However, the matter did not achieve adversary proceeding stature until December 24, 1987, when the Debtor filed a Complaint in the nature of a Counterclaim to Dechert's Proof of Claim. Therein, the Debtor not only contested Dechert's claim, but also sought millions of dollars of damages from Dechert. We have issued three published Memoranda arising from the pre-trial gyrations in this matter, reported at 91 B.R. 7 (September 23, 1988), 91 B.R. 5 (June 30, 1988), and 86 B.R. 390 (February 29, 1988). The first of these arose in our denial of the Dechert's motion to dismiss this proceeding in its entirety based upon, inter alia, the pendency of a parallel, prior state court proceeding concerning the same facts, and upon the failure of the Debtor to join Carpenter, allegedly an indispensable party, in this action.
See, e.g., In re South Bay Medical Associates, 184 B.R. 963, 969 (Bankr.C.D.Cal. 1995) (citing cases); In re Direct Satellite Communications, Inc., 91 B.R. 5 (Bankr.W.D.Pa. 1988). See also In re Cuyahoga Equip., 980 F.2d 110 (2d Cir. 1992) (stating in dictum that a district court could exercise jurisdiction supplemental to its bankruptcy jurisdiction).
The bank contends that the bankruptcy court has pendent jurisdiction over the two fraud counts based on its independent "relating to" jurisdiction over the constructive-trust claim. Although a number of bankruptcy courts have held that the doctrines of ancillary and pendent jurisdiction are applicable to bankruptcy courts, see Wieboldt Stores, Inc. v. Schottenstein, 111 B.R. 162 (N.D.Ill. 1990); In re Aerni, 86 B.R. 203 (Bankr.D.Neb. 1988); In re Direct Satellite Communications, Inc., 91 B.R. 5 (Bankr.E.D.Pa. 1988); In re Tidewater Group, 63 B.R. 670 (Bankr.N.D.Ga. 1986); In re Coral Petroleum, Inc., 62 B.R. 699 (Bankr.S.D.Tex. 1986); In re Wood, 52 B.R. 513 (Bankr.N.D.Ala. 1985); In re WWG Ind., Inc., 44 B.R. 287 (Bankr.N.D.Ga. 1984), this court is not altogether convinced that these doctrines should be used to extend the jurisdiction of bankruptcy courts to claims which are beyond the "arising in" and "relate to" scope of § 1334(b). No appellate courts have yet ruled on this question, and the bankruptcy court decisions relied upon by SouthTrust Bank invoke notions of judicial economy and procedural convenience as principal justifications for extending to themselves the authority to exercise this kind of supplemental jurisdiction.
When weighing whether to exercise supplemental jurisdiction, courts generally engage in a three-part inquiry. First, "the federal claim must be substantial." Cooper, 409 B.R. at 786 (citing Dechert Price & Rhoads v. Direct Satellite Commc'ns (In re Direct Satellite Commc'ns), 91 B.R. 5, 6 (Bankr. E.D. Pa. 1988)). "Second, the pendent claim must derive from a common nucleus of operative fact, and must be of the sort normally triable in the same proceeding as the federal claim." Id. (citations and quotation marks omitted). "
When weighing whether to exercise supplemental jurisdiction, courts generally engage in a three-part inquiry. First, “the federal claim must be substantial.” 222 S. Caldwell, 409 B.R. at 786 (citing Dechert Price & Rhoads v. Direct Satellite Communications (In re Direct Satellite Commc'ns), 91 B.R. 5, 6 (Bankr.E.D.Pa.1988) ). “Second, the pendent claim must derive from a common nucleus of operative fact, and must be of the sort normally triable in the same proceeding as the federal claim.” Id. (citations and quotation marks omitted).
In analyzing whether pendent jurisdiction exists, first, the federal claim must be substantial. Dechert Price & Rhoads v. Direct Satellite Communications (In re Direct Satellite Communications), 91 B.R. 5, 6 (Bankr.E.D.Pa.1988). Here, the federal claim (Deposit claim) is a core bankruptcy proceeding over a substantial federal claim.
E.D. Cal. 1991) (in suit brought by trustee against debtor and third party to recover fraudulent transfers, bankruptcy court had "related to" and pendent jurisdiction to hear third party claim brought by transferee against nondebtor for malpractice.); Dechert Price Rhoads v. Direct Satellite Communications, Inc. (In re Direct Satellite Communications, Inc.), 91 B.R. 5, 6-7 (Bankr. E.D. Pa. 1988) (in suit by debtor that was core proceeding, bankruptcy court could exercise pendent jurisdiction over claims against third-party defendants, where claims arose out of a "common nucleus of operative facts" as debtor's "core" claims against defendant.). See also Brubaker, On the Nature of Federal Bankruptcy Jurisdiction: A General Statutory and Constitutional Theory, 41 WM. MARY L.REV. 743, 854 (2000).
Under the principles of these cases, this bankruptcy judge would have authority to hear Heartwood's third-party claim. See, e.g., National Westminster Bancorp N.J. v. ICS Cybernetics, Inc. ( In re ICS Cybernetics, Inc.), 123 B.R. 467, 472 (Bankr. N.D. N.Y. 1989); Aerni v. Columbus Fed. Savings ( In re Aerni), 86 B.R. 203, 205 (Bankr. D. Neb. 1988); Dechert Price Rhoads v. Direct Satellite Communications, Inc. ( In re Direct Satellite Communications, Inc.), 91 B.R. 5, 6 (Bankr. E.D. Pa. 1988); Sonnyco Coal, Inc. v. Bartley ( In re Sonnyco Coal, Inc.), 89 B.R. 658, 665-68 (Bankr. S.D. Ohio 1988), aff'd in part, rev'd in part, 131 B.R. 799 (S.D. Ohio 1990); Petrolia Corp. v. Elam ( In re Petrolia Corp.), 79 B.R. 686, 692-93 (Bankr.
The bankruptcy courts that invoke supplemental jurisdiction generally do so with self-restraint, intending only to bring all related claims to a comprehensive and consistent conclusion. See In re Marine Iron Shipbuilding Co., 104 B.R. 976, 985-87 (D.Minn. 1989); In re Summit Airlines, Inc., 160 B.R. at 923 (commenting that "most" courts will exercise supplemental jurisdiction, but should not do so except where it is "clearly appropriate"); In re Feifer Industries, 141 B.R. at 452-53; In re Direct Satellite Communications, Inc., 91 B.R. 5 (Bankr.E.D.Pa. 1988); In re John PetersonMotors, Inc., 56 B.R. at 592-93. See also Zerand-Bernal Group, Inc. v. Cox (Cary Metal Products, Inc.), 158 B.R. 459, 464-65 (N.D.Ill. 1993), aff'd, 23 F.3d 159 (7th Cir. 1994) ("strictly limiting" a bankruptcy court's exercise of ancillary jurisdiction to "unusual circumstances").
1986). Jurisdiction found present: In re Salem Mills, Inc., 148 B.R. 505, 510 (Bankr.N.D.Ill. 1992); In re Eads, 135 B.R. 387, 397-98 (Bankr.E.D.Cal. 1991); and In re Direct Satellite Communications, Inc., 91 B.R. 5, 6-7 (Bankr.E.D.Pa. 1988). The facts of the cases in which the courts chose to exercise jurisdiction over third-party complaints were clearly distinct from those of the instant case.