The "Who, What, When, Where, Why, and How" of Appeals in Bankruptcy
Proceedings -- Standard of Review, Mootness, etc.
V. WHY: STANDARD OF REVIEW|
In an appeal from district court review of a bankruptcy
order, the circuit court of appeals independently reviews the
court's order without deference to the district court's
determination. Grella v. Salem Five Cent Sav. Bank, 42
26, 30 (1st Cir. 1994); accord In re Foust, 52 F.3d
768 (8th Cir. 1995) ("Although the district court's conclusions
the bankruptcy court's decisions may carry some persuasive weight,
appellate review of the bankruptcy court's decision is independent
the district court's opinion."); In re Graves, 33 F.3d 242,
(3d Cir. 1994) (circuit court's review in a bankruptcy appeal
"duplicates that of the district court and [it] view[s] the
court decision unfettered by the district court's determination");
re Eagle-Picher Indus., Inc., 999 F.2d 969, 972 (6th Cir. 1993)
B. Factual Findings And Legal Conclusions
When a district court or circuit court reviews a decision
bankruptcy court, it reviews the factual findings for clear error
its legal conclusions de novo. Fed. R. Bankr. P. 8013;
Salem Five Cent Sav. Bank, 42 F.3d 26, 30 (1st Cir. 1994);
of Rigdon, 36 F.3d 1375 (7th Cir. 1994) (proper construction of
bankruptcy statute is a legal issue, subject to de novo review);
re Investment Bankers, Inc., 4 F.3d 1556, 1560 (10th Cir.
cert. denied, 114 S. Ct. 1061 (1994); Matter of
3 F.3d 1125, 1126 (7th Cir. 1993); In re Century Boat Co.,
F.2d 154, 156 (6th Cir. 1993); Meridian Bank v. Alten, 958
1226, 1229 (3d Cir. 1992); In re Chase & Sanborn Corp., 904
588 (11th Cir. 1990). A finding is clearly erroneous "when
there is evidence to support it, the reviewing court on the entire
evidence is left with a definite and firm conviction that a mistake
been committed." Anderson v. City of Bessemer, 470 U.S.
574 (1985) (quoting United States v. United States Gypsum
333 U.S. 364 (1948)). However, keep in mind that "the proper
characterization of a question as one of fact or law is sometimes
slippery." Thompson v. Keohane, 116 S. Ct. 457, 464
The Third Circuit offers this criteria: "[T]he beginning place
ofinquiry involves the status to be accorded each determination by
trial court, and whether that determination involves basic facts,
inferred facts or ultimate facts. ... Basic facts are the
and narrative events elicited from the evidence presented at trial,
admitted by stipulation, or not denied, where required, in
pleadings. ... Inferred facts are 'drawn' from the basic facts and
be found 'only when, and to the extent that, logic and human
indicate a probability that certain consequences can and do follow
the basic facts.' ... Both basic and inferred factual
involve no legal conclusions and thus should be disturbed only when
clearly erroneous. ... An ultimate fact, however, 'is usually
in the language of a standard enunciated by case-law rule or by
e.g., an actor's conduct was negligent; the injury occured in the
of employment; the rate is reasonable; the company has refused to
bargain collectively. The ultimate finding is a conclusion of law
least a determination of a mixed question of law and fact.'"
facts are subject to de novo review. In re Cohen, 191
599, 603-04 (D.N.J. 1996 (quoting Universal Minerals, Inc. v.
Hughes & Co., 669 F.2d 98, 102 (3d Cir. 1981)).
C. Mixed Questions Of Law And Fact
A mixed question of law and fact occurs when the facts are
established, the rule of law is undisputed, and the issue is
facts satisfy the legal rule. Pullman-Standard v. Swint,
U.S. 273, 289 n.19 (1982). "The term 'mixed question of law and
refers to questions about the application of a rule or standard to
particular facts of the case. The question whether the defendant in
personal injury suit was negligent is a familiar illustration."
G.J. Leasing Co. v. Union Electric Co., 1995 WL 257885 (7th
May 4, 1995); see also In re Ralar Distributors,
B.R. 81, 82 (D. Mass. 1995) ("application of a statutory provision
particular facts poses a mixed question of law and fact").
how courts describe the appropriate standard of review to apply to
a situation are confusing.
The correct standard requires that courts "break down" the
matter and apply "the appropriate standard to each component."
Meridian Bank v. Alten, 958 F.2d 1226, 1229 (3d Cir. 1992);
accord Pullman-Standard v. Swint, 456 U.S. 273
Matter of U.S. Abatment Corp., 39 F.3d 556, 559 (5th Cir.
("[W]hether a creditor's conduct is so egregious" as to allow the
to equitably subordinate a creditor's claim is a "question of law,
which an appellate court may exercise plenary review.");
Marine Servs., Inc. v. Belcher Towing Co., 966 F.2d 602, 604
Cir. 1992) (court reviews questions involving the application of
particular facts de novo); In re Arnold and Baker Farms, 177
648, 653 (Bankr. 9th Cir. 1994) ("[a]lthough the facts underlying
determination are reviewed under the clearly erroneous standard,
question of whether the legal standard has been satisfied is
novo"); In re William Schneider, Inc., 175 B.R. 769, 771
Fla. 1994) ("determination of what law applies or determination of
ultimate legal conclusions resulting from the application of the
the facts" is subject to de novo review); In re Allegheny
Inc., 170 B.R. 83, 86-87 (W.D. Pa. 1994) (the appellate court
applies de novo "review of the trial court's choice and
of legal precepts and its application of those precepts to
facts"). For example, in evaluating challenges to plans of
reorganization on appeals, courts have held that "[c]ontract law
principles govern the interpretation of a plan of reorganization.
determination of whether a contract is ambiguous ... is a question
law, requiring ... review de novo .... If a contract is deemed
unambiguous, then the intention of the parties is a question of
and the Bankrutpcy Court's conclusion will be set aside only if
erroneous.". Salmon v. Laser Plot, Inc., 189 B.R. 559,
(D. Mass. 1995) (Internal citations ommitted).
However, some courts say that where there are mixed
fact and law, appellate courts conduct a de novo review.
Compare Boone v. United States, 944 F.2d 1489, 1492
Cir. 1991) (mixed questions of fact and law are reviewed de novo);
re Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir. 1988)
(mixed questions of fact and law which contain "primarily a
consideration of legal principles" are considered de novo); In
Lee, 179 B.R. 149, 155 (Bankr. 9th Cir. 1995) (mixed questions
law and fact are reviewed de novo).
Still other courts hold that a trial judge's determinations
mixed questions of fact and law, as of questions purely of fact,
set aside on appeal only if clearly erroneous. E.g.,
Leasing Co. v. Union Electric Co., 1995 WL 257885 (7th Cir. May
1995) (Posner, C.J.) ("grave error on the part of the appellant" to
assert that "appellate review of the district judge's resolution of
mixed questions of law and fact is plenary"); In re Winthrop Old
Nurseries, Inc., 50 F.3d 72, 73 (1st Cir. 1995) ("mixed
law and fact [is] subject to the clearly erroneous standard, unless
bankruptcy court's analysis was 'infected by legal error.'"); In
Wes Dor, Inc., 996 F.2d 237, 241 (10th Cir. 1993) (if question
involves primarily a factual inquiry, court applies the clearly
erroneous standard); In re Smith, 180 B.R. 648, 651 n.10 (D.
1995) (in reviewing mixed questions of law and fact which contain
primarily a factual inquiry, court applies the clearly erroneous
standard); S & P, Inc. v. Pfeifer, 189 B.R. 173, 179 (N.D.
1995). ("Mixed questions of fact and law are similarly reviewed
the 'clearly erroneous' standard.").
D. Discretionary Determinations
Various court orders by a bankruptcy court, including
determinations, e.g., dismissal of a case for being filed in bad
or whether to grant leave to amend a proof of claim, are reviewed
abuse of discretion. In re Sunnymead Shopping Ctr. Co.,
B.R. 809, 814 (Bankr. 9th Cir. 1995); In re William Schneider,
Inc., 175 B.R. 769, 771 (S.D. Fla. 1994). "Discretion" means
different things in different contexts. Where the decision of the
is merely procedural, i.e., whether to grant a continuance, the
reviewing court is likely to give great deference to the trial
decision. However, where the decision of the judge is determinative
substantive right of a party, i.e., whether to dismiss a bankruptcy
as being filed in bad faith, the reviewing court is likely to give
little or no deference to the trial judge's decision.
Abuse of discretion has best been described as "[w]hat we mean
we say that a court has abused its discretion, is merely that we
that [the court] made a mistake." Pearson v. Dennison,
F.2d 24, 28 n.6 (9th Cir. 1965); accord In re
67 F.3d 1394, 1399 (9th Cir. 1995) (Abuse of discretion occurs when
reviewing court has "a definite and firm conviction that the court
committed a clear error of judgment in the conclusion it reached
weighing of the relevant factors."); Shore v. Federal Exp.
42 F.3d 373, 380 (6th Cir. 1994) ("An abuse of discretion exists
the reviewing court is firmly convinced that a mistake has been
"Abuse of discretion can occur if (1) the court fails to
... exercise discretion, deciding instead as if by general rule or
arbitrarily;' (2) the court fails to take relevant facts
its exercise' of discretion into account; or (3) its decision is
on erroneous conclusions of law or fact." United States v.
Roberson, 188 B.R. 364, 365 (D. Md. 1995) (citing James v.
Jacobson, 6 F.3d 233, 239 (4th Cir. 1993)), or the
of the law to the facts, see, e.g., In re
F.2d 956, 959 (3d Cir. 1992); Charles v. Carey, 627 F.2d
(7th Cir. 1980); Clemons v. Board of Educ., 228 F.2d 853,
(6th Cir. 1956); see generally Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384 (1990) (trial court abuses its discretion
its ruling is based "on an erroneous view of the law or on a
erroneous assessment of the evidence."); Jeffrey v. Desmond,
F.3d 183 (1st Cir. 1995). ("The cask which encases a judge's
though commodious, can be shattered when a reviewing tribunal is
persuaded that the trial court misconceived or misapprehended the
or misconstrued its own rules."); Wheeler v. Sims, 951 F.2d
802 (7th Cir.), cert. denied, 113 S. Ct. 320 (1994) ("[T]he
of discretion standard is met only when the trial judge's decision
based on an erroneous conclusion of law or where the record
evidence on which he rationally could have based that decision, or
the supposed facts found are clearly erroneous."); Zolfo, Cooper
Co. v. Sunbeam-Oster Co., Inc., 50 F.3d 253, 257 (3d Cir. 1995)
(Abuse of discretion occurs when a "judge fails to apply the proper
legal standard or to follow proper procedures in making the
determination, or bases an award upon findings of fact that are
erroneous."); NLRB v. Frazier, 966 F.2d 812, 815 (3d Cir.
("An abuse of discretion arises when `the `lower [court's ]
rests upon a clearly erroneous finding of fact, an errant
law or an improper application of law to fact."); In re
112 B.R. 341, 345 (Bankr. 9th Cir. 1990) ("A trial court abuses its
discretion when it rests its conclusions on clearly erroneous
findings or an incorrect legal standard."), aff'd, 940 F.2d
(9th Cir. 1991); In re Red Carpet Corp., 902 F.2d 883, 890
Cir. 1990) ("Abuse of discretion occurs if the judge fails to apply
proper legal standard or to follow proper procedures in making the
determination."); In re Smith, 180 B.R. 648, 651 n.12 (D.
1995) (trial court abuses its discretion when "(1) its decision is
on erroneous conclusions of law, (2) its factual findings are
erroneous, or (3) when the record contains no evidence to support
However, other courts have been more deferential as to what
constitutes "abuse of discretion," remarking that it occurs only
no reasonable man would take the view adopted by the trial
Delno v. Market Street Ry., 124 F.2d 965, 967 (9th Cir.
accord Matter of Sheridan, 57 F.3d 627, 635 (7th Cir.
1995) (discussing standard of review of court's refusal to admit
testimony); In re Volpert, 186 B.R. 240, 245 (N.D. Ill.
In re Blackwell, 162 B.R. 117, 119 (E.D. Pa. 1993); see
also In re Barber, 191 B.R. 879, 883 (D. Kan. 1996) ("In
Tenth Circuit, '[a]n abuse of discretion occurs when the district
court's decision is arbitrary, capricious or whimsical, or results
manifestly unreasonable judgment.'") (quoting Moothart v.
21 F.3d 1499, 1504-05 (10th Cir. 1994)). This standard has been
widely and properly criticized by noted jurists as reducing
review to a "largely meaningless ritual." Buffalo
Courier-Express, Inc. v. Buffalo Evening News, Inc., 601 F.2d
(2d Cir. 1979) (Friendly, J.); see also Roland Mach. Co.
Dresser Indus., 749 F.2d 380, 388-90 (7th Cir. 1984) (Posner,
United States v. Criden, 648 F.2d 814, 817-19 (3d Cir. 1981)
When reviewing discretionary determinations affecting
substantive rights of a party, we should argue that the former
is correct; the latter view of the court's role in reviewing
"discretionary" decisions is appropriate only in merely procedural
decisions. Review of substantive decisions requires that appellate
courts apply "not a rule of perfunctory appellate review but one of
careful scrutiny." Direx Isreal, Ltd. v. Breakthrough
Corp., 952 F.2d 802, 815 (4th Cir. 1991); cf. United
States v. Boyd, 1995 WL 274461 (7th Cir. May 10, 1995) (Posner,
C.J.) (appellate review of discretionary determination is
but "not abject"). Application of standards set forth in the
the Rules, even if quite open ended such as "good faith" or
neglect," does not make the ruling discretionary. See
Pioneer Investment Servs. Co. v. Brunswick Assocs. L.P., 113
Ct. 1489 (1993) (discussing standards for "excusable neglect").
E. Review of Agency Determinations
"When a trial court reviews an agency's action, the
must give the agency action a 'presumption of regularity.'"
Matter of Best Refrigerated Exp., Inc., 168 B.R. 969, 973
D. Neb. 1994) (quoting Citizens To Preserve Overton Park, Inc.
Volpe, 401 U.S. 402, 415 (1971)). A court may overturn an
agency's determination "only if it finds that decision to be
capricious, an abuse of discretion, or otherwise not in accordance
the law.'... Under [this] standard, a court must defer to the
decision if the decision has a rational basis." Best
Refrigerated, 168 B.R. at 973 (quoting 5 U.S.C. § 706(2)(A)
(1988)) (internal citations omitted); accord Bankruptcy
of United Shipping Co. v. General Mills, Inc., 34 F.3d 1383,
(8th Cir. 1994). When a circuit court reviews a judgment which
turn reviews an agency decision, its review is "[i]n substance, ...
reviewing the decision of an administrative agency" and is
"very narrow." Id.
VI. HOW TO ENSURE YOUR APPEAL SURVIVES AND PROSPERS
A. Mootness Generally
The mootness doctrine arises from the constitutional
that Article III courts hear only live cases and controversies.
Mills v. Green, 159 U.S. 651, 653 (1895). If a court can
fashion "some form of meaningful relief," even if it only partially
redresses the grievances of the prevailing party, an appeal is not
moot. Church of Scientology v. United States, 113 S. Ct.
450 (1992); In re Seidler, 44 F.3d 945 (11th Cir. 1995)
not moot if court can fashion "effective" relief).
In addition to dismissing a bankruptcy appeal for
grounds, it may be dismissed for "statutory or prudential" grounds.
These "equitable considerations" which may justify a decision not
reach the merits of a claim "include the value of finality in
reorganizations as well as the related rights of innocent third
who may have relied upon a confirmed reorganization plan."
of Eddington Thread Mfg. Co., Inc., 189 B.R. 898, 901-03 (E.D.
1995); accord In re Continental Airlines, 75 F.3d
872-78 (3d Cir. 1996) (Opinion has a comprehensive discussion of
doctrine and collects cases in all circuits.); but see In
Seidler, 44 F.3d 945 (11th Cir. 1995) (pending appeal is not
merely because creditor failed to appeal subsequent order
chapter 13 plan where there was no evidence that property sought by
creditor had been transferred).
Dismissal of the underlying bankruptcy case does not always
render moot a pending bankruptcy appeal. In re Davis,
B.R. 907 (Bankr. 9th Cir. 1995).
B. Mootness And Substantial Consummation
In bankruptcy cases, "substantial consummation" of a plan
reorganization will frequently moot a pending appeal. 11 U.S.C.
§ 1101(2); Covington v. Covington Land L.P., 71 F.3d
1225 (6th Cir. 1995) ("A plan of reorganization, once implemented,
should be disturbed only for compelling reasons."); In re
Corp., 10 F.3d 944, 952-53 (2d Cir. 1993) (listing five factors
be considered as to whether substantial consummation of plan moots
appeal); Miami Ctr. L.P. v. Bank of New York, 901 F.2d 931
Cir. 1990) (absent stay, appeal of substantially consummated plan
moot), cert. denied, 498 U.S. 1041 (1991); In re Islands
Bakery Partnership, 179 B.R. 243 (W.D. Wash. 1995) (appeal of
order confirming the plan of reorganization is moot when the court
cannot fashion "effective relief;" court must look to: (1) whether
reorganization plan has been substantially consummated, (2) what
the appeal and reorganization plan will have on third parties that
not before the court, and (3) whether relief can be granted without
creating an unmanageable, uncontrollable situation for the
court); but see In re Seidler, 44 F.3d 945, 947 n.3
Cir. 1995) (substantial consummation is a chapter 11 concept,
inapplicable in chapter 13 cases).
C. Mootness And Stay Pending Appeals
Counsel should always seek a stay pending appeal; failure to
supports later arguments that our appeal is moot. See
generally In re Best Prods. Co., 177 B.R. 791, 803-05
(S.D.N.Y. 1995). In Best Products, the RTC's appeal of
order confirming the plan of reorganization dismissed as moot where
plan was substantially consummated and the RTC failed to request a
pending appeal. RTC's argument that requesting a stay would have
futile was brushed aside; the court noted that RTC would have had
strong argument for a stay because without a stay it's appeal would
suffer irreparable harm because mooting of its appeal was a likely
result. This amply illustrates that obtaining a stay pending appeal
critical in the bankruptcy context. See, e.g., §
(validity of sale of property not affected by subsequent reversal
appeal unless stay obtained); § 364(e) (reversal of order
obtaining credit does not affect extension of credit, absent stay);
Farmers Bank v. Kittay (In re March), 988 F.2d 498 (4th Cir.
1993) (appeal of foreclosure issue rendered moot by sale of
In re Chateaugay Corp., 988 F.2d 322 (2d Cir. 1993)
(implementation of order authorizing payment to pension plan
appeal of order moot); Cargill, Inc. v. Charter Int'l Oil
829 F.2d 1054 (11th Cir. 1987) (failure by disappointed bidder to
stay as required by § 363(m) caused appeal from order approving
of debtor's subsidiary to become moot), cert. denied, 485
1014 (1988); Dahlquist v. First Nat'l Bank, 737 F.2d 733
Cir. 1984); In re Manges, 23 F.3d 1034 (5th Cir. 1994);
Specialty Equipment Companies, Inc., 1993 WL 317646 (7th Cir.
In re Man-Gas Transmission, 1994 WL 421596 (5th Cir. 1994);
re Block Shim Dev. Co., 939 F.2d 289 (5th Cir. 1991); In re
Clarke, 98 B.R. 979 (Bankr. 9th Cir. 1989) (all holding that an
appeal of cash collateral order moot where collateral spent during
appeal); In re Olive Street Invs., Inc., 106 B.R. 183 (E.D.
1989) (appeal from unstayed order lifting stay was rendered moot by
foreclosure sale); In re Clinton Street Food Corp., 170 B.R.
(S.D.N.Y. 1994); In re Texaco, 92 B.R. 38 (S.D.N.Y. 1988);
re CGI Indus. Inc., 27 F.3d 296 (7th Cir. 1994) (all holding
appeal of § 364 financing order granting super priority lien to
another creditor was moot).
D. Stay Pending Appeal From Money Judgments
Rule 7062, FRBP, makes Rule 62, Federal Rules of Civil
("FRCP"), applicable to bankruptcy appeals.Rule 62 entitles the
States to a stay pending resolution of its appeal, without any
of probability of success or irreparable injury. See,
Hoban v. Washington Metro. Area Transit Auth., 841 F.2d
1158-59 & n.3 (D.C. Cir. 1988) (per curiam) (construing identical
provisions of local rule). This right derives from the
Rule 62(a), Rule 62(d), and Rule 62(e), FRCP.
Judgments are automatically stayed for ten days by Rule 62(a),
FRCP. Rule 62(d), FRCP, allows an appellant to obtain a further
pending appeal as of right by filing an approved supersedeas bond.
Together, Rule 62(a) and Rule 62(d), FRCP, entitle an appellant who
posts a proper supersedeas bond to a stay pending appeal "as a
right" in cases involving monetary judgments and most other kinds
cases not involving injunctions.[FN1] Fed. Prescription
Inc. v. Am. Pharmaceutical Ass'n, 636 F.2d 755, 759 (D.C. Cir.
(emphasis in original); see American Mfrs. Mut. Ins. Co.
Am. Broadcasting Paramount Theatres, Inc., 385 U.S. 931, 87
17 L. Ed. 2d 37 (1966); Hebert v. Exxon Corp., 953 F.2d 936,
(5th Cir. 1992); In re Swift Aire Lines, Inc., 21 B.R. 12,
(Bankr. 9th Cir. 1982); Metz v. United States, 130 F.R.D.
459 (D. Kan. 1990); In re Gleasman, 111 B.R. 595, 599 (W.D.
1990); In re Max Sugarman Funeral Home, Inc., 94 B.R. 16, 17
(D.R.I. 1988); see also 9 Collier on Bankruptcy,
7062.08, at 7062-9 (15th ed. 1990); 7 Moore, Federal
¶ 62.06, at 62-30 (2d ed. 1987).
FN1. A money judgment requires: (1) an identification
parties for and against whom judgment is being entered, and (2) a
definite and certain designation of the amount which one party must
to the other party. Penn Terra Ltd. v. Department of Envtl.
Resources, 733 F.2d 267, 275 (3d Cir. 1984); cf.
v. Exxon Corp., 953 F.2d 936, 938 (5th Cir. 1992) (declaratory
judgment that binds party to pay a specific sum of money is a money
judgment). An injunction does not seek a money judgment in either
substance or form, nor does it contemplate the payment of a sum
In other words, an injunction seeks performance not payment.
States v. F.E. Gregory & Sons, Inc., 58 B.R. 590, 591-92 (W.D.
Rule 62(e), FRCP, provides that the federal government
be required to post a bond to obtain a stay pending appeal, making
stay under Rule 62(d), FRCP, unconditional when the United States
appellant. See Fed. R. Civ. P. 62(e) ("When an appeal is
taken by the United States .. and the operation or enforcement of
judgment is stayed, no bond, obligation, or other security shall be
required"); Fed. R. Bankr. P. 8005 ("[W]hen an appeal is taken by
United States ... a bond or other security shall not be
Rule 62(d) embodies a policy determination that an
avoid the risk and cost of paying a money judgment that might be
reversed on appeal, regardless of the likelihood of success, by
the appellee against the risk that the appellant will be unwilling
unable to pay the judgment if it is ultimately affirmed.
Fed. Prescription Servs., 636 F.2d at 760-61 (discussing
of the supersedeas bond). And because the United States is able
pay any judgment that is ultimately affirmed, Rule 62(e) allows the
federal government to obtain a stay pending appeal without having
post a bond. See, e.g., Wright & Miller, Federal
and Procedure, Civil § 2906, at 330 (1976). Accordingly,
United States is entitled to a stay in bankruptcy appeals without
posting a bond. See, e.g., United States v. Trans
Airlines, Inc., No. 92-115 (D. Del. Oct. 19, 1993), appeal
dismissed sub nom. In re Trans World Airlines,
18 F.3d 208 (3rd Cir. 1994); In re Rape, 100 B.R. 288
W.D.N.C. 1989); contra In re Westwood Plaza Apartments,
Ltd., 150 B.R. 163 (Bankr. E.D. Tex. 1993); see
"Circuit Court Review Of Orders On Stays Pending Bankruptcy
Am. Bankr. L.J. 353 (1988).
E. Stays Of Other Orders Or Judgments
A stay is not available as of right from (1) an
final judgment in an action for an injunction; (2) an interlocutory
final judgment in a receivership action; (3) an order directing an
accounting in an action for infringement of letters patent; (4) an
granting relief from the automatic stay provided by 11 U.S.C.
362, 922 or 1301; (5) an order authorizing or prohibiting the use
cash collateral or estate property under 11 U.S.C. § 363; and
order authorizing the trustee to obtain credit pursuant to 11
§ 364. See Fed. R. Civ. P. 62(a); Fed. R. Bankr. P.
"Stays pending appeals from such orders are discretionary with
bankruptcy court." 9 Collier on Bankruptcy, ¶
8005-004 (15th ed. 1990).
The standard governing the issuance of a discretionary
similar to the standard governing preliminary injunctions, and
the consideration of four factors: (a) the likelihood of success on
appeal; (b) the prospect of irreparable harm to the moving party if
relief is denied; (c) the possibility of harm to other interested
parties if relief is granted; and (c) whether a stay will harm the
public interest. See In re First Sav. Ass'n, 820
700, 704 (5th Cir. 1987); In re Delaware and Hudson R.R., 90
90, 91 (Bankr. D. Del. 1988).
F. Rule 8005 Stays
The impact of Rule 8005, FRBP, on stays pending appeal is
subject to controversy. Rule 8005 allows a bankruptcy court to (1)
suspend or continue other proceedings in the overall
case, and (2) to make "other appropriate orders" during the
pendency of the appeal, presumably orders other than
stay pending appeal of a judgment (the section is entitled "Stay
Appeal"). A bankruptcy court's power to issue a stay pending appeal
expressly granted under Rule 7062, FRBP. 9 Collier on
Bankruptcy ¶ 8005.03, at 8005-4 (15th ed. 1993). The
Committee Notes to Rule 8005 support this interpretation. "The
sentence of rule is derived from § 39(c) of the Bankruptcy Act
confers on the bankruptcy judge discretion respecting the stay or
continuation of other proceedings in the case while
appeal is pending." Bankruptcy Code, Rules and Forms,
(West 1993 ed.).
Courts which find that Rule 8005 permits a bankruptcy judge
stay a judgment pending appeal apply the standard governing
discretionary stays and preliminary injunctions, and require the
consideration of the usual four factors: (a) the likelihood of
on appeal; (b) the prospect of irreparable harm to the moving party
relief is denied; (c) the possibility of harm to other interested
parties if relief is granted; and (d) whether a stay will harm the
public interest. See In re Abbo, 191 B.R. 680,
(Bankr. N.D. Ohio 1996); In re Ward, 184 B.R. 253, 255
D.S.C. 1995); In re Mocco, 176 B.R. 335, 339 (Bankr. D.N.J.
1995); cf. In re Kar Dev. Assocs., LP., 182 B.R. 870
Kan. 1995) (Stays of district court judgments pending appeal to the
circuit court are governed by Rule 8017, not 8005; however, the
for determining whether to grant a stay are the same.).
Note: boilerplate language that closing is
upon entry of final nonappealable order may constitute a consensual
stay. See In re Brookfield Clothes, Inc., 31 B.R.
G. Notice Of Appeal On Court's Jurisdiction
"The filing of a notice of appeal is an event of
significance - it confers jurisdiction on the [appellate court] and
divests the [trial court]of its control over those aspects of the
involved in the appeal." Griggs v. Provident Consumer
Co., 459 U.S. 56, 58 (1982) (per curiam).
Appeal from an order does not deprive bankruptcy court of
jurisdiction over all aspects of the case. In re Strawberry
Square Assocs., 152 B.R. 699 (Bankr. E.D.N.Y. 1993). The
retains jurisdiction when (1) the matter is not related to the
involved in the appeal; (2) the order appealed is not appealable or
clearly frivolous; and (3) the court's action would aid in the
appeal. In re Bryant, 175 B.R. 9, 11-12 (W.D. Va. 1994).
Although "filing an appeal divests the lower court of its
over matters on appeal," "the court retains jurisdiction to
enforce the order or judgment" -- "acts undertaken to enforce the
judgment ... [are] permissible" but "acts which expand upon or
... [are] prohibited." In re Prudential Lines, Inc.,
B.R. 222, 243-44 (S.D.N.Y. 1994); accord NCRB v.
Bronze, Inc., 829 F.2d 585 (6th Cir. 1987) (bankruptcy court
enforce or implement (as opposed to alter) a judgment despite
appeal); Matter of Fletcher, 176 B.R. 445, 446 n.1 (Bankr.
Mich. 1995) (rendering a written opinion after a party filed a
appeal is permissible as an aid to the appellate courts review).
Filing of a notice does deprive the bankruptcy court of
jurisdiction to enter orders that would affect or modify any issue
matter on appeal. In re Bialac, 694 F.2d 625 (9th Cir.
In re Health Care Prods., 169 B.R. 753, 755 (M.D. Fla. 1994)
("Filing a Notice of Appeal from an appealable order divests the
court of jurisdiction over issues related to the appeal."); In
Health Care Products, 169 B.R. 753 (M.D. Fla. 1994) (bankruptcy
court lacked jurisdiction to strike affidavit following grant of
judgment on turnover complaint and opponent's filing of notice of
appeal); In re Neuman, 67 B.R. 99 (S.D.N.Y. 1986) (no
jurisdiction to modify appealed order); In re Maurice, 179
881 (Bankr. N.D. Ill. 1995) (bankruptcy court lacks authority to
guidance or modify order pending appeal); In re Commodore
87 B.R. 62 (Bankr. N.D. Ind. 1987) (no jurisdiction "to anything
impacts on any issue or matter under appeal").
H. How About New Issues Or New Arguments or New Law
Whether a district court sitting as an appellate court may
an issue not raised in the bankruptcy proceeding is subject to
controversy. Matter of Endicott, 157 B.R. 255, 258 (W.D.
1993) (collecting cases). But the district court cannot take new
evidence; it is stuck with the appellate record. In re
54 F.3d 1108, 1113 (3d Cir. 1995) ("It is error for a district
when acting in the capacity of a court of appeals, to make its own
factual findings."); In re Foust, 52 F.3d 766, 768 (8th Cir.
1995) (reversible error for district court to take additional
Generally, appellate courts will not review an issue raised
the first time on appeal except for sovereign immunity or
jurisdiction. Sac and Fox Nation v. Hanson, 47 F.3d
1063 (10th Cir. 1995); Marymount Hospital, Inc. v. Shalala,
F.3d 658, 663 (D.C. Cir. 1994) ("[a]rguments not made below are
waived ... absent exceptional circumstances"); see also
v. Shalala, 40 F.3d 323, 324 (10th Cir. 1994) ("Absent
reasons, we do not consider arguments that were not presented to
district court."); Rademacher v. Colorado Ass'n of Soil
Dist. Medical Benefit Plan, 11 F.3d 1567, 1572 (10th Cir. 1993)
("[t]he failure to raise the issue with the trial court precludes
except for the most manifest error"); Carr v. Sandler, 190
941, 945 (M.D. Fla. 1995) ("The Court will not consider an issue
not properly inferred from previously states issues."). However,
the issue involved is purely one of law and is fully supported by
record below, an appellate court has the discretion to consider
Greene v. United States, 13 F.3d 577, 586 (2d Cir. 1994);
re Hall, Bayoutree Assocs., Ltd., 939 F.2d 802, 804 (9th Cir.
see also T I Federal Credit Union v. Delbonis, 72
921, 930 (1st Cir. 1995) ("[C]ases involving important
governmental issues may be exceptional and, as such, there should
full treatment of all legal issues involved, whether squarely
by the parties or not."); In re Skywalkers, Inc., 49 F.3d
n.4 (9th Cir. 1995) (appellate court may consider an issue not
below "because of a change in the intervening law that brought the
An appellate court can affirm on a different basis if the
and the law support it. Schweiker v. Hogan, 457 U.S.
n.24 (1982); Baybank-Middlesex v. Ralar Distributors, Inc.,
F.3d 1200, 1202 (1st Cir. 1995) ("We are free to affirm a district
court's ruling on any ground supported in the record even if the
was not pleaded, tried or otherwise referred to in the proceedings
below."); In re Frontier Props., Inc., 979 F.2d 1358, 1364
Cir. 1992) (panel may affirm bankruptcy court on any grounds
by the record); In re Sugarhouse Realty, Inc., 192 B.R. 355,
n.11 (E.D. Pa. 1996) ("The [appellate] court can affirm the correct
decision of a lower court on grounds different than those relied
that court.... It is also settled that the court can affirm on any
for which it finds support on the record.").
"When [a superior court] issues a rule of federal law, all
courts are required to give it full retroactive effect in all cases
which are still pending on direct review." Matter of M4
Enterprises, Inc., 183 B.R. 981, 984 (Bankr. N.D. Ga. 1995)
I. Are District Court/BAP Decisions Binding?
Although we think they are not, whether district court
and bankruptcy appellate panel decisions are binding precedent is
subject to controversy. Compare In re Ball, 185
595 (Bankr. 9th Cir. 1995) (Bankruptcy Appellate Panel is bound by
doctrine of stare decisis to follow earlier decision of BAP panel);
In re Kar Dev. Assocs., 180 B.R. 624, 626 (Bankr. D. Kan.
("A decision of a single district judge in a multi-judge district
the law of the district and [bankruptcy judges] are not bound to
the prior cases."), aff'd, 180 B.R. 629, 639-40 (D. Kan.
In re Barakat, 173 B.R. 672 (Bankr. C.D. Cal. 1994)
decisions are binding precedent throughout the circuit; district
decisions are not binding even in that district unless the district
court sits en banc) and In re Gaylor, 123 B.R. 236
E.D. Mich. 1991) (district court decisions are not binding
with Bryant v. Smith, 165 B.R. 176, 180 (W.D. Va.
("the bankruptcy judge is no more free to disregard the clear
of [the district] court, than this court is free to disregard the
precedent of the Court of Appeals or the Supreme Court.")
In re Holdenried, 178 B.R. 782, 786 (Bankr. E.D. Mo. 1995)
Court must follow the decisions of a higher court having direct
appellate review. Decisions of the [district court] are binding
this Court."); see generally Maddock, Stemming The Tide
Bankruptcy Court Independence: Arguing The Case For District Court
Precedent, 2 ABI L. Rev. 507 (1994) (comprehensive collection
cases on this issue).
J. Can Appellants Proceed In Forma Pauperis?
Appellants cannot proceed in forma pauperis on appeal from
matter; filing fee is required. Similarly, counsel cannot be
for indigent appellant in bankruptcy appeal. In re
B.R. 192 (Bankr. W.D. Mo. 1995).