Federal Court Digests: June 4, 2007

Daily Record, The (Baltimore), Jun 4, 2007

Therefore, "[a]n action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options or freedom of action (either positively or negatively) and [it] in any way impacts upon the handling and administration of the bankruptcy estate." Id. at 625-26. Pacor was decided in a pre-confirmation context, however, and the 3rd Circuit has since examined "related to" jurisdiction from a somewhat different analytical perspective, in a post- confirmation context. See Binder v. Price Waterhouse & Co. (In re Resorts Int'l, Inc.), 372 F.3d 154, 166 (3d Cir. 2004). In its view, "the essential inquiry appears to be whether there is a close nexus to the bankruptcy plan or proceeding sufficient to uphold bankruptcy court jurisdiction over the matter." Id. at 166-67.

The court here found the 3rd Circuit's "close nexus" requirement to be a logical corollary of "related to" jurisdiction. Although it agreed with the 3rd Circuit that under this inquiry that "[m]atters that affect the interpretation, implementation, consummation, execution, or administration of the confirmed plan will typically have the requisite close nexus," it did not find the facts and circumstances here to be typical.

Here, neither the Plan nor the order confirming the Plan provided that the breach of contract claim or the tortious interference claim would remain property of the bankruptcy estate following the confirmation of the Plan. Consequently, upon Plan confirmation, the claims vested in the reorganized Debtor and could no longer be considered "property of the estate" under Section 1334(e). See Still v. Rossville Bank (In re Chattanooga Wholesale Antiques, Inc.), 930 F.2d 458, 462 (6th Cir. 1991). Therefore, finding no jurisdiction under Section 1334(b), the court found no federal jurisdiction over the Debtor's adversary proceeding.

Constitutional

First Amendment retaliation

BOTTOM LINE: Mother whose employment was terminated after her son sought elected office failed to state a claim for First Amendment retaliation and son lacked standing to bring claim.

CASE: Smith v. Frye, No. 06-1801 (decided May 18, 2007) (Judges DUNCAN & Niemeyer) (Judge Motz concurring).

COUNSEL Allan Norman Karlin, Morgantown, WV, for Appellants. John M. Hedges, Byrne, Hedges & Lyons, Morgantown, WV, for Appellee.

FACTS: Mary Lou Smith was hired as the Clerk of the Magistrate Court of Mineral County, West Virginia, in November 2002. The Clerk of the Magistrate Court serves at the will and pleasure of the Chief Judge of the 21st Judicial Circuit of West Virginia. Two circuit judges for the 21st Judicial Circuit, Judge Philip B. Jordan, Jr. and Judge Andrew N. Frye, Jr., take turns serving as Chief Judge based on a regular two-year rotation.

When Ms. Smith was first hired, Judge Jordan was serving as Chief Judge. On January 1, 2003, Judge Frye assumed the role. From the time of her hiring, Ms. Smith apparently performed her job adequately, receiving no complaints about her performance.

On January 30, 2004, Ms. Smith's adult son, Greg Smith, filed to run for the office of Mineral County Circuit Clerk. At that time, the office was held by an incumbent Republican whom Mr. Smith would challenge in the Republican primary. Several days later, Judge Frye told Judge Jordan that he intended to fire Ms. Smith because of her son's candidacy. Judge Frye terminated Ms. Smith's employment on February 5, 2004.