1 Collier bankr.cas.2d 281, Bankr. L. Rep. P 67,291 in Re Pacific Homes, Debtor. Richard E. Matthews v. The United Methodist Church

The question presented to us on this appeal is pertinent only to those reorganization cases governed by the bankruptcy statutes prior to the effective date of the Bankruptcy Reform Act of 1978, Pub.L.No.95— 598, 92 Stat. 2549 (1978) (codified at 11 U.S.C. §§ 101 , et seq.). Our decision, therefore, may be of limited significance for future cases, but the issue of statutory interpretation presented appears to be one of first impression and by reason of its importance to the parties in the proceeding we think it appropriate to explain in detail the reasons for our holding. The sole issue is whether, under the Bankruptcy Act of 1938, a bankruptcy judge in a Chapter X bankruptcy proceeding has jurisdiction to hear a plenary action for negligence, breach of fiduciary duties, mismanagement, and waste brought by a Chapter X trustee where the defendants to the action file a timely objection to the jurisdiction of the bankruptcy referee.

The district court held that the bankruptcy judge bad jurisdiction of the action despite the appellants’ objection, and this appeal is from its order denying a motion to withdraw reference of the case. In re Pacific Homes, 456 F.Supp. 851 (C.D.Cal.1978).…