ATLANTA - (Mealey's) A
panel of the 11th Circuit U.S. Court of Appeals on May 30 reversed and remanded
a case and ruled that the bankruptcy court in which a debtor filed its petition
has jurisdiction over whether a claim against the estate was discharged
(Alderwoods Group Inc., et al. v. Reyvis Garcia, et al., No. 10-14726, Chapter
11, 11th Cir.; 2012 U.S. App. LEXIS 10891) [an enhanced version of this opinion is available to lexis.com subscribers].
In 1999, the Alderwoods Group Inc. filed for Chapter 11 bankruptcy in the U.S.
Bankruptcy Court for the District of Delaware.
Alderwoods had purchased Osiris Holding of Florida Inc., which operated
Graceland Cemetery. Later, Northstar Graceland LLC purchased the cemetery from
The Bankruptcy Court confirmed a reorganization plan, and the bankruptcy was
discharged in 2002.
In 2008, Reyvis Garcia, Ramona Johnson and Mercedes Woodberry filed a class
action tort claim against Alderwoods in the Miami-Dade County, Fla., Circuit
Court against Alderwoods, naming also its successors Osiris and Northstar.
The class contended that Alderwoods was unable to locate the gravesites of
their family members, causing them damages. The claims were based on common law
theories of tortious interference with dead bodies, intentional or reckless
infliction of emotional distress, and gross negligence under Florida tort law.
Alderwoods filed a complaint against the class members in the U.S. Bankruptcy
Court for the Southern District of Florida, contending that under 28 U.S. Code
Sections 157 and 13345 the claims had been discharged in bankruptcy.
Alderwoods sought a Bankruptcy Court order enjoining the class members from
pursuing their case in state court.
The class members moved in the Florida Bankruptcy Court for an order dismissing
Alderwoods' complaint for lack of subject matter jurisdiction. In the
alternative, the class members asked that the court abstain from exercising
jurisdiction and/or remand the case to state court.
The Bankruptcy Court denied the class members' motion and concluded that it had
jurisdiction and that neither abstention nor remand was required or
The Bankruptcy Court also held that the claims brought by the class members in
Florida state court had not been discharged in bankruptcy.
Alderwoods appealed to the U.S. District Court for the Southern District of
Florida, which affirmed the Bankruptcy Court's ruling. Alderwoods then appealed
to the 11th Circuit, where the case was heard by a panel comprising Circuit
Judges Gerald Bard Tjoflat and Beverly B. Martin and U.S. Judge Robert T.
Dawson of the Western District of Arkansas, sitting by designation.
The panel said that the crucial issue in the case was determining which court
has the power to enforce the discharge injunction, given the fact that two
separate bankruptcy courts were used in the filing of the initial petition and
the subsequent lawsuit filed by the debtor after the discharge was granted by
the first bankruptcy court.
In light of the jurisdictional issue, the panel said, pursuant to 28 U.S. Code
Section 1334(e)(1), the District Court in which a case under Title 11 of the
Bankruptcy Code is commenced or is pending shall have exclusive jurisdiction of
all the property involved in the bankruptcy proceeding wherever it may be
28 U.S. Code Section 1334
In the case at hand, it is apparent that if the class members' filing of the
state court action indeed violated the discharge injunction contained in the
confirmation order, then it was the Delaware Bankruptcy Court's injunction to
enforce, not the Florida Bankruptcy Court's, the panel said.
The Chapter 11 case was administered by the Delaware Bankruptcy Court and that
court confirmed Alderwoods' reorganization plan and entered the order
discharging its preconfirmation liabilities, the panel added; therefore, the
Delaware Bankruptcy Court must be the one to determine if the class members'
claims were discharged in bankruptcy.
Alderwoods and Osiris are represented by Ted Christopher Craig of GrayRobinson
in Miami and Samuel Danon, Jamie Zysk Isani and Andrew D. Zaron of Hunton &
Williams in Miami.
Northstar is represented by Robin Corwin Campbell of Kopelowitz Ostrow in Fort
Lauderdale, Fla., and Alan J. Perlman of Yoss in Fort Lauderdale. The class
members are represented by Charles W. Throckmorton, David Aaron Samole, Kozyak
Tropin & Throckmorton in Coral Gables, Fla.
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