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In re Morrissey

September 15, 1983

IN RE: JAMES M. MORRISSEY, SR. T/D/B/A ENERGY UNLIMITED BK NO. 1-81-00417 FRANK, LAWRENCE G., TRUSTEE IN BANKRUPTCY FOR MORRISSEY, JAMES M., SR. T/D/B/A ENERGY UNLIMITED, APPELLANT
v.
ARNOLD, ADAM A. AND ARNOLD, CATHERINE



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

Author: Aldisert

Before: ALDISERT and WEIS, Circuit Judges, and RE, Chief Judge.*fn*

Opinion OF THE COURT

ALDISERT, Circuit Judge.

This appeal presents important substantive questions concerning the power of a trustee in bankruptcy to assume a debtor's executory land sale contract. Before these questions can be addressed, however, we must resolve a jurisdictional issue not raised by either party, to-wit: the ability of a district court, with the parties' consent, to refer to a magistrate the disposition of an appeal from a bankruptcy court order. Because we hold that Congress has precluded a district court from making such a reference, we do not reach the merits of this case. Had we reached the merits, our ability to dispose of this appeal would have been severely hampered by the brevity of the bankruptcy court's opinion. Accordingly, we vacate the judgment entered below and remand with the direction that the district court further remand the proceedings to the bankruptcy court to make findings of fact and conclusions of law adequate for the purposes of subsequent appellate review.

This court has jurisdiction under 28 U.S.C. § 1293(b), notwithstanding the parties' characterization of our jurisdiction as falling under 28 U.S.C. § 1291. See Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101 n.3 (3d Cir. 1981); Moxey v. Comer (In re Comer), 716 F.2d 168 (3d Cir. 1983).*fn1

I.

The facts are not in dispute. Morrissey, the debtor, entered into a land sale contract with Adam and Catherine Arnold for the purchase of 42 acres of farm property. The contract required Morrissey to pay real estate taxes and make monthly installment payments to the sellers. After he encountered financial difficulties Morrissey missed some of these payments. The Arnolds notified Morrissey that they considered him in default on the contract. Morrissey then surrendered the property and filed for voluntary bankruptcy. The bankruptcy court appointed a trustee who then applied to the court to assume the alleged executory contract for the real estate purchase. The bankruptcy judge denied the request, noting that because Morrissey was in default, and because he surrendered the property prior to filing the bankruptcy petition, the land sale agreement was terminated and could be neither revived by the court nor assumed by the trustee. The trustee appealed to the district court where, upon the written consent of the parties, the entire matter was referred to a magistrate under the consensual reference provision of 28 U.S.C. § 636(c)(1).*fn2 The magistrate affirmed the bankruptcy judge's determination and the trustee appeals once again.

II.

In addressing this jurisdictional question we recognize several basic principles. First, United States district courts are courts of limited jurisdiction and Congress, as allowed by the Constitution, must expressly grant them the power and authority to hear and decide cases. Also Professor Charles Alan Wright teaches, "the parties cannot confer on the federal court jurisdiction that has not been vested in the court by the Constitution and Congress." C. Wright, LAW OF FEDERAL COURTS 23 (4th ed. 1983). Moreover, parties cannot waive lack of jurisdiction even by express consent. Jackson v. Ashton, 33 U.S. (8 Pet.) 148, 8 L. Ed. 898 (1834).

As set out in the margin, 28 U.S.C. § 636(c)(1) allows a magistrate, upon the consent of the parties, to "conduct any and all proceedings in a jury or nonjury civil matter . . . when specially designated to exercise such jurisdiction by the district court or courts he serves."*fn3 Thus, the jurisdiction of a magistrate to decide a case is not based solely on the consent of the parties, but derives from a proper designation by the district court. Because district court jurisdiction is statutory, its ability to make a proper designation of, and thereby to confer jurisdiction on, a magistrate is also a creature of statute. The critical statutory provision here is 28 U.S.C. § 1334(c). This contains specific provisions for appeals from bankruptcy courts to the district courts. It states that:

(a) The district courts for districts for which panels have not been ordered appointed under section 160 of this title shall have jurisdiction of appeals from all final judgments, orders, and decrees of bankruptcy courts.

(b) The district courts for such districts shall have jurisdiction of appeals from interlocutory orders and decrees of bankruptcy courts, but only by leave of the ...


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