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In Re United Health Care Organization, Inc. Amresco New England Ii, L.P., Intervenor--Appellant v. John F. Olson, Jr., Daniel E. Carpenter, Mary Ellen Olson, and United Automobile, Aerospace and Agricultural Implement Workers of America, Afl-Cio, Intervenors-Appellees. Amresco New England Ii, L.P. v. John F. Olson, Jr., Daniel E. Carpenter, and Mary Ellen Olson

Citations: 147 F.3d 179; 1998 U.S. App. LEXIS 13026Docket: 97-7931

Court: Court of Appeals for the Second Circuit; June 19, 1998; Federal Appellate Court

Narrative Opinion Summary

This case involves AMRESCO New England II, L.P.'s appeal against a preliminary injunction and a dismissal order related to its attempt to collect on a mortgage note. The injunction, issued by the Southern District of New York, barred AMRESCO from suing fiduciaries of a bankrupt entity, while the Connecticut District Court's dismissal relied on this injunction. After the injunction was dissolved due to a failed settlement, the appeal concerning it was deemed moot. The court determined that AMRESCO was not subject to the initial injunction and vacated the Connecticut dismissal, reinstating AMRESCO's complaint. The case centered on whether AMRESCO's actions were related to the UHCO bankruptcy and whether procedural due process was observed in extending the injunction. The court concluded that AMRESCO was not bound by the injunction due to jurisdictional limitations and a lack of evidentiary hearings, leading to the reinstatement of its action in Connecticut. The decision underscores the necessity of clear jurisdictional authority and procedural fairness in bankruptcy-related injunctions.

Legal Issues Addressed

Due Process in Injunction Proceedings

Application: AMRESCO argued that the extension of the injunction without an evidentiary hearing denied it due process, highlighting procedural fairness issues in the injunction's application.

Reasoning: Amresco also claimed that, even if jurisdiction existed, extending the injunction without an evidentiary hearing denied it due process.

Effect of Dissolved Injunction on Dismissal Orders

Application: With the dissolution of the injunction, the dismissal order of AMRESCO's Connecticut action was vacated, and the complaint was reinstated.

Reasoning: Judge Thompson's dismissal of the Connecticut action, which relied solely on the now-dissolved injunction, is to be vacated, and the Connecticut action is reinstated.

Jurisdiction under 28 U.S.C. 1334(b)

Application: The court evaluated whether Judge Scheindlin had jurisdiction to include AMRESCO in the amended injunction, determining that AMRESCO's Connecticut action was not 'related to' the UHCO bankruptcy.

Reasoning: On appeal, Amresco contended that Judge Scheindlin lacked jurisdiction to include it in the amended injunction, arguing that its Connecticut action was not 'related to' the UHCO bankruptcy under 28 U.S.C. 1334(b).

Mootness of Injunction Appeals

Application: The appeal regarding the injunction became moot after the injunction was dissolved due to the expiration of the underlying bankruptcy settlement agreement.

Reasoning: Judge Scheindlin's injunction preventing Amresco from pursuing claims against Carpenter and John Olson is no longer in effect, as the underlying bankruptcy settlement agreement has expired without being fulfilled.

Scope and Application of Section 105 Injunctions

Application: The court found that AMRESCO was not covered by Bankruptcy Judge Walsh's original injunction as it was not named in the injunction's order, thus not barred from initiating the Connecticut action.

Reasoning: The Court finds that Amresco was not covered by Walsh's injunction, as it is not named in the injunction's order, and previous rulings have supported this interpretation.