A Chart of Bankruptcy Jurisdiction for Admiralty Lawyers

Jurisdictional gamesmanship is now one of the most important skills for admiralty counsel involved in bankruptcy related litigation. Admiralty lawyers are called upon increasingly to engage in such gamesmanship. In order to do so effectively, however, the rules of the game must be fully understood and appreciated. The significance of disputes unrelated to the merits of controversies has been greatly increased by the Bankruptcy Amendments and Federal Judgeship Act of 1984. Although delay, for its own sake, is unethical, these amendments require counsel to be aware of opportunities to select the forum most likely to produce a favorable result for the client's cause. Counsel who fail to avail themselves of these opportunities run the risk of having a disappointed client question their decisions.

Admiralty lawyers and their clients are thought to be uncomfortable in bankruptcy courts. Accordingly, this article will explore various statutory routes whereby admiralty lawyers can plan their escapes from the bankruptcy court, or, at least, from the bankruptcy judge.

The routes to be discussed include: The distinction among core, non-core, and unrelated proceedings; voluntary and mandatory abstention in bankruptcy proceedings; permissive and mandatory withdrawal of a district court's reference of a bankruptcy matter to a bankruptcy court; jury demand; removal and remand; and abstention in bankruptcy cases.

Bankruptcy judges, under 28 U.S.C.A. § 151, are now a ‘unit’ of the United States District Court, known as the bankruptcy court. The United States District Court has original and exclusive jurisdiction over bankruptcy cases and original, but not exclusive, jurisdiction over bankruptcy proceedings. A United States District Court is authorized to refer any and all bankruptcy cases, or parts thereof, to the bankruptcy courts. It appears that the great majority of district courts have made general referrals of all bankruptcy cases and proceedings to the bankruptcy courts.

Under the present court structure, many admiralty lawyers apparently wish to avoid the unit of the United States District Court known as the bankruptcy court. They would prefer that bankruptcy related admiralty litigation be conducted before a United States District Judge. The district court is, after all, the home of admiralty jurisdiction.

The 1984 Act revives the concept of summary jurisdiction that existed under the Bankruptcy Act of 1898. The new label for summary jurisdiction is core jurisdiction. A brief review of some historical milestones will facilitate an understanding of jurisdiction under the 1984 Act.