Opinion ID: 3052182
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: We must first address the question whether we have jurisdiction over an order removing a trustee from an ongoing bankruptcy proceeding, a question of first impression in our circuit. The BAP concluded, and the parties agree, that the removal of a Bankruptcy Trustee is a final, appealable order. Our consideration of our jurisdiction does not rest there, however, as we must consider the question of our own jurisdic- The Honorable Ralph R. Beistline, United States District Judge for the District of Alaska, sitting by designation. IN THE MATTER OF: AFI HOLDING, INC. 6953 tion. 28 U.S.C. § 158(d) vests jurisdiction in the Courts of Appeals over appeals only from all “final decisions, judgments, orders, and decrees entered” either by the district courts or the BAP. We have “adopted a pragmatic approach to finality in bankruptcy cases.” In re Lazar, 237 F.3d 967, 985 (9th Cir. 2001) (internal quotation marks and citation omitted). “[A] bankruptcy court order is final and thus appealable where it 1) resolves and seriously affects substantive rights and 2) finally determines the discrete issue to which it is addressed.” Id. (quoting In re Lewis, 113 F.3d 1040, 1043 (9th Cir. 1997) (internal quotation marks omitted). The Eleventh Circuit has recently considered, also for the first time, whether the removal of a trustee is a final order over which the courts of appeals have jurisdiction. The Eleventh Circuit explained that “[i]n the bankruptcy context, this Court has concluded that it is generally the particular adversary proceeding or controversy that must have been finally resolved rather than the entire bankruptcy litigation,” and concluded that the “removal of a bankruptcy trustee is a ‘final’ order appealable to this Court.” In re Walker, 515 F.3d 1204, 1210-11 (11th Cir. 2008) (internal quotation marks and citation omitted). In so concluding, the Eleventh Circuit relied heavily upon the Third Circuit’s reasoning in In re Marvel Entm’t Group, Inc., 140 F.3d 463, 470-71 (3d Cir. 1998). There, the Third Circuit considered the finality of an order appointing a trustee. The Third Circuit reasoned that “[w]ere we to put off hearing an appeal of the district court’s order appointing a trustee until after the entire bankruptcy proceeding, allowing the possibility of an order returning this bankruptcy to its very beginning for a second round, the concept of judicial efficiency would be effectively turned on its head.” It also noted that “[l]iberal finality considerations in orders appointing bankruptcy trustees are necessary because these orders cannot be meaning6954 IN THE MATTER OF: AFI HOLDING, INC. fully postponed to the bankruptcy’s conclusion.” Id. at 470. The Third Circuit therefore held that the order appointing a bankruptcy trustee is a final order vesting it with jurisdiction. Similar finality considerations apply to an order removing the trustee. Although the bankruptcy proceedings may continue, and here, in fact they have, the removal order resolves and seriously affects the substantive rights of the parties to a disinterested trustee and finally determines the discrete issue to which it is addressed—whether the bankruptcy court’s finding of a lack of disinterestedness was cause for the trustee’s removal under § 324. Thus we, like our sister circuits, conclude that an order removing a bankruptcy trustee is a “final order” over which we have jurisdiction pursuant to § 158(d). See In re BH & P, Inc., 949 F.2d 1300, 1307 (3d Cir. 1991) (concluding that the district court’s order removing the trustee due to a conflict of interest is “final”); Turshen v. Chapman, 823 F.2d 836, 83940 (4th Cir. 1987) (holding that removal order is “final” because “[f]inality in the sense of 28 U.S.C. § 1291 is not required either for purposes of appeal or for the application of collateral estoppel to unappealed bankruptcy court rulings”); Matter of Schultz Mfg. Fabricating Co., 956 F.2d 686, 691-92 (7th Cir. 1992) (treating the denial of a motion to remove a trustee as a final order). While we have found some decisions to the effect that appointment of a Trustee is not a “final order,” In re Delta Servs. Indus., 782 F.2d 1267, 1272 (5th Cir. 1986); Matter of Cash Currency Exch., Inc., 762 F.2d 542, 546 (7th Cir. 1985); but see Matter of Cajun Elec. Power Co-op., Inc., 69 F.3d 746, 748 (5th Cir. 1995), we have found no decision that holds that an order removing a trustee for cause under § 324 is not final. Here it appears that a remaining issue to be determined in IN THE MATTER OF: AFI HOLDING, INC. 6955 the proceedings is the trustee’s entitlement to fees.1 That decision is necessarily affected by the outcome of this appeal. This only further demonstrates the efficiency and necessity for a final determination as to the propriety of the removal. A similar situation existed in In Re BH & P, Inc., where the district court had issued an order removing for cause the trustee while remanding the issue of interim compensation to the bankruptcy court. “In approaching this finality question,” the Third Circuit recognized that “[t]he unique characteristics of bankruptcy cases have led us to consistently consider finality in a more pragmatic and less technical way in bankruptcy cases than in other situations” and concluded that the district court’s order removing the trustee due to a conflict of interest was final, despite the necessity to consider fees on the earlier remand. 949 F.2d at 1306 (internal quotation marks and alteration omitted).