Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-16-00016/USCOURTS-ca10-16-00016-0/pdf.json

Parties Involved:
Harvey Sender
Appellee
Cheryl L. Wolff
Appellant
Deris M. Wolff
Appellant

Document Text:

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

_________________________________

IN RE DERIS M. WOLFF and CHERYL 

L. WOLFF,

 Debtors.

__________________________________

DERIS M. WOLFF and CHERYL L. 

WOLFF,

 Appellants,

v.

HARVEY SENDER, Chapter 7 Trustee,

 Appellee.

BAP No. CO-16-016

Bankr. No. 11-13071

Chapter 7

ORDER DISMISSING 

APPEAL AS INTERLOCUTORY

_________________________________

Before KARLIN, Chief Judge, CORNISH, and JACOBVITZ, Bankruptcy Judges.

_________________________________

This Court entered the Order to Show Cause Why Appeal Should Not be 

Considered for Dismissal as Interlocutory on May 31, 2016, requiring Appellants Deris 

and Cheryl Wolff to file a memorandum of law setting forth Appellants’ position as to 

whether the order appealed is final, or whether leave to appeal an interlocutory order 

should be granted [BAP ECF No. 5]. Before the Court is the Memorandum of Law 

Regarding the Finality of the Order and the Motion for Leave to file an Interlocutory 

Appeal in the Alternative Should the Order Appealed be Found to Lack Sufficient Finality 

for Appeal (the “Motion for Leave”) filed by Appellants on June 14, 2016 [BAP ECF 

Nos. 10 & 11]; and Appellee’s Combined Response to Appellants’ Motion for Leave to 

BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 1 of 9
File an Interlocutory Appeal in the Alternative Should the Order Appealed be Found to 

Lack Sufficient Finality for Appeal and Appellants’ Memorandum of Law Regarding the 

Finality of the Order Appealed (“Trustee’s Response”) filed by Appellee Harvey Sender, 

Chapter 7 Trustee (the “Trustee”) on June 28, 2016 [BAP ECF No. 16].

Appellants filed a Chapter 13 petition on February 21, 2011 and after confirming a 

plan, converted their case to Chapter 7 on July 20, 2015. In their schedules, Appellants 

listed two real properties: their residence in Littleton, Colorado (the “Colorado Property”)

and a rental property in Sidney, Nebraska (the “Nebraska Property”). Appellants did not 

list either property as exempt on Schedule C. Upon his appointment, the Trustee filed 

separate motions seeking approval of employment of real estate brokers to market both of 

the properties. Appellants objected to the motion to employ a real estate broker to market 

the Colorado Property (the “Objection”) and because the motion to employ a real estate 

broker to market the Nebraska Property was granted just one day after filing, Appellants 

also sought reconsideration of that order (the “Motion to Reconsider”). Appellants did 

not object to the qualifications of the real estate brokers. Instead they objected to the sale 

of the Colorado and Nebraska Properties on the basis that they were no longer property of 

the bankruptcy estate and any post-petition appreciation in value belonged to Appellants 

and not the estate.

The bankruptcy court heard arguments on Appellants’ Objection and Motion to 

Reconsider and entered an order that (1) authorized the Trustee to employ a real estate 

broker to market the Colorado Property; and (2) denied Appellants’ Motion to Reconsider 

the order employing a real estate broker to market the Nebraska Property (the 

2

BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 2 of 9
“Employment Order”). In so deciding, the bankruptcy court addressed Appellants’ 

arguments that the Colorado and Nebraska Properties, and any postpetition appreciation 

in value of the properties, are not property of the bankruptcy estate. The bankruptcy court 

concluded that the Colorado and Nebraska Properties are property of the estate and that 

any appreciation of value of the real estate also is property of the estate. Appellants 

appealed the Employment Order.

This Court has jurisdiction to hear timely-filed appeals from “final judgments, 

orders, and decrees” of bankruptcy courts within the Tenth Circuit, unless one of the 

parties elects to have the district court hear the appeal.1

 “Generally, an order is final if it 

ends the litigation on the merits and leaves nothing for the court to do but execute the 

judgment.”2

 Accordingly, we will address whether the bankruptcy court’s order granting 

employment of a broker is final and whether the bankruptcy court’s ruling on the 

Trustee’s authority to market the Colorado and Nebraska Properties—and retain any 

appreciation for the benefit of the estate—makes the Employment Order a final, 

appealable order and, if not, whether leave to appeal should be granted.

The Supreme Court has recently addressed the finality of orders in bankruptcy 

cases. In Bullard v. Blue Hills Bank,

3 the Supreme Court analyzed the statutory language 

1 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8002, 8005; 10th Cir. 

BAP L.R. 8005-1. 

2 Adelman v. Fourth Nat’l Bank & Tr. Co., N.A. (In re Durability, Inc.), 893 F.2d 

264, 265 (10th Cir. 1990).

3 135 S.Ct. 1686 (2015).

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BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 3 of 9
“from final judgments, orders, and decrees . . . in cases and proceedings” and addressed

what a relevant “proceeding” is under 28 U.S.C. § 158(a).4 The Court found that an 

order denying confirmation of a Chapter 13 plan is not a final order because it did not 

resolve whether a plan should ultimately be confirmed in the case but was merely a step 

in the “process of attempting to arrive at an approved plan.”5

 In so finding, the Court 

held that the relevant “proceeding” is “the process of attempting to arrive at an approved 

plan that would allow the bankruptcy to move forward.”6

 

In the case of a Chapter 13 plan, confirmation “alters the status quo and fixes the 

rights and obligations of the parties” because the terms of a confirmed plan “become 

binding on debtor and creditor alike.”7

 The Court recognized that denial of confirmation 

of a plan with leave to amend “changes little” because “the parties’ rights and obligations 

remain unsettled.”8 Thus, the Court found the debtor would not be “unfairly burden[ed]” 

because he retained the right to propose amended plans that may be freely modified.9 As 

the very purpose of the rule of finality is to avoid delays and inefficiencies associated 

4 Id. at 1692. 

5 Id. at 1692-93.

6 Id. at 1692.

7 Id.

8 Bullard, 135 S.Ct. at 1693.

9 Id. at 1694.

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BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 4 of 9
with the length and expense of filing an appeal,

10 the Court held “[a] ‘proceeding’ should 

not be defined ‘so narrowly that the requirement of finality would do little work as a 

meaningful constraint on the availability of appellate review.’”11

Here, the relevant proceeding is the process of selling property in the bankruptcy 

case. A trustee’s sale of property in a Chapter 7 case with the assistance of a real estate 

broker, outside the ordinary course of business, is a two part process: first the trustee 

must obtain court approval to employ a professional to market the property,12 and second, 

if the trustee and a buyer reach agreement on a sale, then the trustee must file a separate 

motion to approve the sale, which requires notice and an opportunity for a hearing.13

The Trustee has received the bankruptcy court’s approval on the first part of that 

process. The Employment Order grants the Trustee the authority to employ a broker to 

market the properties pursuant to 11 U.S.C. § 327 and to compensate the broker if a sale 

10 Id. at 1693.

11 In re Lynch, 544 B.R. 444, 448 (10th Cir. BAP 2016) (quoting Bullard, 135 

S.Ct. at 1693). 

12 In re Albrecht, 233 F.3d 1258, 1259 (10th Cir. 2000) (11 U.S.C. 327(a) requires 

a trustee seek court approval to employ a professional and 11 U.S.C. § 330 provides that 

only professionals employed pursuant to § 327 may be compensated from the estate). 

13 11 U.S.C. § 363(b)(1); In re Paige, 584 F.3d 1327, 1333 n.4 (10th Cir. 2009) 

(before a trustee may sell an estate’s assets he must first convince the bankruptcy court of 

the soundness of this decision); see In re Galleria Invs., LLC, No. A06-62557-PWB, 

2008 WL 7842107, at *8 (Bankr. N.D. Ga. Apr. 4, 2008) (Section 363(b) requires “notice 

and a hearing. If the trustee . . . provides proper notice in accordance with Fed. R. Bankr. 

P. 6004 and no objections are interposed, the trustee may proceed with the sale as 

proposed without the necessity of judicial intervention. If an objection is made, the 

bankruptcy court conducts a hearing to consider it and rules on the objection. Obviously, 

in such a situation, an order resolving the objection is required.”).

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is consummated.

14 This Court has unequivocally held, however, that such an order 

approving employment of a professional is not final for purposes of appeal.15

A potentially complicating factor here is that the bankruptcy court not only 

approved the Trustee’s retention of a broker but also ruled that the properties, and any 

postpetition appreciation of the properties, is property of the estate. The Employment 

Order addresses § 348(f)(1) and § 541(a) in concluding that the Colorado and Nebraska 

Properties are property of the estate and any appreciation in property value also belongs 

to the estate. Pursuant to § 348(f)(1), the bankruptcy court found that because Appellants 

remained in possession and control of the Colorado and Nebraska Properties since the 

petition date, those properties became property of the Chapter 7 estate upon conversion.16 

Additionally, the bankruptcy court found that because § 541(a)(1) broadly defines 

property of the estate to include proceeds, product, offspring, rents or profits from 

property of the estate, the appreciation in property value is “equity inseparable from the 

property, and thus always comprises property of the estate.”17 

The conclusion of the Employment Order that the Colorado and Nebraska 

Properties are property of the bankruptcy estate is relevant to both steps of the overall 

14 All future references to “Code,” “Section,” and “§” are to the Bankruptcy Code, 

Title 11 of the United States Code, unless otherwise indicated.

15 See, e.g., In re Cook, 223 B.R. 782, 792 (10th Cir. BAP 1998) (“An order 

approving employment, allowing interim fees, or denying disqualification of a 

professional is not a final, appealable order.”). 

16 § 348(f)(1). 

17 Employment Order at 3 [BAP ECF No. 1].

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BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 6 of 9
process of selling a property in the bankruptcy court. If the property is not property of 

the estate, generally there would be no reason for a trustee to retain a broker to sell the 

property and the bankruptcy court would not approve a sale. Likewise, if there is no 

equity in the property for the estate unless postpetition appreciation is property of the 

bankruptcy estate, generally there would be no reason for a trustee to retain a broker to 

sell the property or for the bankruptcy court to approve a sale. 

If the Trustee finds a buyer for the Colorado and Nebraska Properties, he must 

still, after notice and hearing, receive bankruptcy court authority to actually sell the 

properties free and clear of any liens.18 As a result, Appellants’ rights in the Colorado 

and Nebraska Properties, and any equity associated therewith, are not yet altered. 

Appellants’ rights with respect to the properties do not become fixed by operation of the 

Bankruptcy Code until entry of an order approving a § 363(b) sale motion. The finality 

of an order approving a sale pursuant to § 363(b) is recognized in § 363(m).19 

Accordingly, the Employment Order is not a final order as Appellants are neither 

“unfairly burden[ed]”20 by dismissal of this appeal nor are the issues in this appeal

18 The Trustee concedes he must file a motion pursuant to § 363(b) prior to selling 

the Colorado and Nebraska Properties. Trustee’s Response at 7. [BAP ECF No. 16].

19 Section 363(m) provides “[t]he reversal or modification on appeal of an 

authorization under subsection (b) . . . of a sale or lease of property does not affect the 

validity of a sale or lease under such authorization to an entity that purchased or leased 

such property in good faith, whether or not such entity knew of the pendency of the 

appeal, unless such authorization and such sale or lease were stayed pending appeal.”

20 Bullard, 135 S.Ct. at 1694.

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BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 7 of 9
“effectively unreviewable on appeal from a final judgment”21 because Appellants have 

the opportunity to object to any motion for sale and appeal any order approving a sale.22

At that time, Appellants may also seek review of prior intermediate orders, such as the 

Employment Order.23

Furthermore, “[l]eave to hear appeals from interlocutory orders should be granted 

with discrimination and reserved for cases of exceptional circumstances.”24 Granting 

leave to appeal requires that the “interlocutory orders must involve a controlling question 

of law as to which there is a substantial ground for difference of opinion, and the 

immediate resolution of the order may materially advance the ultimate termination of the 

litigation.”25 

21 Yousef v. Reno, 254 F.3d 1214, 1218 (10th Cir. 2001). 

22 Cf. In re Reliant Energy Channelview, LP, 397 B.R. 697, 699-700 (D. Dela. 

2008) (an order approving the bidding procedures for auction of property did not have a 

preclusive effect on further litigation until the sale became final through an order 

approving the sale.); In re Farmland Indus., Inc., 289 B.R. 122 (8th Cir. BAP 2003) 

(finding an order approving a compromise establishing auction procedures was 

interlocutory but exercising jurisdiction to review an interlocutory order). See also In re 

Lotspeich, 328 B.R. 209, 216 (10th Cir. BAP 2005) (noting that a sale order is a final 

order giving the Court jurisdiction to review the sale).

23 See, e.g., McBride v. CITGO Petroleum Corp., 281 F.3d 1099, 1104 (10th Cir. 

2002) (stating that “a notice of appeal which names the final judgment is sufficient to 

support review of all earlier orders that merge in the final judgment” and citing case 

quoting 16 Wright et al., Federal Practice & Procedure § 3949, at 440 (Supp. 1994), for 

the proposition that a “notice of appeal from final judgment permitted assertion of claims 

of error in interlocutory orders in the same case”). 

24 Personette v. Kennedy (In re Midgard Corp.), 204 B.R. 764, 770 (10th Cir. BAP 

1997).

25 Id. 

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BAP Appeal No. 16-16 Docket No. 20 Filed: 07/18/2016 Page: 8 of 9
Were this Court to grant leave to appeal the interlocutory orders, resolution of 

those interlocutory matters would be only an intermediate step in the overall process of 

selling a property in the bankruptcy court. There are many additional intermediate steps 

that must be undertaken, e.g. among other things, the employed broker must find buyers, 

there must be equity in the real property such that the Trustee can exercise his business 

judgment to follow through with a sale, and the Trustee must actually file motions to sell 

that must themselves be fully adjudicated. Therefore, immediate resolution of the 

Employment Order would not materially advance the ultimate termination of the 

litigation, and the Court declines to grant leave to appeal the interlocutory order.

For the reasons stated above, it is HEREBY ORDERED that:

1. The Motion for Leave is DENIED.

2. This Appeal is DISMISSED.

3. All deadlines previously set in this Appeal are VACATED.

For the Panel

Blaine F. Bates

Clerk of Court

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