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190.
Bankruptcy Jurisdiction -- Appellate Jurisdiction
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1. District Courts.
a. District courts have appellate authority over dispositive orders
and judgments of the bankruptcy court. 28 U.S.C. § 158(a).
i. Final orders, judgments and decrees are appealable as of
right;
ii. Interlocutory orders and decrees increasing or reducing the
time periods for filing a chapter 11 plan under § 1121
are appeals as of right [added by Section 102 of the
Bankruptcy Reform Act of 1994];
iii. Other interlocutory orders are appealable by leave of
court. Id.; see Masters, Mates & Pilots Plans v.
Lykes Bros. S.S. Co. (In re Lykes Bros. S.S. Co.), 200
B.R. 933 (M.D. Fla. 1996) (court should grant
discretionary, interlocutory review if order involves
controlling issue of law, there is substantial ground for
difference of opinion, and immediate appeal would
materially advance ultimate termination of the litigation);
Robinson v. Johns-Manville Corp. (In re Johns-Manville
Corp.), 45 B.R. 833 (S.D.N.Y. 1984) (leave should be
liberally granted if it facilitates expeditious resolution
of the case); see also Brandt v. Wand
Partners, 242 F.3d 6 (1st Cir. 2001) (bankruptcy
court's interlocutory orders preceding withdrawal of
reference were not properly before court of appeals on
appeal from district court's final judgment).
b. Concept of "finality" for bankruptcy appeals. Compare
United States Trustee v. Bloom (In re Palm Coast, Matanza
Shores L.P.), 101 F.3d 253 (2d Cir. 1996) (concept of
finality is more flexible in bankruptcy; orders may be
immediately appealable if they finally dispose of discrete
disputes within larger case) with Stanley v. Crossland,
Crossland, Chambers, MacArthur & Lastreto (In re Lakeshore Vill.
Resort, Ltd.), 81 F.3d 103 (9th Cir. 1996) (questioning use
of a flexible approach to finality of district court decisions in
bankruptcy). See Law Offices of Nicholas A. Franke v.
Tiffany (In re Lewis), 113 F.3d 1040 (9th Cir. 1997)
(bankruptcy court order is "final" and, thus, appealable where it
(1) resolves, seriously affects substantive rights; (2) finally
determines discrete issue); Jove Eng'g, Inc. v. IRS (In re
Jove Eng'g, Inc.), 92 F.3d 1539 (11th Cir. 1996) (remand
order appealable where bankruptcy court need only perform
ministerial duty of offsetting up to $500 against IRS' claim
without exercising any discretion or making any further
findings); Masunaga v. Stoltenberg (In re Rex Montis Silver
Co.), 87 F.3d 435 (10th Cir. 1996) (order remanding to
bankruptcy court for determination of amount of sanctions was not
final); Westbury Real Estate Ventures, Inc. v. Bradlees, Inc.
(In re Bradlees Stores, Inc.), 210 B.R. 506 (S.D.N.Y. 1997)
(dismissal of creditor's breach of contract action was not final
when bankruptcy court had not resolved creditor's proofs of claim
based on same breach).
c. Timeliness of Appeal Failure to file notice of appeal within 10
days deprives district court of subject matter jurisdiction to
review bankruptcy court's order. Veltman v. Whetzal, 93
F.3d 517 (8th Cir. 1996); see Fed. R. Bankr. P. 8002;
see also United States ex rel. Rudd v. Schimmels (In re
Schimmels), 85 F.3d 416 (9th Cir. 1996) (failure to file
timely notice of appeal from summary judgment order was not
excused by court's alleged failure to enter separate judgment);
United States v. Henry Bros. P'ship (In re Henry Bros.
P'ship), 214 B.R. 192 (B.A.P. 8th Cir. 1997) (exceptional
circumstances doctrine did not apply to extend time for filing
notice of appeal).
d. Does district court have authority -- if the parties consent --
to refer bankruptcy appeal to magistrate for report and
recommendation? Yes. Hall v. Vance, 887 F.2d 1041
(10th Cir. 1989); accord In re Apex Oil Co., 146
B.R. 821 (Bankr. E.D. Mo. 1992). No. In re Elcona
Homes Corp., 810 F.2d 136 (7th Cir. 1987).
2. Bankruptcy Appellate Panels.
a. Creation of Bankruptcy Appellate Panels
Changing prior law which made the creation of bankruptcy
appellate panels discretionary with each circuit council (and
resulted in the existence of a BAP in only one circuit, the
Ninth), the Bankruptcy Reform Act of 1994 directs circuit
councils to establish BAPs unless a council finds (i)
insufficient judicial resources or (ii) establishment of a BAP
would result in undue delay or increased cost to parties. A BAP
cannot hear appeals in a district unless a majority of the
district judges for that district authorize such service. Once
authorized, the BAP, upon consent of the parties, can hear and
determine appeals otherwise directed to district court. 28
U.S.C. § 158(b). BAP's exist in the 1st, 6th, 8th, 9th and
10th Circuits. (Note, however, a majority of the judges
in a district must authorize use of a BAP; therefore, you must
determine whether the circuit and the specific district
permits its use [e.g., in the 10th Circuit, cases in the District
of Colorado are not appealable to the 10th Circuit BAP]). The
DC, 3d, 4th, 5th, and 11th Circuits do not intend to create BAPs
at this time. The 7th Circuit has deferred its decision on
whether to create a BAP. The 2d Circuit abolished its BAP.
b. Procedure
Once authorized in a district, appeals will be heard by a panel
of three sitting bankruptcy judges unless (i) the appellant
elects when filing the appeal, or (ii) any other party elects
within thirty days after service of the notice of appeal, to have
the appeal heard by the district court. 28 U.S.C. §
158(c)(1).
c. BAP opinions are regarded as "highly persuasive though not
binding, precedent." Daly v. Septula (In re Carrozzella &
Richardson), 255 B.R. 267, 273 (Bankr. D. Conn. 2000);
accord In re Akram, 259 B.R. 371, 374 (Bankr. C.D.
Cal. 2001).
3. Courts of Appeals.
a. Appeal from the district court is governed by 28 U.S.C.
§§ 158(d) and 1291-92 and the Federal Rules of
Appellate Procedure. See Conn. Nat'l Bank v.
Germain, 503 U.S. 249 (1992) (courts of appeals are
authorized by 28 U.S.C. § 1292 to review orders of district
courts or bankruptcy appellate panels entered upon review of
interlocutory bankruptcy court order; such jurisdiction is not
limited by 28 U.S.C. § 158(d) permitting review of "final"
orders); see also In re Forty-Eight Insulations,
Inc., 115 F.3d 1294, 1300 (7th Cir. 1997) (refusal to grant
stay pending appeal of order authorizing interim distribution had
effect of denying injunction and provided jurisdiction in court
of appeals under 28 U.S.C. § 1292(a)(1)); Adams v. First
Fin. Dev. Corp. (In re First Fin. Dev. Corp.), 960 F.2d 23
(5th Cir. 1992) (court of appeals lacks jurisdiction to hear
appeal of order overruling objections to disclosure statement);
Sonnax Indus., Inc. v. Tri-Component Prods. Corp., 907
F.2d 1280 (2d Cir. 1990) (denial of relief from automatic stay is
equivalent to permanent injunction and is final, appealable
order). But see Lievsay v. W. Fin. Sav. Bank
(In re Lievsay), 118 F.3d 661, 663 (9th Cir. 1997) (28 U.S.C.
§§ 1291 and 1292 do not apply to appeals from BAPs),
cert. denied, 522 U.S. 1149 (1998).
b. Unlike former law, parties no longer may agree to proceed
directly to court of appeals, by-passing district court appellate
review.
c. Courts are split on whether court of appeals has jurisdiction of
appeal from district court's order remanding final order back to
bankruptcy court. Compare Pizza of Haw., Inc. v.
Shakey's, Inc. (In re Pizza of Haw., Inc.), 761 F.2d 1374
(9th Cir. 1985) with Buckner v. FmHA (In re
Buckner), 66 F.3d 263 (10th Cir. 1995), and In re
Fox, 762 F.2d 54 (7th Cir. 1985). See Millers Cove
Energy Co. v. Moore (In re Millers Cove Energy Co.), 128 F.3d
449 (6th Cir. 1997); In re Nichols, 21 F.3d 690 (5th Cir.
1994) (district court order reversing bankruptcy court decision
on conversion claim and remanding for significant further
proceedings not appealable); Schneider v. FmHA (In re
Schneider), 873 F.2d 1155 (8th Cir. 1989) (district court's
reversal and remand of bankruptcy court's order overruling FmHA
objection to confirmation of chapter 12 held not to be final,
appealable order). Cf. Things Remembered, Inc. v.
Petrarca, 516 U.S. 124 (1995) (under the bankruptcy removal
statute, 28 U.S.C. § 1452, court of appeals lacks
jurisdiction to review an order remanding a bankruptcy case to
state court).
d. District court's denial of United States' sovereign immunity
defense to debtor's preference action is not immediately
appealable. Pullman Constr. Indus. v. United States (In re
Pullman Constr. Indus.), 23 F.3d 1166 (7th Cir. 1994).
4. Stay Pending Appeal.
a. Obtaining a stay pending appeal is critical in the bankruptcy
context. See, e.g., § 363(m) (validity of sale of
property not affected by subsequent reversal on appeal unless
stay obtained); § 364(e) (reversal of order approving
obtaining credit does not affect extension of credit, absent
stay); Ginther v. Ginther Trusts (In re Ginther), 238 F.3d
686 (5th Cir. 2001) (rejecting attempt to challenge purchaser's
good faith to avoid having appeal dismissed as moot under
363(m)), petition for cert. filed, 69 U.S.L.W. 9730 (U.S.
Apr. 30, 2001) (No. 00-1666); 255 Park Plaza Assocs. L.P. v.
Conn. Gen. Life Ins. Co. (In re 255 Park Plaza Assoc. L.P.),
100 F.3d 1214 (6th Cir. 1996) (failure to obtain stay of order
approving sale of estate's only assets renders appeal moot);
Cargill, Inc. v. Charter Int'l Oil Co. (In re Charter
Co.), 829 F.2d 1054 (11th Cir. 1987) (failure by disappointed
bidder to obtain stay as required by § 363(m) caused appeal
from order approving sale of debtor's subsidiary to become moot);
Plotner v. AT&T, 172 B.R. 337 (W.D. Okla. 1994) (appeal of
§ 363 decision moot after good faith purchaser consummated
sale); Whatley Ranch Joint Venture, Ltd. v. Whatley (In re
Whatley), 169 B.R. 698 (D. Colo. 1994), aff'd, 54 F.3d
788 (10th Cir. 1995) (same); In re Tempo Tech. Corp., 202
B.R. 363 (D. Del. 1996) (district court can review bankruptcy
court's finding that buyer was in fact "good faith purchaser");
Mellon Bank v. Del. & Hudson Ry. (In re Del. and Hudson
Ry.), 129 B.R. 388 (D. Del. 1991) (same); Farmers Bank v.
Kittay (In re March), 988 F.2d 498 (4th Cir. 1993) (appeal of
foreclosure issue rendered moot by sale of property); Official
Comm. of Unsecured Creditors of LTV Aerospace & Def. Corp. v.
Official Comm. of Unsecured Creditors of LTV Steel Co. (In re
Chateaugay Corp.), 988 F.2d 322 (2d Cir. 1993)
(implementation of order authorizing payment to pension plan
rendered appeal of order moot); Dahlquist v. First Nat'l
Bank, 737 F.2d 733 (8th Cir. 1984) (appeal of cash collateral
order moot where collateral spent during appeal); Holywell
Corp. v. Bank of N.Y. (In re Holywell Corp.), 901 F.2d 931
(11th Cir. 1990) (absent stay, appeal of substantially
consummated plan is moot); Manges v. Seattle-First Nat'l Bank
(In re Manges), 29 F.3d 1034 (5th Cir. 1994) (same); In re
Specialty Equip. Cos., 3 F.3d 1043 (7th Cir. 1993) (same);
Ronit, Inc. v. Stemson Corp. (In re Block Shim Dev.
Co.-Irving), 939 F.2d 289 (5th Cir. 1991) (same); RTC v.
Best Prods. Co. (In re Best Prods. Co.), 177 B.R. 791
(S.D.N.Y.), aff'd, 68 F.3d 26 (2d Cir. 1995) (same);
Clarke v. Duck (In re Clarke), 98 B.R. 979 (B.A.P. 9th
Cir. 1989), app. dismissed, 914 F.2d 261 (9th Cir. 1990)
(same); In re Olive St. Invs., Inc., 106 B.R. 183 (E.D.
Mo. 1989) (appeal from unstayed order lifting stay was rendered
moot by foreclosure sale), app. dismissed, 972 F.2d 214
(8th Cir. 1992); White Rose Food v. Gen. Trading Co. (In re
Clinton St. Food Corp.), 170 B.R. 216 (S.D.N.Y. 1994) (appeal
of § 364 financing order granting super priority lien to
another creditor was moot); In re CGI Indus., Inc., 27
F.3d 296 (7th Cir. 1994) (same). But see S. St.
Seaport LP v. Burger Boys, Inc. (In re Burger Boys, Inc.), 94
F.3d 755 (2d Cir. 1996) (debtor's assumption of lease did not
render moot landlord's appeal where no third party relied on
assumption and court could fashion effective relief by deeming
lease rejected); Arnold & Baker Farms v. FmHA (In re Arnold &
Baker Farms), 85 F.3d 1415 (9th Cir. 1996) (appeal moot only
when court can no longer provide effective relief or it would be
inequitable to grant relief as where third party's rights have
intervened). See generally "Circuit Court Review Of
Orders On Stays Pending Bankruptcy Appeals," 62 Am. Bankr. L.J.
353 (1988).
The doctrine of equitable (or prudential) mootness provides that
"an appeal should . . . be dismissed as moot when, even though
effective relief could conceivably be fashioned, implementation
of that relief would be inequitable." In re Cont'l Airlines,
Inc., 91 F.3d 553, 558-59 (3d Cir. 1996)(en banc).
Five factors when applied to plan confirmation orders: (1)
whether the plan has been substantially consummated; (2) whether
a stay has been obtained; (3) whether the relief requested would
affect the rights of parties not before the court; (4) whether
the relief requested would affect the success of the plan; and
(5) the public policy of affording finality to bankruptcy
judgments. Nordhoff Invs., Inc. v. Zenith Elecs. Corp. (In re
Zenith Elecs. Corp.), 250 B.R. 207 (D. Del. 2000),
aff'd, 2001 WL 698000 (3d Cir. Jun. 21, 2001) (No.
00-2250, 00-2249); see also United States ex rel. FCC
v. GWI PCS 1 Inc. (In re GWI PCS 1 Inc.), 230 F.3d 788 (5th
Cir. 2000) (where temporary stay expired and plan was
substantially consummated before court heard appeal, appeal was
equitably moot), cert. denied 121 S. Ct. 2623 (2001);
In re PWS Holding Corp., 228 F.3d 224 (3d Cir. 2000)
("equitable mootness" is limited in scope and should be
cautiously applied; here, where only narrow releases provided
under a plan were being challenged, a reversal or unraveling of
the entire plan would not occur and dismissal based on equitable
mootness would not be required).
b. Note: boilerplate language that closing is conditioned
upon entry of final nonappealable order may constitute a
consensual stay. See In re Brookfield Clothes,
Inc., 31 B.R. 978 (S.D.N.Y. 1983).
c. Right of U.S. to stay pending appeal might not be considered
automatic in the bankruptcy context. See In re
Westwood Plaza Apts., 150 B.R. 163 (Bankr. E.D. Tex. 1993),
aff'd in part, 192 B.R. 693 (E.D. Tex. 1996).
5. Effect of Appeal.
Appeal from order does not deprive bankruptcy court of jurisdiction over all
aspects of the case. [See discussion at pp. 66-67 below.]
6. Standing To Appeal.
Appellate standing is not defined by the Bankruptcy Code. The courts have
applied the "person aggrieved" standard, i.e., one who is "directly and
adversely affected pecuniarily" by the challenged ruling. Kabro Assocs.
of W. Islip, LLC v. Colony Hill Assocs. (In re Colony Hill Assocs.), 111
F.3d 269, 273 (2d Cir. 1997).
7. Procedural Requirements.
See Durkin v. Shea & Gould, 92 F.3d 1510 (9th Cir. 1996)
(circuit court lacked jurisdiction to address issues not certified to it by
district court); United States Trustee v. Hayes (In re Bishop, Baldwin,
Rewald, Dillingham & Wong, Inc.), 104 F.3d 1147 (9th Cir. 1997)
(appellant not precluded from raising issues on appeal merely because they
were not included in statement of issues on appeal submitted pursuant to
Fed. R. Bankr. P. 8006).
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