The Honorable Richard H. Battey, Chief Judge, United States 1

District Court the District of South Dakota.

___________

No. 96-1508 

___________

Steve Veltman; Sue Veltman, *

*

Appellants, *

* Appeal from the United States

v. * District Court for the

* District of South Dakota. 

Dennis Whetzal, Chapter 7 *

Trustee; Internal Revenue *

Service, *

*

Appellees. *

___________

 Submitted: June 12, 1996

 Filed: August 22, 1996

___________

Before BOWMAN, HEANEY, and BEAM, Circuit Judges.

___________

BEAM, Circuit Judge.

Steve and Sue Veltman (the Veltmans), co-owners of property in the

bankruptcy estate of Troy and Connzella Ray (the debtors), appealed to the

district court from ten bankruptcy court orders confirming the sale of

fifteen lots. The Veltmans alleged that they did not receive adequate

notice that the lots were to be sold free and clear of their ownership

interest. The Veltmans now appeal the district court's order dismissing 1

their bankruptcy appeal for lack of subject matter jurisdiction for failure

to file a timely notice of appeal. We affirm. 
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I. BACKGROUND

In January 1993, the debtors filed a petition under Chapter 11 of the

Bankruptcy Code (Code). The bankruptcy estate included fifteen undeveloped

lots located in Oak Mountain Estates, Lawrence County, South Dakota. The

debtors owned an undivided twenty-five percent interest in the property

with the Veltmans. In July 1993, the Veltmans filed a motion in bankruptcy

court to partition their interest in the property. The bankruptcy court

entered an interim order authorizing the Chapter 11 debtors to sell the

lots free and clear of liens and encumbrances with the proceeds to be held

in escrow until the final hearing on the motion to partition. The Internal

Revenue Service (IRS)--a creditor with a lien on the property--objected to

this order because it had not received sufficient notice. In February

1994, the bankruptcy court entered an amended interim order on the

Veltmans' motion to partition. This order again authorized the debtors to

sell the property free and clear of liens and encumbrances with the

proceeds to be held in escrow until the final hearing on the motion to

partition. All liens and encumbrances, including the IRS lien, were to

attach to the proceeds.

Subsequently, the Veltmans, the debtors, and Norwest Bank of South

Dakota (Norwest) (a creditor claiming an interest in the property)

negotiated and entered into a stipulation whereby Norwest would receive

sixty percent of all net proceeds of sales up to $63,000 plus interest.

Under the stipulation, the Veltmans would not receive their twenty-five

percent interest; rather, they would receive the remaining forty percent

of all net proceeds of sales up to $77,177.03 plus interest. The IRS

opposed this stipulation because the government was not included in the

division of the proceeds. Nevertheless, on August 5, 1994, the bankruptcy

court approved the stipulation over the objection of the IRS, with the

condition that the stipulation would be subject to the terms of the amended

interim order. One such term provided:
 The Veltmans did not execute and deliver the deeds, however, 2

until ordered to do so by the district court in the spring of 1996.

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"[T]hat the Debtors are authorized to sell lots free and clear

of all liens and encumbrances with the sales proceeds remaining

after payment and settlement of the authorized expenditures to

be escrowed in an interest-bearing account, with all liens and

encumbrances on the real estate to attach to the proceeds of

the sale in the order of their priority, including any liens of

the United States of America, acting through the Internal

Revenue Service, with such priority and distribution of

proceeds to be determined by this [bankruptcy court] at a

future hearing in this case."

Veltman v. Whetzal, 192 B.R. 201, 202 (D.S.D. 1996) (quoting the Order

Approving Stipulation, dated August 5, 1994, at 1-2). 

In January 1995, the debtors' Chapter 11 case was converted to a

Chapter 7 proceeding. In August, the Chapter 7 trustee, Dennis Whetzal

(Trustee), filed a motion requesting the bankruptcy court to authorize the

sale of the real property "free and clear of all liens, encumbrances and

interests." Id. (emphasis added by district court). Interested parties,

including the Veltmans, received notice of the motion. No objections to

this motion were filed and on September 8, 1995, the bankruptcy court

entered an order approving the sale. In this order, the bankruptcy court

stated that the sale of the real property was subject to the terms and

conditions set forth in the Trustee's motion. The Veltmans did not appeal

this decision.

Prior to the sale, the Trustee asked the Veltmans to commit to

selling their interest at the auction and delivering their deeds at

closing. The Veltmans agreed in a letter dated September 29, 1995, in

which they also referenced the stipulation. The property was sold at an

auction for approximately $273,000. The Trustee prepared deeds for the

Veltmans to execute. On October 3, 1995, the Trustee filed a motion to

2

confirm the sale of the real property
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free of all liens, encumbrances, and interests in the property. The

Veltmans filed an objection to the Trustee's motion, stating that: (1)

they were willing to comply with the stipulation and the bankruptcy court

order dated August 5, 1994; (2) they had no objection to the sale of their

interest in the property on the terms and conditions of the stipulation;

(3) they had no objection to the results of the auction sale; and (4) they

did not want their proceeds to be commingled with the funds of the

bankruptcy estate. The Veltmans then filed a motion to release the

proceeds of the sale according to the terms of the stipulation. The

bankruptcy court denied the Veltmans' motion and confirmed the sale in ten

separate orders dated October 26, 1995. On November 2, 1995, the Veltmans

filed a notice of appeal from those orders and a motion to stay action

pending appeal, which the bankruptcy court denied on November 6, 1995. 

The Veltmans appealed to the district court, which found that it

lacked subject matter jurisdiction to decide the case because the Veltmans

had failed to appeal the September 8th bankruptcy court order authorizing

the sale of the real property within ten days of the date of the entry of

judgment as required. See Fed. R. Bankr. P. 8002(a). Rejecting the

Veltmans' contention that the order of September 8, 1995, failed to provide

them with adequate notice of any intent to sell the property free and clear

of their ownership interest, the district court dismissed the Veltmans'

appeal. The Veltmans now appeal from the district court's order. 

On appeal, the Veltmans contend that their notice of appeal filed on

November 2, 1995, was timely. They argue that the bankruptcy court's

October 26th orders confirming the sale notified them for the first time

that the property was sold free and clear of their interest. They also

assert that the bankruptcy court could not transfer their fee interest in

the property without first conducting an adversarial proceeding.
 The Veltmans do not assert that the notice requirements set 3

out in the bankruptcy rules were violated. See Fed. R. Bankr. P.

2002.

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II. DISCUSSION

We must first determine which bankruptcy court order authorized the

sale of the property free and clear of the Veltmans' interest. The

Veltmans contend that the September 8th order did not so authorize the sale

of the property because: (1) that order failed to provide them with

adequate notice; and (2) the bankruptcy court failed to comply with

provisions in the Code that require an adversarial proceeding and specific

determinations prior to selling the interest of a non-debtor co-owner.

Turning first to the question of adequate notice, we agree with the

district court that the September 8th order provided the Veltmans with

sufficient notice that the property was to be sold free and clear of their

interest. Under the Code, a Chapter 7 trustee has the authority to sell 3

the real property in the bankruptcy estate after notice and a hearing. 11

U.S.C. § 363(b)(1). The notice and hearing required prior to sale of the

real property are defined in the Code as follows:

(1) "after notice and a hearing", or a similar phrase--

(A) means after such notice as is appropriate in

the particular circumstances, and such opportunity

for a hearing as is appropriate in the particular

circumstances; but

(B) authorizes an act without an actual hearing if

such notice is given properly and if--

(i) such a hearing is not requested

timely by a party in interest.

. . . . 
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11 U.S.C. § 102(1). The bankruptcy court's September 8th order approved

the sale of the property subject to the terms and conditions set out in the

Trustee's motion. One such condition was that the court authorize the sale

of the real property free and clear of all liens, encumbrances and

interests. This language provided the Veltmans with adequate notice that

the property was to be sold free and clear of their ownership interest.

They filed no objection to the Trustee's motion and did not appeal the

bankruptcy court's September 8th order. Therefore, the Veltmans received

adequate notice and waived their request for a hearing.

The Veltmans first filed a notice of appeal on November 2, 1995,

after the bankruptcy court entered several orders confirming the sale of

the property on October 26, 1995. In general, failure to file a timely

notice of appeal from a bankruptcy court's order deprives the district

court of jurisdiction to review that order. See, e.g., Jacobson v.

Nielsen, 932 F.2d 1272 (8th Cir. 1991) (per curiam). An appeal from a

bankruptcy court order to a district court must be made by filing a notice

of appeal with the clerk within ten days of the entry of that order. Fed.

R. Bankr. P. 8001(a) & 8002(a). We agree with the district court that the

Veltmans should have filed their notice of appeal within ten days of

September 8, 1995. See Fed. R. Bankr. P. 9006(a) (setting out the method

to calculate the ten-day period). Therefore, the district court correctly

concluded that it lacked subject matter jurisdiction to review the

bankruptcy court's September 8th order.
 As argued by the IRS in its motion to dismiss for lack of

4

subject matter jurisdiction, which was submitted to us after oral

argument, once a sale becomes final and a stay is not entered the

sale cannot be reviewed on appeal. See 11 U.S.C. § 363(m); see

also In re CGI Indus., Inc., 27 F.3d 296, 299 (7th Cir. 1994)

(stating that two complementary policies support this conclusion:

(1) the importance of encouraging finality in bankruptcy sales by

protecting good-faith purchasers; and (2) the court's general

jurisdictional bar from deciding cases in which it cannot provide

a remedy). But see In re Moberg Trucking, Inc., 112 B.R. 362, 363

(Bankr. 9th Cir. 1990) (stating that subsection 363(m) does not

render an appeal unreviewable when the appellant seeks to attack

the section 363 sale on the grounds of improper notice). The IRS

also submitted an affidavit by the Trustee in which the Trustee

attested that the real property had been conveyed to each buyer by

trustee's deed, that the Veltmans had supplied the warranty deeds

as ordered by the district court, and that those deeds had been

filed. 

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We also doubt that the October 26th orders are now reviewable because

the property has already been sold. See 11 U.S.C. § 363(m). Even if we 4

review the later bankruptcy court orders of
 Because the Veltmans consented to the sale of the property, 5

we need not rely on a theory of implied consent. Some courts have

found implied consent, however, when a party with an interest in

the bankruptcy estate fails to object after receiving notice of the

sale under subsection 363(f)(2). See In re Tabone, Inc., 175 B.R.

855, 858 (Bankr. D.N.J. 1994); In re Elliot, 94 B.R. 343, 345 (E.D.

Pa. 1988).

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October 26, the Veltmans have failed to establish that the bankruptcy court

erred in authorizing the sale of the property free and clear of the

Veltmans interest. Under the Code, a bankruptcy trustee may sell property

of the bankruptcy estate under subsection 363(b) "free and clear of any

interest in such property of an entity other than the estate" if "such

entity consents." 11 U.S.C. § 363(f)(2). In the stipulation, the Veltmans

consented to the sale of the property free and clear of their interest.

They also consented to the sale of their property interest in their letter

of September 29, 1995. Moreover, the Veltmans did not dispute their

obligation to execute and supply the deeds to the real property in their

objection to the bankruptcy court's October orders confirming the sale.

Instead, they objected to any sale in which they would receive an amount

different than the sum agreed to in the stipulation. Thus, the Veltmans

consented to the sale of the lots and have waived any objection to the

sale. 

5

The Veltmans contend that their consent to the sale was conditioned

upon the enforcement of the stipulation. The Veltmans
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understandably express concern about the amount they will receive for their

property interest without the protection of the stipulation. Because this

question is essentially one of valuation, however, it is best left to the

bankruptcy court to resolve. While we recognize that the stipulation was

entered into while the case was proceeding under Chapter 11, the terms of

the stipulation seem to provide a fair and equitable resolution to the

valuation dispute. Unlike other "creditors," the Veltmans had an ownership

interest in the property. Moreover, the stipulation was executed by the

parties and accepted by the bankruptcy court on several occasions. Lastly,

as the district court noted, the Trustee did not submit a proposed

distribution of sale proceeds to the bankruptcy court. Veltman, 192 B.R.

at 202-03. In any event, we leave it to the bankruptcy court to determine

the value of the Veltmans' property interest in the fund.

The Veltmans next contend that the bankruptcy court erred in

authorizing the sale of their property interest without first complying

with bankruptcy provisions that require an adversarial proceeding prior to

the sale of an innocent co-owner's interest in a bankruptcy estate. See

11 U.S.C. § 363(h); Fed. R. Bankr. P. 7001. As discussed above, we do not

have subject matter jurisdiction to review the September 8th order

authorizing the sale because the Veltmans failed to file a timely notice

of appeal from that order. Moreover, it is doubtful that any of the

bankruptcy court's orders are reviewable now that the sale of the property

has become final. See 11 U.S.C. § 363(m); see also supra note 4. In any

event, the Veltmans have waived this argument by failing to present it to

the bankruptcy court in a timely manner. 

If we reviewed the Veltmans' contention, we would find it to be

without merit. As the Veltmans acknowledge in their brief, subsection

363(h) is inapplicable if the non-debtor property owner consented to the

sale. We have already concluded that the Veltmans consented to the sale

of the property free and clear of their
 The Veltmans reliance on In re Wickham, 127 B.R. 9, 11

6

(Bankr. E.D. Va. 1990) is misplaced. In that case, the court held

that the trustee must comply with the requirements of subsection

363(h) as well as those in subsection 363(f) to sell a non-debtor,

co-owner's interest in tenancy by the entirety property in the

bankruptcy estate because the co-owner opposed the sale. The

Veltmans' consent to the sale makes this a different case.

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interest and thus neither the protection provided by subsection 363(h) nor

a hearing was necessary.6

 

III. CONCLUSION

For the reasons discussed above, we conclude that we lack subject

matter jurisdiction to review this appeal. Accordingly, we affirm the

district court's order and leave it to the bankruptcy court to resolve the

valuation question as to the amount the Veltmans should receive for their

ownership interest in the property that was sold. The parties may also

present their arguments for costs, damages, and sanctions to the bankruptcy

court for consideration along with the valuation issue. All pending

motions are denied.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.