and 12 and debt adjustment under Chapter 13. Creditors' remedies in bankruptcy mainly concern the realization on their claims — i.e. getting some satisfaction on the debtor's debt to them.14 In the bankruptcy process, the means for that realization is the administration of the estate that arises on every bankruptcy filing by operation of 11 U.S.C. § 541(a). Depending on the form of bankruptcy sought under the petition, the administration is performed through the recovery and liquidation of assets (Chapter 7) or the management of the estate's assets pending the confirmation of a plan through which creditors will receive payment from the debtor's future, post-confirmation resources (Chapters 11, 12, or 13).

The Eighth Circuit has cautioned against giving a broad scope to core-proceeding status, to avoid breaching Article III's structural limitations on the exercise of the judicial power of the United States, i.e. plenary federal judicial power. In re Cassidy Land and Cattle Co., Inc., 836 F.2d 1130, 1132 (8th Cir.1988). See also In re Marine Iron & Shipbuilding Co., 104 B.R. at 982.

On the other hand, related-proceeding jurisdiction has long been described as "broad." E.g., Cutcliff v. Reuter, 791 F.3d 875, 881-882 (8th Cir.2015); Buffets, Inc. v. Leischow, 732 F.3d 889, 894 (8th Cir.2013); In re Farmland Industs., Inc., 567 F.3d at 1019; In re Titan Energy, Inc., 837 F.2d 325, 330 (8th Cir.1988). It is "met if the proceeding `could alter the debtor's rights, liabilities, options, or freedom of action ... and which in any way impacts upon the handling and administration of the bankruptcy estate.'" Cutcliff v. Reuter, 791 F.3d at 881-882; Specialty Mills, Inc. v. Citizens State Bank, 51 F.3d at 774; In re Dogpatch U.S.A., Inc., 810 F.2d 782, 786 (8th Cir.1987). See also Celotex Corp. v. Edwards, 514 U.S. 300, 308, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995); Integrated Health Servs. of Cliff Manor, Inc. v. THCI Co., LLC, 417 F.3d 953, 958 (8th Cir.2005); Kocher v. Dow Chemical Co., 132 F.3d 1225, 1230-1231 (8th Cir.1997); Abramowitz v. Palmer, 999 F.2d 1274, 1277 (8th Cir.1993) In re Titan Energy, Inc., 837 F.2d at 330 (all opining that related-proceeding jurisdiction may lie where the outcome of a proceeding "could conceivably have any effect" on the administration of the bankruptcy estate).

But, to reemphasize: one way or another, the bankruptcy jurisdiction only encompasses proceedings that bear on the remedies that are administered in bankruptcy, the federal process for resolution of broader financial distress that necessarily has a closed end at some point in relation to such resolution. In re Farmland Industs., Inc., 567 F.3d at 1019 (citing Celotex Corp. v. Edwards, 514 U.S. at 308 n. 6, 115 S.Ct. 1493 for proposition that "bankruptcy courts have no jurisdiction over proceedings that have no effect on the debtor"; and Specialty Mills, Inc. v. Citizens State Bank, 51 F.3d at 774, for proposition that related-proceeding jurisdiction requires "some nexus between the civil proceeding and the Title 11 case"). It is clear that there must be a bankruptcy estate currently in administration, for the estate-related variety of core-proceeding jurisdiction to lie, and for related-proceeding jurisdiction to lie. Further, the subject matter of the proceeding must have some kind of connection in fact or law, a nexus, to the estate as a whole or to an asset currently in the estate. In re A.P.I., Inc., 537 B.R. 902, 910-11, 2015 WL 5315593 *7 (Bankr.D.Minn. Sept. 9, 2015).

Thus, a proceeding to determine the validity, extent, or priority of a lien against an asset of the bankruptcy estate is a core proceeding. In re B.J. McAdams, Inc., 66 F.3d 931, 936 (8th Cir. 1995). However, once the subject asset is no longer property of the bankruptcy estate the proceeding no longer has core status under 28 U.S.C. § 157(b)(2)(K). In re Holmes, 387 B.R. 591, 598-599 (Bankr. D.Minn.2008) (relying on holding in Abramowitz v. Palmer, 999 F.2d at 1276-1277, that core-proceeding status of action to determine competing claims to asset of debtor lapses when debtor's claim of exemption to asset is allowed and asset passes out of bankruptcy estate).

To like effect — and by operation of simple logic — an "impact" or a "conceivable effect" on the administration of the bankruptcy estate is no longer possible after the estate has been fully administered, or after the outcome of the proceeding can no longer factually or legally affect the size of the estate or the division of it among claimants. Thus, after that point there is no longer a basis for related-proceeding jurisdiction either. In re A.P.I., Inc., 537 B.R. at 908-09, 2015 WL 5315593 *5; In re Barsness, 398 B.R. at 659. Cf. In re Holmes, 387 B.R. at 601 (where bankruptcy estate in Chapter 7 case is still open and under administration, debtors' challenge to validity of lien against homestead is related proceeding because outcome would determine whether debtors made final election of exemptions under federal or state law, and other assets might be nonexempt and subject to trustee's recovery and liquidation depending on which exemptions debtors elected).

Under that statutory authority and its judicial construction, it is necessary to identify the posture of the Les' underlying bankruptcy case, in relation to the remedies under Chapter 13 that are still in play there. That must be compared to the relief the Les seek under their renewed complaint against the Defendants. For the purposes of the bankruptcy jurisdiction, the question then will be, how does the latter dovetail into the structure for the former — if at all?

The outcome here is channeled by the fact that the Les sought relief under Chapter 13 and their case remains pending under it.

H.R. REP. No. 95-595, 95th Cong., 1st Sess. 118 (1978). The Les proposed a plan under which they would make 36 payments of $101.36 per month to the Standing Trustee. The claims of unsecured creditors were to be paid from the accumulation of these funds. See Plan, [BKY 13-32274, Dkt. No. 13], ¶¶ 1.b and 11. The plan was silent as to the Debtors' relationship with Wells Fargo. It had no treatment for a claim in favor of Wells Fargo, whether designated as secured or unsecured.15

There was a reason for that: Wells Fargo had conducted a sheriff's sale in foreclosure of its mortgage on October 2, 2012, before the date of the Debtors' filing under Chapter 13. See Sheriff's Certificate of Sale, pp. 29-31 in Appendix to Defendants' Motion to Dismiss Plaintiffs' Complaint [Dkt. No. 4]. Per the Notice of Mortgage Foreclosure Sale issued by Wells Fargo, the full amount due on the underlying debt as of the date of the notice (June 20, 2012) was $163,102.48. Appendix to Defendants' Motion to Dismiss [Dkt. No. 4], 17-18. Wells Fargo bid in $170,192.07 at the sale and received the property in foreclosure. Sheriff's Certificate, in Appendix to Defendants' Motion to Dismiss [Dkt. No. 4], 29. The Les have never disputed that this was the full amount then due on the underlying debt. And, in any event, Wells Fargo was barred from obtaining a deficiency judgment under Minn. Stat. §§ 580.225 and 582.30 Subd. 2.

Where there is no right to a deficiency judgment in the former mortgagee, there is no debtor-creditor relationship left. Evans v. Rhode Island Hosp. Trust Co., 67 Minn. 160, 69 N.W. 715, 716 (1897) (upon foreclosure sale, by advertisement or action, underlying debt is extinguished to the amount of purchase money bid at sale); Carnel v. Travelers Ins. Co., 402 N.W.2d 190, 192-193 (Minn.Ct.App.1987) (if underlying debt is extinguished by foreclosure sale, creditor-debtor relationship also ceases to exist) (citing Cross Cos., Inc. v. Citizens Mortg. Inv. Trust, 305 Minn. 111, 119, 232 N.W.2d 114, 119 (1975)).

The sale severed the previously-structured debtor-creditor relationship between the Les and Wells Fargo and altered the relevant structure of rights in other respects. See In re Spaude, 112 B.R. 304, 306-307 (Bankr.D.Minn.1990), and Minnesota case law discussed there. After the sheriff's sale, and during the Les' statutory redemption period, the only property attribute attributable to them that could have passed into a bankruptcy estate was the right of redemption, subject to no more than a possible extension under 11 U.S.C. § 108(b) by way of bankruptcy-specific remedies, Johnson v. First Nat'l Bank of Montevideo, 719 F.2d 270, 278 (8th Cir.1983), cert. denied, 465 U.S. 1012, 104 S.Ct. 1015, 79 L.Ed.2d 245 (1984). After the end of a statutory period without redemption, however, there is no property interest or attribute left in the former mortgagor. Hokanson v. Gunderson, 54 Minn. 499, 56 N.W. 172, 173 (1893); In re Klein, 9 F.Supp. 57, 59 (D.Minn.1934).

The Les' six-month redemption period, Minn.Stat. § 580.23 Subd. 1, expired on April 2, 2013. District Court Dispositive Order, 2, and corresponding portions of Amended Report and Recommendation, 3.16 This vested "perfect title" to the real estate in Wells Fargo, with the sheriff's certificate operating as a conveyance. Minn. Stat. § 580.12; Hokanson v. Gunderson, 54 Minn. 499, 56 N.W. at 173; In re Klein, 9 F.Supp. at 59. As to the real estate itself, the Les had nothing to pass into the bankruptcy estate when they filed under Chapter 13 less than a month later.

For their Chapter 13 filing, the Les did not list any sort of claim or cause of action against Wells Fargo in their asset schedules.17 Nonetheless, they commenced ADV 13-3108 almost immediately after that, and then engaged in a flurry of activity in its litigation.18 They pled their claims in that matter on facts said to have occurred before their Chapter 13 filing.

The more generic, conclusory fact-pleading for the matter at bar, ADV 15-3037, has no date-references for its claims of "FRAUDULENT FORECLOSURE, AND FALSE DEEDS." However, in the historical context it is beyond dispute that the Les complain of being injured by events that occurred in their entirety before their Chapter 13 filing. Thus, any cause of action under either adversary proceeding passed into their bankruptcy estate. E.g., In re Senior Cottages of Am., LLC, 482 F.3d 997, 1001 (8th Cir.2007); United States ex rel Gebert v. Transport Admin. Servs., 260 F.3d 909, 913 (8th Cir. 2001); Wolfe v. Gilmour Mfg. Co., 143 F.3d 1122, 1126 (8th Cir.1998); Whetzal v. Alderson, 32 F.3d 1302, 1303 (8th Cir. 1994); In re Ozark Rest. Equip. Co., Inc., 816 F.2d 1222, 1225 (8th Cir.1987), cert. denied, 484 U.S. 848, 108 S.Ct. 147, 98 L.Ed.2d 102 (1987).

As estates are administered under Chapter 13 in the ordinary course in this district, non-exempt assets themselves are not liquidated by the Standing Trustee. Rather, their value factors into the confirmation process. Ultimately that value dictates the final extent of debtors' obligations of payment into the plan. This results from the best interests of creditors test of 11 U.S.C. § 1325(a)(4), which requires that

In BKY 13-32274, the Standing Trustee did not object to the confirmation of the Les' plan as they originally proposed it. Thus there is no affirmative statement in the record as to the Trustee's evaluation of the merits of the Les' claim against Wells Fargo or its economic value as an asset. But, the only reasonable inference from the lack of objection is that the Standing Trustee assigned no material value to it, for his calculus on the Debtors' satisfaction of § 1325(a)(4).

The next fixture in this analysis is:

11 U.S.C. § 1327(b). The Les submitted their plan using Local Form 3015-1. There is no provision in the form for the retention of otherwise non-exempt property in the estate where it reposed up to the point of confirmation pursuant to § 541(a). The Les did not add such a provision. By operation of § 1327(b), then, the interest in the cause of action in suit in this adversary proceeding revested in the Les on confirmation over a year ago, with all of the Les' other assets.19

The consequence of that and the operation of other statutory governance is that the estate under the Standing Trustee's administration consisted solely of the portion of their post-petition earnings that they committed to the plan. 11 U.S.C. § 1306(a)(2) ("property of the estate includes... earnings from services performed by the debtor after the commencement of the [Chapter 13] case but before the case is closed, dismissed, or converted..., whichever occurs first"). See Security State Bank of Marshalltown v. Neiman, 1 F.3d 687, 689 (8th Cir.1993) (addressing specific question of whether bankruptcy estate still has legal existence after revesting pursuant to § 1327(b); holding it does, on provision of 11 U.S.C. § 1322(a)(1) for trustee's supervision and control over "such portion of future earnings or other future income of the debtor ... as is necessary for the execution of the plan," among other administrative powers and duties of trustee with respect to debtor's payments under confirmed plan).20

The Les headed the caption of their complaint in the bankruptcy court for this district. They assert that "[jurisdiction] of this court over this matter is invoked pursuant to" various provisions of 28 U.S.C. § 157(b). That is an obvious error, In re Holmes, 387 B.R. at 598; but it does evidence the Les' true intent, to invoke the original jurisdiction over bankruptcy proceedings under 28 U.S.C. § 1334(b)(2), id.21

The one jurisdictional category that the Les expressly assert is that of core proceeding under 28 U.S.C. § 157(b)(2)(K):

Complaint [Dkt. No. 1], 4. One can set aside the fact that Wells Fargo has not "claimed" a lien against the real estate at issue since the foreclosure sale. The Les' fact-pleading asserts no basis on which they could have claimed a property interest in the real estate when they filed under Chapter 13. Wells Fargo's documentary submissions cut entirely and exclusively to the opposite, as to this fundamental necessary fact.

The conclusion from this is inescapable: no property interest of the Les in the real estate passed into the bankruptcy estate in BKY 13-32274; so any challenge to a claim of lien by Wells Fargo and any claim for damages stemming from the challenge could not be a core proceeding in BKY 13-32274 under the sole category asserted by the Les.

For that reason and more, this matter can not be a related proceeding either. Regardless of legal viability, any claim against Wells Fargo for damages revested in the Les on confirmation of their plan. So did their unfocused demand for "an order permanently enjoining defendants from asserting any right what-so-ever against the subject property, returning such property to the estate of plaintiff," Complaint, 13. Going forward, the estate in administration in BKY 13-32274 will be funded by only the $3,600.00-odd in total that the Standing Trustee will receive from the Les. The Les' obligation to complete that payment, and their creditors' right to share in the funds, are completely independent of the Les' possession or recovery of any particular asset, or their recovery on any claim for damages against Wells Fargo.22 Neither factually nor legally, the outcome of the Les' claims against Wells Fargo could have no conceivable effect on the administration of the estate under Chapter 13, de minimis as the estate's value is. There is no basis on which to exercise related-proceeding jurisdiction over this lawsuit.23

The federal bankruptcy jurisdiction that the Les assert for this adversary proceeding is absent. Perhaps the original strategy here was to buy long-term access to a federal forum for the Les' overwrought grievances, by the confirmation of a bland, minimum-percentage composition plan under Chapter 13. If that was so, it was wrong.

IT IS THEREFORE ORDERED that this adversary proceeding is dismissed, for lack of jurisdiction.