Opinion ID: 779117
Heading Depth: 1
Heading Rank: 3

Heading: Did the Bankruptcy Court Have Jurisdiction to Enter the Second Supplemental Order?

Text: 24 It is a fundamental tenet of federal civil procedure that — subject to certain, defined exceptions — the filing of a notice of appeal from the final judgment of a trial court divests the trial court of jurisdiction and confers jurisdiction upon the appellate court. See, e.g., Griggs v. Provident Consumer Co., 459 U.S. 56, 58, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982) (The filing of a notice of appeal is an event of jurisdictional significance — it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.). This rule applies with equal force to bankruptcy cases. See In re Statistical Tabulating Corp., Inc., 60 F.3d 1286, 1289 (7th Cir.1995). In the instant case, the bankruptcy court's February 7, 2000 confirmation order was a final order. Thus, the state taxing authorities' February 8, 2000 notice of appeal of the confirmation order divested the bankruptcy court of jurisdiction over the case and placed jurisdiction in the appellate court (i.e., the district court). Unless Transtexas's February 16, 2000 motion falls within the class of postjudgment motions that (when timely filed) will divest an appellate court of jurisdiction and return jurisdiction to the trial court, the bankruptcy court had no jurisdiction to enter the second supplemental order and the district court erred in affirming this order on the merits. 25 Federal Rule of Bankruptcy Procedure 8002(b) (an adaption of Federal Rule of Appellate Procedure 4(a)(4)) addresses the effect of postjudgment motions on notices of appeal. That rule states, in pertinent part: 26 If any party makes a timely motion of a type specified immediately below, the time for appeal for all parties runs from the entry of the order disposing of the last such motion outstanding. This provision applies to a timely motion: 27 (1) to amend or make additional findings of fact under Rule 7052, whether or not granting the motion would alter the judgment; 28 (2) to alter or amend the judgment under Rule 9023; 29 (3) for a new trial under Rule 9023; or 30 (4) for relief under Rule 9024 if the motion is filed no later than 10 days after the entry of judgment. 31 A notice of appeal filed after announcement or entry of the judgment, order, or decree but before disposition of any of the above motions is ineffective to appeal from the judgment, order, or decree, or part thereof, specified in the notice of appeal, until the entry of the order disposing of the last such motion outstanding.... 32 FED. R. BANKR.P. 8002(b). Thus, Bankruptcy Rule 8002 dictates that a number of postjudgment motions will render the underlying judgment nonfinal, both when filed before an appeal is taken — thus tolling the time for taking an appeal — and when filed after the notice of appeal — thus divesting the appellate court of jurisdiction and rendering the previously-filed notice of appeal dormant until the postjudgment motion is adjudicated, see Burt v. Ware, 14 F.3d 256, 258 (5th Cir.1994). If Transtexas's February 16, 2000 motion is properly construed as one of the motions referenced in Bankruptcy Rule 8002, then the bankruptcy court had jurisdiction to enter the second supplemental order on February 18, 2000, regardless of the state taxing authorities' February 8, 2000 notice of appeal. 33 At the bankruptcy court's February 17, 2000 hearing to consider Transtexas's February 16 motion seeking entry of a separate order reiterating the interest rate applicable to the state taxing authorities' priority tax claims, the state taxing authorities argued that the bankruptcy court had no jurisdiction to enter the requested postjudgment order because Transtexas's motion could not properly be construed as any of the types of motions that would divest an appellate court of jurisdiction. The state taxing authorities specifically addressed whether Transtexas's motion could properly be construed as a Rule 59(e) (Bankruptcy Rule 9023) motion to alter or amend the judgment, which would divest the appellate court (i.e., the district court) of jurisdiction. The state taxing authorities initially argued that Transtexas's motion was not a Rule 59(e) motion because it did not seek the type of relief provided by Rule 59(e). They pointed out that Transtexas's motion did not ask the bankruptcy court to alter or amend the confirmation order but, instead, merely asked the bankruptcy court to reiterate a provision of that confirmation order in a separate order. The state taxing authorities further argued that, even if Transtexas's motion could be construed as a motion under Rule 59(e), the motion should be denied on the merits because none of the traditional justifications for granting relief pursuant to Rule 59(e) was applicable. 34 In response to the jurisdictional objections voiced by the state taxing authorities at the February 17, 2000 hearing, the bankruptcy court acknowledged that there might be a procedural problem with granting Transtexas's February 16 motion and entering a second supplemental order. However, the court apparently determined that pragmatic concerns outweighed any jurisdictional defect. This determination was erroneous. 35 Certainly, the unique nature of bankruptcy proceedings, combined with the public policy interest in promoting successful reorganizations, often favors tolerance of greater procedural flexibility in bankruptcy cases. Concepts of finality, for example, are less concrete in the bankruptcy context and, thus, principles disfavoring appeal of orders that do not dispose of an entire case are often less rigorously adhered to in bankruptcy cases. See, e.g., Bartee v. Tara Colony Homeowners Assoc. (In re Bartee), 212 F.3d 277, 282-83 (5th Cir.2000) (describing this court's flexible approach to finality in bankruptcy proceedings); see also 16 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3926.2 (2d ed. 1996 & Supp.2002) (explaining the rationale underlying the more flexible approach to finality that is usually adopted in bankruptcy cases). However, these principles of flexibility do not permit a bankruptcy court to enter an order addressing a postjudgment motion when the bankruptcy court lacks jurisdiction over the case (or over the portion of the case addressed in the postjudgment motion) 2 simply because prompt disposition of the motion might be desirable from an efficiency standpoint. Such pragmatic concerns cannot outweigh a jurisdictional defect. 36 Unless Transtexas's February 16, 2000 motion divested the appellate court (i.e., the district court) of jurisdiction, the bankruptcy court lacked jurisdiction to enter the February 18, 2000 supplemental order that is before us in this appeal. As noted above, Transtexas's motion did not specifically invoke any of the Federal Rules of Civil Procedure or the Bankruptcy Rules. Thus, it is unclear what type of postjudgment motion Transtexas was intending to file. However, the absence of such specificity is not dispositive. In determining how to construe a postjudgment motion, we look beyond the form of the document and examine its substance to determine how the motion is best characterized. See, e.g., N. Alamo Water Supply Corp. v. City of San Juan, Tex., 90 F.3d 910, 918 (5th Cir.1996). Among the types of motions listed in Bankruptcy Rule 8002 (Federal Rule of Appellate Procedure 4(a)(4)) that will toll the time for taking an appeal or divest an appellate court of jurisdiction by rendering dormant a previously-filed notice of appeal, the only categories that might encompass Transtexas's February 16 request are a Rule 59(e) (Bankruptcy Rule 9023) motion to alter or amend the judgment or a Rule 60(a) (Bankruptcy Rule 9024) motion to correct a clerical error. However, Transtexas's request is not properly construed as either of these types of motions. 37 A Rule 59(e) motion is a motion that calls into question the correctness of a judgment. Rule 59(e) is properly invoked to correct manifest errors of law or fact or to present newly discovered evidence. Waltman v. Int'l Paper Co., 875 F.2d 468, 473 (5th Cir.1989) (quoting Keene Corp. v. Int'l Fid. Ins. Co., 561 F. Supp. 656, 665 (N.D.Ill.1982) (internal quotations omitted)). Transtexas's February 16 motion requesting entry of a separate order reiterating the provision of the confirmation order establishing the interest rate applicable to the state taxing authorities' priority tax claims suggests no manifest error of law and refers to no newly-discovered evidence. This motion seeks — at most — only a change in the form of the judgment. Thus, the substance of Transtexas's motion reveals that (if this request can even be characterized as one of the postjudgment motions recognized by the Federal Rules of Civil Procedure or the Bankruptcy Rules) it is perhaps more akin to a motion to correct a clerical error under Rule 60(a) (Bankruptcy Rule 8002). 3 38 There is some indication from the hearing transcript that the bankruptcy court might have been treating Transtexas's February 16 motion as if it were a motion to correct a clerical error under Rule 60(a). However, Transtexas's motion is not a proper Rule 60(a) motion because Transtexas does not seek the type of relief provided for in this rule. 39 As this court has repeatedly indicated, Rule 60(a) provides a specific and very limited type of relief. See, e.g., In re W. Tex. Mktg. Corp., 12 F.3d 497, 503 (5th Cir.1994); Am. Precision Vibrator Co. v. Nat'l Air Vibrator Co. (In re Am. Precision Vibrator Co.), 863 F.2d 428, 429-30 (5th Cir.1989). Rule 60(a) finds application where the record makes apparent that the court intended one thing but by merely clerical mistake or oversight did another. Such a mistake must not be one of judgment or even of misidentification, but merely of recitation, of the sort that a clerk or amanuensis might commit, mechanical in nature. W. Tex. Mktg., 12 F.3d at 503 (quoting Dura-Wood Treating Co., Div. of Roy O. Martin Lumber Co. v. Century Forest Ind., Inc., 694 F.2d 112, 114 (5th Cir.1982) (internal citations and quotations omitted in original)). In the instant case, neither party contends that the interest rate established in the confirmation order was the result of a clerical error or that entry of the second supplemental order was necessary to clarify or correct the confirmation order. Both parties agree that the second supplemental order merely reiterated a determination by the bankruptcy court that was already correctly reflected in the existing confirmation order. Under these circumstances, we cannot construe Transtexas's February 16 motion requesting entry of a separate order reiterating the interest rate applicable to the state taxing authorities' priority tax claims as a proper Rule 60(a) motion, nor can we construe the bankruptcy court's second supplemental order as an order correcting clerical mistakes in judgments, orders, or other parts of the record and errors therein arising from oversight or omission pursuant to this rule. FED. R.Civ.P. 60(a); cf. Lee v. Joseph E. Seagram & Sons, Inc., 592 F.2d 39, 43 (2d Cir.1979) (reasoning that portions of a judgment or order that are clearly accurate and intentional cannot be altered by invoking Rule 60(a)); Ferraro v. Arthur M. Rosenberg, Inc., 156 F.2d 212, 214 (2d Cir.1946) (reasoning that when no clerical error [i]s shown it change[s] nothing to call deliberate action accurately reflected in the record a clerical error for the purpose of attempting to invoke Rule 60). 40 Because Transtexas's February 16, 2000 motion is not properly construed as a Rule 60(a) motion seeking to correct a clerical error, a Rule 59(e) motion seeking to alter or amend a judgment, or any of the other motions that can divest an appellate court of jurisdiction pursuant to Bankruptcy Rule 8002 (Federal Rule of Civil Procedure 4(a)(4)), the bankruptcy court had no jurisdiction to enter the second supplemental order reiterating the interest rate applicable to the state taxing authorities' priority tax claims. The district court thus erred in affirming this order.