Opposition Brief — Miami Center Ltd. Partnership v. Smith, 110 S. Ct. 867 (1990) (No. 89-864)

Depieiaee CUFT, U.S.

(4) FILED

No: 89-864 \") {|| pec 28 1989

| JOSEPH F. SPANIOL, JR,

Fe in the CLERK

| Supreme Court! ~~

b of the

P United States

OCTOBER TERM, 1989

IN RE: HOLYWELL CORPORATION, et al.,

Debtors.

MIAMI CENTER LIMITED PARTNERSHIP, MIAMI

CENTER CORPORATION, HOLYWELL CORPORATION,

CHOPIN ASSOCIATES, and THEODORE B. GOULD,

Petitioners,

US.

FRED STANTON SMITH, individually and as Trustee of the

: aE YORK; CF LIQ UIDATING TRUST: THE BANK OF

CITY NATIONAL BANK OF MIAMI, as

Land Trust #5008793, M.C. HOLDING

HS. New York General Partnership, and its

in Se ROBANK CORPORATION, H.D.

AC INVESTMENTS, INC., BOTT

HOLDING CORPORATION, AMERICAN

, LTD., and M. CENTER CORPORATION,

Respondents.

: Petition for Writ of Certiorar to the

»s Court of f Appeals for the Eleventh Circuit

3F IN OPPOSITION TO

FOR WRIT OF CERTIORARI

}

|

ur

QUESTIONS PRESENTED FOR REVIEW

1. Whether the debtors have alleged any basis for review

in this Court?

2. Whether the Eleventh Circuit erred in affirming the

district court’s affirmance and adoption of the bankruptcy

court’s Report and Recommendation on Petition for Removal,

which found that the subject matter of the complaint removed

to the bankruptcy court was a core proceeding over which

the bankruptcy court had jurisdiction?

3. Whether the Eleventh Circuit erred in affirming the

district court’s affirmance of the bankruptcy court’s dismissal

of the complaint, where the complaint failed to state a claim

on which relief could be granted?

4. Whether the confirmed plan of reorganization governs

the scope of fiduciary duties owed by the liquidating trustee

of the Miami Center Liquidating Trust?

5. Whether the Eleventh Circuit erred in affirming the

district court’s affirmance of the bankruptcy court’s dismissal

of the complaint, where all of the issues raised in the

complaint had been resolved by the courts or were the subject

of pending proceedings?

6. Whether the liquidating trustee can be liable in

damages for common law claims where the acts complained

of were mandated by a confirmed plan of reorganization?

PARTIES TO THE PROCEEDINGS

Theodore B. Gould

Holywell Corporation

Miami Center Corporation

Chopin Associates

Miami Center Limited Partnership

Robert Musselman, Esquire

Bank of New York

S. Harvey Ziegler, Esquire

Vance Salter, Esquire

Thomas Noone, Esquire

M.C. Holding Partners

Fred Stanton Smith, individually and as trustee of the

Miami Center Liquidating Trust

Judge Sidney M. Weaver, United States Bankruptcy

Court for the Southern District of Florida

Judge Eugene Spellman, United States District Court for

the Southern District of Florida

City National Bank of Miami

Robank Corporation

H.D. Liquidation, Inc.

Zentac Investments, Inc.

Bott Florida Holding Corporation

American Security, Ltd.

Eleventh Circuit Court of Appeals

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........

PARTIES TO THE PROCEEDINGS .............. ii

TABLE OF CONTENTS........................ iii

TABLE OF AUTHORITIES ..................... ,

CITATION TO OPINIONS BELOW .............. 1

STATEMENT OF JURISDICTION ............... 2

APPLICABLE STATUTES AND RULES.......... 2

STATEMENT OF THE CASE................... 3

COURSE OF PROCEEDINGS................ 3

a 5

SUMMARY OF THE ARGUMENT............... 9

ARGUMENT

I. THE DEBTORS HAVE FAILED TO

DEMONSTRATE ANY BASIS FOR REVIEW

EH 10

A. The bankruptcy court has post-confirmation

ee cea nakanas 10

B. The complaint was a “core proceeding” and

was properly removed to the bankruptcy

DPPPPESSER CSc en eeeceecescseicce ll

C. The bankruptcy court’s dismissal of the

complaint was proper ................ 15

TABLE OF CONTENTS (Continued)

Page

1. The confirmed plan of reorganization,

which is the law of the case, and which

binds the debtors, does not impose

liability for the acts complained of .. 15

2. All of the allegations contained in the

complaint regarding failures to act were

already the subject of court orders, were

pending as adversary proceedings or

motions before the bankruptcy court, or

had been decided and were on appeal

when the debtors filed their complaint 16

3. There is no right to a jury trial in this

GORD cv ccencnnncdensceenepeuneeses 20

oe) +P) | | eee err rr rrr Terry cry 22

APPENDIX

TABLE OF AUTHORITIES

Cases Page

Dairy Queen, Inc. v. Wood,

a! or FT el errr 20

Granfinanciera, S.A. v. Nordberg,

ee ll 20, 21

Harley Hotels v. Rain’s International, ;

Oe Bs PS, Un UI sw hc cece cwccccnne 13

Holywell Corporation v. Bank of New York,

59 B.R. 340 (S.D. Fla. 1986)................. 6, 10

In re Arnold Print Works, Inc.,

BS Foe BGS (et Cir. 1087)... 2... oc ccc 14

In re Blanton Smith Corporation,

81 B.R. 440 (Bankr. M.D. Tenn, 1987) ........ ll

In re Franklin Computer Corporation,

60 B.R. 795 (Bankr. E.D. Pa. 1986)........... 14

In re Gould,

_U.S._, 109 S.Ct. 148 (1988) ............... 6, 11

In re LA. Durbin,

62 B.R. 139 (S.D. Fla. 1986)................. 13

In re Jartran, Inc.,

76 B.R. 123 (Bankr. N.D. Ill. 1987)........... ll

In re J.B. Van Scriver Co.,

73 B.R. 838 (Bankr. E.D. Pa. 1987)........... 14

In re Lion Capital Group,

46 B.R. 850 (Bankr. S.D. N.Y. 1985).......... 13

In re Lombard Wail, Inc.,

48 B.R. 986 (S.D. N.Y. 1985) ................ 13

In re Mankin,

823 F.2d 1296 (9th Cir. 1987) ............... 13

TABLE OF AUTHORITIES (Continued)

Cases Page

In re Monroe Well Service, Inc.,

80 B.R. 324 (Bankr. E.D. Pa. 1987) .......... 11

In re National Equipment & Mold Corporation,

71 B.R. 24 (Bankr. N.D. Ohio 1986).......... 14

In re St. Louis Freight Lines, Inc.,

45 B.R. 546 (Bankr. E.D. Mich., N.D. 1984) ... ll

In re STN Enterprises, Inc.,

73 B.R. 470 (Bankr. D. Vt. 1987) ............ 14

In re Sanders,

81 B.R. 496 (Bankr. W.D. Ark. 1987)......... 11

In re Vincent,

68 B.R. 865 (Bankr. M.D. Tenn. 1987)........ 14

Leonard v. Vrooman,

383 F.2d 556 (9th Cir. 1967) ................ 20

Macon Prestressed Concrete Co. v. Duke, —

46 B.R. 727 (M.D. Ga. 1985) ................ 13

Miami Center Limited Partnership v. Bank of New

York,

838 F.2d 1547 (11th Cir. 1988), cert. denied,

ee ee BOO Bs Ges GE Geo oclew ct ck tbc tas 6, 10,

11, 16,17

Northern Pipeline Constr. Co. v. Marathon Pipeline

Co.,

GBB UB. GO CAGED wc cccccccccestescccssnec 13, 20,

TABLE OF AUTHORITIES (Continued)

Statutes Page

11 U.S.C. Section 541l(a)....................... 7, 18

11 U.S.C. Section 114l(a)...................... 11, 16

11 U.S.C. Section 1142 ....................0.... 16

11 U.S.C. Section 1142(a)...................... 16, 17

11 U.S.C. Section 1142(b)....... 2... ek, 11

11 U.S.C. Section 3020(d) ...... 0.00, 11

IIE on cc cncccccccccccecscces 3, 12

SINE a cn cicecccccccccscccccsces 3, 12

28 U.S.C. Section 157(bX2XA), (B), (M), (N), and (O) 12

28 U.S.C. Section 1254(1).............000000...., 2

28 U.S.C. Section 1334 ............0...0000005.. 12

28 U.S.C. Section 1334(a).............00.00.0...., 12

28 U.S.C. Section 1452 ....................005. 3, 12

EE Shae cdececeeecscceccccncecas 2

vii

CITATION TO OPINIONS BELOW

The bankruptcy court’s Report on Petition for Removal

and Motion for Remand, and Order on Motions to Dismiss

appears at Debtors’ App. G at 24-26.

The district court’s Order Affirming and Adopting

Bankruptcy Court’s Report and Recommendation on Petition

for Removal and Motion for Remand appears at Debtors’ App.

F at 22-23.

The bankruptcy court’s Order Granting Motions to

Dismiss and Dismissing Adversary Complaint appears at

Debtors’ App. E. at 19-21.

The district court’s Order Affirming Bankruptcy Court

appears at Debtors’ App. D at 7-18.

The Eleventh Circuit's per-curiam affirmance appears at

Debtors’ App. C at 5-6; the denial of the debtors’ petitions

for rehearing and rehearing en banc appear at Debtors’ App.

B at 3-4; and the Judgment appears at Debtors’ App. A at 1-2.

STATEMENT OF JURISDICTION

Debtors Holywell Corporation, Miami Center Limited

Partnership, Miami Center Corporation, Chopin Associates

and Theodore B. Gould seek review pursuant to 28 U.S.C.

Section 1254(1) of the Eleventh Circuit Court of Appeal’s

affirmance of orders of the district court and bankruptcy court

which allowed the removal and subsequent dismissal of a

state court action filed by the debtors. The debtors sued Fred

Stanton Smith, individually, and as Trustee of the Miami

Center Liquidating Trust, and the Bank of New York for $40

million for claims arising out of the implementation of the

confirmed plan of reorganization. Although Section 1254(1)

provides for review of appellate decisions by writs of

certiorari, the debtors’ petition fails to meet any of the

established criteria for review. The petition does not allege

or demonstrate a genuine conflict with a decision of another

federal court of appeals on the same matter, nor does it

demonstrate a departure from the accepted and usual course

of judicial proceedings. The petition also does not allege an

important question of federal law which has not been, but

should be, settled by the Court. See S.Ct.R. 17.1(a)-(c).

APPLICABLE STATUTES AND RULES

The statutes and rules applicable to the brief in opposition

to the petition for writ of certiorari are printed in the

appendix hereto.

STATEMENT OF THE CASE

Course of Proceedings

In October, 1987, the debtors filed an action in the state

court against, inter alia, the Bank of New York (‘“‘bank’’) and

Fred Stanton Smith, both individually, and as Trustee of the

Miami Center Liquidating Trust (‘liquidating trustee’’),

seeking money damages of almost $40 million. (Debtors’ App.

H at 27-44). The complaint was in five counts: negligence,

breach of fiduciary duty, discharge of trustee, breach of

contract, and conversion. Id. The debtors alleged that the

liquidating trustee was liable for damages for failing to

demand settlement from the Bank of New York of certain

post-closing adjustments to the purchase price from the sale

of the Miami Center to the bank’s nominee; by allowing the

bank a credit toward the purchase price of approximately $27

million at the closing, representing post-petition interest on

its mortgage; by failing to resolve bankruptcy claim 502; by

agreeing to pay ad valorem taxes on the Miami Center

property; and by failing to reserve funds for the payment of

income taxes allegedly due as a result of the sale of the Miami

Center and the Washington properties. Id.

Pursuant to the bank’s petition, the action was removed

to the United States Bankruptcy Court for the Southern

District of Florida, in accordance with 28 U.S.C. Section 1452

and Bankruptcy Rule 9027. (Debtors’ App. G at 25). The

debtors moved for remand to the state court. Jd. Following

a hearing on that motion, the bankruptcy court found that

the issues raised by the complaint were core matters under

28 U.S.C. Section 157, and recommended that the district

court grant the petition for removal and deny the debtors’

motion for remand. Jd. The district court thereafter affirmed

and adopted the bankruptcy court’s Report and

Recommendation on Petition for Removal and Motion for

Remand by Order dated March 2, 1988. (Debtors’ App. F at

22-23).

The bankruptcy court then granted the motions of Fred

Stanton Smith, both individually and as liquidating trustee,

and of the bank to dismiss the complaint. (Debtors’ App. E

at 19-21). The bankruptcy court held, in part:

1. The motion to dismiss of Fred Stanton Smith

individually be and the same is hereby granted.

The complaint contains no sufficient aHegations

that Fred Stanton Smith was guilty of gross

negligence, willful default or misconduct, as

provided {by] Article 5, paragraphs 7 and 8 of

Confirmed Amended Consolidated Plan of

Reorganization. Such allegations are required to

establish individual liability under the terms of

the Plan.

2. The motion to dismiss of Fred Stanton Smith as

Liquidating Trustee of the Miami Center

Liquidating Trust be and the same is hereby

granted upon the ground that all matters

contained in the Adversary Complaint have either

been resolved by this Court in other pending

adversary complaints or motions which were

heard before the Court (and which rulings are

presently on appeal) or are the subject of pending

adversary proceedings or motions and which wil!

be resolved in ordinary course.

3. The motion to dismiss of the Bank of New York

is granted upon the same grounds as stated above

concerning the motion to dismiss of Fred Stanton

Smith as Liquidating Trustee of the Miami Center

Liquidating Trust.

Id.

The district court affirmed the bankruptcy court’s order

dismissing the complaint, holding that the confirmed plan

of reorganization provides a standard of “gross negligence”’

in order to hold the liquidating trustee liable for damages,

that the allegations in the complaint did not allege any such

conduct, and that the debtors are bound by the confirmed

plan. (Debtors’ App. D at 12-13). The district court further

held that the complaint failed to state a claim upon which

relief could be granted because the debtors did not claim the

liquidating trustee breached any common law fiduciary duty

while acting within the provisions of the plan, but rather that

his actions mandated by the plan were violative of claimed

common law duties. (Debtors’ App. D at 13). The district court

further held that all of the debtors’ allegations had been

resolved or were already the subject of pending proceedings.

Id. at 14-17.

The Eleventh Circuit affirmed in a per curiam opinion,

and denied the debtors’ petitions for rehearing and rehearing

en banc. (Debtors’ App. B and C). This petition followed.

Facts

This petition for writ of certiorari is the Petitioners’ fifth

attempt at review in this Court. The Petitioners, all debtors

in a bankruptcy proceeding now in its fifth year, were the

developers of what is known as the Miami Center, a hotel!

and office complex connected by a shopping arcade located

in downtown Miami, Florida. The Bank of New York, the

construction lender, instituted foreclosure proceedings

against the debtors in July, 1984. Immediately thereafter,

in August, 1984, the debtors filed voluntary petitions under

Chapter 11 of the Bankruptcy Code, owing approximately

$350 million to over 400 creditors.

One year later, the bankruptcy court confirmed a plan

of reorganization proposed by the bank which created the

Miami Center Liquidating Trust and provided for the

appointment of a liquidating trustee. The plan became

effective October 10, 1985, after the debtors failed to post a

supersedeas bond to stay the plan’s implementation. The

central features of the plan, in addition to creating the Miami

Center Liquidating Trust, included the substantive

consolidation of the debtors and the sale of the Miami Center

by the liquidating trustee to the bank’s nominee. The district

court affirmed the order of confirmation, Holywell

Corporation v. Bank of New York, 59 B.R. 340 (S.D. Fla. 1986),

and the Eleventh Circuit Court of Appeals ordered the district

court to dismiss the debtors’ appeal as moot, finding the plan

had been substantially consummated and the court could not

grant meaningful relief to the debtors. Miami Center Limited

Partnership v. Bank of New York, 838 F.2d 1547 (11th Cir.

1988). The debtors’ petitions for writs of certiorari and

mandamus to this Court were denied. See Miami Center

Limited Partnership v. Bank of New York, __U.S.__, 109 S.Ct.

69 (1988) and Jn re Gould, __U.S.__, 109 S.Ct. 148 (1988),

respectively.

In pertinent part, the plan provides:

No recourse shall ever be had, directly or indirectly,

against the Trustee or any of his agents or employees

personally by legal or equitable proceedings or by

virtue of any statute or otherwise, it being expressly

understood and agreed that all liabilities of the

Trustee or such agents are [sic] employees or under

this Trust shall be enforceable only against and be

satisfied only out of the Trust Property.

(Debtors’ App. K at 58). The confirmed plan further provides

the liquidating trustee is not liable for any act done in good

faith and in the exercise of his best judgment, nor is he liable

except for gross negligence, willful default, or misconduct. Jd.

The plan also provides the bankruptcy court shall retain

jurisdiction after confirmation until all payments and

distributions have been made, and until entry of a fina!

decree, to enter any orders necessary or appropriate to carry

out the terms of the plan. Jd. The bankruptcy court has not

yet entered a final decree, and payments and distributions

called for by the plan are not complete, although the plan

has been substantially consummated. Miami Center Limited

Partnership v. The Bank of New York, supra.

In addition to receipt of monies from the sale of the Miami

Center, the plan was also funded by the proceeds from the

sale of what is known as the Washington properties and by

the inclusion of all the debtors’ assets, as defined by 11 U.S.C.

Section 54i(a). Id.'

The following is a summary of bankruptcy court and

district court decisions that directly affect the issues raised

in the debtors’ adversary complaint, the dismissal of which

has led to this petition:

1. Post-closing adjustments. On October 28, 1987, the

liquidating trustee filed an adversary complaint against the

debtors and the bank in which the liquidating trustee sought

a determination of post-closing adjustments to the purchase

price of the Miami Center, which was sold to the bank’s

designee pursuant to the plan of reorganization. The

liquidating trustee also sought a determination of whether

the bank was an undersecured creditor and thus not entitled

to receive a credit for post-petition interest on its mortgage

lien claims. (Trustee’s App. A). The bankruptcy court held

that the bank was not undersecured. (Debtors’ App. S at 132).

On appeal, the district court held that because the credit

toward the purchase price of post-petition interest was an

integral part of the plan of reorganization, any question

regarding the order of confirmation was moot because the

plan was not subject to collateral attack, and the issue of the

bank’s status as an undersecured creditor was thus required

to remain unanswered. (Debtors’ App. T at 133-140). The

bank and the liquidating trustee subsequently settled the

remaining counts of the complaint with the bankruptcy

court’s approval (and over the debtors’ objections). (Trustee’s

App. G and H). The entire matter is now pending in a

consolidated appeal by the debtors in the Eleventh Circuit.

'The debtors also sought review in this Court of the bankruptcy court's

order granting the liquidating trustee sole authority over the Washington

proceeds. The petition was denied. Holywell v. Smith, US... S.Ct._

(1988).

2. Income Taxes. On December 28, 1987, the liquidating

trustee filed an adversary proceeding in the bankruptcy court

against the debtors, the Bank of New York and the United

States of America, in which the trustee sought, inter alia,

a determination of the income tax liabilities of the trust

arising from the sale of the Miami Center and the

Washington properties. The bankruptcy court ruled that

under the facts and circumstances of this case, the trust was

not responsible for filing income tax returns or paying income

taxes that may be due on the sale of the Miami Venter and

Washington properties. The district court affirmed. (Debtors’

App. Q and R). The debtors and the government appealed

to the Eleventh Circuit, where the case is pending. United

States v. Smith, case no. 89-5862.

3. Super-priority loans. On the debtors’ motion for

repayment of super-priority loans, the bankruptcy court held

that the claimed loans were in fact inter-debtor loans made

after the debtors filed for bankruptcy, but before confirmation

of the plan, and could be repaid only from debtor Miami

Center Limited Partnership’s assets to the lending debtors.

The district court reversed, holding that the right to

repayment of the super-priority/inter-debtor loans became an

asset of the trust upon confirmation of the plan of

reorganization. Accordingly, the liquidating trustee both

owes and owns the “super-priority’”’ loans and hence no

payment is due. (Trustee’s App. B). The debtors’ appeal to

the Eleventh Circuit remains pending, case no. 89-5950.

4. Employer-in-fact. The bankruptcy court considered the

issue of whether a party (the debtors) other than the Internal

Revenue Service could bring an action against the bank

under the Internal Revenue Code for tax liabilities as an

‘‘employer-in-fact.”’ The court held a third party cannot do

so, and dismissed the debtors’ complaint directed te this issue.

(Trustee’s App. C). The district court dismissed the debtors’

appeal. (Trustee App. D).

5. Ad valorem taxes. The bankruptcy court entered an

order transferring funds held in an escrow account for the

payment of disputed ad valorem property taxes on the Miami

Center from the liquidating trustee's former counsel (the law

firm of Holland & Knight) to an escrow account in the names

of the liquidating trustee’s present counsel (Herbert Stettin,

P.A.) and counsel for the bank (S. Harvey Ziegler, Esquire,

of Kirkpatrick and Lockhart). (Trustee’s App. E). The

bankruptcy court also approved a settlement of the amount

of such taxes. (Trustee’s App. G). The district court affirmed

both orders — which the debtors had appealed separately —

and the debtors’ consolidated appeal in the Eleventh Circuit

remains pending, case no. 89-5165 (Trustee’s App. G and H).

SUMMARY OF ARGUMENT

The debtors’ arguments regarding both the impropriety

of removing their complaint from state court to the

bankruptcy court and the bankruptcy court’s subsequent

dismissal of the lawsuit are deceptive. They would have the

Court believe that all of their allegations are strictly state

common law claims which are only peripherally related to

their tangled bankruptcy proceedings. There are however,

several unalterable facts which the debtors have refused to

acknowledge: (1) the plan provides for the bankruptcy court’s

retention of post-confirmation jurisdiction; (2) the law

provides for the bankruptcy court’s retention of post-

confirmation jurisdiction; (3) each of the liquidating trustee's

actions about which the debtors complain were required by

the terms of the confirmed plan of reorganization; and (4) the

confirmed plan is binding on the debtors.

Clearly the debtors have never accepted the plan of

reorganization which was proposed by the bank, and this

certiorari proceeding is simply the latest manifestation. The

state court suit isa collateral attack on the plan and another

end-run to avoid the federal courts of the Southern District

of Florida. The bankruptcy court, district court, and Eleventh

Circuit recognized this tactic, and quite properly put an end

to it by dismissing the case. The debtors have entirely failed

to show this was error, and have failed to allege or

demonstrate any appropriate grounds for review in this

Court.

ARGUMENT

I.

THE DEBTORS HAVE FAILED TO DEMONSTRATE

ANY BASIS FOR REVIEW IN THIS COURT

The debtors’ contention that the removal of their

complaint from state court to bankruptcy court violated their

constitutional right of due process and their constitutional

right to a jury trial are frivolous in light of the facts, the law,

and the self-created labyrinthine procedural history of these

bankruptcy proceedings. Accordingly, the removal of the

complaint to the bankruptcy court and the dismissal of the

complaint was entirely proper.

A. The bankruptcy court has post-confirmation

jurisdiction.

The genesis of the bankruptcy court’s assertion of

jurisdiction is the plan of reorganization. The plan provides

for the bankruptcy court to retain jurisdiction after

confirmation to enter any order necessary or appropriate to

~carry out the terms of the plan. The plan was confirmed by

the bankruptcy court, and the district court affirmed the order

of confirmation on the merits after remand to the bankruptcy

court for entry of findings of fact and conclusions of law.

Holywell Corporation v. The Bank of New York, 59 B.R. 340

(S.D. Fla. 1986). The debtors appealed to the Eleventh Circuit,

which held that the district court should have dismissed the

appeal as moot because the plan had been substantially

consummated and the court could not grant meaningful

relief. Miami Center Limited Partnership v. The Bank of New

York, 838 F.2d 1547 (11th Cir. 1989). This Court denied the

debtors’ petitions for writs of certiorari and mandamus.

10

Miami Center Limited Partnership v. The Bank of New York,

__U.S._, 109 S.Ct. 69 (1988) and Jn re Gould, _U.S.__, 109

S.Ct. 148 (1988), respectively. The plan is the law of the case,

and it binds the debtors, regardless of whether they voted

to accept it. See In re Blanton Smith Corporation, 81 B.R.

440 (Bankr. M.D. Tenn. 1987); Jn re Sanders, 81 B.R. 496

(Bankr. W.D. Ark. 1987); In re Monroe Well Service, Inc.,80

B.R. 324 (Bankr. E.D. Pa. 1987); Jn re Jartran, Inc., 76 B.R.

123 (Bankr. N.D. Ill. 1987); and Jn re St. Louis Freight Lines,

Inc., 45 B.R. 546 (Bankr. E.D. Mich., N.D. 1984); see also 11

U.S.C. Section 1141(a).

In addition to the plan’s jurisdictional provision, the

Bankruptcy Code also provides for the bankruptcy court to

retain post-confirmation jurisdiction. Section 1142(b) provides

“the court may direct the debtor and any other necessary

party to execute or deliver or join in the execution or delivery

of any instrument required to effect a transfer of property

dealt with by a confirmed plan, and to perform any other act,

including the satisfaction of any lien,-that is necessary for

the consummation of the plan.” In addition, Bankruptcy Rule

3020 provides:

(d) Retained Power. Notwithstanding the entry of the

order of confirmation, the court may enter all orders

necessary to administer the estate.

As both the confirmed plan and the substantive law

provide the bankruptcy court with jurisdiction over the

debtors and the liquidating trustee after confirmation of the

plan, the removal of the complaint to the bankruptcy court

was proper.

B. The complaint was a “‘core proceeding’’ and was

properly removed to the bankruptcy court.

11

The allegations in the complaint constituted a “core

proceeding” over which the bankruptcy court properly had

jurisdiction under 28 U.S.C. Section 157. The debtors’

arguments to the contrary are merely conclusions of law

without any application of the law to the facts of this case.

In its Report on Petition for Removal and Motion for

Remand, and Order on Motions to Dismiss, the bankruptcy

court held that the “matters in that state court action are

matters relating to the implementation and the

administration of the plan of reorganization confirmed by this

Court and affirmed by the District Court.” (Debtors’ App.

G at 25). The debtors have failed to demonstrate that this

is not so. The allegations made in the complaint, while

couched in the language of actions at common law for breach

of fiduciary duty, breach of contract, negligence, dismissal

of the trustee and conversion, are clearly claims against the

liquidating trustee, individually, for his conduct as

liquidating trustee in carrying out the terms of the plan. The

debtors do not allege that he failed to carry out the plan;

rather, they allege injury because the liquidating trustee

carried out the plan.

Removal is proper if the district court has jurisdiction to

hear the case under 28 U.S.C. Section 1334. See also 28 U.S.C.

Section 1452; 11 U.S.C, Section 9027. As the district court

has original and exclusive jurisdiction to hear all cases

arising under Title 11, pursuant to 28 U.S.C. Section 1334(a),

the district court can refer such cases to the bankruptcy court.

See 28 U.S.C, Section 157.

The matter at issue was a core proceeding because such

cases include all matters relating to the administration of

the estate, the allowance of claims, orders approving the use,

lease, or sale of property, and other proceedings affecting the

liquidation of assets or the adjustment of the debtor-creditor

relationship. 28 U.S.C. Section 157(bX2XA),(B),(M),(N), and

(O). The claims of the debtors against the liquidating trustee

involve the administration of the bankruptcy proceedings.

Although a bankruptcy court lacks jurisdiction to decide

a case on a right created by state law which is independent

of the petition for reorganization, Northern Pipeline Constr.

Co. v. Marathon Pipeline Co., 458 U.S. 50 (1982), this does

not “restrict the bankruptcy court from hearing al! claims

based purely upon state law causes of action.”’ Jn re /.A.

Durbin, 62 B.R. 139, 143 (S.D. Fla. 1986). “The fact that the

rule of decision in [a] case is provided by state law does not

take away from the fact that [a] proceeding relates directly

to the restructuring of relationships between a debtor and

its creditors, which is at the core of the federal bankruptcy

power.” Jn re Mankin, 823 F.2d 1296, 1309 (9th Cir. 1987).

The connection between the allegations made in the

complaint and the administration of the bankruptcy

proceedings provides the basis for the lower court's finding

that the complaint is a “core matter."’ See Harley Hotels v.

Rain’s International, 57 B.R. 773, 780 (M.D. Pa. 1985). Merely

claiming that a complaint is a common law action for breach

of fiduciary duty, negligence, breach of contract and

conversion does not automatically confer “‘non-core”’ status

on the proceedings, thereby depriving the bankruptcy court

of subject matter jurisdiction. Regardless of what labe! is

attached to a proceeding, the bankruptcy court is required

to decide whether it is a “‘core’”’ proceeding by determining

the relationship, nexus or logical connection between the

allegations and the bankruptcy proceedings. Harley Hotels,

Inc. v. Rains Int’l., Ltd., 57 B.R. at 780; In re Lombard-Waill,

Inc., 48 B.R. 986, 991 (S.D. N.Y. 1985); Macon Prestressed

Concrete Co. v. Duke, 46 B.R. 727, 729-30 (M.D. Ga. 1985);

In re Lion Capital Group, 46 B.R. 850, 856 (Bankr. S.D. NY.

1985). Put another way, it is the substance rather than the

title of the claim that determines whether the matter is a

core proceeding.

The close relationship between the allegations contained

in the complaint and the bankruptcv proceedings is obvious.

Each allegation against Mr. Smith involves actions done

within the scope of his authority as liquidating trustee. More

importantly, all of the debtors’ claims against Mr. Smith

involve actions that were directed by the express terms of

the confirmed plan of reorganization and other orders of the

bankruptcy court to be performed by him, all of which are

core matters. Logical outgrowths of a core matter, such as

the order of confirmation, are also core matters, even if the

label given to the claim is traditionally a state court action.

See In re J. B. Van Scriver Co., 73 B.R. 838, 844 (Bankr. E.D.

Pa. 1987); In re STN Enterprises, Inc., 73 B.R. 470, 482

(Bankr. D. Vt. 1987); Jn re National Equipment and Mold

Corp., 71 B.R. 24 (Bankr. N.D. Ohio 1986). Matters involving

conduct governed by a confirmed plan of reorganization

cannot be considered a garden variety common law action.

In re Arnold Print Works, Inc., 815 F.2d 165, 169-70 (1st Cir.

1987); In re National Equipment and Mold Corp., 71 B.R. at

26-27: In re Vincent, 68 B.R. 865, 869 (Bankr. M.D. Tenn.

1987); In re Franklin Computer Corp., 60 B.R. 795, 802-803

(Bankr. E.D. Pa. 1986).

All of the challenged actions of Mr. Smith involve his

implementation of the plan, and the plan provides for the

bankruptcy court to retain jurisdiction over such matters.

By operation of law, the bankruptcy court was the proper

forum to hear the debtors’ complaint. The plan provided the

bankruptcy court with the requisite jurisdiction, and the

matter was a “core” proceeding. As such, the bankruptcy

court had subject matter jurisdiction to dismiss the debtors’

complaint.

The removal and dismissal of the debtors’ complaint to

the bankruptcy court was entirely proper. The debtors have

failed to demonstrate a genuine conflict with any decision

of this Court or another federal court of appeals; or any

departure from the accepted and usual course of judicial

proceedings; or an important question of federal law. The

petition for writ of ceftiorari should thus be denied.

14

C. The bankruptcy court's dismissal of the complaint was

proper.

The dismissal of the complaint was proper, for the plan

of reorganization does not allow for an action against the

liquidating trustee such as the one filed by the debtors.

Moreover, all of the acts complained of had already been

adjudicated, or were pending on appeal, or were pending

before the bankruptcy court at the time the Order Granting

Motions to Dismiss was entered. The debtors have failed to

demonstrate any basis for review in this Court upon these

facts.

1. The confirmed plan of reorganization, which is the law

of the case, and which binds the debtors, does not impose

liability for the acts complained of.

The confirmed plan of reorganization does not permit the

imposition of liability on the trustee for the acts complained

of. The plan provides that there shall! be no recourse avainst

the liquidating trustee in his individual capacity, and that

all liabilities of the liquidating trustee shal! be enforceable

onl, against and satisfied out of property of the trust The

plan further provides that the liquidating trustee is n e

for any act performed in the exercise of his good faith and

best judgment. It says the liquidating trustee can only be

found liable in his capacity as trustee for gross negligence,

willful default, or misconduct. (Debtors’ App. K at 58). The

debtors’ complaint contained no such allegations.

The debtors’ filing of the lawsuit against Fred Stanton

Smith constitutes a collateral attack on the confirmed plan

The debtors do not allege that the liquidating trustee failed

to carry out any of the plan’s terms or that he negligently

carried out the plan. Rather, they allege the plan itself is

flawed and illegal, and that because the liquidating trustee

carried it out as written, he should be held personally

responsible to them for millions of dollars of damages

Obviously, the debtors’ allegations relate to matters governed

15

by the plan and under these circumstances, the liquidating

trustee is not guilty of negligence, let alone gross negligence.

Section 1141(a) of the Bankruptcy Code makes it ineluctably

clear that “the provisions of a confirmed plan bind the debtor,

any entity issuing securities under the plan, any entity

acquiring property under the plan, and any creditor...” 11

U.S.C. Section 1141(a). Moreover, Section 1142(a) of the

Bankruptcy Code requires the debtor and “any entity

organized or to be organized for the purpose of carrying out

the plan”, such as the Miami Center Liquidating Trust, to

carry out the terms of the plan. 11 U.S.C. Section 1142(a).

As the debtors’ opportunity to attack the merits of the plan

is now moot, Miami Center Limited Partnership v. Bank of

New York, 838 F.2d 1547 (11th Cir. 1988), cert. den., _U.S._,

109 S.Ct. 69, the law precludes them from attacking the plan

in this manner.

The filing of the complaint against Fred Stanton Smith

personally for acts performed in accordance with the

confirmed plan is a clear violation of the plarn provisions and

Section 1142 of the Bankruptcy Code. Such collateral attacks

on a confirmed and substantially consummated plan should

not be permitted.

Thus, the district court did not err in affirming the

bankruptcy court’s dismissal of the complaint.

2. All of the allegations contained in the complaint

regarding failures to act were already the subject of court

orders, were pending as an adversary proceeding or motions

before the bankruptcy court, or had been decided and were

on appeal when the debtors filed their complaint.

All of the acts about which the debtors complain were

the subject of court orders, or were on appeal, or were pending

before the bankruptcy court as an adversary proceeding or

motion when the debtors filed this lawsuit. The debtors do

not address these facts in their petition for writ of certiorari,

nor do they demonstrate any basis for review in this court.

16

a. Discharge of the liquidating trustee. The debtors seek

the liquidating trustee’s discharge and then argue against

the validity of his existence, as they have in virtually every

one of the multitude of appeals taken from the bankruptcy

court’s orders in this case. This issue, however, is moot.

Miami Center Limited Partnership v. The Bank of New York,

supra. The plan of reorganization specifically provides for the

appointment of a liquidating trustee, and the plan, as

confirmed, is the law of this case. The debtors, moreover, did

not appeal the bankruptcy court’s August 12, 1985 order

appointing Fred Stanton Smith as trustee of the Miami

Center Liquidating Trust. (Debtor’s App. I at 45). The

appointment of a trustee under the plan of reorganization

is the law of this case, and the debtors are barred from

claiming otherwise. See 11 U.S.C. Section 1142(a). Moreover,

the debtors want a state court to discharge the liquidating

trustee, whereas the plan vests the authority to discharge

and replace the liquidating trustee with the bankruptcy

court. This too is the law of the case.

b. Income taxes. In the complaint, the debtors claim

Fred Stanton Smith is liable to them for money damages for

failing to establish a reserve for the payment of income taxes.

They claim it was a breach of fiduciary duty. First, the debtors

refer to no provision in the plan which requires the

liquidating trustee to file tax returns or pay income taxes

(because there are no such provisions). Second, and more

importantly, the matter has already been adjudicated in favor

of the liquidating trustee by the bankruptcy court and the

district court. (Debtors’ App. Q and R). The issue now pends

before the Eleventh Circuit, case no. 89-5862. The complaint

was thus properly dismissed because the tax issue had

already been decided in favor of the liquidating trustee.

c. Super-priority loans. The debtors also sought :znoney

damages for the liquidating trustee’s failure to establish

reserves for the payment of super-priority loans. In fact, these

were post-petition, inter-debtor loans. At the time the debtors

17

filed their complaint, the bankruptcy court had already

adjudicated the issue, holding the debtors were entitled to

repayment, but only from the assets of debtor Miami Center

Limited Partnership. On appeal, the district court reversed

this decision and held that the liquidating trustee owned the

right to receive the repayment of the “super-priority” loans

because the Miami Center Liquidating Trust became the

owner of the debtors’ right to repayment upon confirmation

of the plan. See 11 U.S.C. Section 541(a). (Trustee’s App. B).

That is, the liquidating trustee both owed and owned the

loans, hence no repayment was necessary. Jd. There was thus

no error in dismissing the complaint on this basis.

d. Claim 502. The debtors further alleged in their

complaint that the liquidating trustee was liable in damages

because he had not established a reserve for the claims of

the Miami Center Joint Venture (“MCJV”’), a partnership

comprised of debtor Theodore Gould and non-debtor Olympia

and York Florida Equity Corporation. Again, the lower courts

properly recognized that this issue had already been dealt

with. MCJV’s Claim 502 was the subject of an order of the

bankruptcy court (adv. proc. no. 87-0255-BKC-SMW-A),

orders the district court (case no. 85-3430-CIV-ATKINS,

consolidated with case nos. 87-1237-CIV-ATKINS,

87-1317-CIV-ATKINS, and 87-1583-CIV-ATKINS), and

orders of the Eleventh Circuit (appeal nos. 86-5609, 88-5429

and 89-5346). MCJV filed Claim 502 in the debtors’ Chapter

11 proceedings. The plan and numerous court orders deal

with its payment. It is inconceivable that the debtors can seek

money damages for the plan’s treatment of Claim 502 where

the debtors do not even own the claim. Moreover, the lawsuit

against the liquidating trustee is an improper attempt to

relitigate the issues concerning the claims of MCJV ina new

forum.

e. Post-petition interest. The debtors also sought money

damages—on-the ground that the liquidating trustee is

personally liable for allowing the bank to-take $27 million

18

in post-petition interest as a credit against the purchase price

at the closing on the sale of the Miami Center. The

bankruptcy court properly dismissed the complaint, for the

$27 million dollar credit was due the bank under the express

terms of the confirmed plan. The plan’s terms, which bind

the parties, provide for payment of post-petition interest to

the bank. The debtors’ claim that the bank is not entitled

to this interest is further evidence of their “end-run”

approach to litigation.

The liquidating trustee instituted an adversary

proceeding against the Bank of New York and the debtors

regarding the post-closing adjustments from the sale of the

Miami Center. In particular, Count III of that adversary

complaint sought declaratory relief on the question of

whether the bank was undersecured and thus not entitled

to post-petition interest. The bankruptcy court held the bank

was not undersecured. The debtors appealed. The district

court vacated the bankruptcy court’s order based on the

Eleventh Circuit’s decision dismissing the appeal from the

order of confirmation as moot, and ordered the bankruptcy

court to dismiss that portion of the adversary, holding: ‘‘[T]he

question of whether [the bank] was ‘entitled’ to obtain the

$27 million is no longer subject to adjudication.” (Debtors’

App. T at 139). The district court found “(t]he Plan

unmistakenly provided for the bank to have a credit for

interest and expenses accruing through the date of closing

... Id. As the plan binds all parties, and any questions

regarding the order of confirmation are now moot, the district

court properly held that no court has the present authority

to adjudicate the issue of the bank’s undersecurity and its

entitlement to post-petition interest. The debtors appealed

to the Eleventh Circuit, where the case is pending.

The debtors’ arguments are a collateral attack on the

confirmed plan of reorganization and on numerous decisions

of the courts which have dealt with the plan. This Court

should not permit the debtors to use a petition for writ of

19

certiorari as an opportunity to reargue their earlier legal

failures. Court decisions involving income tax liability,

payment of post-petition interest to the bank, claims of

MCJV, inter-debtor loans, ad valorem taxes, and federal

withholding taxes are the law of this case, despite the debtors’

contrary assertions.

3. There is no right to a jury trial in this case.

The debtors’ argument that they were deprived of their

right to a trial by jury under the Seventh Amendment of the

Constitution of the United States is specious, for it is

predicated on the false assumption that the complaint stated

a cause of action.

The debtors’ citation to Leonard v. Vrooman, 383 F.2d

556 (9th Cir. 1967), is inapplicable to this appeal. That case

held that when a bankruptcy trustee acts in excess of his

authority and is sued in state court, he is not protected by

the injunctive power of the bankruptcy court. Mr. Smith is

not a bankruptcy trustee, injunctions were not issued in this

proceeding, and the complaint does not allege that he acted

beyond the scope of his duties, as defined by the plan. Mr.

Smith is a contract trustee appointed by the bankruptcy court

pursuant to a confirmed plan of reorganization, and was sued

by the debtors for carrying out the plan’s terms. Vrooman

is also inapplicable because the plan in this case contains

a reservation of jurisdiction which provides for the

bankruptcy court to retain jurisdiction to enter any order

necessary or appropriate to effectuate the plan.

Dairy Queen, Inc. v. Wood, 82 S.Ct. 894 (1962), is cited

by the debtors for the proposition that there is a per se right

to a trial by jury under the Seventh Amendment of the United

States Constitution. Quite obviously, a complaint must first

state a cause of action to entitle a plaintiff to this right, and

this complaint fails to do so. The debtors’ reliance on

Granfinanciera, S.A. v. Nordberg, __U.S.__, __S.Ct.__ (1989),

and Northern Pipeline Construction Company v. Marathon

Pipeline Company, supra, to support their claim to a per se

right to a jury trial is also misplaced. The issue in

Granfinanciera was whether a creditor had any right to a

trial by jury once the cause was at issue. That is, once there

was a complaint and answer. This case was never at issue,

for the debtors’ complaint failed to state any legally

cognizable claim upon which relief could be granted, and was

properly dismissed on motion. There is no per se right to a

trial by jury, as the debtors contend, for the right to proceed

to trial must first be established by the filing of a claim upon

which relief could be granted. Moreover, Northern Pipeline,

supra, does not hold that any claim given a common law title

is a non-core matter.

None of these cases demonstrate the existence of a

genuine conflict with the Eleventh Circuit’s opinion in this

case, nor do they demonstrate that the Eleventh Circuit

departed from the accepted and usual course of judicial

proceedings. As no basis for review in this Court exists, the

petition for writ of certiorari should be denied.

21

CONCLUSION

None of the cases cited by the debtors demonstrate the

existence of a conflict between the decision of the Eleventh

Circuit Court of Appeals and the decision of another federal

appellate court or this Court. Moreover, the debtors have not

demonstrated that the Eleventh Circuit’s opinion departed

from the accepted and usual course of judicial proceedings

or that the issues raise an important question of federal law,

for the debtors’ arguments have no merit. Clearly, the

bankruptcy court had jurisdiction to entertain the debtors’

law suit because the plan and the law provides for post-

confirmation jurisdiction under the circumstances of this case.

The bankruptcy court’s dismissal of that law suit was also

proper because the complaint failed to state a claim on which

relief could be granted. Neither the plan of reorganization

nor the law imposes liability for the acts complained of. As

such, the debtors’ petition for writ of certiorari fails to allege

or demonstrate any basis for review in this Court and should

be denied.

RESPECTFULLY SUBMITTED,

Herbert Stettin, Esquire

Appendix

INDEX TO APPENDIX

Complaint, Smith v. Bank of New York, et al,

United States Bankruptcy Court for the Southern

District of Florida, case no. 87-0523-BKC-SMW.A...

Order on Bankruptcy Appeal dated November 4,

1988, Bank of New York v. Holywell Corp. et al.,

United States District Court for the Southern

District of Florida, case no. 87-0970-CIV-KEHOE ...

Order Dismissing Complaint dated May 12, 1988,

Holywell Corp., et al. v. Bank of New York, United

States Bankruptcy Court for the Southern District

of Florida, case no. 88-0158-BKC-SMW-A..........

Order on Bankruptcy Appeal dated February 16,

1988, United States v. Miami Center Limited

Partnership, et al., United States District Court for

the Southern District of Florida, case no.

Re I ES nas ccc ccacccnccccccss

Order on Adversary Complaint dated February 4,

1988, City National Bank of Miami v. Smith, United

States Bankruptcy Court for the Southern District

of Florida, case no. 87-0618-BKC-SMW-A..........

Order Dismissing Appeal dated January 30, 1989,

Holywell Corp. et al. v. City National Bank of Miami

and Smith, United States District Court for the

Southern District of Florida, case no. 88-0682-CIV-

eae eee eG esses ss 6006600005

Order Approving Amended Settlement of Ad

Valorem Tax Claims dated November 18, 1988,

Chopin Associates v. Smith, et al., United States

Bankruptcy Court for the Southern District of

Florida, case no. 88-0117-BKC-SMW-A ............

App. 1

INDEX TO APPENDIX (Continued)

Order Affirming Bankruptcy Court’s Order

Approving Amended Settlement of Ad Valorem Tax

Claims dated July 6, 1989, Chopin Associates v.

Smith, Bank of New York, et al., United States

District Court for the Southern District of Florida,

case no. 89-0070-CIV-ATKINS ........ 2... 6. sees H

Statutes and Rules referred to in the brief......... I

11 U.S.C. Section 541(a)

11 U.S.C. Section 1141(a)

11 U.S.C. Section 1142

11 U.S.C. Section 3020

11 U.S.C. Section 9027

28 U.S.C. Section 157

28 U.S.C. Section 158

28 U.S.C. Section 1254(1)

28 U.S.C. Section 1334

28 U.S.C. Section 1452

S.Ct.R. 17. Mahe)

EXHIBIT “A”

IN THE UNITED STATES BANKRUPTCY COURT IN

-AND FOR THE SOUTHERN DISTRICT OF FLORIDA

Case Nos. 84-01590-BKC-SMW

84-01591-BKC-SMW

84-01592-BKC-SMW

84-01593-BKC-SMW

84-01594-BKC-SMW

Adv. No: ,

HOLYWELL CORPORATION,

Debtor,

FRED STANTON SMITH, as Liquidating Trustee of the

Miami Center Liquidating Trust,

Plaintiff,

US.

THE BANK OF NEW YORK, HOLYWELL

CORPORATION, MIAMI CENTER CORPORATION,

MIAMI CENTER LIMITED PARTNERSHIP, CHOPIN

CORPORATION and THEODORE B. GOULD,

Defendants.

COMPLAINT FOR BREACH OF CONTRACT

AND DECLARATORY RELIEF

ALLEGATIONS AS TO ALL COUNTS

1. Fred Stanton Smith (Smith) is the liquidating trustee

of the Miami Center Liquidating Trust.

2. The Bank of New York is the proponent of the

Amended Consolidated Plan of Reorganization (the Plan),

under which Smith was appointed and in which the Bank

of New York was named as purchaser of the Miami Center

property under the Contract of Sale dated October 10, 1985

(the Contract).

3. This adversary complaint is brought pursuant to 28

U.S.C. Sections 157 and 1334(a), Bankruptcy Rules 7001(1)

and 7001(9), and the reservation of jurisdiction in Article XIV

of the Plan.

4. The sale of the Miami Center occurred on October 10,

1985. Smith and the Bank of New York executed the Contract

and a letter agreement modifying the Contract, copies of

which are attached as Exhibit A and B, respectively.

5. At the closing, Smith and City National Bank of

Miami, as Trustee, on behalf of the Bank of New York,

executed a Closing Statement, a copy of which is attached

as Exhibit C.

COUNT I-BREACH OF CONTRACT

6. Thereafter, the Bank of New York breached the

Contract, as modified by the letter agreement, by failing and

refusing to “make such abatements, apportment (sic) or

adjustment promptly” although final or liquidated amounts

have been ascertained.

7. Smith has been damaged by the failure and refusal

of the Bank of New York to complete the post-closing

adjustments required by the Contract, as modified by the

letter agreement. Although demand for payment and credit

of all sums due Smith has been made, the Bank of New York

has failed to pay or credit Smith all sums due him under the

Contract, as modified by the letter agreement.

WHEREFORE, Smith demands judgment against the

Bank of New York.

COUNT II-DECLARATORY RELIEF

8. Each allegation in paragraphs one through seven is

realleged as if set forth herein.

9. Smith and the Bank of New York have attempt to

complete and agree upon the post-closing adjustments

App. 4

required under the Contract, as modified by the letter

agreement. A number of items have been agreed upon, but

a number of items remain in dispute.

10. There is a real, present controversy between Smith

and the Bank of New York of the right of Smith either to

receive credit as seller for those items remaining in dispute,

or the extent to which Smith is entitled to receive credit for

items in dispute.

11. Attached as Exhibit D is a proposed closing

statement which treats each required post-closing adjustment

(excepting only Smith’s claim for reimbursement from the

Bank of New York for post-petition interest from an

undersecured creditor). The proposed closing statement

reflects the position of both parties, the amounts in

controversy, and comments as to the items in dispute.

WHEREFORE, Smith asks this Court to determine the

matters in controversy between the parties.

COUNT III-DECLARATORY RELIEF

12. Each allegation in paragraphs one through eleven

is realleged as if set forth fully herein.

13. Smith takes the position, as does the Bank of New

York, that the Bank of New York was not an undersecured

creditor, and that it was entitled to receive credit against the

purchase price at closing for post-petition interest. Holywel!

Corporation, Miami Center Limited Partnership, Miami

Center Corporation, Chopin Corporation and Theodore B.

Gould (collectively referred to as Debtors) have taken a

contrary position, claiming the Bank of New York was an

undersecured creditor, and therefore not entitled to receive

post-petition interest on its lien.

14. The Bank of New York received credit at closing

against the purchase price of $27,050,115.02, as post-petition

interest.

15. The Debtors contend the Miami Center property sold

by Smith to the Bank of New York was worth less than the

amount of the lien claimed by the Bank of New York, and

that Smith is entitled to recover those sums paid as post-

petition interest to the Bank of New York at closing

representing an amount in excess of the fair market value

of the property sold.

16. The Debtors claim of undersecurity is based upon

a statement in the Confirmation Order of August 8, 1985.

The Order does not refer to a finding of fact or evidence in

the record as support for that conclusion. That order was

appealed, and on remand, the Bankruptcy Court rendered

an Order on Remand, dated January 30, 1986, which omits

any statement that the Bank of New York was an

undersecured creditor. The District Court affirmed the Order

on Remand, and the Eleventh Circuit has dismissed the

Debtors’ appeal as moot.

17. The issue of whether the Bank was an undersecured

creditor is a real, present controversy between Smith and the

Bank of New York on one hand, and the Debtors on the other.

WHEREFORE, Smith asks the Court to determine the

matters in controversy between the parties.

HERBERT STETTIN, P.A.

AmeriFirst Bldg. Suite 2215

One S.E. Third Avenue

Miami, Florida

Telephone: (305) 374-3353

BY: /s/ Herbert Stettin

HERBERT STETTIN, ESQUIRE

App. 6

a

EXHIBIT “‘B”’

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 87-970-CIV-KEHOE

THE BANK OF NEW YORK,

Apellant,

v.

HOLYWELL CORPORATED,

THEODORE B. GOULD, et al.,

Appellees.

ORDER ON BANKRUPTCY APPEAL

THIS IS AN APPEAL from the United States Bankruptcy

Court for the Southern District of Florida, involving the legal

status and priority of certain loans made by two debtors to

another debtor during the pendency of five related

bankruptcy cases.' This Court has jurisdiction in this matter

pursuant to Title 28, United States Code, Section 158.’

I.

BACKGROUND OF BANKRUPTCY PROCEEDINGS

F Five interrelated debtors filed for bankruptcy in August

; 1984. One of the five debtors, Theodore B. Gould (‘‘Gould’’)

i had the controlling interest in the other four debtors:

' Holywell Corporation (‘‘Holywell’’), which was owned one

hundred percent by Gould and which itself owned one

'Case Nos. 84-01590, 85-01591, 84-01592, 84-01593 and 84-015y4.

2The Bankruptcy Court’s findings of fact may not be reversed unless

shown to be “clearly erroneous.” Bankruptcy Rule 8013 and Fed.R. Civ.P.

52(a). The Bankruptcy Court’s conclusions of law are reviewable de novo.

In re Multiponics, Inc., 622 F.2d 709, 713 (5th Cir. 1980).

hundred’percent of Twin Development Corporation (“Twin”),

its subsidiary, and interests in various Gould partnerships;

Miami Center Limited Partnership (“MCLP”), of which

Gould was a limited partner and the individual general

partner; Miami Center Corporation (“MCC’’), which was

owned one hundred percent by Holywell, and which served

as a limited partner and as the corporate general partner of

MCLP; and Chopin Associates (“Chopin”), a general

partnership owned equally by Gould and MCC, which was

the owner and lessor to MCLP of the property encompassing

the Miami Center Project,’ the essential business enterprise

encompassing the bankruptcies of the five debtors. (Debtors

Holywell and Gould are appellees herein, as is Twin. The

Liquidating Trustee, Fred Stanton Smith, although named

as an appellee, has stated that his “. . . interest . . . is in fact

the same as that of the Appellant,” The Bank of New York.)

The Appellant Bank of New York (“Bank’’) lent $197

million dollars to the debtors for construction of the Miami

Center Project. During the bankruptcies, the proceeds of the

sale of certain “cash rich” properties (three buildings

developed by Gould in the Washington, D.C. area), which had

been pledged by the debtors in connection with the loan, were

determined to be ‘‘cash collateral” of the Bank under Title

11, United States Code, Section 363, to be segregated and

held subject to further order of the Barxruptcy Court.* The

three buildings (“Washington Properties”) were subsequently

sold, with net proceeds of approximately $32 million, part

of which was thereafter advanced to the debtors as a post-

petition loan because of MCLP’s operating losses. That loan

and other, similar loans from the Washington Properties were

3The Miami Center Project was a large commercial project situated

prominently in downtown Miami, Florida, consisting of an office building,

hotel, garage, rental space, furnishings, fixtures and equipment.

‘No appeals were taken from these determinations, with the proceeds

becoming “property of the estates” under 11 U.S.C., §541(aX6).

App. 8

given “super-priority”’ status superior to all claim against

MCLP except the Bank’s lien. (The principal amount of the

loans exceeded 4.7 million.)

Subsequent to those ‘‘super-priority’’ loans, the

Bankruptcy Court approved the substantive consolidation

feature of the Bank’s Plan and confirmed the bank’s Plan‘

Well over a year after the effective date of the Plan, the

Liquidating Trustee moved for authority to pay the super-

priority claims, which was followed with the filing of similar

motions by the Debtors and by Twin for payment to

themselves. This appeal is from the granting of those three

motions and from the denial of the Bank’s motion for

rehearing and clarification.

The Bank’s first contention in this appeal is that it was

error to rule that the discharged Debtors, and not the

Liquidating Trustee, owned the post-petition loans. The Bank

further contends on appeal that it was error to authorize the

Liquidating Trustee to repay the post-petition loans, because

the loans had either become extinguished by substantive

consolidation or, if they survived, were subordinated.

In support of these arguments, the Bank emphasizes,

inter alia, the following facts. First of all, in an earlier appeal

in these bankruptcies, another judge of this Court ruled that

Gould and Hclywell, the movants for the sale of the

Washington Properties, “. . . repeatedly made representations

to the effect of acknowledging that the proceeds from the

Washington Properties allocable to Twin would }e available

to creditors in satisfying claims against their estates in

‘The order of substantive consolidation and the confirmation of the

order confirming the Bank’s Plan were ultimately affirmed by the District

Court. Holywell Corporation v. The Bank of New York, 59 B.R. 340 (S.D.

Fla. 1986). The debtors’ appeal therefrom was dismissed. Miami Center

Limited Partnership v. Bank of New York, 820 F.2d 376 (11th Cir. 1987).

App. 9

bankruptcy.” That Court affirmed the Bankruptcy Court,

which granted the Liquidating Trust” . . . complete control

over Twin’s proceeds arising from the sale of the Washington

properties . . .”’ Also, because the Gould and Holywell estates

were relatively solvent and the MCLP estate was insolvent,

creditors of the former estates had concerns about protecting

their own particular interests. At the hearing, and as

reflected in the order, on the motion for the approval of the

loans, there was agreement that the loans should be restored

to the Holywell and Gould estates, from which they came,

before the claims of the MCLP creditors, other than the Bank.

Furthermore, under the Amended Consolidated Plan, a Trust

was established, with a “... designated .. . Trustee of all

property of the estates of the Debtors within the meaning

of §541(a) of the Code ...,” with the result that the post-

petition loans become a nullity, inasmuch as the Liquidating

Trustee owned the rights to repayment of the loans and, at

the same time, had the duty to repay the loens from the cash

and property within the Trust. Thus, the bank concludes that

the Trustee should have “‘cancelled”’ the promisory notes or

else have written a repayment check to himself.*

‘Holywell Corporation v. The Bank of New York, Case No. 86-0848-CIV-

RYSKAMP, Order of February 20, 1987, at p.6.

"Footnote 6 at p. 11.

‘The Bank also argues that while the Debtors would ordinarily be

expected to oppose the payment of any claim from the Liquidating Trust,

in this instance, they did not oppose the repayment of the post-petition

loans, but rather moved for such repayments when they realized that the

assets in the Liquidating Trust would be insufficient to pay the claims

of all creditors, particularly in contemplation of the large payment to be

made to Olympia & York Florida Equity Corporation (Gould’s partner in

the Miami Center Joint Venture).

App. 10

A.

The Bankruptcy Court Erred in Concluding that

the Debtors, and not the Liquidating Trustee,

Owned the Post-Petition Loans

Pursuant to the Amended Consolidated Plan of

Reorganization, a Trust was established

. of all property of the estates of the Debtors

within the meaning of §541(a) of the Code, including

but not limited to, Miami Center, the Washington

Proceeds, and all claims and causes of action, if any,

of the Debtors described in Exhibit C and those

pending in the litigation against BNY (‘Trust

Property”) to hold, liquidate, and distribute such Trust

Property according to the terms of this Plan.

By the terms of the Plan, the ‘Washington Proceeds” are

includable as property (“‘proceeds” or “product”’) within the

meaning of Section 541(aX6) of the Bankruptcy Code.’

Another judge of this Court has, in effect, found the

“Washington Proceeds” to be part of the Trust, and the

Eleventh Circuit Court of Appeals has affirmed, as moot, an

appeal therefrom.'° Furthermore, from the facts presented,

it appears clear that the post-petition loans come within the

provisions of Section 541(aX7) of the Bankruptcy Code, as an

°§541. Property of the Estate

(a) The commncement of a case under section 301, 302, or 303 of this

title creates an estate. Such estate is comprised of all the following

property, wherever located and whomever held:

*-_ + *+ * *

(b) Proceeds, product, offspring, rents, or profits of or from property

of the estate, except such as are earnings from services performed by an

individual debtor after the commencement of the case.

“Holywell Corporation v. Bank of New York, 59 B.R 340 (S.D. Fla.

1986); Miami Center Limited Partnership v. Bank of New York, 820 F.2d

376 (11th Cir. 1987).

App. 11

interest in property by the estate acquired after

commencement of the case.!!

Thus, upon the effective date of the Plan, by its own

terms, these “proceeds” became the property of the estate

under Section 541(a), with the rights to repayment becoming

property of the Liquidating Trustee, and with the liability

of the MCLP to repay the loans becoming a claim against

the Liquidating Trustee. '?

B.

The Bankruptcy Court Erred in Concluding and

Authorizing the Liquidating Trustee to Repay the

Post-Petition Loans, to the Extent They Were

Extinguished by Substantive!

‘“{Lliabilities of consolidated entities inter se are

extinguished by ... consolidation.” Jn Re Auto-Train

Corporation, 810 F.2d 270, 276 (D.C. Cir. 1987). Thus, the

''For the proposition that under Section 541(aX7), the property of the

estate includes “[ajny interest in property that the estate acquires after

the commencement of the case,” see Matter of Wilson, 694 F.2d 236, 237-8

(11th Cir. 1982).

'2As succinctly stated in the Appellant’s Initial Brief, upon the effective

date of the Plan, “the Liquidating Trustee both owned and owed those

Loans.” [emphasis added]

\3Additionally, under this issue, Bank argues that even if the post-

petition loans survived substantive consolidation, they were subordinated

by virtue of Sections 1142(a) and (b), of the Code, pursuant to which an

entity organized to carry out the plan and the Bankruptcy Court are

charged with implementing the Plan, and that nowhere under the Code

is such an entity or the Court authorized to modify the plan’s priorities.

Thus, the Bank argues that even if there is no substantive consolidation,

nonetheless, because the Debtors, as Affiliated Creditors under the Plan,

are assigned a priority lower than Olympia & York Florida Equity

Corporation, the as-yet unpaid creditor, their claim is thereby subordinated

and the priorities of the plan may not be changed. See, e.g., Miller v.

Meinhard-Commercial Corporation, 462 F.2d 358 (5th Cir. 1962).

App. 12

assets and liabilities of all the consolidated debtors would

thereby become merged, eliminating all inter-debtor

obligations and guarantees.'*

This legal principle applies to the present case. As

indicated by the Bank, even the Debtors themselves have

acknowledged in prior District Court proceedings, see

Holywell Corporation v. Bank of New York, 59 B.R. 340, 350

(S.D. Fla. 1986), and in a brief before the Eleventh Circuit

Court of Appeals, that these inter-debtor loans were, in fact,

eliminated by substantive consolidation.'’

c.

In response to the issues raised by the Bank, the Debtors

rely strongly on the position taken by the Bankruptcy Court

that “. . . the substantive consolidation of the five estates...

did not extinguish any of the post-petition claims presently

under consideration . . . [and that] . . . [i]f this result was in

fact intended by the [B]ank when it presented its plan, it

should have been made explicit [inasmuch as the Bankruptcy

Court}... would not have confirmed a plan nullifying .. .”’

the post-petition loan orders.'*

Acknowledging the considerable weight and deference to

be accorded to the Bankruptcy Court’s position, nonetheless,

the present facts and attendant legal considerations militate

against the approval of such a result. First of all, unlike the

more customary situation, this case involves the infusion of

'4See, e.g., In Re Richton International Corporation, 12 B.R. 555, 556

(Bkrtcy S.D.N.Y. 1981).

'SIn the “Brief of Appellants [Debtors],”’ at p.12 (Case Nos. 86-5286

and 86-5386) the Debtors argue to the Eleventh Circuit Court of Appeals

that “(t]he consolidation had the intended effect of eliminating al! inter

Debtor claims, such as the super-priority loans from Gould and Holywe!!

to MCLP.”

‘Order Denying Reconsideration, April 1, 1987.

App. 13

funds originating not from a party or source outside the assets

or control of the bankrupt entities, but rather from two inter-

related party debtors to yet another inter-related party

debtor. In other words, these particular “super-priority” loans

consist of funds not newly-created and infused into the case,

but rather of funds previously existing and accounted for,

within the assets of, or under the control of, certain of the

co-debtors, that is, funds already within the purview of the

bankruptices. Such funds are clearly distinguishable from

those found, for example, in the case of In Re Flagstaff

Foodservice Corporation, 739 F.2d 73 (2d Cir. 1984), relied

upon by the Appellees, where a creditor infused fresh funds,

previously no part of, and unknown to, the bankruptcy case.

Flagstaff Foodservice, therefore, lacks a basic underlying

factor for the “super-priority” status of the present loans,

namely, the protection of the lenders’ creditors over the

creditors of the loans’ recipient. Thus, in part, because the

Appellant Debtors, upon discharge, walked away from the

bankruptcies, free of any liabilities, vis-a-vis the “super-

priority” loans, they should not now be heard to assert a claim

to the assets.

Indeed, if the course of the loans were to be mapped out,

the funds would be seen travelling from the lender debtors

(Point A) to the recipient debtor (Point B). Then, when

repayment funds became available, the funds would be seen

returning from Point B to Poiut A. Where, in the interim,

however, substantive consolidation has occurred and the

resultant Liquidating Trust has been created, Point A has

become Point B, and vice versa. Therefore, the only remaining

movement, to the extent it can be meaningfully described,

would be viewed as a constructive repayment entirely within

the trust itself and would, so to speak, constitute a “taking

App. 14

from Peter to pay Paul” from one “estate” within the merged

debtors to another.'’

Secondly, especially in view of the posture and

interrelation of the parties and of the surrounding

circumstances presented, there is a legal consideration to be

noted and observed; namely, the full and absolute priority

rule, see Consolidated Rock Products Co. v. DuBois, 312 U.S.

510, 61 S.Ct. 675, 682, 85 L.Ed. 982 (1941), which “...

precludes the participation of equity interests in assets until

the creditors have been made whole.” Jn Re Evans Products

Company, 65 B.R. 870, 873 (S.D. Fla. 1986). Thus, the

discharged Debtors’ claims may not accrue, in effect, until

the remaining creditors of Gould and Holywell “have been

made whole.”

D.

A final issue is presented by the Appellees, asserting that

the Liquidating Trustee cannot legally exist under the

Bankrutpcy Code and thus cannot be said to own the super-

priority loans. As the Appellant Bank aptly points out, this

issue was not raised below in the Bankruptcy Court and that

no appeal was taken from the order appointing the

Liquidating Trustee. Therefore, no comment on this point

is called for.

"One of the alternate remedies scught by the Bank is a “formal

transaction” whereby the Liquidating Trustee, who is responsible for the

suject assets and liabilities, would write a repayment check in his capacity

as the “super-priority” loans debtor, to himself in his capacity as the

“super-priority” loans creditors.

App. 15

Wherefore, to the extent the subject loans are repayable

as “super-priority” obligations of MCLP ahead of the claims

of any MCLP creditors, the appealed Orders should be, and

are, affirmed. Furthermore, to the extent necessary to be in

confirmity with this opinion, this matter is remanded to the

Bankruptcy Court (i) in order to clarify and/or supplement

its Orders to assure that repayment of the loans be made to

the estate of Gould and Holywell, subject to the claims of the

remaining creditors of the estate, and (ii) to ascertain, where

necessary, the specific source of the repayment funds.

DONE AND ORDERED in Chambers at Miami, Florida,

this 4th day of November, 1988.

/s) JAMES W. KEHOE

James W. Kehoe

United States District Judge

copies furnished to:

See attached service list

App. 16

SERVICE LIST

Vance E. Salter, Esq.

Coll, Davidson, Carter,

Smith, Salter & Barkett

3200 Miami Center

100 Chopin Plaza

Miami, Florida 33131

Attorneys for Bank of New York

S. Harvey Ziegler, Esq.

Kirkpatrick & Lockhart

1428 Brickell Avenue

Miami, Florida 33131

Attorneys for Bank of New York

Thomas F. Noone, Esq.

Emmet, Marvin & Martin

48 Wall Street

New York, New York 10005

Attorneys for Bank of New York

John W. Kozyak, Esq.

Kozyak, Tropin & Throckmorton, P.A

2850 Southeest Financial Center

200 S. Biscayne Blvd.

Miami, Florida 33131

Attorneys for Olympia & York

Theodore Gould

2653 Ivy Road

Charlottesville, Virginia 22901

Raymond W. Bergan, Esq.

Williams & Connolly

839 17th St., N.W.

Washington, D.C. 20006

App. 17

Albert I. Edelman, Esq.

26th Floor

100 Park Avenue

New York, New York 10017

Attorneys for Olympia & York

Scott D. Sheftall, Esq.

Floyd, Pearson, Richman, Greer,

Weil, Zack & Brumbaugh, P.A.

One Biscayne Tower, 25th Floor

Miami, Florida 33131-1868

Attorneys for Holywell Leasing Co.

and Holywell Telecommunications Co.

Herbert Stettin, Esq.

Herbert Stettin, P.A.

Suite 2215

AmeriFirst Building

One S.E. 3rd Avenue

Miami, Florida 33131

Attorney for Liquidating Trustee

Robert A. Mark, Esq.

Stearns, Weaver, Miller, Weissler,

Aldaheff and Sitterson

Museum Tower

150 W. Flagler St.

Miami, Florida 33130

Fred H. Kent, Jr., Esq.

Carlton, Fields, Ward Emmanuel, etc.

1400 Florida National Bank Tower

Jacksonville, FL 32202

Fred Stanton Smith

c/o Keyes Company

100 North Biscayne Blvd.

Miami, FL 33132

App. 18

EXHIBIT “Cc”

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NOS. 84-01590-BKC-SMW

84-01591-BKC-SMW

84-01592-BKC-SMW

84-01593-BKC-SMW

84-01594-BKC-SMW

ADV. PRO. NO. 88-0158-BKC-SMW.-A

In Re:

HOLYWELL CORPORATION, et al.,

Debdtor.

MIAMI CENTER LIMITED PARTNERSHIP,

MIAMI CENTER CORPORATION,

and HOLYWELL CORPORATION,

Plaintiffs,

vs.

UNITED STATES OF AMERICA, and

THE BANK OF NEW YORK,

Defendants.

ORDER DISMISSING THE COMPLAINT

THIS ADVERSARY PROCEEDING was heard on May

9, 188 upon the Motions to Dismiss the Complaint filed by

Defendants, the United States and The Bank of New York.

The Complaint alleges that The Bank of New York is

responsible to pay certain withholding taxes, interest, and

penalties as “employer in fact” instead of the debtors,

pursuant to Sections 3505 and 6323(i) of the Internal Revenue

Code.

App. 19

Having reviewed the pertinent pleadings and heard

argument of counsel, it is hereby ORDERED and

ADJUDGED that:

1. The Complaint fails to state a legally sufficient cause

of action, because only the IRS has the legal right to assert

a claim against The Bank of New York under Sections 3505

and 6323 of the Internal Revenue Code. In re Brandt-Airflex

Corp., Case No. 87-5034 (2d Cir. slip op. March 30, 1988), affg.

78 Bankr. 10 (E.D. N.Y. 1987).

2. However, to the extent that the IRS’s exercise of

discretion might affect these estates with respect to interest

or penalties on withholding taxes previously paid to the IRS,

the Court is unwilling to permit the IRS an open-ended or

indefinite period within which to prosecute such a claim or

to decline to prosecute it.

3. Accordingly, the United States, through the Special

Procedures Section of the IRS, is directed to take one of the

following actions, as it may elect, on or before Tuesday, May

31, 1988:

(a) Formally assert any alleged claim the IRS may

have as against The Bank of New York with respect to any

failure by the debtors to pay any withholding taxes or the

interest or penalties on such taxes; or

(b) Notify in writing counsel for The Bank of New

York, the Trustee, and the debtors, as well as debtor Theodore

B. Gould (appearing pro se in this proceeding), that the

alleged claim will not be asserted by the United States.

4. If the United States fails to make such an election

and to take one of the two actions described in Paragraph

3 of this Order, then it shall be barred from thereafter

asserting any alleged claim (against the debtors, the Bank,

or otherwise) relating to any failure by the debtors to pay

any withholding taxes or the interest or penalties on such

taxes.

App. 20

The Court retains jurisdiction to enforce the provisions

herein.

DONE AND ORDERED in Chambers, at Miami, Florida,

this 12th day of May, 1988.

United States Bankruptcy Judge

Vance E. Salter, Esq., shall

furnish copies of this order

to all persons listed on ©

the attached Service List

App. 21

SERVICE LIST

Herbert Stettin, Esq.

2215 AmeriFirst Building

One Southeast Third Avenue

Miami, Florida 33131

Tel: (305) 374-3353

Theodore B. Gould

Holywell Corporation

2564-A Ivy Road

Charlottesville, VA 22901

Tel: (804) 295-7125

Robert M. Musselman, Esq.

Mussellman and Associates

413 Seventh Street, N.E.

Charlottesville, VA 22902

Tel: (804) 977-4500

Robert Mark, Esq.

Stearns Weaver Miller Weissler

Alhadeff & Sitterson, P.A.

2200 Museum Tower

150 West Flagler Street

Miami, Florida 33130

Tel: (305) 789-3440

Jose F. de Leon Esq.

Trial Attorney, Tax Division

U.S. Department of Justice

P.O. Box 14198

Ben Franklin Station

Washington, D.C. 20044

Tel: (202) 272-6548

App. 22

nae AAS Ri AO le eo nT

EXHIBIT “‘D”’

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 88-1272-CIV-Hoeveler

Bankruptcy

Case Nos: 84-01590-BKC-SMW

84-01591-BKC-SMW

84-01592-BKC-SMW

84-01593-BKC-SMW

84-01594-BKC-SMW

In re:

HOLYWELL CORPORATION, et al.,

THE UNITED STATES OF AMERICA,

Appellant,

Us.

MIAMI CENTER LIMITED PARTNERSHIP, et al.,

Appellees.

MIAMI CENTER LIMITED PARTNERSHIP, acting by

THEODORE B. GOULD and MIAMI CENTER

CORPORATION, its General Partners;

and HOLYWELL CORPORATION,

Cross-Appellants,

US.

UNITED STATES OF AMERICA, and

THE BANK OF NEW YORK,

Cross-Appellees.

App. 23

ORDER ON BANKRUPTCY APPEAL

THIS CAUSE is before the Court on an appeal filed by

the United States of America (“IRS”) from the Order

Dismissing the Complaint entered on May 12, 1988 in an

adversary proceeding in the bankruptcy court. A Cross-Notice

of Appeal was filed by the plaintiffs in the adversary

proceeding. The issues were briefed and the parties appeared

for argument before the Court on November 2, 1988.

The Court has considered the briefs and the statements

of counsel agreeing upon the relief which should be entered

on this appeal. Thereupon, the Court having considered the

record and being otherwise fully advised in the premises, it

is —

ORDERED AND ADJUDGED As follows:

1. The bankruptcy court’s dismissal of the adversary

complaint for failure to state a legally sufficient cause of

action is affirmed insofar as the complaint attempted to assert

a claim against defendant, The Bank of New York (the

“Bank”’) under Sections 3505 and 6323 of the Internal

Revenue Code. Only the IRS has the legal right to assert such

a claim against Bank. Affirmance of this portion of the

bankruptcy court order is expressly without prejudice to

further proceedings which may be necessary in the

bankruptcy court or other court of competent jurisdiction to

determine (i) the amount, if any, which may be owed by the

Trustee of the Miami Center Liquidating Trust for the

withholding taxes described in the adversary complaint; (ii)

the amount of any interest or penalties the IRS has claimed

on such taxes; or (iii) the rights of the Trustee or the cross-

appellants to seek indemnification against the Bank under

Florida law.

2. Paragraph 2, 3 and 4 of the bankruptcy court’s order

required the IRS to take affirmative action against the Bank

under Sections 3505 and 6323 of the Internal Revenue Code,

failing which it would be barred from thereafter asserting

App. 24

any future claims against the debtors, the Bank or any other

party with respect to withholding taxes or the interest or

penalties on such taxes. The parties to the appeal stipulate

and this Court finds that the bankruptcy court did not have

jurisdiction to order the IRS to assert a claim against the

Bank pursuant to Section 3505 of the Internal Revenue Code

and, accordingly, paragraphs 2, 3 and 4 of the bankruptcy

court’s order are reversed and vacated.

DONE AND ORDERED in Chambers, at Miami, Florida,

this 16th day of February, 1989.

/s/ WILLIAM M. HOEVELER

U. S. District Court Judge

Copies furnished to:

ROBERT A. MARK, ESQ.

THEODORE B. GOULD

ROBERT M. MUSSELMAN, ESQ.

HERBERT STETTIN, ESQ.

FRED STANTON SMITH, ESQ.

JOSE F. DELEON, ESQ.

DEXTER LEHTINEN, ESQ.

THERESA MITCHELL, ESQ.

THOMAS F. NOONE, ESQ.

S. HARVEY ZIEGLER, ESQ.

VANCE E. SALTER, ESQ.

App. 25

EXHIBIT “E”’

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 88-0682-Civ-NESBITT

IN RE:

HOLYWELL CORPORATION, et al.,

HOLYWELL CORPORATION, MIAMI CENTER

CORPORATION, MIAMI CENTER LIMITED

PARTNERSHIP, CHOPIN ASSOCIATES, and

THEODORE B. GOULD,

Appellants,

US.

CITY NATIONAL BANK OF MIAMI, as Trustee under Land

Trust #5008793, and FRED STANTON SMITH, as Trustee

of the Miami Center Liquidating Trust,

Appellees.

ORDER DISMISSING APPEAL

Appellants in this bankruptcy appeal are the Debtors in

the Miami Center bankruptcy. Appellees are the Trustee of

the Miami Center Liquidating Trust, and City National Bank

of Miami. The issues raised in this appeal (which is but one

of many arising from the massive bankruptcy case) involve

an escrow account established at the time of the sale of the

Miami Center for the payment of real estate taxes to Dade

County.

In an Order dated February 4, 1988, Judge Weaver

approved a transfer of the escrow fund from the account of

the Trustee’s former attorneys to that of the present

attorneys. Appellants contend that Judge Weaver did not

have jurisdiction to consider or approve the escrow transfer

because ratification of the reorganization plan effectively

App. 26

terminated the bankruptcy proceedings. The court finds this

argument completely without merit. The reorganization plan

espressly provides that the bankruptcy court shall oversee

implementation of the plan; moreover, the Bankruptcy Code

provides for continuing jurisdiction. See 11 U.S.C. § 945 and

Bankruptcy Rule 3020(d). Therefore, Judge Weaver

appropriately exercised his jurisdiction by approving the

escrow transfer.

Appellants raise several other arguments challenging the

validity of the escrow account, but because those issues were

not raised in the order appealed from, they are not properly

before this court.

For the above-stated reasons, it is hereby

ORDERED and ADJUDGED that this appeal is

DISMISSED.

DONE AND ORDERED in chambers, at Miami, Florida,

this 3rd day of January, 1989.

/s/_ LENORE C. NESBITT

Lenore C. Nesbitt

United States District Judge

cc: counsel of record

App. 27

EXHIBIT “‘F”’

IN THE UNITED STATES BANKRUPTCY COURT IN

AND FOR THE SOUTHERN DISTRICT OF FLORIDA

CASE NO: 84-01590/91/92/93/94

BKC-SMW

HOLYWELL CORPORATION, et al.,

Debtors,

CITY NATIONAL BANK OF MIAMI,

Plaintiffs,

US.

FRED STANTON SMITH, etc. et. al.,

Defendants.

ORDER ON ADVERSARY COMPLAINT

THIS CAUSE having come on to be heard on January

26, 1988, on Adversary Trial and Counterclaim of Defendants

Holywell Corporation, et. al., and the Court having heard

argument of counsel, having reviewed the pleadings on file

and being otherwise fully advised in the premises, it is

hereupon

ORDERED AND ADJUDGED AS FOLLOWS:

1. The escrow fund in question, presently held in the

name of Holland and Knight, is determined to be a fund

specifically set up for the purpose of paying ad valorem taxes,

if any, due on the Miami Center property. The Court reserves

jurisdiction to determine at a later date, by appropriate

adversary complaint or otherwise, all remaining issues

concerning the claims made for the payment of ad valorem

taxes on the property in question.

2. The escrow fund previously held in the name of

Holland and Knight is ordered transferred to a new escrow

App. 28

——

to be held in the name of S. Harvey Ziegler arid Herbert

Stettin, subject to the further order of this court. No

withdrawals or other disbursements from this escrow shal!

be permitted without Order of Court after notice and a

hearing. The Court authorizes the existing escrow account

to remain in effect in order not to cause any penalty for early

withdrawal, provided that the name of the escrow is changed.

The escrowees shall have the right to jointly select an

authorized bank to continue to hold the funds in escrow.

3. The Counterclaim filed by Holywell Corporation et.

al. be and it is hereby dismissed, without prejudice.

DONE AND ORDERED in Chambers, at Miami, Florida,

this 4th day of February, 1988.

/s/ SIDNEY M. WEAVER

Sidney M. Weaver

United States Bankruptcy Judge

ms

conformed copy:

Herbert Stettin, Esquire

will immediately upon receipt

of a signed copy forward same to

all counsel of record.

App. 29

EXHIBIT “G”’

30390AAS

IN THE UNITED STATES BANKRUPTCY COURT IN

AND FOR THE SOUTHERN DISTRICT OF FLORIDA

CASE NO. 84-01590-BKC-SMW

84-01591-BKC-SMW

84-01592-BKC-SMW

84-01593-BKC-SMW

84-01594-BKC-SMW

ADV. NO. 88-0117-BKC-SMW-A

IN RE:

HOLYWELL CORPORATION, et al.

CHOPIN ASSOCIATES, acting by THEODORE B. GOULD

and MIAMI CENTER CORPORATION, Its Partners, and

MIAMI CENTER LIMITED PARTNERSHIP, Acting by

THEODORE B. GOULD and MIAMI CENTER

CORPORATION, Its General Partners,

Plaintiffs,

Us.

FRED STANTON SMITH, as Trustee of

THE MIAMI CENTER LIQUIDATING TRUST,

THE BANK OF NEW YORK,

CITY NATIONAL BANK OF MIAMI, as

Trustee of Land Trust #5008793,

DADE COUNTY, FLORIDA, a Municipality,

JOEL ROBBINS, as Property

Appraiser of DADE COUNTY FLORIDA

FRED GANZ, as Tax Collector

of DADE COUNTY, FLORIDA

App. 30

ORDER APPROVING AMENDED SETTLEMENT OF

AD VALOREM TAX CLAIMS

THIS CAUSE came before the Court for hearing in Miami

on October 31, 1988 pursuant to an Order Setting Hearing

on Trustee’s Motion For Approval Of Amended Stipulation

Settling Ad Valorem Tax Claims, dated October 11, 1988.

The Court had heard the testimony presented, examined the

exhibits received into evidence, observed the candor and

demeanor of the witnesses who testified, considered the

argument of counsel, and is otherwise fully advised in the

premises. Based upon that testimony, exhibits and argument,

the Court makes the following findings of fact and conclusions

of law:

1. The Court had previously scheduled a hearing on a

Motion for Approval of Compromise of Ad Valorem Tax

Claims on Apri! 28, 1988, and consolidated that hearing with

a pending adversary proceeding brought by Chopin

Associates et al., case# 88-0117-BKC-SMW.A.

2. On October 31, 1988, the Liquidating Trustee moved

the Court to take judicial notice of all of the testimony,

exhibits and argument received by the Court at the hearing

held on April 28, 1988. No party in interest voiced any

objection to this and the Court orally granted the motion.

The Court has therefore, taken cognizance of and has

considered as a part of the record concerning the Amended

Settlement of Ad Valorem Tax Claims, the record made

before the Court on the proposed settlement of the ad valorem

tax claims previously heard on April 28, 1988.

3. On that date, the proponents of the settlement put

in evidence testimony from John Fletcher, an attorney who

specializes in ad valorem tax matters, that the burden of proof

on a taxpayer requires proof by substantial competent

evidence of the exclusion of every reasonable hypothesis of

value used by the tax assessor, using recognized methods of

valuation. Mr. Fletcher cited pertinent Florida law

App. 31

supporting this conclusion, and testified as to the difficulty

imposed on a taxpayer in such circumstances.

4. The proponents of the settlement also elicited

testimony from A.H. Blake, a former tax assessor of Dade

County, that the tax settlement proposed was fair and

reasonable, and was in the best interest of the liquidating

trust. He concluded the settlement proposed favored the

liquidating trust more than it did the Bank of New York.

5. The proponents also put in evidence the testimony of

Fred S. Smith, the liquidating trustee. Mr. Smith is an

experienced local real estate broker and testified that, based

on his experience as a broker and as president of Keyes

Corporation, he believed the settlement is in the best interest

of the liquidating trust. He specifically identified the letter

agreements of February 24, 1988 between the liquidating

trust, the Bank of New York and the Dade County Attorney;

the letter of March 17, 1988 modifying that letter agreement,

and the letter of March 22, 1988 further modifying that

agreement. He agreed with that settlement and

recommended it. In each instance, he confirmed the

settlement was clearly favorable to the liquidating trust

because it would terminate a number of pending ad valorem

tax suits; would prevent exposure of the liquidating trsut to

judgments in favor of the County for sums fs” in excess of

the sums to be paid under the terms of ¢ » settlement

agreement; and would preserve the right of the debtors to

continue to seek the invalidation of all claims asserted by

the County for ad valorem taxes on the ground that no proofs

of claim had ever been filed. The Court further notes that

a settlement would stop the considerable attorneys’ fee and

cost expenses involved in prosecuting and defending the

numerous state court ad valorem tax suits.

6. The Debtors placed into evidence a number of

depositions taken in the adversary complaint, together with

a large number of exhibits in support of their position that

the proposed settlement was not in the best interest of

App. 32

creditors and that the County had no enforceable claims

which it could assert because of its failure to file proofs of

claim.

7. The County put on the testimony of Frank Jacobs,

an assistant property appraiser, who testified as to the

litigation risks and other considerations taken into account

by the County in entering into the agreement. He also

testified that the transaction was not structured in any

manner so as to favor the Bank of New York over the

liquidating trust.

8. The Court received evidence from Theodore B. Gould

concerning the interest claimed by St. Joe Paper Company.

Mr. Gould conceded he could not locate any written

agreement concerning any continuing ownership interest by

St. Joe Paper Company, nor any written evidence of any claim

which that company might have for the recovery of

overpayment of taxes for 1979.

9. From the testimony presented and a review of the

exhibits and other documents put in evidence, it appears the

issues involved for the years 1979, 1980 and 1981 are for

refunds of real property taxes paid based on claims of

overassessment. The settlement proposed includes a waiver

by the liquidating trust of any further claim for refund for

those years, concomitant with a waiver by the County of al!

claims for additional taxes, including People Mover and other

special assessments and for personal property taxes.

10. The principal issue in the 1983 tax dispute involves

a demand by Dade County for additional ad valorem taxes

based upon a dispute concerning whether the office building

property was substantially completed on the valuation date.

The County has conceded for purposes of this settlement that

the property was not substantially complete; a very

considerable savings to the liquidating trust.

11. The dispute for the years 1984 and 1985 concerns

claims of additional taxes due based upon disputed

App. 33

assessments of the entire property. The settlement adjusts

the assessments very considerably in favor of the liquidating

trust.

12. Asa preliminary, the Court takes note of the fact

that the Plan of Reorganization, which was confirmed by the

Court and which has been substantially consummated,

reflected the value of the property in question (inclusive of

certain personal property) to be $255,600,000. There were

MAI appraisals supporting this valuation, and the Bank of

New York through its nominee paid this sum on October 10,

1985. Under such circumstances there is the possibility the

County would argue the disputed assessments for 1984 and

1985 were reasonable and the liquidating trust might be

liable for taxes which would be substantially in excess of the

amounts agreed upon in the settlement proposal.

13. Under the terms of the original settlement proposal

of April, 1988, the parties agreed to a schedule of assessed

values, additional taxes due, and some pre and post-petition

interest on those sums. A copy of that schedule is attached

to these findings as Exhibit A.

14. The sums agreed to be paid constitute full

satisfaction of all issues, interest and claims for taxes which

were or could have been raised in any of the pending ad

valorem tax litigation or in the matters which were filed

concerning these ciaims for taxes.

15. As part of this settlement proposal, the County also

agreed to settle its disputed ad valorem tax claims with the

Bank of New York for periods subsequent to 1985 when the

Bank of New York was the owner of the property in question.

16. As an additional] consideration to the liquidating

trust in the settlement, the Bank of New York and the

liquidating trust have agreed the bank will reprorate the

1985 taxes previously received from the liquidating trust as

a credit on the closing statement on October 10, 1985, and

will refund to the liquidating trust those sums found to be

App. 34

due on reproration based on a reduced assessment, together

with interest at 6.91%. It was estimated this will result in

the liquidating trust receiving $400,000 to $500,000.

17. As a further part of the agreement between the

liquidating trust and the County, the liquidating trust agreed

to pay interest on the sums due the County under the

settlement, at the rate provided by Florida Law from and

after April 1, 1988. Following the conclusion of the hearing

on April 28, 1988, and the submission by the parties and

review by the Court of post trial memoranda, the Court

expressed the view that it was satisfied the settlement was

in the best interest of the liquidating trust with the exception

of those sums provided in the settlement agreement to be paid

to Dade County representing post-petition preconfirmation

interest, which totaled approximately $155,000.00. 'The Court

expressed the view that, as a matter of substantive law,

payment of post-petition preconfirmation interest to a non-

consensual lien creditor was not permissible.

18. The liquidating trustee, the Bank of New York and

Dade County requested the Court grant leave to conduct

further discussions in an attempt to resolve this remaining

issue. The Court encouraged this. Thereafter, an amended

stipulation for settlement of the ad valorem tax claims was

filed with the Court. It provided there would be an additional

reduction of $109,870.90 of the sums to be paid by the

liquidating trust as ad valorem taxes to the County. This

meant that the sums to be paid by the liquidating trust would

be adjusted downward from $3,430,753.97 to $3,320,883.07.

This sum, together with interest at the rate of $25,455.41

per month from April 1, 1988, until paid to Dade County,

would constitute the entire obligation of the liquidating trust

to the County.

19. The approval of the proposed amended settlement

agreement is a matter within this Court’s sound discretion

See In re Jackson Brewing Company, 624 F.2d 599 (5th Cir.

1989); In re Teltronics Services, Inc., 762 F.2d 185 (2d Cir.

App. 35

1985); In re Prudence Co., 98 F.2d 559 (2d Cir. 1938), cert.

denied 306 U.S. 636, 59 S.Ct. 485, 83 L. Ed. 1037 (1939).

In order to exercise this discretion properly, the Court

must consider all of the relevant facts and evaluate whether

the compromise suggested falls below the “lowest point in

the range of reasonableness.” See e.g., In re Teltronics

Services, Inc., supra at page 189; In re W.T. Grant Co., 699

F.2d 599, 608 (2d Cir. 1983). The Fifth Circuit in In re Jackson

Brewing Co., 624 F.2d at 602 stated as follows:

To assure a proper compromise the bankruptcy

judge must be apprised of all the necessary facts for

an intelligent, objective and educated evaluation. He

must compare the ‘terms of the compromise with the

likely rewards of litigation.’ Protective Committee for

Independent Stockholders of T.M.T- Trailer Ferry, Inc.

vu. Anderson, (“T.M.T. Trailer’), 390 U.S. 414, 425, 88

S.Ct. 1157, 1163, 20 L. Ed. 2d 1, 10 (1968). He must

evaluate and set forth in a comprehensible fashion:

(1) the probability of success in the litigation, with

due consideration for the uncertainty in fact and law.

(2) the complexity and likely duration of the litigation

and any attendant expense.

(3) all factors bearing on the wisdom of the

compromise.

Id. at 424-25, 88 S.Ct. at 1163, 20 L. Ed. 2d at 9-10.

20. In making its evaluation, this Court need not rest

its decision whether to approve a settlement upon a resolution

of ultimate factual and legal issues which underlie the

disputes that are proposed to be compromised. In re Teltronics

Services, Inc., supra. In a Fifth Circuit decision which is

binding on this Court, Florida Trailer and Equipment

Company v. Deal, 284 F.2d 567, 571 (5th Cir. 1960), the Court

stated:

App. 36

Of course, the approval of a proposed settlement

does not depend upon establishing as a matter of legal

certainty that the subject claim or counterclaim is or

is not worthless or valuable. The probable outcome

in the event of litigation, the relative advantages and

disadvantages are, of course, relevant factors for

evaluation. But the very uncertainties of litigation, as

well as the avoidance of wasteful litigation and expense,

lay behind the Congressional infusion of a power to

compromise. This is a recognition of the policy of the

law generally to encourage settlements. This could

hardly be achieved ij the test on hearing for approval

meant establishing success or failure to c certainty.

Parties would be hesitant to explore the likelihood of

settlement apprehensive as they would then be that the

application for approval would necessarily result in a

judicial determination that there was no escape from

liability or no hope of recovery and hence no basis for

a compromise. Thus, this Court need not resolve each

disputed matter in determining the propriety of the

settlement, rather, the Court may, and should, make

a pragmatic decision on the basis of all equitable

factors. (Emphasis added).

21. As noted in the prior discussion in this order, the

Court has conducted both a legal and factual analysis of the

probable outcome of the pending ad valorem tax cases. It is

not, however, necessary that the Court have gone through

such an analysis to the point of reaching a binding conclusion

that one party of the other would prevail. Certainly, the Court

has recognized the complexity of all of the issues involved,

the length of time required to resolve all of these issues, the

expense involved in resolving all of these issues, the

uncertainty of result, and the potential devastating effect an

adverse ruling would have upon the liquidating trust and

its ability to pay claims to creditors and return the surplus

to the debtors.

App. 37

22. The compromise proposed to the Court is one which

is an exercise of business judgment which appears to the

Court to be sound, reasonable and practical. It recognizes a

large savings in tax to the liquidating trust; it permits the

debtor, by appeal only, to continue its attempt to invalidate

the tax claims in their entirety for failure of the taxing

authorities to have filed proofs of claim in these proceedings;

and it assists in the orderly completion of the work to be done

in ending this case.

23. One of the obligations imposed by Jackson Brewing

Co., supra, upon bankruptcy courts engaged in determining

whether to approve a settlement proposed requires a

consideration of “all the factors bearing on the wisdom of the

compromises’. The Court believes it has done so, and it

recognizes the benefits which flow to each of the parties

involved. The taxing authorities receive a substantial amount

of cash and an end to time consuming and expensive litigation

on their part. The Bank of New York rece‘*es property free

of any further claims by the taxing authorities, and the

debtors receive a resolution of County tax claims on excellent

terms. In sum, having reviewed the evidence and the

documents received into evidence, together with having

considered the equities involved, the Court finds and

determines that the amended settlement agreement does not

“fall below the lowest point in the range of reasonableness’.

The terms of the amended settlement are reasonable and in

the best interest of the liquidating trust.

Accordingly, it is hereby ORDERED AND ADJUDGED:

1. That the Amended Settlement Agreement be and it

is hereby ratified, confirmed and approval, pursuant to

Bankruptcy Rule 9019(a);

2. That the parties hereto are directed to implement and

comply with the terms of the Amended Settlement

Agreement as set forth in its entirety.

App. 38

3. The Court will enter a separate Final Judgment

dismissing adversary proceeding 88-0117-BKC-SMW.-A, in

accordance with the terms of these findings.

DONE AND ORDERED in Chambers in Miami, Dade

County, Florida on this 18th day of November, 1988.

/s/_ SIDNEY M. WEAVER

Sidney M. Weaver |

Bankruptcy Court Judge

Herbert Stettin, Esquire

will furnish copies to

all counsel of record

upon receipt of conformed

copy.

App. 39

EXHIBIT “‘H”

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 89-0070-Civ-Atkins

In re:

HOLYWELL CORPORATION, et al.,

Debtors.

CHOPIN ASSOCIATES, acting by

THEODORE B. GOULD, et al.,

Appellants,

US.

FRED STANTON SMITH, as Trustee of

THE MIAMI CENTER LIQUIDATING TRUST, et al.,

Appellees.

ORDER AFFIRMING BANKRUPTCY COURT’S

ORDER APPROVING AMENDED SETTLEMENT OF

AD VALOREM TAX CLAIMS

This cause is before the court on the debtors’ appeal from

the bankruptcy court’s order, dated November 18, 1989 (the

“Order’’), approving an amended settlement of outstanding

and potential tax disputes between Dade County Taxing

Authorities and the Liquidating Trustee of the Miami Center

Liquidating Trust. A hearing on the appeal was held before

this court on April 25, 1989. Now, upon consideration of the

responsive briefs, the hearing, and the relevant case law and

rules, it is

ORDERED AND ADJUDGED that the order is

AFFIRMED.

App. 40

BACKGROUND INFORMATION

This appeal arises out of the bankruptcy’s court’s

approval of a settlement reached between the appellees Dade

County Taxing Authority (“Dade County”) and Fred Stanton

Smith, Liquidating Trustee of the Miami Center Liquidating

Trust (the “Liquidating Trustee”). Veterans of Holywell

litigation will, in the present order, have to content

themselves with a pared-down version of the facts; the

uninitiated should consult earlier opinions for a more

complete factual panoraina.

In August, 1984, the debtors filed simultaneous Chapter

11 petitions in the United States Bankruptcy Court for the

Southern District of Florida.' The amended reorganization

plan (the “plan”) was confirmed one year later, and the plan,

by its terms, created the Miami Center Liquidating Trust

(the “trust”). The plan further provided for the appointment

of a liquidating trustee and required the trustee to sell the

subject property to the appellee Bank of New York (the

“‘Bank”’) or its nominee. The property was sold to the Bank’s

nominee, City National Bank (“City National’’), on October

10, 1985.

From 1982 until the present, certain ad valorem taxes

on the subject property were not fully paid. The parties were

aware of this when the property was sold in 1985. The

confirmation plan therefore required the liquidating trustee,

at the 1985 closing, to escrow part of the property’s purchase

price to cover any outstanding ad valorem taxes. This escrow

fund now contains approximately $8.5 million.

Shortly after the 1985 sale, Dade County attempted to

settle with the trust matters pertaining to the ad valorem

taxes allegedly due against the subject property. The first

round of settlement negotiations failed, but the liquidating

'The debtors are Theodore Gould, Holywell Corporation, Miami Center

Limited Partnership, Miami Center Corporation, and Chopin Associates

App. 41

trustee, in March, 1988, filed a motion in bankruptcy court

for an order authorizing a compromise of all outstanding ad

valorem taxes against the property from 1979 through 1985.

Under the proposed settlement, the trust would pay Dade

County $3,430,754.34 in ad valorem taxes for the period

running from 1979 through 1984. Additionally, the Bank

would return to the trust a reprorated sum assessed against

the trust at the consummation of the 1985 sale. The

settlement further required the trust to waive certain claims

against Dade County for alleged overpayments of taxes, in

exchange for which the County waived or favorably adjusted

numerous assessments against the trust. See Order, at 5.

With the exception of the appellants, who continued to

maintain that the County did not hold valid tax liens, the

affected parties agreed to the-proposal.

The merits of the proposal were scrutinized at a two-day

evidentiary hearing conducted by the bankruptcy court in

April, 1988. The parties submitted to the bankruptcy court

written memoranda in support of their respective positions.

The bankruptcy court concluded that the proposal was fair,

but the court refused to issue its approval until the parties

struck from the proposal the post-petition interest payment

that was to have been assessed against the trust. See Order,

at 7-8. The provision was deleted, and the bankruptcy court,

after yet another hearing, finally approved the proposal on

November 18, 1988. In so doing, the bankruptcy court also

dismissed the related adversary proceeding filed by the

appellants. This appeal followed.

DISCUSSION

The former Fifth Circuit case of Jn re Matter of Jackson

Brewing Co., 624 F.2d 605 (5th Cir-1980), furnishes the

touchstone for the present inquiry. The Jackson court

explained that the bankruptcy court, before it approves a

settlement, must scrutinize the facts of its case with sufficient

detail to determine:

App. 42

(1) The probability of success in the litigation, with

due consideration for the uncertainty in fact and law,

(2) The complexity and likely duration of the

litigation and any attendant expense, inconvenience

and delay, and

(3) All other factors bearing on the wisdom of the

compromise.

Id. at 607 (relying on Protective Committee for Independent

Stockholder of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S.

414, 424-25 (1968)). The purpose of such a test is to ensure

that the bankruptcy court has before it sufficient facts to

permit an informed, independent evaluation of the proposal.

Matter of AWECO, Inc., 725 F.2d 293, 299 (5th Cir. 1984);

see also In Re American Reserve Corp., 841 F.2d 159, 162 (7th

Cir. 1987) (bankruptcy court cannot merely “rubber stamp”

the settlement proposal).

The reviewing court’s primary duty is to determine

whether the compromise approved by the bankruptcy court

is ‘fair, equitable, and in the best interest of the estate.”

Jackson, 624 F.2d at 608; see also In re A & C Properties,

784 F.2d 1377, 1381 (9th Cir. 1986) (reviewing court must

determine whether the settlement is reasonable on the facts

of the case). To discharge this duty, the reviewing court must

determine, first, that there existed a “substantial factual

basis for the compromise” and, second, that the bankruptcy

court has drawn “articulate findings and conclusions” from

that factual basis. Jackson, 624 F.2d at 608. If this test is

passed, the reviewing court ‘may not reverse absent some

other abuse ... of ... discretion.” Jd. (relying on Florida

Trailer & Equipment Co. v. Deal, 284 F.2d 567, 571 (5th Cir.

1960)). When conducting this inquiry, the reviewing court

must, of course, uphold factual findings that are not clearly

erroneous, see Fed. R. Civ. P. 52, and it must always bear

in mind that public policy favors settlement over protracted,

costly litigation.

App. 43

—-

Applying these principles to the facts of the present case,

the court concludes that the bankruptcy court’s ruling should

be affirmed. The bankruptcy court conducted a searching

Jackson inquiry, and it approved the proposal only after the

proceedings yielded a welter of evidence bearing on the

propriety of settlement. For example, both A. H. Blake, a

former tax assessor, and the liquidating trustee, an

experienced real estate broker, testified that the proposed

settlement resolved tax matters very favorably for the trust.

Order, at 3-4. Several reduced valuations undertaken by Dade

County for settlement purposes also conferred large tax

breaks upon the trust. See id. at 5-6 (discussing procedures

which “adjust[] the assessments very considerably in favor

of the liquidating trust”). The bankruptcy court also observed

that the Bank’s reproration of funds received from the trust

in October, 1985, would return to the trust an additional

$400,000 to $500,000. Jd. at 7. The net result is that the

payments due under the proposal will consume less than half

the money in the escrow account, thereby conferring

substantial savings upon the trust.?

Against these and many other benefits, the bankruptcy

court balanced the detriments which the appellants claimed

would attend the proposed settlement. See Order, at 9-10. The

bankruptcy court was aware tha. the appellees had, for years,

been involved in state court litigation which challenged the

County’s ad valorem tax assessments. The court nevertheless

believed that these proffered detriments were outweighed by

the benefits attending settlement — the court observed that

the issues raised by the state court litigation were complex,

that the outcome of the litigation was, at best, uncertain, and

that the litigation itself was extremely expensive. Jd. at 3-4

‘The appellants do not dispute that “lajny savings realized upon a

successful resolution of the property tax litigation would be payable into

the Miami Center Liquidating Trust for the benefit of the remaining

creditors.’ Answer Brief of Appellees Bank of New York, et al., at 3.

App. 44

.

:

& 10. The bankruptcy court therefore concluded that the

settlement would inure to the best interests of the estate. This

conclusion finds ample support in the record, and the court,

at this juncture, perceives no reason to disturb it.

The appellants, however, advance a number of arguments

to the contrary. The appellants argue, inter alia, that Dade

County’s failure to file proofs of claims precludes the County

from enforcing any ad valorem tax liens against the property;

that various sections of the Bankruptcy Code further bar the

County’s claims; and that the County’s assessments violate

the Equal Protection Clause of the Fourteenth Amendment.

The appellants also argue that the bankruptcy court lacked

jurisdiction to approve the proposed settlement because such

approval compromised the claims of non-party St. Joe Paper

Company. They also argue that bankruptcy court committed

a host of errors pertaining to interest payments. Although

the exact thrust of this outpouring is unclear, the appellants

appear to believe that the bankruptcy court committed

various legal errors and that these errors, viewed separately

or in the aggregate, warrant reversal.

The appellants misunderstand the nature of the present

inquiry. Legal arguments advanced by a settlement dissenter

must, at the review stage, be assessed not in a vacuum but,

rather, with reference to the overarching principles

delineated in Jackson. That is to say, the district court does

not conduct a “mini-trial” on the merits of each claim

purportedly compromised by a bankruptcy settlement; rather,

the district court determines only whether the bankruptcy

court, by compromising those claims, abused its discretion

and approved a settlement which was not fair, reasonable,

or in the best interests of the estate. See Jn re Blair, 538 F.2d

849, 851-52 (9th Cir. 1976) (decision on whether there should

be trial on merits of compromised claim is vouchsafed to

sound discretion of bankruptcy court); Jn re Hessinger

Resources, LTD., 67 B.R. 378, 383 (C.D. Ill. 1986) (not

necessary to conduct “mini-trial” on merits). A more

App. 45

expansive standard of review would ignore the clear mandate

of Jackson and undermine sound public policy. See Florida

Trailer & Equipment Co., 284 F.2d at 574 (policy favoring

settlement would be undermined if reviewing court could

disturb settlement which compromises potentially valid

claim).

Viewed in this light, the court now turns to the more

salient arguments advanced by the appellants.’ The

appellants first argue that the County’s failure to file proofs

of claims prevents the County from enforcing liens against

the property. This argument does not, however, warrant

reversal. Bankruptcy Rule 3003(cX2) prevents certain non-

filing creditors from being treated as such for purposes of

“voting or distribution”; but the Rule does not “prevent such

a creditor from otherwise participating in the case.” 8 Collier

on Bankruptcy § 3003.05(3) & n.8 (15th ed. 1989) (emphasis

added). It is therefore not clear whether Rule 3003(cX2) bars

Dade County’s claims in the present case: the County’s

success or failure depends on whether receipt of settlement

proceeds constitutes proscribed “distribution,” or mere

“participation in the case.” At best, then, the appellants’

argument raises an novel issue of law that has not been

decided in this circuit — it hardly proves that the omnibus

settlement was unfair, inequitable, or not in the estate’s best

interests. Compare In re South Atlantic Financial Corp., 767

F.2d 814, 819 (11th Cir. 1985) (court addresses distinct

question dealing with adequacy of filing).

The appellants’ “jurisdictional” argument fails for a

similar reason. Although it might, perhaps, be argued that

a bankruptcy court abuses its discretion when it compromises

the rights of a non-party, the present appellants simply

cannot make that argument. There was no tangible evidence

that St. Joe Paper Company (the non-party in question) even-

‘Although the court has reviewed all of the arguments advanced by

the appellants, the court will, in the present order, undertake to discuss

only the timely, relevant arguments.

App. 46

EP ee 5

held a continuing ownership interest. Nor was there any

evidence that St. Joe Paper Company held a claim for the

recovery of tax overpayments. See Order, at 4-5. Far from

demonstrating that the settlement was unfair, then, the

appellants’ jurisdictional argument — viz. that a bankruptcy

court cannot approve a settlement absent the participation

of a non-party whose interest cannot be proved — is meritless.

Examination of the remaining arguments leads to the

same conclusion. First, the appellants argue that the

County’s tax assessments were discriminatory and thus

violative of the Equal Protection Clause. Compromising this

claim in favor of settlement was, however, hardly an abuse

of discretion: the taxpayer seeking to prevail on a

discrimination claim faces an extremely stringent burden of

proof, see Testimony of John Fletcher, at 11 (discussing

burden of proof); Testimony of A. H. Blake, at 39 (noting that

“(tlo win an ad valorem tax case is pretty near impossible’’);

Deltona Corporation v. Bailey, 336 So. 2d 1163, 1168 (Fla.

1976) (plaintiff whose property is assessed at fair market

value must prove that “his property is assessed at a

percentage of value substantially higher than the percentage

at which all other property in the county is generally

assessed’’) (emphasis added), and the present appellants have

not been able to surmount that burden in any of their

repeated, costly state court forays.

Finally, the court rejects the appellants’ comprehensive

“unfairness” argument. The gist of this argument is that the

settlement impermissibly favored the Bank over the trust,

and that the bankruptcy court approved a proposal which

was a “bad deal” for the trust. The bankruptcy court,

however, found that the proposal played no favorites. The

court also found that the settlement redounded to the trust’s

best interests. These findings are well supported by credible

evidence. Accordingly, the clearly erroneous standard

precludes this court from substituting its own factual findings

for those of the bankruptcy court.

App. 47

CONCLUSION

The court has carefully reviewed the record, the

bankruptcy court’s rulings, and the arguments which support

and attack those rulings. This court believes that the

bankruptcy court conducted a thorough inquiry into the

propriety of settlement, and that its ultimate decision was

clearly articulated and well supported. The court also finds

that the settlement was eminently fair, reasonable, and in

the best interests of the estate. The appellants’ contrary

arguments do not warrant a different conclusion.

Accordingly, the bankruptcy court’s rulings must be

AFFIRMED.

DONE AND ORDERED at Miami, Florida this 6th day

of July, 1989.

/s/_ C. CLYDE ATKINS

C. Clyde Atkins

United States District Judge

cc: Mr. Robert M. Musselman

Mr. Robert A. Mark

Mr. Theodore B. Gould

Mr. Herbert Stettin

Mr. Thomas F. Noone

Mr. S. Harvey Zeigler

Mr. James Kracht & Mr. Daniel Weiss

Mr. Fred Stanton Smith

Mr. Vance E. Salter

Mr. James F. McAuley

App. 48

3

q

;

4

EXHIBIT “‘1”’

§541 BANKRUPTCY CODE

11 U.S.C. § 541. Property of the estate.

(a) The commencement of a case under section 301, 302,

or 303 of this title creates an estate. Such estate is comprised

of all the following property, wherever located and by

whomever held:

_ (1) Except as provided in subsection (b) and (cX2) of

this section, all legal or equitable interests of the debtor

in property as of the commencement of the case.

(2) All interests of the debtor and the debtor’s spouse

in community property as of the commencement of the

case that is—

(A) under the sole, equal, or joint management and

control of the debtor; or

(B) liable for an allowable claim against the debtor,

or for both an allowable claim against the debtor and

an allowable claim against the debtor’s spouse, to the

extent that such interest is so liable.

(3) Any interest in property that the trustee recovers

under section 329(b), 363(n), 543, 550, 553, or 723 of this

title. =

(4) Any interest in property preserved for the benefit

of or ordered transferred to the estate under section 510(c)

or 551 of this title.

(5) Any interest in property that would have been

property of the estate if such interest had been an interest

of the debtor on the date of the filing of the petition, and

that the debtor acquires or becomes entitled to acquire

within 180 days after such date—

(A) by bequest, device, or inheritance;

App. 49

(B) as a result of a property settlement agreement

with debtor’s spouse, or of an interlocutory or final

divorce decree; or

(C) as beneficiary of a life insurance policy or of

a death benefit plan.

(6) Proceeds, product, offspring, rents, or profits of or

from property of the estate, except such as are earnings

from services performed by an individual debtor after the

commencement of the case.

11 U.S.C. § 1141. Effect of confirmation.

(a) Except as provided in subsection (dX2) and (dX3) of this

section, the provisions of a confirmed plan bind the debtor,

any entity issuing securities under the plan, any entity

acquiring property under the plan, and any creditor, equity

security holder, or general partner in the debtor, whether

or not the claim or interest of such creditor, equity security

holder, or general partner is impaired under the plan and

whether or not such creditor, equity security holder, or

general partner has accepted the plan.

—

11 U.S.C. § 1142. Implementation of plan.

(a) Notwithstanding any otherwise applicable

nonbankruptcy law, rule, or regulation relating to financial

condition, the debtor and any entity organized or to be

organized for the purpose of carrying out the plan shall carry

out the plan and shall comply with any orders of the court.

(b) The court may direct the debtor and any other

necessary party to execute or deliver or to join in the

execution or delivery of any instrument required to effect a

transfer of property dealt with by a confirmed plan, and to

perform any other act, including the satisfaction of any lien,

that is necessary for the consummation of the plan.

App. 50

11 U.S.C. § 3020. Deposit; confirmation of Plan

(a) Deposit. In a chapter 11 case, prior to entry of the

order confirming the plan, the court may order the deposit

with the trustee or debtor in possession of the consideration

required by the plan to be distributed on confirmation. Any

money deposited shall be kept in a special account established

for the exclusive purpose of making the distribution.

(b) Objections to and Hearing on Confirmation.

(1) Objections. Objections to confirmation of the plan

shall be filed with the court and served on the debtor, the

trustee, any committee appointed under the Code and on

any other entity designated by the court, within a time

fixed by the court. An objection to confirmation is

governed by Rule 9014.

(2) Hearing. The court shall rule on confirmation of

the plan after notice and hearing as provided in Rule

2002. If no objection is timely filed, the court may

determine that the plan has been proposed in good faith

and not by any means forbidden by law without receiving

evidence on such issues.

(c) Order of Confirmation. The order of confirmation

shall conform to Official Form No. 31 and notice of entry

thereof shall be mailed promptly as provided in Rule 2002(f)

to the debtor, creditors, equity security holders and other

parties in interest.

(d) Retained Power. Notwithstanding the entry of the

order of confirmation, the court may enter all orders

necessary to administer the estate.

11 U.S.C. § 9027. Removal

(a) Application.

(1) Where Filed; Form and Content. An application

for removal shall be filed with the clerk for the district

App. 51

and division within which is located the state or federal

court where the civil action is pending. The application

shall be verified and contain a short and plain statement

of the facts which entitle the applicant to remove and be

accompanied by a copy of all process and pleadings.

(2) Time for Filing: Civil Action Initiated Before

Commencement of the Case Under the Code. If the claim

or cause of action in a civil action is pending when a case

under the Code is commenced, an application for removal

may be filed only within the longest of (A) 90 days after

the order for relief in the case under the Code, (B) 30 days

after entry of an order terminating a stay, if the claim

or cause of action in a civil action has been stayed under

§ 362 of the Code, or (C) 30 days after a trustee qualifies

in a chapter 11 reorganization case but not later than 180

days after the order for relief.

(3) Time for Filing; Civil Action Initiated After

Commencement of the Case Under the Code. If a case

under the Code is pending when a claim or cause of action

is asserted in another court, an application for removal

may be filed with the clerk only within the shorter of (A)

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 or (B) 30 days after receipt

of the summons if the initial pleading has been filed with

the court but not served with the summons.

(b) Bond. An application for removal, except when the

applicant is the trustee, debtor, debtor in possession, or the

United States shall be accompanied by a bond with good and

sufficient surety conditioned that the party will pay all costs

and disbursements incurred by reason of the removal should

it be determined that the claim or cause of action ws not

removable or was improperly removed.

App. 52

(c) Notice. Promptly after filing the application and the

bond, if required, the applicant shall serve a copy of the

application on all parties to the removed claim or cause of

action.

(d) Filing in Non-Bankruptcy Court. Promptly after

filing the application and bond, if any, the applicant shall

file a copy of the application with the clerk of the court from

which the claim or cause of action is removed. Removal of

the claim or cause of action is effected on such filing of a copy

of the application. The parties shall proceed no further in that

court unless and until the claim or cause of action is

remanded.

(e) Remand. A motion for remand of the removed claim

or cause of action shall be filed with the clerk and served

on the parties to the removed claim or cause of action. Unless

the district court orders otherwise, a motion for remand shall

be heard by the bankruptcy judge, who shall file a report and

recommendation for disposition of the motion. The clerk shall

serve forthwith a copy of the report and recommendation on

the parties. Within 10 days of being served with a copy of

the report and recommendation, a party may serve and file

with the clerk objections prepared in the manner provided

in Rule 9033(b). Review by the district court of the report

and recommendation shall be governed by Rule 903¢

(1) After removal of a claim or cause of action to a

district court the district court or, if the case under the

Code has been referred to a bankruptcy judge of the

district, the bankruptcy judge, may issue all necessary

orders and process to bring before it all proper parties

whether served by process issued by the court from which

the claim or cause of action was removed or otherwise.

App. 53

(2) The district court or, if the case under the Code

has been referred to a bankruptcy judge of the district,

the bankruptcy judge, may require the applicant to file

with the clerk copies of all records and proceedings

relating to the claim or cause of action in the court from

which the claim or cause of action was removed.

(g) Process After Removal. If one or more of the

defendants has not been served with process, the service has

not been perfected prior to removal, or the process served

proves to be defective, such process or service may be

completed or new process issued pursuant to Part VII of these

rules. This subdivision shall not deprive any defendant on

whom process is served after removal of the defendant’s right

to move to remand the case.

(h) Applicability of Part VII. The rules of Part VII apply

to a claim or cause of action removed to a district court from

a federal or state court and govern procedure after removal.

Repleading is not necessary unless the court so orders. In a

removed action in which the defendant has not answered,

the defendant shall answer or present the other defenses or

objections available under the rules of Part VII within 20

days following the receipt through service or otherwise of a

copy of the initial pleading setting forth the claim for relief

on which the action or proceeding is based, or within 20 days

following the service of summons on such initial pleading,

or within five days following the filing of the application for

removal, which ever period is longest.

(i) [Abrogated).

(j) Record Supplied. When a party is entitled to copies

of the records and proceedings in any civil action or

proceeding in a federal or a state court, to be used in the

removed civil action or proceeding, and the clerk of the federal

or state court, on demand accompanied by payment or tender

of the lawful fees, fails to deliver certified copies, the court

may, on affidavit reciting the facts, direct such record to be

App. 54

supplied by affidavit or otherwise. Thereupon the

proceedings, trial and judgment may be had in the court, and

all process awarded, as if certified copies had been filed.

(k) Attachment or Sequestration; Securities. When a

claim or cause of action is removed to a district court, any

attachment or sequestration of property in the court from

which the claim or cause of action was removed shall hold

the property to answer the final judgment or decree in the

same manner as the property would have been held to answer

final judgment or decree had it been rendered by the court

from which the claim or cause of action was removed. All

bonds, undertakings, or security given by either party to the

claim or cause of action prior to its removal shall remain valid

and effectual notwithstanding such removal. All injunctions

issued, orders entered and other proceedings had prior to

removal shall remain in full force and effect until dissolved

or modified by the court.

28 U.S.C. § 157. Procedures

(a) Each district court may provide that 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 shall! be

referred to the bankruptcy judges for the district.

(b\1) Bankruptcy judges may hear and determine all

cases under title 11 and all core proceedings arising under

title 11, or arising in a case under title 11, referred under

subsection (a) of this section, and may enter appropriate

orders and judgments, subject to review under section 158

of this title.

(2) Core proceedings include, but are not limited to—

(A) matters concerning the administration of the

estate;

(B) allowance or disallowance of claims against

the estate or exemptions from property of the estate,

and estimation of claims or interests for the purposes

of confirming a plan under chapter 11, 12, or 13 of title

11 but not the liquidation or estimation of contingent

or unliquidated personal injury tort or wrongful death

claims against the estate for purposes of distribution

in a case under title 11;

(C) counterclaims by the estate against persons

filing claims against the estate;

(D) orders in respect to obtaining credit;

(E) orders to turn over property of the estate;

(F) proceedings to determine, avoid, or recover

preferences;

(G) motions to terminate, annul, or modify the

automatic stay;

(H) proceedings to determine, avoid, or recover

fraudulent conveyances;

(I) determinations as to the dischargeability of

particular debts;

(J) objections to discharges;

(K) determinations of the validity, extent, or

priority of liens;

(L) confirmations of plans;

(M) orders approving the use or lease of property,

including the use of cash collateral;

(N) orders approving the sale of property other

than property resulting from claims brought by the

estate against persons who have not filed claims

against the estate; and

(O) other proceedings affecting the liquidation of

the assets of the estate or the adjustment of the debtor-

creditor or the equity security holder relationship,

except personal injury tort or wrongful death claims.

(3) The bankruptcy judge shall determine, on the judge’s

own motion or on timely motion of a party, whether a

proceeding is a core proceeding under this subsection or is

a proceeding that is otherwise related to a case under title

11. A determination that a proceeding is not a core proceeding

shall not be made solely on the basis that its resolution may

be affected by State law.

(4) Non-core proceedings under section 157(bX2XB) of

title 28, United States Code, shall not be subject to the

mandatory abstention provisions of section 1334(cX2).

(5) The district court shall order that personal injury tort

and wrongful death claims shall be tried in the district court

in which the bankruptcy case is pending, or in the district

court in the district in which the claim arose, as determined

by the district court in which the bankruptcy case is pending.

(c)1) A bankruptcy judge may hear a proceeding that

is not a core proceeding but that is otherwise related to a

case under title 11. In such proceeding, the bankruptcy judge

shall submit proposed findings of fact and conclusions of law

to the district court, and any final order or judgment shal!

be entered by the district judge after considering the

bankruptcy judge’s proposed findings and conclusions and

after reviewing de novo those matters to which any party

has timely and specifically objected.

(2) Notwithstanding the provisions of paragraph (1) of

this subsection, the district court, with the consent of all the

parties to the proceeding, may refer a proceeding related to

a case under title 11 to a bankruptcy judge to hear and

determine snd to enter appropriate orders and judgments,

subject to review under section 158 of this title.

App. 57

(d) The district court may withdraw, in whole or in part,

any case or proceeding referred under this section, on its own

motion or on timely motion of any party, for cause shown.

The district court shall, on timely motion of a party, so

withdraw a proceeding if the court determines that resolution

of the proceeding requires consideration of both title 11 and

other laws of the United States regulating organizations or

activities affecting interstate commerce.

28 U.S.C. § 158. Appeals

(a) The district courts of the United States shall have

jurisdiction to hear appeals from final judgments, orders, and

decrees, and, with leave of the court, from interlocutory orders

and decrees, of bankruptcy judges entered in cases and

proceedings referred to the bankruptcy judges under section

157 of this title. An appeal under this subsection shall be

taken only to the district court for the judicial district in

which the bankruptcy judge is serving.

(b\(1) The judicial council of a circuit may establish a

bankruptcy appellate panel, comprised of bankruptcy judges

from districts within the circuit, to hear and determine, upon

the consent of all the parties, appeals under subsection (a)

of this section.

(2) No appeal may be referred to a panel under this

subsection unless the district judges for the district, by

majority vote, authorize such referral of appeals originating

within the district.

(3) A panel established under this section shall consist

of three bankruptcy judges, provided a bankruptcy judge may

not hear an appeal originating within a district for which

the judge is appointed or designated under section 152 of this

title.

(c) An appeal under subsections (a) and (b) of this section

shall be taken in the same manner as appeals in civil

proceedings generally are taken to the courts of appeals from

App. 58

— SS

the district courts and in the time provided by Rule 8002 of

the Bankruptcy Rules.

(d) The courts of appeals shall have jurisdiction of

appeals from all final decisions, judgments, orders, and

decrees entered under subsections (a) and (b) of this section.

28 U.S.C. § 1254. Courts of appeals; certiorari; appeal;

certified questions

Cases in the courts of appeals may be reviewed by the

Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition

of any party to any civil or criminal case, before or after

rendition of judgment or decree;

(2) By certification at any time by a court of

appeals of any question of law in any civil or criminal

case as to which instructions are desired, and upon such

certification the Supreme Court may give binding

instructions or require the entire record to be sent up

for decision of the entire matter in controversy.

28 U.S.C. § 1334. Bankruptcy cases and proceedings

(a) Except as provided in subsection (b) of this section,

the district court shall have original and exclusive

jurisdiction of all cases under title 11.

(b) Notwithstanding any Act of Congress that confers

exclusive jurisdiction on a court or courts other than the

district courts, the 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.

(ceX1) Nothing in this section prevents a district court

in the interest of justice, or in the interest of comity with

State courts or respect for State law, from abstaining from

hearing a particular proceeding arising under title 11 or

arising in or related to a case under title 11.

App. 59

rt C Gel,

(2) Upon timely motion of a party in a proceeding based

upon a State law claim or State law cause of action, related

to a case under title 11 but not arising under title 11 or

arising in a case under title 11, with respect to which an

action could not have been commenced in a court of the

United States absent jurisdiction under this section, the

district court shall abstain from hearing such proceeding if

an action is commenced, and can be timely adjudicated, in

a State forum of appropriate jurisdiction. Any decision to

abstain made under this subsection is not reviewable by

appeal or otherwise. This subsection shall not be construed

to limit the applicability of the stay provided for by section

362 of title 11, United States Code, as such section applies

to an action affecting the property of the estate in bankruptcy.

(d) The district court in which a case under title 11 is

commenced or is pending shall have exclusive jurisdiction

of all of the property, wherever located, of the debtor as of

the commencement of such case, and of property of the estate.

28 U.S.C. § 1452. Removal of claims related to bankruptcy

cases

(a) A party may remove any claim or cause of action in

a civil action other than a proceeding before the United States

Tax Court or a civil action by a governmental unit to enforce

such governmental unit’s police or regulatory power, to the

district court for the district where such civil action is

pending, if such district court has jurisdiction of such claim

or cause of action under section 1334 of this title.

(b) The court to which such claim or cause of action is

removed may remand such claim or cause of action on any

equitable ground. An order entered under this subsection

remanding a claim or cause of action, or a decision to not

remand, is not reviewable by appeal or otherwise.

Supreme Court Rule 17. Considerations governing review

on certiorari

-1. A review on writ of certiorari is not a matter of right,

but of judicial discretion, and will be granted only when there

are special and important reasons therefor. The following,

while neither controlling nor fully measuring the Court's

discretion, indicate the character of reasons that wil! be

considered.

(a) When a federal court of appeals has rendered a

decision in conflict with the decision of another federal!

court of appeals on the same matter; or has decided a

federal question in a way in conflict with a state cuurt

of last resort; or has so far departed from the accepted

and usual course of judicial proceedings, or so far

sanctioned such a departure by a lower court, as to cal!

for an exercise of this Court’s power of supervision.

(b) When a state court of last resort has decided a

federal question in a way in conflict with the decision of

another state court of last resort or of a federal! court of

appeals.

(c) When a state court or a federal court of appeals

has decided an important question of federa! law which

has not been, but should be settled by this Court, or has

decided a federal question in a way in conflict with

applicable decisions of this Court.

.2. The same general considerations outlined above wil!

control in respect of petitions for writs of certiorari to review

judgments of of' the United States Court of Appeals for the

Federal Circuit, the United States Court of Military Appeals,

and of any other court whose judgments are reviewable by

law on writ of certiorari.