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The SIPC is the bankruptcy trustee for the Debtor.

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

EDWARD G. MURPHY, III, : CIVIL ACTION

Appellant :

:

v. :

:

SECURITIES INVESTOR PROTECTION :

CORP., :

Appellee : NO. 05-2311

MEMORANDUM AND ORDER

McLaughlin, J October 14, 2005

This appeal concerns a dispute between Edward G.

Murphy, III (“Murphy”) and the Securities Investor Protection

Corporation (the “SIPC”) over the liability of Murphy to the SIPC

for customer claims that have been allowed by the SIPC against

Selheimer & Co. (the “Debtor”).1 The Bankruptcy Court granted

the SIPC’s motion for partial summary judgment and held that

Murphy is liable for payments advanced by the SIPC in

satisfaction of three customer claims by Enis Witt Best, Deborah

Stone and the estate of Edwin Fugate as well as for one allowed,

but not yet paid customer claim by Jeanne Murphy. Following this

decision, the Bankruptcy Court granted the SIPC’s motion for a

final judgment under Fed. R. Civ. P. 54(b) as to the Fugate, Best

and Stone claims. 

The Court finds that the Bankruptcy Court incorrectly

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issued a final judgment under Rule 54(b) and will reverse on this

ground.

I. Factual Background

The Debtor was formed as a partnership in 1967. It

acted as a securities broker-dealer and also provided financial

services. On December 7, 1994, the Debtor closed its business

because of an SEC investigation. The Debtor was a member of the

SIPC and was registered with the SEC as a securities brokerdealer.

As a result of the SEC investigation, Perry A.

Selheimer, the managing general partner of the Debtor, was

charged with various criminal acts and pled guilty to mail fraud. 

In connection with that plea, Mr. Selheimer admitted that the

sale of securities provided to him by Edwin Fugate, Enis Witt

Best, Deborah Stone (Murphy’s sister) and Jeanne Murphy (Murphy’s

mother) involved an abuse of a position of trust.

On September 8, 1997, the SIPC caused notices to be

published and mailed regarding the commencement of a direct

payment procedure with respect to the Debtor. Enis Witt Best,

Deborah Stone, Jeanne Murphy and the estate of Edwin Fugate, all

filed claims. The customer claim of the Fugate Estate was

allowed by the SIPC in the amount of $63,963.12. The claim by

Enis Witt Best was initially denied by the SIPC, but that claim

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was later settled for $25,000. The claims by Deborah Stone and

Jeanne Murphy were also denied at first. Following that denial,

the Bankruptcy Court issued an order allowing those claims. In

September of 2002, the SIPC paid Deborah Stone $162,195 in

satisfaction of her claim. On June 21, 2004, the SIPC made a

formal redetermination of Jeanne Murphy’s claim and allowed that

claim in the amount of $840,667. Jeanne Murphy has opposed this

determination and is currently litigating her claim in the

Bankruptcy Court.

At present, all that is left of the Debtor’s estate are

claims against its general partners. The SIPC argues that Murphy

is a general partner of the Debtor and on June 6, 2004, commenced

this proceeding. The SIPC seeks to recover, from Murphy, the

deficiency between the property of the Debtor and the amount of

the claims that have been allowed. 

The Bankruptcy Court granted the SIPC’s motion for

partial summary judgment on January 20, 2005 and held that Murphy

was liable in the amount of $251,158.12 for the customer claims

paid by the SIPC to the Fugate Estate, Enis Witt Best and Deborah

Stone. Additionally, the Bankruptcy Court found Murphy liable

for at least $840,667 that the SIPC has allowed, but not yet paid

to Jeanne Murphy. 

Following the January 20 decision, Murphy filed a

motion for reconsideration and also requested a stay of the

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Bankruptcy Court’s order. The SIPC filed a motion requesting

that a final order be issued under Fed. R. Civ. P. 54(b) with

respect to the claims of Fugate, Best and Stone. 

On April 12, 2005, the Bankruptcy Court denied Murphy’s

motion for reconsideration. In the same decision, the Bankruptcy

Court granted the SIPC’s motion for a partial final judgment

under Fed. R. Civ. P. 54(b). Finally, the Bankruptcy Court

granted Murphy’ motion for a stay but required that he post a

bond of $1.25 million.

On appeal, Murphy has challenged the Bankruptcy Court’s

decisions that: granted the SIPC’s Rule 54(b) motion; granted the

SIPC’s motion for partial summary judgment; and required that

Murphy post a bond as a condition of his motion for a stay being

granted. 

II. Legal Analysis

A. Standard of review

A district court reviews a bankruptcy court’s factual

findings under a clearly erroneous standard. A bankruptcy

court’s factual findings are not clearly erroneous unless the

findings are completely devoid of minimum evidentiary support

displaying some hue of credibility or bear no rational

relationship to the supportive evidentiary data. A district

court’s review of a bankruptcy court’s legal determinations is

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plenary. Kool, Mann, Coffee & Co. v. Coffey, 300 F.3d 340, 353

(3d Cir. 2002); see also Bankr. R. 8013.

B. Partial Final Judgment Under Rule 54(b)

The Court must first consider whether the Bankruptcy

Court was correct in granting the SIPC’s motion for a partial

final judgment under Fed R. Civ. P. 54(b). 

The Bankruptcy Court granted the SIPC a final judgment

as to some but not all of the claims the SIPC has brought against

Murphy. In its January 20, 2005 decision, the Bankruptcy Court

granted the SIPC’s motion for partial summary judgment and held

that Murphy was liable for claims that the SIPC paid out to the

Fugate Estate, Enis Witt Best and Deborah Stone. The Bankruptcy

Court also held that Murphy is liable for the claim of Jeanne

Murphy in the amount of $840,667. This decision did not

represent a final determination as to all claims in this case

because the exact amount of Jeanne Murphy’s claim is still being

adjudicated.

 Following this decision, the SIPC moved for a final

judgment to be issued against Murphy in the amount of $251,158.12

under Rule 54(b). $251,158.12 represents the total amount of the

claims of Fugate, Best and Stone. The SIPC did not request a

final judgment as to the claim of Jeanne Murphy. The Bankruptcy

Court granted the SIPC’s motion on April 12, 2005. Thus, the

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2 To take an appeal of an interlocutory judgment by leave,

the appellant must file a notice of appeal which is accompanied

by a motion for leave to appeal to which the other party has an

opportunity to respond. Bankr. R. 8001(b); Bankr. R. 8003(a). 

No such motion has been filed in this case. A district court may

also grant leave to appeal even in the absence of a motion. 

Bankr. R. 8003(c). Here, Murphy has argued that the Bankruptcy

Court should not have granted a partial final judgment under Rule

54(b). Because Murphy has argued affirmatively against the

appealability of the Bankruptcy Court’s judgment, this Court will

not impose a right to appeal on him. Thus, the Court may only

hear this appeal if the Bankruptcy Court has issued a proper

final judgment under Rule 54(b).

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Bankruptcy Court has granted final judgment as to some, but not

all of the claims the SIPC has brought against Murphy.

If the Bankruptcy Court was correct to grant the SIPC’s

Rule 54(b) motion, then this Court can review the Bankruptcy

Court’s summary judgment decision and its holding that Murphy

post a bond as a condition of a stay being granted. However, if

the Bankruptcy Court was incorrect in its Rule 54(b)

determination, the Bankruptcy Court has not properly issued a

final order and Murphy could appeal the Bankruptcy Court’s orders

granting summary judgment and granting a stay only with leave of

the court.2 In re White Beauty View Inc., 841 F.2d 524, 527 (3d

Cir. 1988); 28 U.S.C. § 158(a)(3).

In considering the SIPC’s request for a partial final

judgment under Rule 54(b), the Bankruptcy Court looked first to

the language of the rule. Rule 54(b) states that when a case

involves multiple claims, a court may issue a final judgment as

to some but not all of the claims “only upon an express

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determination that there is no just reason for delay and upon the

express direction for the entry of judgment.” Fed. R. Civ. P.

54(b). 

The Bankruptcy Court then applied the factors set forth

in Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d

360 (3d Cir. 1975). Those factors are: 

(1) the relationship between the adjudicated and

unadjudicated claims; (2) the possibility that the need for

review might or might not be mooted by future developments

in the [bankruptcy] court; (3) the possibility that the

reviewing court might be obliged to consider the same issue

a second time; (4) the presence or absence of a claim or

counterclaim which could result in set-off against the

judgment sought to be made final; (5) miscellaneous factors

such as delay, economic and solvency considerations,

shortening the time of trial, frivolity of competing claims,

expense, and the like.

Allis-Chalmers, 521 F.2d at 364 (internal citations omitted). 

Depending on the facts of the particular case, all or some of

these factors may bear upon a determination under Rule 54(b). 

Id.

The Bankruptcy Court determined that the first four

factors weighed in favor of granting a partial final judgment,

but that the miscellaneous factors did not. Specifically, the

Bankruptcy Court found that: the only common element between the

liquidated claims of Fugate, Best and Stone and the unliquidated

claim of Jeanne Murphy is that Murphy will have to pay both of

them; its determination of the amount of Jeanne Murphy’s claim

would not affect an appellate review of the liquidated claims;

Case 2:05-cv-02311-MAM Document 9 Filed 10/14/05 Page 7 of 16
3 In reviewing a Rule 54(b) determination, a court must

consider two separate issues: (1) is the judgment final; and (2)

does a balance of the judicial administrative interests and

equities show that the judgment was ready for appeal. Waldorf v.

Shuta, 142 F.3d 601, 608 (3d Cir. 1998). Murphy has not

challenged the finality of the judgment. (Appellant Br. 8). 

Furthermore, the Bankruptcy Court made clear in its April 12,

2005 order that it was granting the SPIC’s motion for a partial

final judgment under Rule 54(b). The Court will consider

Murphy’s challenges to the Bankruptcy Court’s determination that

the judgment was ready for appeal.

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the appeal of the Jeanne Murphy claim would not implicate the

same issues as this appeal and even if it did, the law of the

case doctrine would apply; and there is nothing Murphy can do to

offset what he owes the SIPC. The Bankruptcy Court also found

that the SIPC has not demonstrated a pressing need for a final

judgment and found no evidence that the SIPC would be prejudiced

if its Rule 54(b) motion was not granted.

The Bankruptcy Court concluded that “while there may be

no reason for delay, there may also be no reason to hasten to

final judgment.” Despite this conclusion, the Bankruptcy Court

granted the SIPC’s Rule 54(b) motion, but then stayed that

judgment under Fed. R. Civ. P. 62(h).

Murphy has appealed the Bankruptcy Court’s grant of the

SIPC’s Rule 54(b) motion.3 First, Murphy has challenged the

Bankruptcy Court’s findings pursuant to its application of the

Allis-Chalmers factors. Second, Murphy asserts that the granting

of the SIPC’s Rule 54(b) motion was improper in light of the

Bankruptcy Court’s determination that the SIPC would not be

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prejudiced by the denial of its Rule 54(b) motion.

Generally, courts are less concerned about finality for

bankruptcy appeals. In re Jeannette Corp., 832 F.2d 43, 45 (3d

Cir. 1987). However, this liberal approach does not apply in

situations unrelated to the special needs of bankruptcy

litigation. Id. When dealing with an appeal of an adversary

proceeding, a court should apply the same concepts of

appealability as in general civil litigation. In re White Beauty

View, 841 F.2d at 526. Thus, the Court will apply general

concepts of finality in assessing the Bankruptcy Court’s issuance

of a partial final judgment under Rule 54(b).

First, the Court concludes that the Bankruptcy Court

did not abuse its discretion in applying the Allis-Chalmers

factors. The Supreme Court has held that a reviewing court

should overturn the trial court’s balance of the equities in a

Rule 54(b) determination only if the conclusions by the trial

court were clearly unreasonable. Curtiss-Wright Corp. v. Gen.

Elec. Co., 446 U.S. 1, 10 (1980). The trial court’s assessment

merits substantial deference. Id. 

The Bankruptcy Court carefully considered the factors

laid out in Allis-Chalmers and this Court sees no reason to

revisit that analysis. Except for a few conclusory statements

that there are still outstanding issues in this case and that

Murphy will have to relitigate the same issues, Murphy has not

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put forth any arguments that the Bankruptcy Court improperly

balanced the Allis-Chalmers factors. 

Second, the Court will consider whether the Bankruptcy

Court was correct to grant the SIPC’s Rule 54(b) motion in light

of its conclusion that the Allis-Chalmers factors were

essentially neutral as to the SIPC’s Rule 54(b) motion. 

The Supreme Court has instructed that a decision under

Rule 54(b) is best left to the sound discretion of a trial court. 

Curtiss-Wright Corp., 446 U.S. at 10. The proper role of a

reviewing court “is not to reweigh the equities or reassess the

facts but to make sure that the conclusions derived from those

weighings and assessments are juridically sound and supported by

the record.” Id. The Bankruptcy Court is in the best position

to weigh the various facts of this case. This Court finds no

reason to disturb the Bankruptcy Court’s balance of the equities

under Allis-Chalmers. The Court concludes, however, that the

Bankruptcy Court incorrectly applied the applicable legal

standard once the balance of the equities was complete.

The United States Court of Appeals for the Third

Circuit, in Panichella v. Pennsylvania Railroad Co., 252 F.2d 452

(3d Cir. 1958), and succeeding cases has made clear that in a

Rule 54(b) determination, the burden is on the party seeking a

partial final judgment to demonstrate that the matter is an

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4 The Supreme Court has held that the phrase “infrequent

harsh case” in isolation is not a reliable standard for appellate

review. Curtiss-Wright Corp., 446 U.S. at 10. That term is used

here simply as a description of the type of case that warrants a

Rule 54(b) determination.

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“infrequent harsh case”4 that merits a favorable exercise of

discretion. Allis-Chalmers, 521 F.2d at 365. Analyzing the

Panichella decision, a leading commentator concluded that some

showing must be made by the party desiring a Rule 54(b) judgment

to overcome the normal rule that no appeal be heard until the

entire case has been completed. Wright, Miller & Kane, Federal

Practice and Procedure: Civil 3d § 2659. 

Additionally, a Rule 54(b) motion should not be granted

unless there is some showing of hardship or unfairness that would

be alleviated by a Rule 54(b) determination. Panichella, 252

F.2d at 455; see also 10 Moore’s Federal Practice, § 54.23[1][b]

(Matthew Bender 3d ed. 2000). In addition to the Court of

Appeals’s decision in Panichella, cases in other circuits have

also required a showing of some hardship or injustice that would

be alleviated by an immediate appeal in order for a Rule 54(b)

determination to be proper. See e.g., O’Bert v. Vargo, 331 F.3d

29, 41 (2d Cir. 2003); Burlington N. R.R. Co. v. Bair, 754 F.2d

799, 800 (8th Cir. 1985); Rudd Constr. Equip. Co., Inc. v. Home

Ins. Co., 711 F.2d 54, 56 (6th Cir. 1983). 

Finally, “54(b) orders should not be entered routinely

or as a courtesy or accommodation to counsel” and should only be

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used for “the improved administration of justice and the more

satisfactory disposition of litigation.” Panichella, 252 F.2d at

455; see also 10 Moore’s Federal Practice, supra, § 54.23[3]. 

Although there is no precise test to determine when a Rule 54(b)

determination is properly made, such a determination is not to be

entered routinely. Curtiss-Wright Corp., 446 U.S. at 10-11. 

After weighing the Allis-Chalmers factors, the

Bankruptcy Court concluded that “while there may be no reason for

delay, there may also be no reason to hasten to final judgment.” 

This Court accepts that conclusion, but holds that such a

situation does not merit a grant of a partial final judgment

under Rule 54(b). 

First, the Bankruptcy Court did not find that the SIPC

had met its burden in showing that a Rule 54(b) determination was

appropriate. See Allis-Chalmers, 521 F.2d at 365. Rather, the

Bankruptcy Court found that the balance of the equities did not

weigh heavily for or against a Rule 54(b) determination. In such

a case, a court should not depart from the general rule that an

appeal should not be heard until the entire case is completed. 

See Wright, Miller & Kane, supra, § 2659.

Second, the Bankruptcy Court made no finding that any

injustice or hardship would be alleviated by granting the SIPC’s

motion for partial final judgment. See Panichella, 252 F.2d at

455; 10 Moore’s Federal Practice, supra, § 54.23[1][b]. Instead,

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the Bankruptcy Court found that the SIPC had not demonstrated a

pressing need for a Rule 54(b) determination. 

 Third, the Bankruptcy Court made no finding that this

case fell into the category of the “infrequent harsh case” or

that the administration of justice would be improved. See AllisChalmers, 521 F.2d at 365; Panichella, 252 F.2d at 455. In fact,

the Bankruptcy Court appeared to grant the SIPC’s Rule 54(b)

motion mostly as an accommodation to counsel by attempting to

strike a compromise by granting the Rule 54(b) motion and issuing

a stay simultaneously.

Finally, the Court notes that there is some confusion

regarding which claims were covered by the Bankruptcy Court’s

order granting a partial final judgment. Both parties and the

Court agree that the judgment that Murphy was liable for the

Best, Fugate and Stone claims was certified as final by the

Bankruptcy Court. The Court does not read the Bankruptcy Court’s

order as issuing a final judgment that Murphy was liable to the

SIPC for Jeanne Murphy’s claim. Although the Bankruptcy Court’s

April 12, 2005 order was not explicit as to which claims final

judgment was being entered for, that order stated that the SIPC’s

Rule 54(b) motion was granted. The SIPC’s 54(b) motion only

requested a final judgment against Murphy with respect to the

Best, Fugate and Stone claims. The Bankruptcy Court did make a

determination that Murphy is liable to the SIPC for at least

Case 2:05-cv-02311-MAM Document 9 Filed 10/14/05 Page 13 of 16
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$840,667 for the Jeanne Murphy claim in its January 20, 2005

order granting the SIPC partial summary judgment. However, no

such determination was included in the April 12, 2005 order that

granted the SIPC’s Rule 54(b) motion. 

That said, both parties seem to be under the impression

that the Bankruptcy Court also granted a final judgment that

Murphy was liable for the Jeanne Murphy claim in the amount of

$840,667. In fact, the parties have represented that enforcement

proceedings have commenced against Murphy with respect to the

Jeanne Murphy claim. 

 The United States Court of Appeals for the Third

Circuit has held that clear reasons should be set out to support

a Rule 54(b) determination. Anthuis v. Colt Indus. Operating

Corp., 971 F.2d 999, 1003 (3d Cir. 1992). To the extent that the

Bankruptcy Court’s order issuing a partial final judgment was

unclear as to which claims it covered, that is an additional

reason why the Bankruptcy Court’s Rule 54(b) determination was

improper.

III. Conclusion

For the foregoing reasons, the Bankruptcy Court’s

decision granting the SIPC’s motion for an express determination

under Rule 54(b) and for a partial final judgment should be

reversed. The Court is without jurisdiction to consider any

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other aspects of the Bankruptcy Court’s decision.

An appropriate Order follows.

Case 2:05-cv-02311-MAM Document 9 Filed 10/14/05 Page 15 of 16
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

EDWARD G. MURPHY, III, : CIVIL ACTION

Appellant :

:

v. :

:

SECURITIES INVESTOR PROTECTION :

CORP., :

Appellee : NO. 05-2311

ORDER

AND NOW, this 14th day of October, 2005, upon

consideration of the appeal by Edward G. Murphy, III of the

Bankruptcy Court’s Order of April 12, 2005, the briefs of the

appellant and appellee and arguments presented at a hearing held

on October 6, 2005, IT IS HEREBY ORDERED that for the reasons set

forth in a memorandum of this date, the Bankruptcy Court’s Order

is REVERSED to the extent that Order granted the SIPC’s Motion

for an Express Determination Under Rule 54(b) and for a Partial

Final Judgment. The Court is without jurisdiction to consider

any other aspects of the Bankruptcy Court’s Order.

BY THE COURT:

/s/ Mary A. McLaughlin

MARY A. MCLAUGHLIN, J. 

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