Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-03112/USCOURTS-casd-3_16-cv-03112-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (District or BAP)

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

IN RE: CHADWICK C. COLLINS, 

Debtor. 

CHARLES G. COLLINS; JANELLE L. 

COLLINS; CHADWICK C. COLLINS, 

Appellants, 

v. 

NANCY L. WOLF, Chapter 7 Trustee, 

Appellee. 

Case No.: 3:16-cv-03112-BEN-WVG 

Bankruptcy No. 

ORDER GRANTING MOTION TO 

DISMISS FOR LACK OF 

JURISDICTION 

20 Appellants Charles G. Collins ("Charles") and Janelle L. Collins ("Janelle"), and 

21 Appellant-Debtor Chadwick C. Collins ("Chadwick," collectively "Appellants") filed this 

22 appeal from a December 13, 2016 "Order for Turnover of Property to Chapter 7 Trustee" 

23 ("Turnover Order") issued by Chief Bankruptcy Judge Laura S. Taylor of the Bankruptcy 

24 Court for the Southern District of California (hereinafter "Bankruptcy Court"). (Docket 

25 No. 1.) The Turnover Order ordered Appellants to tum over the real property located at 

26 1480 Beechtree Road, San Marcos, California 92078 (the "Beechtree Road Property") 

27 Ill 

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and made findings concerning the chain oftitle and ownership interest in the Beechtree

Road Property. (Docket No. 1-2.)

Appellee Nancy L. Wolf, Chapter 7 Trustee, moves to dismiss the appeal for lack

ofjurisdiction. (Docket No. 14.)1 The motion is fully briefed. The Court finds the

motion suitable for determination on the papers without oral argument, pursuant to Civil

Local Rule 7.1.d.l. For the reasons set forth below, Wolfs motion to dismiss is

GRANTED.

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8 BACKGROUND AND PROCEDURAL HISTORY

On December 7, 2011, Appellant-Debtor Chadwick filed his Chapter 7 bankruptcy

case. (Docket No. 1-2.) On March 7, 2013, Wolffiled an adversary complaint in the

Bankruptcy Court against Appellants seeking declaratory reliefpursuant to 11 U.S.C. §

541 that the Beechtree Road Property was part ofChadwick’s bankruptcy estate, and an

order under 11 U.S.C. § 542 for turnover ofsaid property to Wolffor sale pursuant to 11

U.S.C. § 363. (Docket No. 5-1 atpp. 11-23.)

During the course ofthe adversary proceedings, Judge Taylor bifurcated the issues

for trial into two phases; Phase I was conducted on February 1, 2, and 3, 2016. (Docket

No. 1-2.) Thereafter, the parties submitted post-Phase 1 trial-related briefings, and Judge

Taylor heard oral arguments before issuing the December 13, 2016 Turnover Order. (Id.)

The Turnover Order found that the Beechtree Road Property is the property of

Chadwick’s bankruptcy estate, and that the property was Chadwick and Janelle’s

community property at the time Chadwick filed his Chapter 7 bankruptcy case on

December 7, 2011. (Id.) The Turnover Order further found that Charles did not hold any

interest or estates in the Beechtree Road Property, was not entitled to a lien, and did not

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i The docket reflects that Wolffiled a Motion to Dismiss and an Amended Motion to

Dismiss, which are identical except that the Amended Motion removed the contention

that the Appellants’ appeal was untimely filed. (Compare Docket Nos. 13 & 14.) The

Court’s ruling in this Order shall resolve both motions.

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have a lien against the property. (Id.) Judge Taylor ordered Appellants to turn over the

Beechtree Road Property, and reserved “for further determination and entry offinal

judgment” the issue ofWolfs claim against Charles for monetary damages pursuant to

11U.S.C. §542. (Id.)

On December 27, 2016, Appellants filed the instant appeal to the Turnover Order.

On March 27, 2016, Appellee filed the pending Amended Motion to Dismiss for lack of

jurisdiction. (Docket No. 14.)

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LEGAL STANDARD

Federal district courts generally have jurisdiction over appeals of “final judgments,

orders, and decrees” ofbankruptcy courts. See 28 U.S.C. § 158(a)(1).2 In contrast, with

limited exceptions not relevant here, district courts lack appellate jurisdiction over

appeals from interlocutory orders of bankruptcy judges except where the district court

grants leave to appeal under 28 U.S.C. § 158(a)(3).

In considering whether to grant leave to appeal, a district court “looks to the

standards set forth in 28 U.S.C. § 1292(b), which concerns the taking ofinterlocutory

appeals from the district court to the court of appeals.” In re Roderick Timber Co., 185

B.R. 601, 604 (B.A.P. 9th Cir. 1995); see also In re Belli, 268 B.R. 851, 858 (B.A.P. 9th

Cir. 2001) (“We look for guidance to the standards developed under 28 U.S.C. § 1292(b)

to determine ifleave to appeal should be granted [under section 158(a)(3) ].”).

Additionally, “[ijnterlocutory appeals are generally disfavored and should only be

granted where extraordinary circumstances exist.” In re Cameron, No. C 13-02018 SI,

2014 WL 1028436, at *4 (N.D. Cal. Mar. 17, 2014).

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27 2 Unless otherwise noted, all section references in the remainder ofthis Order are to Title

28 28 ofthe United States Code.

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1 DISCUSSION

Wolf argues that this Court lacksjurisdiction over the Appellants’ appeal because

the Turnover Order was not a final order within the meaning ofsection 158(a)(1), and

because the circumstances do not justify the Court’s exercise of discretionary review

under section 158(a)(3). The Court agrees.

Ordinarily, a final order is one that “ends the litigation on the merits and leaves

nothing for the Court to do but execute the judgment.” Kirkland v. Legion Ins. Co., 343

F.3d 1135, 1139 (9th Cir. 2003) (quoting Catlin v. United States, 324 U.S. 229, 233

(1945) (internal quotation marks omitted). Applying this traditional concept offinality to

bankruptcy appeals “has bedeviled courts because the idiosyncrasies of bankruptcy

sometimes make it difficult to discern whether orders entered in bankruptcy cases are

final in the classic sense of ending litigation on the merits and leaving nothing for the

court to do but execute the judgment.” Belli, 268 B.R. at 854 (citing Catlin, 324 U.S. at

233 (finality); Frontier Props., 979 F.2d at 1362-64 (bankruptcy finality); Edith H. Jones,

Bankruptcy Appeals, 16 T. Marshall L. Rev. 245, 253 (1991)).

Appellants urge the Court to apply the “flexible finality” approach that has been

applied by the Ninth Circuit to determine finality in bankruptcy cases. (Appellants’

Opp’n. at 5-7.) Appellants contend that under flexible finality analysis, the Turnover

Order is a final order.3 {Id.) It is true that the Ninth Circuit has held that “the finality

rules are to be given additional flexibility in the context ofbankruptcy proceedings.” In

re Frontier Props., Inc., 979 F.2d 1358, 1362 (9th Cir. 1992). However, in the context of

an adversary proceeding, an order is final ifit would be considered an appealable final

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25 3 Appellants’ opposition suggests Appellants also contend that Judge Taylor’s August 29,

2016 “Memorandum Decision” is a final order from which they seek to appeal. {See

Appellants’ Opp’n at 2-5.) However, Appellants’ Notice ofAppeal only challenges the

Turnover Order. (Docket No. 1.) The Court shall not consider an appeal to an order not

properly before it.

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order in an ordinary federal civil action under 28 U.S.C. § 1291. See In re King City

Transit Mix, Inc., 738 F.2d 1065, 1066 (9th Cir. 1984) (explaining that in an adversary

proceeding “even the unique nature of a bankruptcy proceeding does not warrant a

departure from final orderjurisprudence developed in the context of 28 U.S.C. § 1291”);

see also Belli, 268 B.R. at 855 (“Finality for purposes ofjurisdiction over ‘as ofright’

appeals under 28 U.S.C. § 158(a)(1) in adversary proceedings does not differ from

finality in ordinary federal civil actions under 28 U.S.C. § 1291.”).

As the Ninth Circuit Bankruptcy Appellate Panel explained in Belli:

Adversary proceedings are merely federal civil actions under

another name, and do not ordinarily present the types of

uncertainties that necessitate “flexible finality” analysis.

Adversary proceedings are a “single judicial unit.” The parties

are named in the pleadings; the claims are those presented in

the respective counts ofthe complaint. The litigation is

conducted under the Federal Rules ofCivil Procedure ... and

follows the ordinary pattern ofsummons and complaint,

answer, discovery, pretrial, trial, and judgment[.]

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Id. at 854-55. “Under this analysis, the ordinary standards of 28 U.S.C. § 1291 and

Federal Rule ofCivil Procedure 54(b) control the determination offinality for the

purposes of appeals from adversary proceedings, not flexible finality.” Brady v. Otton,

No. 15-CV-00757-WHO, 2015 WL 1906204, at *4 (N.D. Cal. Apr. 27, 2015) (citing

Belli, 268 B.R. at 855-57; King City, 738 F.3d at 1066.

Here, Appellants acknowledge that the Turnover Order arises from an adversary

proceeding related to Chadwick’s bankruptcy. (Appellants’ Opp’n at 2) (“The subject

order was entered in an adversary proceeding in the bankruptcy case filed by the Trustee

against Appellants.”) As explained above, the flexible finality approach is not applicable

to adversary proceedings. Moreover, Appellants do not offer any persuasive explanation

why “traditional finality rules are [in]adequate” for purposes ofthis case. Belli, 268 B.R.

at 854. Accordingly, the Court shall proceed to determine whether the Turnover Order is

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a final order applying the traditional analysis under 28 U.S.C. § 1291 and Federal Rule of

Civil Procedure 54(b).

Under Rule 54(b),4 a trial court may enter an early final order that disposes of

fewer than all the claims or fewer than all the parties.5 Fed. R. Civ. P. 54(b). “The court

does so by making an express determination that there is no just reason for delay,

together with an express direction that judgment be entered.” Belli, 268 B.R. at 855

(emphasis added). An order that fails to expressly use this “mandated express language”

is interlocutory and not appealable as a final order. Id. at 855-56. Moreover, “such an

order may be revised ‘at any time before the entry ofjudgment adjudicating all the claims

and the rights and liabilities of all the parties.’” Id. at 856 (quoting Fed. R. Civ. P. 54(b)).

When an order is issued in an adversary proceeding that does not resolve all claims

against all parties, a district court’s jurisdiction “depends on whether the requisite Rule

54(b) certification appears on the face ofthe record.” Belli, 268 B.R. at 856. “Ifthere is

a Rule 54(b) certification, it is treated as a final order over which appellate jurisdiction

exists ‘as ofright’ under 28 U.S.C. § 158(a)(1).” Id. On the other hand, “[i]fthere is no

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4 Unless otherwise noted, all references to rules in the remainder ofthis Order are to the

Federal Rules ofCivil Procedure.

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19 5 Rule 54(b) provides:

When an action presents more than one claim for reliefwhether as a claim, counterclaim, crossclaim, or third-party

claim - or when multiple parties are involved, the court may

direct entry of a final judgment as to one or more, but fewer

than all, claims or parties only ifthe court expressly determines

that there is no just reason for delay. Otherwise, any order or

other decision, however designated, that adjudicates fewer than

all the claims or the rights and liabilities offewer than all the

parties does not end the action as to any ofthe claims or parties

and may be revised at any time before the entry of a judgment

adjudicating all the claims and all the parties’ rights and

liabilities.

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Fed. R. Civ. P. 54(b), incorporated by Fed. R. Bankr. P. 7054(a). 28

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Rule 54(b) certification, then the order is interlocutory, and appellate jurisdiction depends

on whether the appellate court grants leave to appeal under 28 U.S.C. § 158(a)(3).” Id.

Applying the traditional concept offinality to this case, it is clear that the Turnover

Order is not a final order. Nowhere in the Turnover Order is there an express direction

for entry offinal judgment and statement that there is no just reason for delay an appeal.

Thus, the Turnover Order lacks the requisite Rule 54(b) certification on its face. In fact,

the Turnover Order expressly states its reservation of one the issues for later

determination and entry offinal judgment. (Docket No. 1-2.) (“The issue ofthe [Wolfs]

claim against [Appellant] Charles G. Collins, for monetary damages pursuant to 11

U.S.C. § 542, is reserved for further determination and entry of a final judgment by the

Court.”)

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Appellants’ argument that the remaining issue was not properly pled in the

adversary complaint may have been relevant ifthe Court applied the flexible finality

approach. {See Appellants’ Opp’n at 2-4.) However, under traditional finality principles,

this argument is not relevant because in any event, the Bankruptcy Court did not

expressly provide Rule 54(b) certification to the portions ofthe Turnover Order that are

the gravamen ofAppellants’ appeal. As a result, until such time that the Bankruptcy

Court resolves the remaining issue or expressly entersjudgment on the issues for which

Appellants seek appellate review, it remains free under Rule 54(b) “to change its mind”

about the other findings. Belli, 268 B.R. at 857. Therefore, Appellants’ are not entitled

to an appeal as ofright under 28 U.S.C. § 158(a)(1), and the Court must determine

whether to grant them leave to appeal under 28 U.S.C. § 158(a)(3).

There are “[f]ourjudge-made exceptions to the final judgment rule -the collateral

order, practical finality, death knell, and pragmatic finality doctrines.” Belli, 268 B.R. at

857 (citing 18 James Wm. Moore, Moore's Fed. Prac. 3d §§ 202.07-202.10 (2001)),

none ofwhich apply to this appeal. Id. (“The collateral order doctrine is inapplicable

because the issue is neither separate from the merits ofthe appeal nor effectively

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unreviewable after final judgment.... The practical finality doctrine requires irreparable

injury that is not entailed by this appeal.... The death knell doctrine, to the extent it

retains vitality, requires that the appellant have been put effectively out of court, which

has not happened here... . The pragmatic finality doctrine requires, among other

elements, an unsettled issue ofnational significance.”) (internal citations omitted).

Consequently, the Court declines to exercise jurisdiction under 28 U.S.C. § 158(a)(3).

Finally, in their opposition Appellants request leave to file an appeal to the

Turnover Order ifthe Court finds the Turnover Order is interlocutory. The Court finds

interlocutory review is not warranted here. First, Appellants have not even attempted to

explain why there is no just reason to delay hearing oftheir appeal until the bankruptcy

judge has entered final judgment. See Cameron, supra, 2014 WL 1028436, at *4

(“Interlocutory appeals are generally disfavored and should only be granted where

extraordinary circumstances exist.”) Second, it does not appear to the Court that denying

leave to appeal now would result in “wasted litigation and expense,” that the appeal

“involves a controlling question oflaw as to which there is a substantial ground for

difference of opinion,” or that “an immediate appeal would materially advance the

ultimate termination ofthe litigation.” See In re NSB Film Corp., 167 B.R. 176, 180

(B.A.P. 9th Cir. 1994) (citing In re Caribbean Tubular Corp., 44 B.R. 283, 285 (D.P.R.

1984)). In short, the Court “decline[s] to intermeddle with the [Bankruptcy Court’s]

handling ofthe adversary proceeding until it has completed the task.” Belli, 268 B.R. at

858.

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1 CONCLUSION

For the reasons stated above, the Court finds the Turnover Order is an interlocutory

order, interlocutory review is not warranted, and Appellants have not identified another

basis forjurisdiction. Accordingly, Appellee’s motion to dismiss the appeal for lack of

jurisdiction is GRANTED, and Appellants’ request for leave to file an appeal to the

Turnover Order is DENIED.

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7 IT IS SO ORDERED.

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9 DATED: September/£_, 2017

HOJ>k

Umted States District Court Judge 10

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