## Facts

- Patricia M. Atwood filed a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of New Mexico.
- After the bankruptcy filing, a creditor caused Atwood to be served with a state-court summons and complaint seeking to collect a prepetition consumer debt.
- Atwood responded by filing an adversary proceeding in the bankruptcy court against the creditor and related entities, as well as collection counsel, seeking damages for the postpetition collection activity.
- The complaint asserted only non-bankruptcy causes of action: violations of the Fair Debt Collection Practices Act (FDCPA), the New Mexico Unfair Practices Act (NMUPA), and New Mexico common-law theories tied to unfair debt-collection conduct.
- Defendants moved to dismiss the adversary complaint under Rule 12(b)(6) (as incorporated by Bankruptcy Rule 7012), and the court addressed whether it had subject-matter jurisdiction to adjudicate the asserted non-bankruptcy claims.

## Issues

1. Whether the bankruptcy court had subject-matter jurisdiction under 28 U.S.C. § 1334(b) and § 157 to hear the Chapter 7 debtor’s FDCPA, NMUPA, and New Mexico common-law claims arising from postpetition collection efforts.
2. Specifically, whether those claims were “core” proceedings, or at least “related to” the bankruptcy case because their outcome could conceivably affect administration of the Chapter 7 estate.

## Decision

- The court determined that the FDCPA, NMUPA, and New Mexico common-law claims were not core proceedings because they did not invoke rights created by the Bankruptcy Code and could exist outside of bankruptcy.
- The court held it lacked “related to” jurisdiction over those claims because their outcome would have no conceivable effect on the Chapter 7 estate’s administration or distribution to creditors.
- The court rejected the idea that it could retain the non-bankruptcy claims based on a pendent/supplemental theory of jurisdiction independent of § 1334(b).
- The court dismissed the adversary proceeding’s non-bankruptcy claims for lack of subject-matter jurisdiction (leaving the debtor to pursue them, if at all, in a court with proper jurisdiction).
- The court noted that to the extent the debtor sought relief for an automatic-stay violation, that type of relief is a core bankruptcy matter, but the adversary complaint before it asserted only the non-bankruptcy consumer-protection and common-law theories.

## Legal Principles

- Bankruptcy-court jurisdiction over civil proceedings exists only as provided by 28 U.S.C. § 1334(b): proceedings “arising under” title 11, “arising in” a bankruptcy case, or “related to” a bankruptcy case.
- A proceeding is “core” under 28 U.S.C. § 157(b) only if it invokes a substantive right created by bankruptcy law or is a type of proceeding that can arise only in bankruptcy.
- “Related to” jurisdiction requires that the proceeding’s outcome could conceivably affect the bankruptcy estate being administered (for example, by altering the debtor’s rights or liabilities in a way that changes estate administration or creditor recoveries).
- Postpetition consumer-protection and common-law damages claims that belong to the debtor personally, and that would not change claim allowance, estate property, or distributions, generally do not satisfy the “conceivable effect” test for related-to jurisdiction in a Chapter 7 case.
- Bankruptcy courts may not adjudicate purely non-bankruptcy causes of action absent core or related-to jurisdiction; jurisdiction cannot be created by pleading choices, convenience, or litigant consent.

## Conclusion

In *In re Atwood*, the bankruptcy court held that a Chapter 7 debtor’s FDCPA, NMUPA, and New Mexico common-law claims based on postpetition collection activity were non-core and not “related to” the bankruptcy case because their resolution would not conceivably affect the Chapter 7 estate, so the court dismissed those non-bankruptcy claims for lack of subject-matter jurisdiction.


In re Atwood, 452 B.R. 249 (2011)