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

C The Scope of Federal Rule of Bankruptcy Procedure 9031

1. Federal Rules of Bankruptcy Procedure 903 1, Federal Rule of Civil Procedure 81(a)(1), Federal Rule of Bankruptcy Procedure 1001, and 28 U.S.C. sec 157(a) and (d).

United States district judges may from time to time adjudicate complex claims and related litigation under the Code. Unfortunately, it appears that district judges, like bankruptcy judges, believe that they may not appoint a special master in a bankruptcy case or proceeding because Rule 9031 and its accompanying Advisory Committee note, when read collectively, prohibit it. After considering the language in the rule and Advisory Committee note, the rule and note preclude both district and bankruptcy courts from appointing special masters based upon the fact that the utilized language applies to both "cases and proceedings under the Code."47

Due to the comprehensive scope of the Federal Rules of Bankruptcy Procedure, as set forth in Rules 1001 and 9031, district judges, as stated earlier, also are precluded from appointing a special master in a bankruptcy "case" under the Code, even if the reference is withdrawn under 28 U.S.C. sec 157(d) and the district judge exercises original bankruptcy jurisdiction.48 In contrast, however, Federal Rule of Civil Procedure 81 (a)(1) only applies to "proceedings" in bankruptcy -- not to bankruptcy "cases."49 Does this mean or suggest that a district judge may appoint a special master in a bankruptcy case, notwithstanding Federal Rule of Bankruptcy Procedure 9031? Are the Federal Rules of Bankruptcy Procedure (i.e., Rule 9031) and the Federal Rules of Civil Procedure (i.e., Rule 81(a)(1)) in conflict on this point? If a rules conflict exists, was the restriction regarding the appointment of a special master in Federal Rule of Bankruptcy Procedure 9031 an intended result? Perhaps clarification is required.

The clear distinction between a bankruptcy "case" and "proceeding" under the Code must be thoroughly analyzed and is worth further clarification considering its great significance under the Code, its accompanying relevant Title 28 provisions, and the Federal Rules of Bankruptcy Procedure.50 First, the bankruptcy "case" is described as a term of art which refers to the entire case or the "whole ball of wax" that is created upon the filing of the bankruptcy "petition" under sec 101(42) of the Code.51 Second, "proceedings" are specific "subactions" within a bankruptcy "case" and are commenced by the filing of, for example, a complaint, motion, notice, an objection, or an application.52

The Congress officially recognized the statutory distinction between a "case" and "proceeding" when it enacted the former bankruptcy rules approved by the Supreme Court and Congress in 1973.(53) Although these distinctively different terms are not statutorily defined under the 1978 Code, nothing indicates that Congress intended a different meaning for these terms than the meanings historically used under the 1898 Act.54 Congress has frequently drawn distinctions between bankruptcy cases and the civil proceedings arising under, arising in, or related to such cases since the enactment ofthe 1978 Code.55 Thus, the terms bankruptcy "case" and "proceeding" must be considered according to their respective differences when analyzing the impact of the procedural rules promulgated under the Rules Enabling Act.56