Opinion ID: 1321157
Heading Depth: 2
Heading Rank: 2

Heading: The Bankruptcy Court's Dictum

Text: We come, then, to what we view to be the real motivation for this appeal from the bankruptcy court's decision. Nelson challenges the court's statement that RTI did not file its Chapter 11 petition in bad faith. According to Nelson, because the court dismissed the bankruptcy case based on RTI's inability to reorganize under Chapter 11, rather than on a bad-faith petition, the court's good-faith statement was dictum that was not essential to the outcome. See Tate v. Showboat Marina Casino P'ship, 431 F.3d 580, 582 (7th Cir. 2005). Nelson further urges us to strike this dictum from the record, thereby hoping to avoid the preclusive effect of the bankruptcy court's statement in yet another lawsuit against E. James and Kathleen Emerson in Delaware state court. In that action, the Delaware Chancery Court held that the bankruptcy court's good-faith finding, as affirmed by the district court, precluded Nelson's claim that the Emersons breached their fiduciary duty to RTI by filing for bankruptcy in bad faith. Nelson v. Emerson, C.A. No. 2937-VCS, 2008 WL 1961150, at - (Del.Ch. May 6, 2008) (unpublished). Nelson is correct that the bankruptcy court's statement about RTI's good faith was dictum. This language was not essential to the outcome of dismissing RTI's bankruptcy case. Tate, 431 F.3d at 582. In fact, the court's conclusion that RTI did not file for bankruptcy in bad faith supports the exact opposite outcome, since a bad-faith petition is one ground for dismissing a Chapter 11 case. See Fruehauf Corp. v. Jartran, Inc. (In re Jartran, Inc.), 886 F.2d 859, 867 (7th Cir.1989). Still, Nelson's challenge to the bankruptcy court's dictum does not create a justiciable controversy because dicta are not appealable rulings. Chathas v. Local 134 IBEW, 233 F.3d 508, 512 (2000); see also Abbs v. Sullivan, 963 F.2d 918, 924 (7th Cir.1992) (There is no known basis for an appeal from a dictum. (quotation omitted)). We review judgments, not explanatory language in lower court opinions. In re UAL Corp., 468 F.3d 444, 449 (7th Cir.2006). The recharacterization and equitable subordination issues that were essential to the bankruptcy court's judgment are moot, and Nelson's complaint about the court's good-faith dictum does not establish federal jurisdiction. We will accordingly vacate the judgment of the district court in the In re RTI adversary proceeding and remand with instructions to dismiss the appeal from the bankruptcy court as moot.