Opinion ID: 1038460
Heading Depth: 1
Heading Rank: 4

Heading: Applicability of Equitable Mootness

Text: Before applying the prudential factors to this appeal, we note a preliminary issue raised by the parties. Federal Rule of Bankruptcy Procedure 7001 provides that certain bankruptcy matters—including, according to Appellants, their claims—must be resolved through adversary proceedings. Those proceedings, which approximate civil actions, provide similar procedural protections as the Federal Rules of Civil Procedure. 10 Collier on Bankruptcy ¶ 7001.01 (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. rev. 2013). The parties disagree on whether an appeal asserting a denial of these protections can be dismissed as equitably moot. Appellants assert that the equitable mootness doctrine cannot preclude their appeal because they have a due process right to an adversary proceeding that overrides any interest in preserving the finality of confirmation orders. They rely on our decision in In re Mansaray–Ruffin, 530 F.3d 230 (3d Cir. 8 The Bankruptcy Code does forbid appellate review of certain un-stayed orders. See 11 U.S.C. § 363(m) (order to sell or lease property); id. § 364(e) (order to obtain postpetition financing). Because of these statutory bars, however, equitable mootness is irrelevant in those instances. 14 2008), to support that argument. There, a debtor purported to invalidate a lien on her property by providing for it as an unsecured claim in her confirmed plan instead of filing an adversary proceeding. Id. at 243. Though confirmed plans are normally binding, 11 U.S.C. § 1327, we held that this did not preclude the creditor from seeking to enforce the lien in a subsequent action. Id. Where Rule 7001 “require[s] an adversary proceeding—which entails a fundamentally different, and heightened, level of procedural protections—to resolve a particular issue, a creditor has the due process right not to have that issue resolved without one.” Id. at 242. “The mandatory nature” of this due process right “trump[s] [the] finality” of confirmed plans. Id. at 238. Appellants assert that their right to an adversary proceeding similarly overrides any finality interests promoted by the equitable mootness concept. Debtors respond that the Supreme Court’s decision in United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010), effectively overrules Mansaray. A creditor filed a motion in Espinosa seeking relief from a confirmation order on the ground that the debtor had attempted to discharge her student loan debt without filing an adversary proceeding as required by the Bankruptcy Rules. The Supreme Court held that this error was insufficient to vacate the Bankruptcy Court’s order confirming the plan. Id. at 269–72. Though Federal Rule of Civil Procedure 60(b)(4), which allows a court to void a final judgment, “applies . . . where [the] judgment is premised . . . on a violation of due process,” the failure to file an adversary proceeding did not deny the creditor due process. Id. at 271–72. To the contrary, sufficient process was afforded by providing notice of and an opportunity to object to the debtor’s plan. That holding, Debtors argue, overturns our determination in Mansaray that the Bankruptcy Rules establish due process rights that can trump finality. 15 Though this issue is intriguing, we need not, and do not, address it in this opinion. This is so because, no matter how we would resolve the issue, equitable mootness was not a proper shield here.