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6-07.VYLENE [impl. covenant to negotiate franchise renewal].doc

April 22, 1993, the bankruptcy court issued an order adopting its earlier Memoranda as proposed findings of fact and conclusions of law.   Naugles filed objections to the proposed findings and conclusions.   On August 25, 1994, the district court declined to adopt the proposed findings and conclusions and entered judgment in favor of Naugles. Vylene filed a timely notice of appeal.


Core v. Non-core Proceeding


[2][3] A bankruptcy court lacks jurisdiction "to make final determinations in matters that could have been brought in a district *1476 court or a state court."  In re Thomas, 765 F.2d 926, 929 (9th Cir.1985).   Nevertheless, §  157(b)(2)(M) specifically provides that "orders approving the use or lease of property, including the use of cash collateral," are core proceedings.

Title 11 U.S.C. §  541(a)(1) defines property of the estate as follows:   "[A]ll legal or equitable interest of the debtor in property as of commencement of the case."   The franchise agreement and the rights conferred therein are clearly assets of the bankruptcy estate.   See In re Tudor Motor Assoc., 102 B.R. 936, 948 (D.N.J.1989) (holding that the "franchisee's contractual rights in a Franchise Agreement are generally considered property of the estate, except where said agreements have been effectively terminated prior to a debtor's filing.");   cf. Steffan v. Malakoff, 99 B.R. 27, 29 (E.D.Cal.1989) (stating that debtor's pre-petition option contract is property of the estate as contemplated in 11 U.S.C. §  541(a)(1)).

Therefore, we hold that the bankruptcy court's determination that the adversary proceedings were "core" proceedings was correct.   The bankruptcy court had jurisdiction to enter final judgment on the matters before it, subject to appellate review in the district court.


[4] The district court ruled that Naugles was not estopped from asserting that the option to renew provision of the franchise agreement was too indefinite to impose any

Seg. 6, item 7 (2007)

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