In re Lazy Days’ RV Center, Inc., 724 F.3d 418 (3d Cir. 2013). In this bankruptcy appeal, Judge Hardiman, writing for the panel, reversed a district court decision that had vacated an order of the Bankruptcy Court on the grounds that the Bankruptcy Court had issued an advisory opinion. The issue that had been decided involved an anti-assignment clause under a lease in light of a provision of the Bankruptcy Code, as well as the viability of a purchase option under that same lease after the debtor and its landlord had entered into a settlement agreement that permitted the debtor to assign the lease.
Judge Hardiman concluded that there was no advisory opinion problem here. The Bankruptcy Court’s order “had the legal effect of voiding the anti-assignment clause. Thus, its opinion was not advisory ….” The panel distinguished In re Martin’s Aquarium, Inc., 98 Fed. Appx. 911 (3d Cir. 2004), upon which the landlord relied. There, the Bankruptcy Court’s declaration that an earlier ruling by it was a judgment within the meaning of Federal Rule of Civil Procedure 54(a) did nothing to resolve the “underlying dispute” there: whether, under Pennsylvania state law, Pennsylvania state courts would have to abide by that Bankruptcy Court ruling. Since the Bankruptcy Court was merely stating that its prior ruling was a Rule 54(a) judgment, its opinion was purely advisory, unlike here, where the Bankruptcy Court decision in question had actual, immediate effect in terms of the validity of the anti-assignment clause.
The landlord also contended that the Bankruptcy Court lacked subject matter jurisdiction to enter its order because it did so after reopening a case that it had previously closed. Judge Hardiman disagreed. Bankruptcy Courts have “broad discretion to reopen cases after an estate has been administered.” Because “the Bankruptcy Court was well suited to provide the best interpretation of its own order” by reopening the case, it had jurisdiction to do that.
Nor was it unconstitutional for the Bankruptcy Court to assert subject matter jurisdiction over “a private rights dispute,” contrary to the landlord’s contention. The landlord relied on three Supreme Court cases that involved “when a bankruptcy court may constitutionally exercise jurisdiction over common law claims.” But this case centered on “a federal law provision with no common law analogue,” a provision of the Bankruptcy Code.
Finally, Judge Hardiman rejected due process and takings arguments that the landlord presented. Though the landlord claimed that the Bankruptcy Court should have held an adversary proceeding rather than proceeding by motion, the panel announced, for the first time in the Third Circuit, that adversary proceedings are not required on motions to reopen. Judge Hardiman found persuasive authority from other Circuits on that point. There was no unconstitutional taking either, since all the courts did here was to adjudicate “the parties’ bona fide dispute regarding their rights under the Settlement Agreement.”