United States District Court, D. Delaware
IN RE IMMC CORPORATION, f/k/a IMMUNICON CORPORATION, et al., Debtors.
EDWARD L. ERICKSON, BYRON HEWETT, LEON TERSTAPPEN, JAMES L. WILCOX, ELIZABETH E. TALLETT, J. WILLIAM FREYTAG, ZOLA P. HOROVITZ, JAMES G. MURPHY, BRIAN GEIGER, JONATHAN COOL, and ALLEN J. LAUER, Appellees. ROBERT F. TROISIO, as Liquidating Trustee of IMMC CORPORATION, Appellant, Bankr No. 08-11178 (KJC)
before the court is the appeal (D.I. 1) of Robert F. Troisio
("Appellant"), liquidating trustee of IMMC
Corporation (f/k/a Immunicon Corporation), of the Bankruptcy
Court's decision denying Appellant's motion to
transfer an adversary proceeding,  pursuant to 28 U.S.C. §
1631, to the United States District Court for the Eastern
District of Pennsylvania (the "E.D.Pa. Court"), and
denying Appellant's renewed motion regarding same, based
on the Bankruptcy Court's conclusion that it lacked
authority under 28 U.S.C. § 1631 to transfer the
proceeding. For the reasons set forth below, the court will
affirm the Bankruptcy Court's decision.
11, 2008, the above-captioned debtors filed a petition for
relief under Chapter 11 of the Bankruptcy Code. On November
7, 2008, the Bankruptcy Court confirmed the debtors' plan
of liquidation. Pursuant to the plan, Appellant was appointed
as liquidating trustee to implement wind-down of the
debtors' affairs and liquidation of the debtors'
property, and also to pursue certain causes of action. On
September 18, 2010, Appellant filed a complaint initiating
the adversary proceeding and asserting breach of fiduciary
duty claims against the debtors' former officers and
directors ("Appellees"). (See B.D.I. 1.)
Memorandum Order dated December 29, 2011, the Bankruptcy
Court determined that it was without jurisdiction to decide
the claims asserted in the adversary proceeding but scheduled
a further hearing to consider Appellant's request that
the Bankruptcy Court transfer the adversary proceeding to the
E.D.Pa. Court pursuant to 28 U.S.C. § 1631, rather than
dismiss the case for want of jurisdiction. See Troisio v.
Erickson (In re IMMC Corp.), 2011 WL 6832900, *4 (Bankr.
D. Del. Dec. 29, 2011). Whether the Bankruptcy Court has
authority to transfer the adversary proceeding to the E.D.Pa.
Court is governed by 28 U.S.C. § 1631, which provides:
Whenever a civil action is filed in a court as defined in
section 610 of this title or an appeal, including a
petition for review of administrative action, is noticed for
or filed with such a court and that court finds that there is
a want of jurisdiction, the court shall, if it is in the
interest of justice, transfer such action or appeal to any
other such court in which the action or appeal could have
been brought at the time it was filed or noticed, and the
action or appeal shall proceed as if it had been filed in or
noticed for the court to which it is transferred on the date
upon which it was actually filed in or noticed for the court
from which it is transferred.
28 U.S.C. § 1631 (emphasis added); see also
McLaughlin v. Arco Polymers, Inc., 721 F.2d 426, 428 n.2
(3d Cir. 1983) (quoting statute with same emphasis)). In
response to Appellant's transfer request, Appellees
argued that the Bankruptcy Court lacked authority to transfer
the adversary proceeding under § 1631 because a
bankruptcy court is not a "court" as defined in 28
U.S.C. § 610, which provides:
As used in this chapter the word "courts" includes
the courts of appeals and district courts of the United
States, the United States District Court for the District of
the Canal Zone, the District Court of Guam, the District
Court of the Virgin Islands, the United States Court of
Federal Claims, and the Court of International Trade.
28 U.S.C. § 610. Appellees argued that bankruptcy courts
are not included in the express language of 28 U.S.C. §
610. Appellees further asserted that a review of legislative
history demonstrates Congressional intent to limit the
transfer power of § 1631 and likewise to exclude
bankruptcy courts from the definition of "courts"
under § 610. Conversely, Appellant argued that the Third
Circuit has recognized a bankruptcy court's authority to
transfer cases pursuant to § 1631 in the Seven
Fields case, which included a footnote stating:
"[W]hen a civil action is filed with a district court
(of which the bankruptcy court is a unit) with a want of
jurisdiction the court shall in the interest of justice
transfer the case to a court in which it could have been
filed originally." See Seven Fields Dev.
Corp., 505 F.3d 237, 247 n.8 (3d Cir. 2007).
The 2012 Decision
briefing and oral argument, the Bankruptcy Court denied the
request to transfer the adversary proceeding to the E.D.Pa.
Court. See Troisio v. Erickson (In re IMMC
Liquidating Estate), 2012 WL 523632, at *4
(Bankr. D. Del. Feb. 14, 2012) (the "2012
Decision"). In reaching its conclusion, the Bankruptcy
Court noted the exclusion of bankruptcy courts from the
statute and rejected the argument that the statute should be
construed broadly based on legislative intent:
The Defendants contend that the legislative history
demonstrates Congressional intent to limit the transfer power
of § 1631, since an early draft of the proposed language
allowed for a transfer between any two courts of the United
States to cure defects in venue as well as jurisdiction; but
"[t]he final version enacted by Congress is more narrow
and permits transfer between any two federal courts, as
defined in 28 U.S.C. § 610 (1986), to cure a defect
in jurisdiction, and eliminates any reference to a transfer
to cure a defect in venue."
IMMC, 2012 WL 523632, *2 (quoting J. Tayon, The
Federal Transfer Statute: 28 U.S.C. § 1631, 29 S.
Tex. L. Rev. 189, 199 n. 58 (1987) (emphasis in original)).
The Bankruptcy Court found that a review of legislative
history of § 610 likewise demonstrated Congressional
intent to exclude bankruptcy courts from its definition of
The "Historical and Statutory Notes" to 28 U.S.C.
§ 610 advise that Congress amended § 610 in 1978 by
substituting "district courts, and bankruptcy
courts" for the phrase "and district
courts" (the "1978 Amendment"). However,
due to extensions of this provision's effective date, the
1978 Amendment was valid for only a 12-day period (from June
28, 1984 to July 10, 1984) because a 1984 statute provided
that the 1978 Amendment "shall not be effective."
These legislative gymnastics ultimately kept bankruptcy
courts from express inclusion in § 610, supporting the
view that the failure to include bankruptcy courts in §
610 was not an oversight, but a purposeful act.
IMMC, 2012 WL 523632, at *2 (citations and footnotes
omitted). The Bankruptcy Court further concluded that the
footnote in Seven Fields was dicta and that
the exclusion of bankruptcy courts from the express language
of §§ 1631 and 610, together with the legislative
history of those sections, cast doubt on the Bankruptcy
Court's authority to transfer the adversary proceeding.
See id. at *2.
The 2015 Decision
February 19, 2015, Appellant filed with the Bankruptcy Court
a renewed motion to transfer the adversary proceeding to the
E.D.Pa. Court, which cited In re DMW Marine, LLC,
509 B.R. 497 (Bankr. E.D. Pa. 2014) in support. (See
B.D.I. 58.) In support of the renewed motion, Appellant also
submitted a Notice of Supplemental Authority, which cited
Wellness Int'l Network, Ltd. v. Sharif, 135
S.Ct. 1932 (2015). (See B.D.I. 64.) Following oral
argument (see B.D.I. 65), the Bankruptcy Court
denied the renewed motion, finding that neither of the
decisions cited by Appellant changed the law or addressed the
authority of a bankruptcy court to transfer a case pursuant
to § 1631; rather, the Bankruptcy Court concluded, those
cases were "offered in support of [Appellant's]
initial position - that this Court is a 'court'
within the meaning of 28 U.S.C. § 610." See
Troisio v. Erickson (In re IMMC Corp.), 2015 WL 6684638,
at *2 (Bankr. D. Del. Oct. 30, 2015) (the "2015
Decision"). The Bankruptcy Court denied the renewed
motion as it "remain[ed] convinced that the express
language and legislative history of § 610 supports the
proposition that Congress did not intend to include
bankruptcy courts in the definition of
Request for Certification of Direct Appeal to the Third
November 11, 2015, Appellant filed a notice of appeal with
respect to both the 2012 Decision and the 2015 Decision.
(See D.I. 1.) On the same day, Appellant filed a
motion seeking certification of the appeal directly to the
United States Court of Appeals for the Third Circuit pursuant
to 28 U.S.C. § 158(d)(2)(A). (See D.I. 2.)
According to the Certification Motion, the appeal presented
the following issue: "Whether bankruptcy judges have the
authority to order a transfer of an adversary proceeding
pursuant to 28 U.S.C. § 1631." (D.I. 2 at 1.) On
January 28, 2016, the court certified the issue for direct
appeal to the Third Circuit, pursuant to 28 U.S.C. §
l58(d)(2)(A)(i), on the basis that the appeal raised a
question of law as to which there is no controlling decision
of the Third Circuit or of the Supreme Court. Troisio v.
Erickson (In re IMMC Corp.), 2016 WL 356026 (D. Del.
Jan. 28, 2016). However, Appellant subsequently failed to
perfect the appeal by filing a petition for permission with
the circuit clerk as required by Federal Rule of Bankruptcy
Procedure 8006(g). Consequently, on April 12, 2016, Appellant
filed a motion to reopen and proceed with the appeal in this
court (D.I. 9) ("Motion to Reopen"). On May 17,
2016, the court granted the Motion to Reopen. Troisio v.
Erickson (In re IMMC Corp.), 2016 WL 2899247 (D. Del.
May 17, 2016). Briefing on the merits of the appeal concluded
on June 19, 2017. (See D.I. 24, 25, 26.)
argues that bankruptcy courts should be deemed one of the
"courts" with transfer authority because § 610
includes the "district courts of the United
States." (See D.I. 24 at 5 (quoting 28 U.S.C.
§ 610)) Appellant primarily relies on language in 28
U.S.C. § 151, which describes bankruptcy judges as a
"unit" of the district court. (See Id. at
7.) Appellant further argues that the Bankruptcy Court's
interpretation is at odds with legislative intent behind
§ 1631, which is to ensure that litigants have their day
in court unimpeded by technicalities of procedure. (See
Id. at 5, 11-12.) Appellant further argues that the
Bankruptcy Court's conclusion ignored the Third
Circuit's statement in Seven Fields, as well as
the reasoning set forth in Schaefer Salt Recovery,
Inc., 542 F.3d 90, 105 (3d Cir. 2008). (See Id.
at 10.) In Schaefer, Appellant contends, "[t]he
Third Circuit held unequivocally that bankruptcy courts, as
units of the district court, come within the definition of
'courts' in 28 U.S.C. § 451 and therefore have
the authority to impose sanctions under Rule 11 [of the
Federal Rules of Civil Procedure], " and that this
reasoning should "appl[y] equally to 28 U.S.C.
§§ 610 and 1631." (See Id. at 5)
Finally, Appellant argues that, even if the Bankruptcy Court
was not authorized under section 1631 to transfer the
adversary proceeding to the E.D.Pa. Court, the Bankruptcy
Court was authorized under § 105(a) of the Bankruptcy
Codeand/or 28 U.S.C. §§
or 1412. (See Id. at 12-14.) On this
basis, Appellant urges the court to reverse the Bankruptcy
Court's 2012 and 2015 Decisions, reinstate the adversary
proceeding, and transfer same to the E.D.Pa. Court.
(Id. at 15.)
Appellees argue that the plain language of the statute is
dispositive of the issue on appeal and that legislative
history of both sections demonstrates Congressional intent to
limit courts with transfer authority. (See D.I 25 at
6-11.) While early drafts of the Federal Courts Improvement
Act of 1984, which enacted § 1631, proposed language
that would have allowed transfer between any two courts of
the United States to cure defects in venue and jurisdiction,
the final version as enacted did not. According to Appellees,
the legislative history of § 610 further supports the
Bankruptcy Court's conclusion that "the failure to
include bankruptcy courts in § 610 was not an oversight,
but a purposeful act." IMMC, 2012 WL 523632 at
*2. Appellees argue that the Bankruptcy Court was correct not
to give any weight to the Third Circuit's dicta
in Seven Fields in this case, and that because the
Schaefer decision did not address a bankruptcy
court's transfer authority, its reasoning does not
control on this issue either. (Id. at 13-17.)
Appellant's alternative arguments - that the Bankruptcy
Court erred in denying transfer because transfer was
authorized under 11 U.S.C. § 105(a), 28 U.S.C. §
157, and/or 28 U.S.C. § 1412 - must be denied, according
to Appellees, because those arguments were waived, are
outside of the scope of this appeal, and are otherwise
meritless. (See Id. at 19-22.)
JURISDICTION AND ...