Opinion
Civil No. 23-1173 (FAB) Bcy No. 22-00036 (MCF) Adv. Proc. No. 22-067 (MCF)
2023-09-22
EL FARMER, INC., et al., Appellants, v. Commonwealth of PUERTO RICO, et al., Appellees.
Gustavo A. Chico-Barris, Ferraiuoli LLC, San Juan, PR, Homel Mercado Justiniano, Ensanche Martinez, PR, for Appellant El Farmer, Inc. Gustavo A. Chico-Barris, Sonia Colon-Colon, Tomas F. Blanco-Perez, Ferraiuoli LLC, San Juan, PR, Homel Mercado Justiniano, Ensanche Martinez, PR, for Appellant Condado 5, LLC. Migda Liz Rodriguez-Collazo, Department of Justice of the Government of Puerto Rico o, Federal and Bankruptcy Division, San Juan, PR, for Appellee Commonwealth of Puerto Rico. Edward W. Hill-Tollinche, Hill & Gonzalez, PSC, San Juan, PR, Migda Liz Rodriguez-Collazo, Department of Justice of the Government of Puerto Rico o, Federal and Bankruptcy Division, San Juan, PR, for Appellees Department of Agriculture, ORIL.
Gustavo A. Chico-Barris, Ferraiuoli LLC, San Juan, PR, Homel Mercado Justiniano, Ensanche Martinez, PR, for Appellant El Farmer, Inc. Gustavo A. Chico-Barris, Sonia Colon-Colon, Tomas F. Blanco-Perez, Ferraiuoli LLC, San Juan, PR, Homel Mercado Justiniano, Ensanche Martinez, PR, for Appellant Condado 5, LLC. Migda Liz Rodriguez-Collazo, Department of Justice of the Government of Puerto Rico o, Federal and Bankruptcy Division, San Juan, PR, for Appellee Commonwealth of Puerto Rico. Edward W. Hill-Tollinche, Hill & Gonzalez, PSC, San Juan, PR, Migda Liz Rodriguez-Collazo, Department of Justice of the Government of Puerto Rico o, Federal and Bankruptcy Division, San Juan, PR, for Appellees Department of Agriculture, ORIL.
OPINION AND ORDER
BESOSA, District Judge.
Appellants El Farmer, Inc. ("El Farmer") and Condado 5, LLC ("Condado 5") (collectively, "appellants") commenced an adversary action against appellees Commonwealth of Puerto Rico, Domingo Emmanuelli-Hernández in his official capacity as the Puerto Rico Attorney General, the Puerto Rico Department of Agriculture ("Department of Agriculture"), Ramón González-Beiro in his official capacity as the Secretary of Agriculture, the Office for Regulation of the Dairy Industry ("ORIL"), and Javier Lugo-Rullán ("Lugo") in his official capacity as the ORIL administrator (collectively, "appellees"). (Adv. Proc. No. 22-067, Docket No. 1.) The United States Bankruptcy Court for the District of Puerto Rico ("bankruptcy court") dismissed the adversary proceeding pursuant to the Burford abstention doctrine. El Farmer, Inc. v. Dept. of Agric., Adv. Proc. No. 22-067, 2023 WL 2603211, 2023 Bankr. LEXIS 715 (Bankr. D.P.R. Mar. 22, 2023) (Cabán-Flores, Bankr. J.) (citing Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943)). Subsequently, El Farmer and Condado 5 filed an appeal. (Docket No. 3.) For the reasons set forth below, the disposition of the bankruptcy court is REVERSED.
Known as the "Oficina para la Reglamentación de la Industria Lechera" in Spanish.
I. Background
El Farmer owns and operates a dairy farm in Isabela, Puerto Rico. (Adv. Proc. No. 22-067, Docket No. 1 at p. 6.) The "milk industry is heavily regulated in Puerto Rico." Puerto Rico Dairy Ass'n v. Pagán, 748 F.3d 13, 15 (1st Cir. 2014). Dairy farmers are allotted quotas, the amount of milk "to be produced every fourteen (14) days, in accordance with the market's needs." Laws of P.R. Ann. tit. 5, § 1126(c). Milk quotas "are an asset which can be sold, leased, or used as collateral for credit." In re Rosa Dairy Farm, Inc., 622 B.R. 806, 808 (B.A.P. 1st Cir. 2020) (citation omitted); see Laws of P.R. Ann. tit. 5, § 1135. El Farmer owns 213,146 liters of bi-weekly milk quota, worth approximately $1,598,595.00. (Adv. Proc. No. 22-067, Docket No. 1 at p. 8.) This property served as collateral for a $2,600,000.00 loan from Condado 5. Id.
ORIL is responsible for regulating the production and distribution of milk. See Laws of P.R. Ann. tit. 5, §§ 1092 et seq. Only licensed dairy farmers are permitted to produce milk for public consumption. Id. § 1192(c), § 1101 ("No producer, processor, or sterilizer of milk or its byproducts may operate without a license issued therefor by the [ORIL] Administrator."). Processors pay dairy farmers predetermined rates for fresh milk, referred to as "liquidations" in industry parlance. (Docket No. 10 at pp. 6-7.) The ORIL administrator establishes "the systems or methods of payment or liquidation to producers" to "ensure the maximum and minimum prices fixed for liquid milk." Laws of P.R. Ann. tit. 5, § 10926(b); see Vaquería Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464, 469 (1st Cir. 2009) ("From its creation [in 1957], ORIL set both a maximum price for the sale of milk to consumers and a minimum price for the purchase of raw milk from dairy farmers by milk processors.").
A processor is "[any] person who is owner, administrator, or in charge of a milk pasteurizing and homogenizing establishment." Laws of P.R. Ann. tit. 5, § 1092.
Price adjustments for fresh milk are subject to an administrative process. See Laws of P.R. Ann. tit. 5, §§ 1103, 1106 and 1107; Laws of P.R. Ann. tit. 3, § 9611. Before implementing a price adjustment, the ORIL administrator must hold a public hearing "in which all parties concerned may participate." Laws of P.R. Ann. tit. 5, § 1103. This hearing serves to "fix the maximum, minimum or only price for liquid milk and/or its byproducts." Laws of P.R. Ann. tit. 5, § 1107. The purpose and date of the hearing must "be announced in a newspaper of general circulation in the Commonwealth with at least five days' notice." Id.; see Laws of P.R. Ann. tit. 3, § 9611 ("Whenever an agency intends to adopt, amend, or repeal a rule or regulation, it shall publish a notice in Spanish and English, in at least one newspaper of general circulation in Puerto Rico, and in Spanish and English on the Internet."). The Puerto Rico Department of Consumer Affairs is required to "render a report and its recommendations to the [ORIL] Administration on said hearings." Id.
See Laws of P.R. Ann. tit. 3, § 9612 ("The agency [i.e., ORIL] shall provide an opportunity to submit comments in writing for a period of at least thirty (30) days after the date of publication of notice.").
A. The Non-Regulatory Discounts
El Farmer delivered fresh milk to Suiza Dairy, Inc. ("Suiza Dairy"), a licensed processor. (Adv. Pro. 22-067, Docket No. 1 at p. 11.) ORIL allegedly "[made] illegal discounts," decreasing the amount Suiza Dairy paid El Farmer for the fresh milk deliveries. Id. at p. 11. ORIL introduced these "non-regulatory" discounts "on the basis that discarded milk losses (milk that had no market) had to be shared by all farmers." Id. The price adjustments "were made without any Administrative Order whatsoever and in clear violation of the Price Order for raw milk that was active at said time." Id.
B. The 2022 Price and Payment Adjustments
Acting ORIL administrator Javier Lugo-Rullán issued Administrative Order No. 2022-027 on May 26, 2022 ("Administrative Order 27"). (Adv. Pro. No. 22-067, Docket No. 25, Ex. 1.) Lugo cited the "marked changes (some of them drastic) in the costs involved in the production of raw milk." Id. at p. 2. For example, "price increases in several economic sectors as a result of the Russia-Ukraine war" significantly increased the cost of feed and transportation. (Docket No. 25, Ex. 2 at p. 2.) Given "these findings," Lugo "decided to announce . . . new milk prices at all levels." (Adv. Pro. No. 22-067, Docket No. 25, Ex. 1 at p. 2.) Administrative Order 27 "ensure[d] that milk producers obtain a better yield for the milk produced in their dairy farms." Id. at p. 3.
Lugo subsequently published Administrative Order 2022-33 ("Administrative Order 33") to modify "the current producer liquidation payment system." Id. This "new model" is based on milk production, replacing milk quota as the determinative factor. Id. The modified liquidations "[caused] El Farmer Inc. substantial economic losses." (Adv. Pro. No. 22-067, Docket No. 1 at p 13.)
El Farmer and Condado 5 aver that ORIL issued Administrative Orders 27 and 33 "without informing affected parties, Public Hearing being held, [and] informing the Consumer Affairs Department" in violation of Puerto Rico law and the "Agreements of Case No. 04-1840 filed with the U.S. District Court for the District of Puerto Rico." Id. at pp. 9-10. The modified liquidations proved financially unfeasible for El Farmer, "forc[ing] the corporation to sell milk below cost of producing the same." Id. at p. 14. For instance, El Farmer charged $7.00 per liter of raw milk before the issuance of Administrative Orders 27 and 33. Id. at p. 15. The "milk quota price fell to $5.00 per liter" after the price and payment modifications. Id.
On August 13, 2004, milk processors Suiza Dairy, Inc. and Vaquería Tres Monjitas commenced an action against the ORIL, requesting that the Court enjoin a regulatory scheme that significantly favored Lechera de Puerto Rico, Inc., a milk processor owned by the Puerto Rico government. (Case No. 04-1840, Docket No. 1.) On July 13, 2017, the Court granted the preliminary injunction. Id., Docket No. 480 (Amended Opinion and Order Granting Preliminary Injunction) (Domínguez, J.). This order required that all processors "pay the same amount" for raw milk and that the ORIL adopt a "non-discriminatory, rational and scientific regulatory standards that will allow him [sic] to determine costs and fair profits for all the participants of the Puerto Rico regulatory milk market." Id. at p. 94. The Court "retain[ed] jurisdiction until full compliance has been duly met." Id. at p. 95. After protracted litigation, the First Circuit Court of Appeals affirmed this disposition on November 23, 2009. Vaquería Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464, 468-69 (1st Cir. 2009).
C. The Bankruptcy Court Proceedings
El Farmer filed a Chapter 12 petition on January 12, 2022. (Bankr. Pet. No. 22-00036, Docket No. 1.) ORIL then issued Administrative Orders 27 and 33, depreciating the value of El Farmer's milk quota. (Adv. Pro. No. 22-067, Docket No. 1 at p. 15.)
EL Farmer and Condado 5 commenced an adversary proceeding against ORIL, the Department of Agriculture, and the Commonwealth of Puerto Rico on September 14, 2022, asserting two causes of action pursuant to 42 U.S.C. § 1983. Id. at pp. 18-25. According to El Farmer and Condado 5, the non-regulatory discounts and administrative orders constitute an impermissible deprivation of property in violation of the Takings Clause. Id.; see U.S. CONST. amend. V. Moreover, El Farmer and Condado 5 contend that the appellees violated the Due Process Clause of the Fourteenth Amendment. Id.; see U.S. CONST. amend XIV, § 1. They seek the following remedies: (1) damages "of at least $100,000.00 for the loss of income during the year 2021, loss of income of at least $50,000.00 during the first six months of 2022, and a lost of $9,600.00 bi-weekly beginning on June 8, 2022," (2) punitive damages, (3) attorneys' fees, and (4) a declarative judgment. (Adv. Pro. No. 22-067, Docket No. 1 at p. 26.)
El Farmer and Condado 5 also allege that the appellees violated the Puerto Rico Constitution. (Adv. Pro. Docket 1 at p. 17.)
El Farmer and Condado 5 also moved for a preliminary injunction, requesting that the bankruptcy court enjoin the implementation of Administrative Order 33. Id., Docket No. 3. The preliminary injunction hearing occurred on October 12, 2022. Id., Docket No. 23. The bankruptcy court denied this motion, ordering El Farmer and Condado 5 "to show cause within 30 days as to why this case should not be dismissed under the Burford doctrine or why the court should not abstain under 28 U.S.C. § 1334(c)(1)." Id. at p. 1.
The bankruptcy court ultimately dismissed the adversary proceeding, "[declining] to pass judgement over the public policy of the Commonwealth of Puerto Rico." El Farmer, Inc., 2023 WL 2603211, at *3, 2023 Bankr. LEXIS 715, at *10. El Farmer and Condado 5 appeal this disposition, asserting that "the Burford abstention doctrine is not applicable." Docket No. 10 at p. 19. ORIL, the Department of Agriculture, and the Commonwealth of Puerto Rico responded. (Docket No. 11.) The appellants replied. (Docket No. 14.) The sole inquiry before this Court is whether the Burford doctrine is applicable.
II. Standard of Review
Federal courts are courts of limited jurisdiction. Destek Grp. v. State of N.H. Pub. Utils. Comm'n, 318 F.3d 32, 38 (1st Cir. 2003); Celotex Corp. v. Edwards, 514 U.S. 300, 307, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) ("The jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute."). Jurisdiction to adjudicate this action derives from 28 U.S.C. § 158(a). On appeal, this Court may affirm, modify, or reverse a bankruptcy court's judgment, or remand with instructions for further proceedings. Fed. R. Bankr. P. 8013; see, e.g., HSBC Bank USA v. Bank of N.Y. Mellon Tr. Co., 646 F.3d 90, 94 (1st Cir. 2011) ("Finding the phrase ambiguous, we remanded to the bankruptcy court to conduct a 'contextual examination of the parties' intent, taking full account of the surrounding facts and circumstances'.") (citation omitted).
The factual findings established by the bankruptcy court "shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Fed. R. Bankr. P. 8013; see also Fed. R. Civ. P. 52(a)(6). Pursuant to the clearly erroneous standard, reversal is proper only if the appellate court possesses a "definite and firm conviction that a mistake has been committed." In re the Bible Speaks, 869 F.2d 628, 630 (1st Cir. 1989) (citing Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (finding no clear error where the record supported the bankruptcy court's conclusion and the facts underlying it)). "This standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently." Anderson, 470 U.S. at 573, 105 S.Ct. 1504.
In contrast, a district court considers the bankruptcy court's conclusions of law de novo. Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir. 1997). It must therefore analyze and solve issues from the same perspective of the bankruptcy court, as if the issues were to be decided for the first time. Segarra-Miranda v. Perez-Padro, 482 B.R. 59, 67 (D. P. R. 2012) (citing Water Keeper Alliance v. U.S. Dept. of Defense, 271 F.3d 21, 31 (1st Cir. 2001)).
III. The Burford Doctrine
Federal courts have a "virtually unflagging obligation . . . to exercise the jurisdiction given to them." Ankenbrandt v. Richards, 504 U.S. 689, 705, 112 S.Ct. 2206, 119 L.Ed.2d 468 (1992) (citation and quotation omitted); New Orleans Pub. Serv., Inc. v. Council of New Orleans (NOPSI), 491 U.S. 350, 359, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("Congress, and not the Judiciary, defines the scope of federal jurisdiction within the constitutionally permissible bounds") (citing Cohens v. Virginia, 19 U.S. 264, 6 Wheat. 264, 404, 5 L.Ed. 257 (1821) ("We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given")). Dismissal despite the existence of federal jurisdiction is, however, warranted in exceptional circumstances. This practice is referred to as "abstention," a compilation of "judicially created rules whereby federal courts may not decide some matters before them even though all jurisdictional and justiciability requirements are met." Erwin Chemerinsky, Federal Jurisdiction at 783 (5th ed. 2007). Abstention is "the exception, not the rule." Moses H. Cone. Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 14, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).
The Burford doctrine is "particularly difficult to define and apply." Constr. Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 89 (1st Cir. 1978); Sevigny v. Emplrs. Ins. of Wausau, 411 F.3d 24, 27 (1st Cir. 2005) ("The Burford doctrine is a set of variegated responses built around a central theme."). The Supreme Court adopted this form of abstention in 1943, holding that a "federal equity court" may abstain in the "public interest" and "with proper regard for the rightful independence of state governments in carrying out their domestic policy." Burford, 319 U.S. 315, 318, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). Essentially, the Burford court determined that dismissal is appropriate if "the availability of an alternative, federal forum threatened to frustrate the purpose of [a] complex administrative system." Quackenbush, 517 U.S. at 725, 116 S.Ct. 1712.
Subsequent precedent refined the Burford doctrine, relegating abstention to "an uneasy position in the jurisprudence of federal court jurisdiction." Chico Serv. State, Inc. v. SOL Puerto Rico Ltd., 633 F.3d 20, 28-29 (1st Cir. 2011). The contemporary Burford doctrine provides that federal courts "sitting in equity" shall refrain from interfering with "proceedings or orders of state administrative agencies" when "timely and adequate state review is available," and:
(1) when there are 'difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar'; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.Fragoso v. Lopez, 991 F.2d 878, 882 (1st Cir. 1993) (quotation and citation omitted). The Burford doctrine is "harsh," "[calling] for the surrender of federal jurisdiction, not its mere postponement." Allstate Ins. Co. v. Sabbagh, 603 F.2d 228, 234 (1st Cir. 1979) (citation and quotation omitted).
The First Circuit Court of Appeals has construed "Burford and its progeny narrowly," noting that the potential invalidation of a "state administrative scheme . . . does not alone justify" abstention. Forty Six Hundred LLC v. Cadence Educ., LLC, 15 F.4th 70, 75 (1st Cir. 2021); Chico Serv. Station, Inc., 633 F.3d at 30 ("In light of the strong presumption in favor of the exercise of jurisdiction, we have held that Burford abstention must only apply in unusual circumstances, when federal review risks having the district court become the regulatory decision maker.") (citation and quotation omitted). For instance, in Vaquería Tres Monjitas, the district court convened "51 intensive evidentiary hearings" to assess the procedure for establishing the price of fresh milk. 587 F.3d 464, 472. The district court then issued an expansive order, compelling ORIL to adopt "rational, non-discriminatory parameters for price regulation." Id. On appeal, the Vaquería Tres Monjitas court rejected ORIL's Burford argument. Id. The preliminary injunction issued by the district court invalidated an ORIL regulation, but "[did] not disrupt [the agency's] role as the regulatory decision-maker or interfere with the agency's ability to apply its expertise to local facts in establishing a coherent state policy." Id. at 474.
A. The Quackenbush Caveat
In Quackenbush v. Allstate Ins. Co., the Supreme Court determined "whether the abstention doctrine first recognized [in the Burford decision] can be applied in a common-law suit for damages." 517 U.S. at 709, 116 S.Ct. 1712. The answer is unambiguous and nuanced: Dismissal is inappropriate, but a stay order may issue in certain circumstances.
Equitable remedies "used regularly in the United States are the injunction, specific performance, reformation, quiet title, and a cluster of restitutionary remedies: accounting for profits, constructive trust, equitable lien, subrogation, and equitable recission." Samuel L. Bray, The System of Equitable Remedies, 83 UCLA L. Rev. 530, 541-42 (2016). Legal remedies include "damages, mandamus, habeas, replacing, ejectment, and certain restitutionary remedies." Id.
The Burford doctrine extends exclusively "to all cases in which the court has discretion to grant or deny relief," (i.e. suits for injunctive relief). Id. at 718, 116 S.Ct. 1712. Abstention requires dismissal only when a federal court "is asked to employ its historic powers as a court of equity." Id. at 717, 116 S.Ct. 1712 (citation and quotation omitted). When litigants seek legal damages, abstention is available "only to permit a federal court to enter a stay order that postpones adjudication of the dispute, not to dismiss the federal suit altogether." Id. at 719, 116 S.Ct. 1712. Accordingly, the Burford doctrine extends exclusively to actions for discretionary relief.
The First Circuit Court of Appeals has repeatedly held that dismissal pursuant to the Burford doctrine is contingent on the relief requested by the plaintiffs. See Dunn v. Cometa, 238 F.3d 38, 43 (1st Cir. 2001) ("[Where] the relief sought is money damages (rather than injunctive or other discretionary relief), Quackenbush permits the district court only to stay the federal action pending state proceedings"); Fragoso, 991 F.2d at 882 ("[If] the only equitable power a court is asked to exercise constitutes the very act of abstaining under Burford, we think it is highly questionable whether the court is one 'sitting in equity' to which Burford abstention might be available."); DeMauro v. DeMauro, 115 F.3d 94, 98 (1st Cir. 1997) (Because "Quackenbush held that the dismissal of a damages action on Burford grounds was reversible error," the district court need not abstain from adjudicating a "damages action"). Moreover, other judges in this district and at least one other jurisdiction in the First Circuit distinguish between equitable and legal damages in determining whether abstention is appropriate pursuant to the Burford doctrine. See Lebrón v. M & G Food Serv., 97 F Supp. 2d 204, 206 (D.P.R. 2000) ("This being an action in damages, the Court may not dismiss it altogether," rendering the Burford doctrine inapplicable) (Casellas, J.); Cestero v. Rosa, 996 F. Supp. 133, 140 (D.P.R. 1998) ("The Court . . . cannot effectuate [an abstention based on the Burford doctrine] because the remaining claims are damages claims, not equitable in nature") (Pérez-Giménez, J.); Figueroa v. Chrysler Corp., 79 F Supp. 2d 20, 22-23 (D.P.R. 1999) ("Thus, as a general rule the Supreme Court has not allowed federal courts to dismiss actions for damages by invoking the doctrine of abstention.") (Domínguez, J.); Bowen v. Worcester Family & Probate Court, Case No. 14-40113, 2014 WL 5106419, 2014 U.S. Dist. Lexis 143898 (D. Mass. Oct. 9, 2014) ("Generally, where the relief sought is money damages . . . dismissal of the action is not permitted under Burford abstention.") (Hillman, J.).
In 2009, the First Circuit Court of Appeals noted in dicta that "[there] is mixed authority on whether the abstention doctrines are only available to challenge the exercise of the court's equitable power, or alternatively, whether they may apply to actions for damages as well." Guillemard-Ginorio v. Contreras-Gómez, 585 F.3d 508, 561 n. 14 (1st Cir. 2009). This Court is confounded by the "mixed authority" reference, however, because the cases cited in support of this proposition either declined to address abstention or held that Burford is inapplicable when the parties seek legal damages. Id. (citing Quackenbush, 517 U.S. at 728, 116 S.Ct. 1712; Deakins v. Monaghan, 484 U.S. 193, 202, 108 S.Ct. 523, 98 L.Ed.2d 529 (1988); DeMauro, 115 F.3d at 98). The First Circuit Court of Appeals set forth no authority suggesting that the Burford doctrine transcends the parameters established by the Supreme Court in Quackenbush.
The Burford doctrine is inapplicable in the adversary proceeding move before this Court on appeal. El Farmer and Condado 5 assert that ORIL, the Department of Agriculture, and the Commonwealth of Puerto Rico are liable for "$100,000.00 during the year 2021, loss on income of at least $50,000.00 during the first six months of 2022, and a loss of $9,600.00 bi-weekly beginning on June 8, 2022." (Adv. Pro. No. 22-067, Docket No. 1.) Accordingly, El Farmer and Condado 5 seek money damages. This request triggers the Quackenbush caveat to the Burford doctrine. The bankruptcy court dismissed the complaint "in its entirety," however, on abstention grounds. El Farmer, 2023 WL 2603211, at *3, 2023 Bankr. LEXIS 715, at *10. This disposition is inconsistent with Quackenbush and First Circuit Court of Appeals precedent.
The bankruptcy court relies extensively on Electric Reliability Council of Texas Inc. v. Just Energy Texas LP, a recent decision from the Fifth Circuit Court of Appeals. Id., 2023 WL 2603211, at *1, 2023 Bankr. LEXIS 715, at *4 (citing 57 F.4th 241 (5th Cir. 2023)). The Just Energy court analyzed whether the Burford doctrine required the dismissal of an action against a state agency responsible for setting the price of electricity in Texas. 57 F.4th at 246. It did not, however, differentiate between equitable and legal causes of action. In fact, the plaintiffs in Just Energy requested a declaratory judgment. Id. at 247. A declaratory judgment is an equitable remedy, subject to dismissal pursuant to the Burford doctrine. Consequently, Just Energy is distinguishable from the adversary proceeding on appeal before this Court.
Because dismissal of the adversary proceeding is foreclosed by binding authority, the disposition of the bankruptcy court is REVERSED.
IV. Conclusion
For the reasons set forth above, the bankruptcy court's dismissal order is REVERSED. This case is REMANDED to the bankruptcy court for further proceedings consistent with this opinion.
Judgment shall be entered accordingly.
IT IS SO ORDERED.