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Civil Resource Manual

190. Bankruptcy Jurisdiction -- Appellate Jurisdiction

  1. District Courts
  2. Bankruptcy Appellate Panels
  3. Courts of Appeals
  4. Stay Pending Appeal
  5. Effect of Appeal
  6. Standing To Appeal
  7. Procedural Requirements

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).