No bankruptcy jurisdiction over DTPA claim

Attorneys filed fee applications in a bankruptcy and the debtor responded with tort counterclaims.  Frazin v. Haynes and Boone, No. 11-10403 (Oct. 1, 2013).  The bankruptcy court entered judgment for the attorneys.  The Fifth Circuit found a lack of jurisdiction over the DTPA counterclaim and remanded.  It reasoned that Stern v. Marshall, 131 S. Ct. 2594 (2011), had overruled prior circuit precedent saying that bankruptcy courts could enter final judgments in all “core” proceedings.  Applying Stern to these claims, the Court reasoned (1) the malpractice claim was intertwined with the fee application, (2) the fiduciary duty action was as well, as it sought fee forfeiture, but (3) “it was not necessary to decide the DTPA claim to rule on the Attorneys’ fee applications” (including whether the claim was an impermissible “fracturing” of a professional negligence claim under Texas law)  The court noted that the district court may have jurisdiction to enter final judgment on the claim.  A dissent would not remand “because no harm is done, at least in this case, and the district court will no doubt simply dismiss whatever has been remanded.”