Should the Federal rules of bankruptcy procedure be amended to expressly authorize United States district and bankruptcy courts to appoint a special master in an appropriate...

University of Memphis Law Review, The, Winter 2001 by Clift, R Spencer III

Interestingly, Federal Rule of Civil Procedure 81 (a)(1) states the applicability of the Federal Rules of Civil Procedure and provides, in relevant part here, that the Rules of Civil Procedure do not apply to "proceedings" in bankruptcy. There is no parallel Federal Rule of Bankruptcy Procedure 7081 to Federal Rule of Civil Procedure 81(a)(1). However, Federal Rule of Civil Procedure 81(a)(1) is not applicable to bankruptcy "cases" under the Code. Although Rule 81(a)(1) carefully limits its restrictive language on the appointment of special masters to bankruptcy "proceedings," Federal Rule of Bankruptcy Procedure 9031 extends the prohibition to bankruptcy "cases," even though there is an absence of both statutory and civil rule authority for this restrictive prohibition. The Advisory Committee note accompanying Rule 9031 further extends the prohibition to bankruptcy "proceedings."

Accordingly, Federal Rule of Civil Procedure 53 regarding the appointment of special masters does not apply in a bankruptcy "proceeding" under the Code, even if the district court withdraws the reference under 28 U.S.C. sec 157(d) and desires to appoint a special master while exercising original bankruptcy jurisdiction (or the district court withdraws the reference for the special and limited purpose of making such an appointment on behalf of the bankruptcy court as a valuable case management tool and immediately thereafter "re-refers" the proceeding to the bankruptcy court).

III. FEDERAL RULE OF BANKRUPTCY PROCEDURE 9031: AN INTENDED RESULT OR A MISINTERPRETATION OF FORMER BANKRUPTCY RULE 513?

A. Former Bankruptcy Rule 513: The Origin ofFederal Rule of Bankruptcy Procedure 9031

Prior to 1983, former Bankruptcy Rule 513 governed and provided the authority regarding whether a special master could be appointed in a bankruptcy case.30 Pursuant to former Bankruptcy Rule 513, United States district judges had the authority to appoint special masters in bankruptcy cases based on the fact that Rule 53 of the Federal Rules of Civil Procedure applied in bankruptcy cases.31 It appears that former Bankruptcy Rule 513 did "not contemplate that a referee [or bankruptcy judge]32 would ever make a special master reference or appointment."33

The impact of the inhibiting words found in former Bankruptcy Rule 513, which apparently limited the powers of the bankruptcy referee (known today as "United States bankruptcy judges"),34 should not be overemphasized here. Scholarly commentary on the effect of former Bankruptcy Rule 513 curtailed what seemed to be a manifest procedural restriction upon a referee or bankruptcy judge's appointment of a special master. The commentary indicates this point by stating as follows: "As there is no specifically conferred power on the bankruptcy referee to make special master references it follows that Bankruptcy Rule 513 confers no added power."35 Although the utilized language fails to equate to a flat restriction upon the appointment of a special master, the commentary on the rule seemingly fails to offer a clear answer regarding the authority for the appointment of a special master by a referee in bankruptcy or by a bankruptcy judge.