Opinion ID: 170980
Heading Depth: 2
Heading Rank: 2

Heading: Cohen Doctrine

Text: The parties argue that they may appeal under the collateral-order exception to the final judgment rule established by Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). To qualify for this limited exception, the order must conclusively determine the disputed question ..., resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment. In re Magic Circle Energy Corp., 889 F.2d 950, 954 (10th Cir.1989). Before reaching the Cohen question, however, we first note that this appeal presents a particularly unique circumstance. As we explain below, the bankruptcy court's order does not fall within the collateral-order exception. And while the BAP affirmed the bankruptcy court, it did so based on a different legal rationale that arguably brings part of the BAP's order within the scope of the exception. In such a case, it is unclear whether the BAP's order cures the nonfinality of the bankruptcy court's order such that the BAP order may be considered final and appealable under § 158. It is not necessary to answer this question, however, because we do not have jurisdiction even if that is the case.

The bankruptcy court's refusal to dismiss claims pertaining to the Rock Springs property is not an appealable collateral order because it is not effectively unreviewable on appeal from entry of a final judgment in the adversary proceeding. WULA suggests that it will irrevocably lose the right to defend these claims in a single forum (the receivership proceeding in Washington state court) unless we permit review now, but this argument fails because WULA has no such right. See Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Old Sec. Life Ins. Co., 600 F.2d 671, 677 (7th Cir.1979) (holding that a delinquent insurance company did not have a right to a single-state forum through application of the McCarran-Ferguson Act and the Missouri Insurance Act, and thus the district court's refusal to dismiss claims was not appealable under the collateral-order doctrine). The Washington Uniform Insurers Liquidation Act does not itself create an exclusive forum in Washington state court. Rather, the Act expressly contemplates that separate claims may be tried in other forums; for example, the Act authorizes the receivership court to stay proceedings when an action should be brought in a forum outside the state. See WASH. REV.CODE ANN. § 48.31.111(4); see also Old Sec. Life Ins., 600 F.2d at 677 (reasoning that the Missouri Insurance Act does not create an exclusive single-state forum). Furthermore, to the extent WULA argues that the collateral-order exception applies because the state court injunction divests the bankruptcy court of jurisdiction, its argument fails because this jurisdictional question may be reviewed on appeal from a final judgment. As a general rule, the denial of a motion to dismiss, even when the motion is based upon jurisdictional grounds, is not immediately reviewable. In re Magic Circle, 889 F.2d at 954 (emphasis added) (quotation omitted). Thus, the denial of WULA's motion to dismiss is not a final collateral order entitled to immediate review.
The Debtors do not argue that the bankruptcy court's disposition of these claims meets the three Cohen requirements for interlocutory appeal of a collateral order, arguing only that the BAP's order falls within the exception. In addition, the satisfaction of these requirements is not apparently based on the bankruptcy court's order. Indeed, the court did not even identify the specific claims it was dismissing, describing them only as those claims not pertaining to the Rock Springs property. Under these circumstances, we cannot say that the bankruptcy court's order is a final collateral order. See Timpanogos Tribe v. Conway, 286 F.3d 1195, 1200 (10th Cir.2002) (noting that [t]he collateral order doctrine sets a high bar for any interlocutory appeal).
The BAP held that the bankruptcy court correctly determined that the McCarran-Ferguson Act did not apply to the claims pertaining to the Rock Springs property; thus, it concluded that the bankruptcy court properly denied WULA's motion to dismiss those claims. Therefore, that part of the BAP's order does not meet the Cohen requirements for the same reasons we have described above. As to the other claims, however, the BAP decided that the bankruptcy court properly dismissed them, but did so for the wrong reason. Specifically, the BAP determined that the bankruptcy court erred in its conclusion that the McCarran-Ferguson Act applied to those claims and thus provided a basis for dismissal. But the BAP reasoned that the bankruptcy court could have permissively abstained from hearing the claims under 28 U.S.C. § 1334(c)(1). Thus, the BAP affirmed on that basis. Ordinarily, a decision to abstain satisfies the collateral-order doctrine. See Mt. McKinley Ins. Co. v. Corning, Inc., 399 F.3d 436, 442 (2d Cir.2005). However, as to the ground for abstention at issue here, Congress has expressly limited appellate jurisdiction. 28 U.S.C. § 1334(d) provides: Any decision to abstain or not to abstain made under subsection (c) (other than a decision not to abstain in a proceeding described in subsection (c)(2)) is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title.... Here, the Debtors argue that even though § 1334(d) normally divests this court of jurisdiction over decisions to abstain under § 1334(c)(1), that jurisdictional bar is not applicable because it was the BAP, rather than the bankruptcy court, that held that abstention was warranted under § 1334(c)(1). According to the Debtors, the BAP lacked the authority to apply § 1334(c)(1) in the first instance, and the case should be remanded to the bankruptcy court for a determination whether abstention is warranted under § 1334(c)(1). In similar situations, parties have been allowed to challenge a court's authority to make a decisioneven though the merits of that decision are not reviewable. See, e.g., Ill. Mun. Ret. Fund v. Citigroup, Inc., 391 F.3d 844, 848-50 (7th Cir.2004); Kelton Arms Condo. Owners Ass'n, Inc. v. Homestead Ins. Co., 346 F.3d 1190, 1191-92 (9th Cir.2003). We are persuaded by those cases, and therefore conclude that we have jurisdiction to consider the debtors' argument that the BAP lacked the authority to apply § 1334(c)(1) in the first instance. Nevertheless, we further conclude that the BAP acted within its authority in applying § 1334(c)(1). Under 28 U.S.C. § 158(d), [a] bankruptcy appellate panel has jurisdiction to decide legal matters not resolved by the trial court upon the record presented to it. Wright & Miller, § 4106, at 558. Here, the BAP's application of § 1334(c)(1) involved such legal matters. Because the BAP acted within its authority, our review of its decision may proceed no further. In light of § 1334(d), we lack jurisdiction to review the merits of the § 1334(c)(1) abstention issue.