IN RE:
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
LONDON
IN RE:
BECKNELL & CRACE COAL CO.
CASE NO. 72-60650
DEBTOR
SHAMROCK COAL COMPANY, INC.
PLAINTIFF
V.
ADVERSARY NO. 95-6026
LOLA BETTYE SLOAN; JIMMIE
SLOAN;
TONY SLOAN; NED T. SLOAN;
MARGARET SLOAN; BRUCE R.
SLOAN;
JOHN SLOAN; RUBEN G. HICKS,
TRUSTEE
DEFENDANTS
This matter is before the court on the motion of the defendants, Lola Bettye Sloan, Jimmie Sloan, Ned T. Sloan, Margaret Sloan, Bruce R. Sloan, and John Sloan (hereinafter the Sloans) to alter, amend, and vacate the findings of fact and conclusions of law in the court's Memorandum Opinion of September 12, 1996, and to amend or vacate the courts accompanying order of September 12, 1996.
The courts memorandum opinion and order of September 12, 1996 grants injunctive relief on the complaint of Shamrock Coal Company, Inc. (hereinafter Shamrock) filed July 20, 1995. The complaint alleges that in violation of a preliminary injunction entered by this court on June 18, 1986, the Sloans on October 16, 1989, filed a civil action in the Jefferson Circuit Court, No. 89-CI-07804, seeking damages from Shamrock for trespass and removal of coal from premises mined by Shamrock pursuant to an Option to Lease Agreement entered into with approval of the court by Shamrock and the trustee in bankruptcy of the debtor, Becknell & Crace Coal Company, Inc.
The courts memorandum opinion and order of September 12, 1996 are based on facts adduced at an evidentiary hearing held on May 30, 1996 on Shamrock's motion for a preliminary injunction enjoining the Sloans from proceeding further in their civil action against Shamrock in the Jefferson Circuit Court.
The memorandum opinion of September 12, 1996 disposes of arguments heard by the court on September 20, 1995 on the motion of the Sloans requesting that this court dismiss the complaint herein or, in the alternative, abstain from hearing the complaint.
As previously noted the complaint was filed July 20, 1995. On August 28, 1995 the Sloans filed their motion to dismiss the complaint on four grounds as follows:
1. The court lacks subject matter jurisdiction;
2. The court lacks jurisdiction over the Sloans;
3. The court is the improper venue; and
4. The complaint fails to state a claim upon which relief can be granted.
This motion of the Sloans was not noticed for hearing.
Under the local rules of the Bankruptcy Court in effect at the time, the court heard motions in adversary proceedings on the first and third Wednesday of each month.
On its own motion, by order entered on August 29, 1995, the court set September 20, 1995, the third Wednesday in September, as the date for hearing the motion of the Sloans to dismiss the complaint or alternatively to abstain from hearing this matter.
Shamrocks complaint names the chapter 7 trustee as a defendant and seeks indemnification from the trustee to the extent Shamrock might be held liable to the Sloans. The trustee noticed his motion to dismiss the complaint as to the trustee for hearing on September 20, 1995 as well. The court's Memorandum Opinion of September 12, 1996, also disposes of this motion of the trustee.
Following the hearing on September 20, 1995, counsel for the Sloans was accorded the opportunity to file a supplemental memorandum in support of the Sloans motion to dismiss or abstain. An agreed order permitting the filing of the supplemental memorandum was entered October 26, 1995, and the supplemental memorandum was filed on that date.
Because the complaint filed by the Sloans in the Jefferson Circuit court was not part of the record the court concluded the record was incomplete. On January 5, 1996 the court ordered the parties to file in this proceeding a certified copy of the record of the action of the Jefferson Circuit Court. The certified copy of the record of the action in the Jefferson Circuit Court was filed herein by counsel for the plaintiff on January 29, 1996, and was supplemented on March 22, 1996 and April 2, 1996.
The record of the state court proceeding as supplemented reveals that on March 18, 1996 the judge presiding over the action in the Jefferson Circuit Court granted summary judgment in favor of Shamrock and dismissed all claims of the Sloans in that action. The state court opinion recognized that the trustee in bankruptcy, standing the shoes of the debtor, Becknell & Crace Coal Company, Inc., had a fee simple interest in the coal underlying the Sloan properties and, by authority of old title 11 U.S.C. § 110, was free to dispose of the debtors interest in the coal in any way the trustee chose, including entry into the Option to Lease Agreement with Shamrock.
The Sloans filed in the state court action a motion requesting that court to vacate its order of March 18, 1996.
With the record thus supplemented the court set this matter for a status conference on May 23, 1996. On motion of counsel for the Sloans for cause shown, the status conference was reset for May 30, 1996, the same date as the hearing on Shamrocks motion for a preliminary injunction as hereinafter discussed.
Shamrocks motion for a preliminary injunction was filed April 23, 1996 and was initially noticed for hearing on May 15, 1996, but was reset for May 30, 1996.
On May 14, 1996 and May 28, 1996, counsel for Shamrock further supplemented the record of the Jefferson Circuit Court action indicating that on May 9, 1996 the Sloans filed in the state court action a motion asking that Shamrock be restrained from requesting injunctive relief in this court. That motion was overruled by the presiding judge of the Jefferson Circuit Court by an opinion and order entered May 20, 1996.
The evidentiary hearing on Shamrocks motion for a preliminary injunction was held on May 30, 1996. The order of May 15, 1996 rescheduling the hearing from that date to May 30, 1996 states that in not objecting to the continuance the Sloans were not submitting to or waiving their objection to the jurisdiction of the bankruptcy court.
The transcript of the May 30, 1996 evidentiary hearing was filed with the court on June 7, 1996.
On August 27, 1996, while Shamrocks motion for a preliminary injunction was under consideration by the court, the Sloans, by counsel, filed in the U.S. District Court for this district a Petition for Extraordinary Writ or Motion for Withdrawal of Reference, Case No. 96-340, London Division, styled Tony Sloan, et al., Petitioners v. Joe Lee, Referee in Bankruptcy,[1] and Shamrock Coal Company.
The undersigned was not served with a copy of the "petition" to the U.S. District Court or a summons with respect thereto and was unaware of the petition when the memorandum opinion and order of September 12, 1996 were entered.
The filing of the Petition for Extraordinary Writ or Motion for Withdrawal of Reference with the U.S. District Court did not operate to deprive the bankruptcy court of jurisdiction of this adversary proceeding. Rule 5011(c), Federal Rules of Bankruptcy Procedure. Consequently, the memorandum opinion and order of September 12, 1996 were unaffected by the filing of the withdrawal motion in the district court.
On September 18, 1996, after entry of the memorandum opinion and order of September 12, 1996, the Sloans, by counsel, filed in the U.S. District Court action a motion to stay proceedings and the finality of orders entered by the bankruptcy court in this bankruptcy proceeding. The Sloans alleged they would be irreparably harmed unless the orders of this court were stayed. Rule 5011(c) directs that such a motion ordinarily shall be presented first to the bankruptcy judge.
On September 20, 1996 the U.S. District Court entered an order denying the motion of the Sloans for an extraordinary writ or withdrawal of reference, or for a stay.
On September 23, 1996, the Sloans, by counsel, timely filed in this adversary proceeding their Motion to Alter, Amend, and Vacate Findings of Facts (sic) and Conclusions of Law and to Amend or Vacate the Courts Order of September 12, 1996. Rules 7052, 9006(a), and 9023(e), Federal Rules of Bankruptcy Procedure. This timely motion operated to extend the time to appeal from the order of September 12, 1996. Rule 8002(b), Federal Rules of Bankruptcy Procedure. Thus, the allegations of the Sloans in the Petition for Extraordinary Relief and Motion for Withdrawal of Reference and Motion for Stay that they would be irreparably harmed unless such relief were granted appear to have been an exaggeration.
Nevertheless, the Sloans appealed to the U.S. Court of Appeals for this circuit from Judge Coffmans order of September 20, 1996, denying their Petition for Extraordinary Relief and Motion for Stay of Proceedings and Finality and Enforcement of Orders, and dismissing their action in the U.S. District Court. Approximately one year later the Sloans and Shamrock stipulated to dismissal of the appeal and the appeal was dismissed by order of the Court of Appeals entered on September 16, 1997.
Meanwhile, on September 23, 1996, Shamrock, by counsel, filed a motion for an order requiring the Sloans, and their counsel of record, to reimburse Shamrock for all costs and attorney fees incurred by Shamrock in defending various actions filed by the Sloans against Shamrock in the Clinton Circuit Court, the Jefferson Circuit Court, the Bankruptcy Court, and the U.S. District Court, insofar as those actions relate to the Option to Lease Agreement entered into between Shamrock and the trustee, with the approval of the bankruptcy court. This request for reimbursement was filed on the same September 23, 1996 date as the Sloans Motion to Alter, Amend, and Vacate Findings of Facts (sic) and Conclusions of Law and to Amend or Vacate the Courts Order of September 12, 1996.
A hearing was held on both of these motions on May 21, 1997.
At the hearing on May 21, 1997, for the reasons stated by the court as will appear of record in the transcript of the hearing, the court orally overruled the motion of the Sloans to alter, amend, and vacate the memorandum opinion and order of September 12, 1996. A final and appealable order was not entered at that time because the court was of the opinion that as a matter of judicial economy there should be a final and appealable ruling as well on the question of sanctions against the Sloans and their counsel in the form of a judgment requiring the Soans and their counsel to reimburse Shamrock for attorney fees and expenses incurred by Shamrock.
At the hearing on May 21, 1997 the Sloans and their counsel requested an evidentiary hearing on the extent to which the attorney fees and expenses, for which Shamrock was requesting reimbursement, were incurred in defense of civil actions commenced by the Sloans in violation of the injunction entered by this court on June 18, 1986. The court allowed 60 days for counsel for Shamrock to itemize their fee requests and for the parties to prepare for an evidentiary hearing on Shamrock's request for reimbursement of attorney fees and expenses, and on any objections of the Sloans and their counsel thereto.
After discovery, pursuant to order of the court entered on August 5, 1997, a hearing was held on September 25, 1997 on the renewed motion of Shamrock for reimbursement of attorney fees and expenses. Shamrock seeks reimbursement for fees and expenses paid to attorneys as follows in defense of litigation initiated in behalf of the Sloans in violation of the injunctive orders of the bankruptcy court: Charles Adams, $20,922.00; Jack Ballantine $29,154.00; and John T. Hamilton $24,198.00, for a total of $74,274.00. Insofar as the court can determine from the supplemental objection of the Sloans and their counsel filed on September 24, 1997, the day prior to the hearing, the Sloans and counsel for the Sloans make no specific objection to the amount of the fees and costs for which Shamrock requests reimbursement. Rather their objections are procedural based on alleged lack of notice of the legal basis for the imposition of sanctions, lack of due process, and the fact the complaint of Shamrock initiating this adversary proceeding does not seek any sanctions or pecuniary damages against the Sloans or counsel for the Sloans.
Sanctions are being imposed on the courts own motion. The courts statement as appears of record in the transcript of the hearing held May 30, 1996, makes this clear and also makes clear the legal basis for the sanctions.
I
The Sloans complain that their motion to dismiss the complaint in this adversary proceeding for lack of subject matter jurisdiction, lack of personal jurisdiction over the Sloans, improper venue, and failure to state a claim upon which relief can be granted was not ruled on by the court prior to entry of the order of September 12, 1996 granting the injunctive relief requested by Shamrock. The Sloans argue they were thereby denied due process by reason of the fact they were not afforded an opportunity to file an answer to the complaint and engage in discovery prior to the hearing on Shamrocks motion for a preliminary injunction.
The complaint alleges the action of the Sloans against Shamrock in the Jefferson Circuit Court was commenced in violation of an extant preliminary injunction entered by this court on June 18, 1986. The injunction is a matter of record in these proceedings. The action of the Jefferson Circuit Court is a matter of record in that court and a copy thereof has been made a part of the record in this adversary proceeding. There was really nothing to discover except with respect to the conduct of the Sloans, of which they were fully aware.
Counsel for the Sloans makes much of the fact that Shamrock had ceased mining on the property in 1988 prior to commencement of the action in their behalf in the Jefferson Circuit Court, a fact which is not disputed. However, it is also true that as mining progressed periodic royalty payments were tendered to the Sloans and that these payments, together with prior payments, equaled $1,000,000, upon payment of which the debtor and the trustee were to become fee simple owners of the coal underlying the Sloan properties. The fact the Sloans had refused to accept these payments did not give them the right to contest the amount owed on the Lease-Purchase Agreement in a court other than the bankruptcy court. Moreover, as the record in this matter indicates, Shamrock was still obligated to perform reclamation work on the Sloan properties pursuant to the terms of the lease agreement between the trustee and Shamrock. Obviously the trustee and Shamrock were still in possession of the Sloan properties and the bankruptcy court still had exclusive jurisdiction over those properties when the action in the Jefferson Circuit Court was commenced. And, without naming the trustee as a defendant, the Sloans were seeking damages for the mining of coal in which the trustee held the predominant if not the entire interest.
The Sloans denial of due process claims ring hollow in view of their efforts to obtain determinations in the Clinton and Jefferson Circuit Courts with respect to the leasehold properties without naming the trustee in bankruptcy a defendant in those actions despite the fact that under the law of this case the trustee held a fee simple interest in the coal underlying the properties and retained the right to assume the lease of the surface properties and to utilize such surface for the purpose of mining the coal underlying the properties.
By these actions and by their failure to apprise Shamrock and the undersigned bankruptcy judge of their hidden purpose in obtaining the order of the Court of Appeals adopting the Settlement Agreement and disposing of the appeals pending in that court, which appeals previously had been dismissed, the Sloans and their counsel have demonstrated disdain for the concept of due process of law.
This court remains respectful of the requirements of due process of law and is satisfied the Sloans have not in any manner been denied due process of law in this adversary proceeding.
The court dealt extensively with the question of subject matter jurisdiction in its memorandum opinion of September 12, 1996. The court concluded it had exclusive jurisdiction over the premises leased by the debtor, Becknell and Crace Coal Company, Inc., from the Sloans, and by virtue of that fact had exclusive jurisdiction to adjudicate the rights of any entity, including the Sloans, claiming an interest in property of the debtor, wherever located.
The assertion the court does not have personal jurisdiction over the Sloans is wrong for several reasons.
As far back in time as August 21, 1972, early on in the Becknell and Crace Coal Company case, the Sloans, by counsel, petitioned the court for an order rejecting the Lease-Purchase Agreement dated January 22, 1970, between the Sloans and the debtor, pursuant to which the debtor was conducting mining operations on the Sloan properties covered by the agreement. In making this request the Sloans acknowledged the courts jurisdiction over the property and submitted themselves personally to the jurisdiction of the court.
On September 6, 1972, the Sloans, by counsel, filed a memorandum brief in support of their petition for rejection of the Lease-Purchase Agreement. In the memorandum the Sloans stated [i]ncluding the year 1972, the future payments due the Sloans from the Debtor, amount to $700,000, plus certain wheelage charges. Thus, the Sloans, by timely filing this informal claim in the case submitted themselves personally to the jurisdiction of the court for the purpose of adjudicating their claim. It was this litigation that resulted in the ruling by the bankruptcy court that the trustee as successor in interest of the debtor owned a fee simple interest in the coal underlying the Sloan properties, a ruling affirmed by the court of appeals and by which the Sloans are personally bound.
According to the certificate of service in this adversary proceeding a summons and copy of the complaint and amended complaint were served on each of the defendants Sloan by first class mail on July 21, 1995 and July 27, 1995, in conformity with Rule 7004(b)(1) of the Federal Rules of Bankruptcy Procedure. There has been no contention this service was somehow defective. Personal jurisdiction over the Sloans in this adversary proceeding seems obvious.
Finally, the Sloans were disbursed funds by the trustee in bankruptcy in accordance with the settlement agreement entered into by the parties, which settlement agreement the court determined should be set aside and was set aside by the courts order of September 12, 1996. Under sections 2(a)(2) and 57(l) of the Bankruptcy Act, 11 U.S.C. §§ 11a(2) and 57(l), the court has summary jurisdiction over the recovery of any payment erroneously made on a claim. Thus, the court has personal jurisdiction over the Sloans for this purpose as well.
Clearly the complaint of Shamrock states a claim upon which relief can be granted. The Sloans and their counsel caused the action in the Jefferson Circuit Court to be filed on October 16, 1989, not only in violation of the orders of this court entered on May 19, 1986, June 16, 1986, and June 18, 1986, but also in violation of Judge Silers memorandum opinion and order of March 15, 1988, which concluded the foregoing orders of the bankruptcy court were consistent with the ruling and mandate of the Sixth Circuit in In re Becknell & Crace Coal Company, Inc., 761 F.2d 319 (6th Cir. 1985), cert. denied, 106 S.Ct. 528, rehearing denied 106 S.Ct. 901. Judge Siler ruled the bankruptcy court had authority to enforce its orders through injunctions.[2]
This courts order of May 19, 1986 (paragraph 3) was entered following a hearing held on May 7, 1986, on the motion of the Sloans for an order permitting them to file in state court an action against the debtor, Becknell & Crace Coal Company, to quiet title for the purpose of obtaining a declaratory judgment determining whether the debtor acquired a fee simple interest in the coal underlying the Sloan properties. This motion was filed after the Sixth Circuit had decided the In re Becknell & Crace Coal Company, Inc. case, 761 F.2d 319 (6th Cir. 1985), cert. denied 106 S.Ct. 528, rehearing denied 106 S.Ct. 901, in which that court held under the terms of the Lease-Purchase Agreement between the debtor and the Sloans the debtor acquired a fee simple interest in the coal. In an earlier motion filed April 8, 1986, also after the foregoing Sixth Circuit decision, the Sloans alleged the bankruptcy court did not have jurisdiction to try title to Kentucky land, where title does not arise from bankruptcy proceedings. The courts order of May 19, 1986 clearly denied the Sloans request to seek a redetermination in state court of their interest in the coal underlying the surface of properties leased to the debtor. Despite the foregoing rulings by the Bankruptcy Court, the District Court, and the Court of Appeals, the Sloans filed actions in the Clinton and Jefferson Circuit Courts which clearly were intended to subvert the rulings of the federal courts.
The Sloans did not name the trustee in bankruptcy as a defendant in the Clinton or Jefferson Circuit Court actions.
In Count I of their complaint in the Jefferson Circuit Court the Sloans alleged:
14. On or after June 11, 1986, the Defendant (Shamrock), without the permission of the Plaintiff and over its objections, did enter upon the subject property to commence exploration activities for the purpose of mining. Subsequent to that date, said Defendant did explore the property, cause trees and vegetation to be removed therefrom, constructed roads and ultimately did cause coal to be removed by the deep mining method.
15. All of the aforementioned activities of the Defendant did occur prior to the Trustee having assumed or any Court granting the Trustee the authority to assume the Lease-Purchase Agreement, Exhibit A herein.
16. The actions of the Defendant complained of hereinabove constitute a trespass to the subject real property or a waste to the same. As a direct and proximate result of the actions of the Defendant, the Plaintiff has lost the use of its property as well as to have the same suffer a detriment to its economic value.
Obviously, in making this allegation the Sloans and their counsel were aware of the Findings of Fact and Conclusions of Law and Judgment entered by this court on June 18, 1986, which after trial and after hearing the objections of the Sloans, authorized the trustee to enter into the Option to Lease Agreement with Shamrock, authorized the trustee through Shamrock to enter onto the premises and conduct exploration and prospecting pursuant to the terms of the Option to Lease Agreement, and allowed the trustee 100 days from the date the judgment became final within which to assume or reject the Lease-Purchase Agreement between the Sloans and the debtor. The Sloans and their counsel were necessarily aware as well that the January 22, 1970 Lease-Purchase Agreement between the Sloans and the debtor, permitted the trustee in bankruptcy, as successor in interest to the debtor, to use so much of the surface of the leasehold as may be reasonably necessary in searching and exploring for coal, to dig, mine and remove coal by whatever means practical, including strip mining, to erect buildings thereon, and to dig air shafts. The Lease-Purchase Agreement also granted rights of way for necessary roads, and even permitted the deposit of waste on the property.
The Lease-Purchase Agreement permitted assignment of the lease on the terms conforming to the agreement.
It is worth noting that while pursuing their action for damages against Shamrock in the Jefferson Circuit Court based on allegations that Shamrock was unlawfully mining coal from their properties because the trustee had not assumed the Lease-Purchase Agreement between the Sloans and the debtor, counsel for the Sloans was at the same time arguing in an appeal to the District Court and a later appeal to the Court of Appeals that the trustee had, by his conduct, assumed the Lease-Purchase Agreement. See October 25, 1991, Memorandum Opinion by Judge Unthank in Civil Actions Nos. 86-227 and 91-157 U.S. Dist. Ct., E.D. Ky., London. See also the brief of counsel for the Sloans filed in the Sixth Circuit Court of Appeals in appeals nos. 91-6462; 91-6463; and 91-6464 in March, 1992, at page 12.
Against this background, the action filed by the Sloans and their counsel in the Jefferson Circuit court smacks of an attempt to shakedown Shamrock.
The order of this court of September 12, 1996 directing the Sloans and counsel for the Sloans to dismiss the action in the Jefferson Circuit Court does not deprive them of due process. Their claim to ownership of the coal underlying their properties has been fully litigated in the federal courts all the way to the U.S. Supreme Court, and, in violation of the injunctive orders of this court, was re-litigated at the trial court level in the Jefferson Circuit Court.
To the extent the Sloans assert a claim based on their contention the mining methods of Shamrock left unrecoverable a substantial amount of unmined coal and thereby rendered such coal unmerchantable, such claim, which arises in this bankruptcy case, can be asserted in an adversary proceeding in this court. By virtue of the courts order of September 12, 1996 setting aside the settlement agreement between the parties as having been obtained by withholding information from the court, the court has and retains exclusive jurisdiction over the property in question. The settlement agreement did not, in any respect, vitiate the holding of the Sixth Circuit in In re: Becknell & Crace Coal Company, Inc., 761 F.2d 319 (1985) recognizing the fee simple interest of the trustee in the coal underlying the Sloan properties. The trustee still has that interest until the court determines otherwise.
In the cases cited by counsel for the Sloans the litigants rights previously had not been adjudicated by a court of competent jurisdiction and the litigants had not habitually disregarded orders of the court vested with jurisdiction of their claims.
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
LONDON
IN RE:
BECKNELL & CRACE COAL CO.
CASE NO. 72-60650
DEBTOR
SHAMROCK COAL COMPANY, INC.
PLAINTIFF
V.
ADVERSARY NO. 95-6026
LOLA BETTYE SLOAN; JIMMIE
SLOAN;
TONY SLOAN; NED T. SLOAN;
MARGARET SLOAN; BRUCE R.
SLOAN;
JOHN SLOAN; RUBEN G. HICKS,
TRUSTEE
DEFENDANTS
[1] The transformation of the office and title of referee in bankruptcy to that of bankruptcy judge dates back to April 24, 1973 on which date the U.S. Supreme Court promulgated Rules of Bankruptcy Procedure. See 93A S.Ct. 3081 (1973). These proposed rules were reported to Congress on May 1, 1973, were approved by Congress, and took effect October 1, 1973.
The rules were the product of nearly 8 years of study which commenced shortly after enactment of Pub.L. 88-633, § 1, 78 Stat. 1001, on October 3, 1964. This statute added to the Judicial Code § 2075, 28 U.S.C. § 2075, which empowered the Supreme Court to prescribe rules of practice and procedure under the Bankruptcy Act.
As originally enacted § 2075 provided that after such rules have taken effect, all laws in conflict with such rules shall be of no further force and effect. Section 2075 also provided that such rules shall not abridge, enlarge or modify any substantive right.
Rules 901 and 902, which took effect October 1, 1973, provided "bankruptcy judge" means the referee of the court of bankruptcy in which a case is pending, or the district judge when issuing an injunction under § 2a(15) of the Act and when acting in lieu of a referee under § 43c of the Act or under Rule 102 (after withdrawal of a case). Thus, Bankruptcy Act cases and controversies were being administered and adjudicated by "bankruptcy judges" several years prior to enactment of the Bankruptcy Reform Act of 1978, which took effect October 1, 1979.
Apparently, the Committee on Bankruptcy Rules, the Committee on Rules of Practice and Procedure, the Judicial Conference of the United States, the U.S. Supreme Court, and Congress, through all of which the bankruptcy rules were vested, did not perceive the designation of "referees" as "bankruptcy judges" as effectuating a change in substantive law or as cause for confusion of courts, litigants, or bankruptcy practitioners.
Since these rules took effect on October 1, 1973, orders and opinions in the Becknell & Crace Coal Company, Inc. case and related adversary proceedings have been entered by the undersigned as "bankruptcy judge," as directed by the Official Forms accompanying these 1973 rules. See 93A S.Ct. pgs. 3174-3210. Heretofore, the Sloans and their counsel have not indicated this practice confused them.
The Bankruptcy Reform Act of 1978 continued sitting bankruptcy judges in office until March 31, 1984, conferred on them the title United States Bankruptcy Judge, and vested them with authority to administer pending and new cases commenced under the Bankruptcy Act until the Bankruptcy Code took effect on October 1, 1979. See Title IV-Transition, §§ 401, 402, 403, 404 and 405 of Pub.L. 95-598.
On June 28, 1982, the U.S. Supreme Court declared unconstitutional title 28 U.S.C. § 1471, as added to the Judicial Code by Title II, § 241(a) of the Bankruptcy Reform Act of 1978, Pub.L. 95-598. Northern Pipeline Const. v. Marathon Pipe Line Co., 102 S.Ct. 2858, 458 U.S.50, 73 L.Ed. 2d 598 (1982). This decision declaring a section of title 28, the Judicial Code, unconstitutional, did not affect the substantive provisions of title 11, the Bankruptcy Code, and did not affect the transition provisions appearing in Title IV of Pub.L. 95-595, except perhaps § 405(2), which enlarged the jurisdiction of the bankruptcy courts during transition. The popular misconception that the Supreme Court declared the "bankruptcy law" unconstitutional is just that, a misconception.
On July 10, 1984, Congress enacted present chapter 6 of title 28 of the United States Code providing for the creation and composition of the bankruptcy courts, the appointment of bankruptcy judges, and for continuation of sitting bankruptcy judges in office until September 30, 1986. See Pub.L. 98-353, Title I § 104(a), July 10, 1984.
Present title 28 U.S.C. § 157 authorizes reference of all bankruptcy cases and proceedings arising under title 11 to bankruptcy judges of the district. Sec. 115 of Pub.L. 98-353 makes clear this includes Bankruptcy Act cases.
In conformity with the foregoing statutory scheme, Rule 83.12 of the Joint Local Rules of the United States District Courts for the Eastern and Western Districts of Kentucky provides for reference of Bankruptcy Act as well as Bankruptcy Code cases to bankruptcy judges.
Obviously, Bankruptcy Act cases are now by law administered by bankruptcy judges.
[2] See Opinion and Order of Judge Siler entered March 15, 1988, in Civil Action No. 86-227, U.S. District Court, E.D. Ky., London Division. Prior to the foregoing ruling, the Sloans had in December of 1987 filed in the U.S. District Court, London Division, a motion asking the court to withdraw the reference in this bankruptcy case. At the conclusion of a hearing held December 18, 1987, Judge Siler overruled the motion.