Opinion ID: 496735
Heading Depth: 2
Heading Rank: 1

Heading: Authorization of Creditors' Committee to Join Pending Litigation

Text: 9 Cluett argues that the bankruptcy court order's provision allowing the creditors' committee to join in the pending LHLC litigation was a final order. 2 Cluett contends that the district court erred in determining that that provision was not a final order on the grounds that it was an order granting the creditors' committee the right to join rather than denying it the right to intervene on behalf of the debtor. The district court recognized the Third Circuit case In re Marin Motor Oil, Inc., 689 F.2d 445 (3d Cir.1982), cert. denied, 459 U.S. 1206, 103 S.Ct. 1196, 75 L.Ed.2d 440 (1983), and distinguished it by noting that Marin Motor Oil held that an order denying a creditors' committee's application to appear in litigation was a final order, but that this case dealt with an order granting the creditors' committee leave to enter the pending litigation. Cluett argues that the district court ignored the Third Circuit's later reaffirmation of Marin Motor Oil in In re Amatex Corp., 755 F.2d 1034 (3d Cir.1985). There the court stated as follows: 10 On appeal [in Marin ], we noted the general rule in this Circuit that an order denying a request to intervene is considered final and appealable.... In Marin, we went even further and held that in a bankruptcy proceeding, the district court's grant of a petition to intervene was also appealable. 11 Amatex, 755 F.2d at 1040 (emphasis in original). 12 Amatex is not inconsistent with the district court's interpretation of Marin Motor Oil, and the district court correctly distinguished Marin Motor Oil from this case. When the Third Circuit discussed Marin Motor Oil in the above quote from Amatex, the court explicitly referred to the district court's grant of a petition to intervene, not the bankruptcy court's grant of a petition. 3 The Marin Motor Oil court also made this distinction, noting that the difficult question was not whether the bankruptcy court's decision denying a claimed absolute right of intervention was final, but whether the district court, which was essentially an appellate tribunal reviewing a final judgment of a trial court, and whose order completely disposed of the appeal from the final judgment of the bankruptcy court, entered an appealable order. 689 F.2d at 448. Amatex also involved a bankruptcy court's denial of a petition to intervene. 755 F.2d at 1040. 13 This distinction makes a difference because as we noted above, both the bankruptcy court order and the district court order must be final for this court to have jurisdiction. The Third Circuit in Marin Motor Oil recognized that an order granting intervention is ordinarily not considered appealable. 689 F.2d at 447; see also C. Wright, A. Miller & M. Kane, 7C Federal Practice and Procedure Sec. 1923, at 507 (2d ed. 1986) (An order granting leave to intervene is not final and is not appealable as of right.). The situation in Marin Motor Oil was a bankruptcy court's denial of intervention and the district court's subsequent reversal, granting intervention. The court thus reached the narrow holding that when the bankruptcy court issues what is indisputably a final order, and the district court issues an order affirming or reversing, the district court's order is also a final order. Marin Motor Oil, 689 F.2d at 449 (emphasis added). 4 The Marin Motor Oil court assumed that the bankruptcy court order denying intervention was a final order, but neither Marin Motor Oil nor Amatex addressed whether a bankruptcy court order granting a creditors' committee's petition to intervene is indisputably a final order, and neither court commented on the propriety of a court of appeals hearing the appeal of such a bankruptcy court order. 14 In addition to the obvious factual distinction between this case and the Third Circuit cases upon which Cluett relies, we believe that in the specific circumstances of this case, the bankruptcy court order granting the creditors' committee the right to intervene in the LHLC litigation is interlocutory. We agree with the district court's assessment that 15 [a]lthough the order granted the creditors committee's petition for leave to join in the LHLC suit, the order, by itself, does not make the creditors committee a party. No motion has been made by the creditors committee seeking leave from the district court to join the action. It is clear that the creditors committee cannot join the LHLC suit as a party without the authorization of the district court hearing the suit. Further, if and when such leave is granted, the outcome of the LHLC action, and the merits of the creditors committee's role therein, will still be far from finally determined. 16 Thus while Marin Motor Oil and Amatex involved a district court's decision allowing intervention in litigation in that court, the grant to intervene in this case is interlocutory because it was made by a bankruptcy court and affirmed by a district court other than the court in which litigation was pending. The order did not have the effect of finally settling the parties' rights--the district court in which the LHLC litigation was pending still had the option to deny the creditors' committee the right to intervene. 17 Cluett argues that granting review of a bankruptcy court's grant of a petition to intervene is logical and fair in bankruptcy proceedings because the creditors' committee and parties who oppose the creditors' committee's intervention then have an opportunity to appeal the bankruptcy court's decision regarding the creditors' committee's standing to prosecute litigation on behalf of the debtor. 5 In the circumstances of this case, however, the creditors' committee has not even petitioned the district court in which LHLC litigation is pending to enter that litigation. Although it is probable that it will seek to intervene, there is a possibility that it will not. Because the creditors' committee has not even attempted to intervene, it would be premature to review the bankruptcy court's approval of its standing to intervene on behalf of the debtor. 6 If the district court in this case had given its opinion on the creditors' committee's standing to intervene in another proceeding, it would in effect have given an advisory opinion, and such an opinion does not meet the case or controversy requirement under Article III of the Constitution. See, e.g., Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 474, 102 S.Ct. 752, 759, 70 L.Ed.2d 700 (1982); Alliance to End Repression v. City of Chicago, 820 F.2d 873, 876 (7th Cir.1987). 18