In re Wolf

Full title: IN RE WOLF

Court: United States District Court, D. Massachusetts

Date published: Feb 9, 1981

No. 80-1873-S (D. Mass. Feb. 9, 1981)

Opinion

No. 80-1873-S.

February 9, 1981.

Bankruptcy Reform Act — Involuntary Cases — Relief Against Debtor — Constitutionality

SKINNER, Bankruptcy Judge.

A motion for declaratory judgment was dismissed since the debtor placed before the court the very issues that were presently before the bankruptcy court. Thus, the issues of whether the 1978 Reform Act violates Article III of the U.S. Constitution by delegating the judicial power of the United States to non-Article III tribunals and whether Section 303(h)(1) is void for vagueness were not reached. Appellate jurisdiction did not exist because the bankruptcy court had not yet issued an order on the debtor's initial motion to dismiss and original jurisdiction was inappropriate because a party may not use an action for declaratory relief as a substitute for appeal. See Sec. 303(h) at ¶ 8011.

[Digest of Opinion]

The alleged debtor filed a motion for abstention and a motion to dismiss. The motion for abstention requested the bankruptcy court to refrain from exercising jurisdiction pending completion of a state court action between the debtor and petitioning creditors. The motion to dismiss was based on two grounds: first, the debtor argued that by failing to give the judges of the new United States Bankruptcy Court lifetime tenure and irreduceable compensation, the 1978 Reform Act violates Article III of the U.S. Constitution. Further, he claimed that Section 303(h)(1) of the Bankruptcy Code, which allows the entry of an order for relief against the debtor "if the debtor is generally not paying such debtor's debts as such debts become due," is vague and therefore in violation of the Fifth Amendment.

Before the bankruptcy court took any action on the debtor's motion to abstain and dismiss, the debtor brought the present case for declaratory and injunctive relief in this court. The creditors argue that this court should not accept jurisdiction of the debtor's action for declaratory relief and accordingly, move to dismiss. The court agreed that the present posture of the parties' dispute does not permit the exercise of either appellate or original jurisdiction.

Appellate jurisdiction does not exist because the bankruptcy court has not yet issued an order on the debtor's motion to dismiss. This court has discretionary jurisdiction of appeals from interlocutory orders of the bankruptcy court, 28 U.S.C. § 1334(b), and mandatory jurisdiction of appeals from final judgments, 28 U.S.C. § 1334(a). Until an order is issued, however, there is nothing for this court to review.

Original jurisdiction is inappropriate because a party may not use an action for declaratory relief as a substitute for appeal. The debtor may not by pass the appellate procedures set out in the 1978 Reform Act by bringing a declaratory motion.

The debtor's only recourse, therefore, was to await the decision of the bankruptcy court on his motion to dismiss. Accordingly, creditor's motion to dismiss this declaratory judgment was allowed.