FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT JULY 2, 2008 THOMAS K. KAH

N CLERK [ P UB L I S H]

I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 07- 13915

________________________ D . C . D oc ke tN o. 06- 01938- C V - O R L - 22 BK CY N o . 0 4 - BK - 0 1 5 6 4 - A BB I N R E : D O N A L D J . D O N O V A N , D e b t o r . __________________________________________________________________ C I N D Y B A R B E N , P la in tif f - A p p e lla n t, v ersu s D O N A L D J . D O N O V A N , D e f e n d a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe M i ddl e D i s tr i c tof F l or i da

_________________________ ( Ju l y 2, 2008) B e f o r e E D M O N D S O N , C h ie f J u d g e , a n d P R Y O R a n d K R A V I T C H , C ir c u it Ju d g es.2

K R A V IT C H , C i rc ui tJudg e: T hi s i s a ba nkrupt c y a ppe a l . T he or de runde rr e vi e w de ni e s the m ot i on of appel l antB arben, an un se cure d cre di t or, t o d i sm i ss D on ov an’ s C hapt er7 b a n k ru p tc y c a s e a s a b u s iv e . T h e is s u e p r e s e n te d is w h e th e rw e h a v e ju r is d ic tio n . W e c o n c lu d e th a t w e d o n o t. I. S tate m en t of F acts A s a r e s ul tof

a di vor c e s e t t l e m e nt , C i ndy B a rbe n hol ds a $54, 000 j udgm e nt a g a in s t h e re x - h u s b a n d , D o n a ld D o n o v a n . T h e ju d g m e n t is u n s e c u r e d a n d is f u lly di s c ha r ge a bl e i n ba nkrupt c y . D onova n f i l e d a C hapt e r13 ba nkrupt c y pe t i t i on on F e brua r y 17, 2004, pr i ort o the pa s s a ge of the 2005 B a nkrupt c y A bus e P r e ve nt i on and C on sum erP rot ec t i on A ct . A C hapt er13 pl an w as confi rm ed, and D on ov an pa i d r oughl y $48, 000 t o the C hapt e r13 trus t e e ove ra pe r i od of a ppr oxi m a t e l y one y e a r . B u t b e c a u s e o f

m o n th ly in c o m e f

lu c tu a tio n s , D o n o v a n b e c a m e u n a b le to m ak e th e p aym en t s u n d er th e p l an as th ey cam e d u e. A cco rd i n g l y, D o n o v a n — ap p a r e n tly a t th e b a n k ru p tc y c o u r t’s s u g g e s tio n — c o n v e r te d th e c a s e to C hapt e r7 on J une 14, 2006; the ba nkrupt c y c our tdi s m i s s e d the C hapt e r13 c a s e on J u n e 3 0 , 2 0 0 6 . T he r e a f t e r , B a rbe n obj e c t e d t o the c onve r s i on a nd m ove d t o di s m i s s the3

C h ap te r7 c a s e . S h e a r g u e d th a t th e c o n v e r s io n to C h ap te r7 w a s p r e s u m p tiv e ly a b u s i v e w i th i n th e me a n i n g o f th e 2 0 0 5 A c tb e c a u s e D o n o v a n h a d mo r e i n c o me th a n th e m e d ia n f

o rh is s ta te

— F lo r id a— a n d , th e r e f o r e , th a t th e c o n v e r s io n s h o u ld be di sa l l ow ed and t he ca se di sm i ss ed. T he bank rupt cy courthel d t hatthe m ore s tr i nge nts t a nda r ds of

the 2005 A c tf

orc onve r s i on t o C hapt e r7 di d nota ppl y a nd th a t B a rb e n la c k e d s ta n d in g to r a is e th e a b u s e is s u e u n d e rp r e - 2 0 0 5 la w . A c c o r d in g ly , h e rm o tio n to d is m is s w a s d e n ie d o n N o v e m b e r8 , 2 0 0 6 . I t is th is deni al of the m ot i on t o d i sm i ss thatw as appeal ed fi rs tt o the di stri ctcourt , w hi ch a f f i r m e d a nd gr a nt e d c os t s t o D onova n, a nd now t o thi s c our t . M e a nw hi l e , the b an k ru p t cy co u rtu l t i m at el y g ran t ed D o n o v an a d i sch arg e i n C h ap t er 7 o n A u g u st 7 , 2 0 0 7 ; th a t o r d e ris n o t o n a p p e a l. I I . D i s c u s s i on A thr e s hol d i s s ue i n a ny c a s e be f or e thi s c our ti s w he the rw e ha ve j ur i s di c t i on; w e a r e obl i ga t e d t o c ons i de rj ur i s di c t i on e ve n i f i tm e a ns r a i s i ng the i ss ue s u a s

p o n te . A T & T M obi l i ty , L L C v. N a t ’ l A s s ’ n f orS t oc k C a rA ut o R a c i ng, I nc . , 494 F . 3d 1356, 1359 ( 11th C i r . 2007) . W e r e vi e w j ur i s di c t i ona l i s s ue s de n o v o . I d . a t 1 3 6 0 . A courtof appeal s has j uri sdi ct i on ov eron l y f i nal j ud gm ent s a nd orders ar i si ng fr om a bankrup t cyproceedi ng , w here as the di stri ctcourtm ay re vi ewWe have also concluded that the finality requirement is met whereprac tical 1 c on side ratio ns re quireit. Se eIn reWalker, 51 5 F .3 d at 12 10 (c on c ludingtha t ju dic ial e c on omy would be “tur

ned on its head”if the appe llate cour t could not reviewthe district court’s a ff ir manc eof theremov a l of

thetr us te e ). B ut p rac tic a l c on side ratio ns do no t re quirereview in this case. We seeno rea son why Ba rben c ould not have obtained me aning ful appe llate review up on a final ju dgment. 4 i nt e r l oc ut or y j udgm e nt s a nd or de r s a s w e l l . I n r e W a l ke r , 515 F . 3d 1204, 1210 (1 1 th C i r. 2 0 0 8 ); 2 8 U . S . C . § 1 5 8 (d ). W h eth er th e d en i al o f a m o t i o n t o d i sm i ss f o ra b u s e is a f

in a l ap p e a la b le o r d e ris a q u e s tio n o f f ir s t im p r e s s io n in th is c ir c u it. G ener al l y s peaki ng , t o b e “ fi nal ” und er28 U . S . C . § 1 58 (d) a nd § 1 29 1, an o r d e rm u s t e n d th e litig a tio n o n th e m e r its , le a v in g n o th in g to b e d o n e b u t e x e c u te th e ju d g m e n t. J o v e E n g ’g v . I R S , 9 2 F .3 d 1 5 3 9 , 1 5 4 7 ( 1 1 th C ir . 1 9 9 6 ) . F in a lity is g i v en a m o re fl ex i b l e i n t erp ret at i o n i n th e b an k ru p t cy co n t ex t , h o w ev er, b ecau se b an k ru p tcy is a n ag g re g atio n o f c o n tro v er sies an d su it s. Id . at 1 5 4 8 . In stea d , “ [i]t i s gener al l y the part i cul aradvers ary proce edi ng or cont rovers y thatm usthave been fi nal l y r es ol ved rather than t he ent i re bank rupt cy l i t i gat i on . ” C om m od ore H o ld in g s , I n c . v . E x x o n M o b il C o rp ., 3 3 1 F .3 d 1 2 5 7 , 1 2 5 9 ( 1 1 th C ir . 2 0 0 3 ) . B utthe j ust i fi ca t i on for r el axi ng the fi nal i ty rul e— thatbank rupt cy i s a n a g g r e g a tio n o f

d is p u te s — a ls o p r o v id e s th e lim itin g p r in c ip le f o rth a t r e la x a tio n .

“ I nc r e a s e d f

l e xi bi l i ty ” i n appl y i ng the f i na l i ty doc tr i ne i n ba nkrupt c y doe s not re nd erappeal abl e a n o rderw hi ch do es no tfi nal l y di spose of acl ai m or advers ary pr oc e e di ng. T hus , t o be f i na l , a ba nkrupt c y c our tor de rm us t“ c om pl e t e l y r e s ol ve 15

al l of the i ss ues per t ai ni ng t o a di sc re t e c l ai m , i ncl ud i ng i ss ues a s t o t he prop er r e l i e f . ” I n r e A t l a s , 210 F . 3d 1305, 1308 ( 11th C i r . 2000) ; s e e e . g. , C l a y C o. B a nk v. C ul t on, 111 F . 3d 92, 93 ( 11th C i r . 1997) ( di s tr i c tc our tor de rr e ve r s i ng a ba nkrupt c y c our t ’ s di s m i s s a l of a n a dve r s a r y pr oc e e di ng a nd r e m a ndi ng t o the bank rupt cy courtfor f

urther procee di ng s w as no tfi nal ); In re F D R H i ckory H ou se , 60 F . 3d 72 4, 72 6 n . 3 (11 th C i r. 19 95 ) ( deni al of sum m ary j ud gm enti s non -f i nal be c a us e i tdoe s notc onc l us i ve l y r e s ol ve a c l a i m ) . I n s hor t , the s a m e c onc e pt s of f i na l i ty appl y i n ba nkrupt c y a s i n a ny othe rc a s e , butthe y a r e a ppl i e d t o the d is c r e te c o n tr o v e r s ie s w ith in th e a d m in is tr a tio n o f th e e s ta te ; “th e s e p a r a te d is p u te be i ng a s s e s s e d m us tha ve be e n f i na l l y r e s ol ve d a nd l e a ve nothi ng m or e f orthe b a n k ru p tc y c o u r t to d o .” I n r e C h a r te rC o ., 7 7 8 F .2 d 6 1 7 , 6 2 1 ( 1 1 th C ir . 1 9 8 5 ) . B as ed es se nt i al l y on t hi s l og i c, the w ei gh tof ci rc ui tautho ri ty has concl ud ed th a t o r d e r s d e n y in g a m o tio n to d is m is s f o rb a d f a ith o ra b u s e a r e n o t ap p e a la b le . A t le a s t th r e e o th e rc ir c u its h a v e s p e c if ic a lly h e ld th a t a n o r d e rd e n y in g a m o tio n to di sm i ss a C hapt er11 bank rupt cy ca se for abu si ve fi l i ng i s nota f i nal order. In re J a r tr a n, 886 F . 2d 859, 864 ( 7th C i r . 1989) ; I n r e 405 N . B e df or d D r . C orp. , 778 F . 2d 13 74 , 13 79 (9th C i r. 19 85 ); se e a l so In re C om m . of A sbes t os R el at ed L i t i gant s, 74 9 F . 2d 3, 5 (2d C i r. 19 84 ) ( decl i ni ng t o i ss ue m andam us t o revi ew d e n ia l o f m o tio n to d is m is s ; s u g g e s tin g in d ic ta th a t s u c h d e n ia l w a s in s u f f ic ie n tlyBa rben a sserts that the denial of her motion to dismiss the Chapter 7 c ase e ffe c tive ly 2 disallowed her

claim bec ause onc e Donova n’s estatewas c onverte d to Chapter 7 administration it becamea practical c ertainty that her c laim would be discharg ed and shewould rec eive little or no pay ment. Be causejudicial disallowanceof a c laim is immediately appealable, B arben argues that a judg e’s order that has the practical e ffe ct of disallowanc e should be a ppeala ble as we ll. Se eGre e r v . O ’D e ll, 30 5 F .3 d 1 29 7, 13 02 (1 1th Cir . 2 00 2) (j udic ial di sallo wa nc eis imme diate ly appealable). B ut while the conversion may in fac t have guara

nteed that B arben would not rec eive a distribution from the estate, that is a result of her unsecured status and the de greeof Donovan’ s insolvency , not a matter of bankruptc y

proce dure. Theconver sion from a Chapter 11 to a Cha pter 7 proc e e dingis n ot l e g a lly e quivalent to disallo winga c laim; B arb e n w a s stilla cre ditor in Donovan’s Chapter 7 caseand would haverec eived a pro rata distribution had there been suf ficient a ssets. 6 fi nal for di re ctappeal ). B utsom e c ou rt s have c on cl ud ed t o t he cont ra ry . In part i cul ar , the T hi rd C i rc ui thas hel d t hatthe deni al of a m ot i on t o d i sm i ss for bad f a i th i s i m m e di a t e l y a ppe a l a bl e i n both C hapt e r7 a nd 11. S e e I n r e B r ow n, 916 F . 2d 12 0, 12 3-12 4 (3d C i r. 19 90 ) ( ci t i ng In re C hri st i an, 80 4 F . 2d 46 (3d C i r. 19 86 )) . T hese ca se s, ho w ever , do no tdi sc uss w hether apart i cul aradvers ary p r o c e e d in g m u s t b e f

in a l. H e r e , the ba nkrupt c y c our t ’ s or de rde ny i ng B a rbe n’ s m ot i on t o di s m i s s the C hapt e r7 c a s e i s nota f i na l or de r . B y de ny i ng he rm ot i on t o di s m i s s , the

2 ba nkrupt c y c our tpe r m i t t e d the C hapt e r7 c a s e t o c ont i nue . T he c our tdi d not c onc l us i ve l y r e s ol ve the ba nkrupt c y c a s e a s a w hol e , nordi d the c our tr e s ol ve a ny a d v e r s a r y p r o c e e d in g o rc la im . F ur the r , thi s c a s e doe s notf i ti nt o one of

oure s t a bl i s he d e xc e pt i ons t o the f i na l i ty rul e . S e e I n r e F D R H i c kor y H ous e , I nc . , 60 F . 3d a t726- 727 ( di s c us s i ng7

the except i on s a nd thei r app l i cabi l i ty i n t hatca se ). A cc ordi ng l y, w e DI S M I S S T HE AP P E AL F OR L ACK OF J URI S DI CT I ON .