Court Opinion

ID: 3016327
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:25.756001+00
Date Added: 2024-06-11T12:26:42.834844
License: Public Domain

____________

                              No. 94-3189
                             ____________

John A. Cochrane,                  *
                                   *
                Appellant,         *
                                   *
     v.                            *
                                   *
Vaquero Investments; Tudor         * Appeal from the United States
Oaks Condominium;                  * District Court for the
                                   * District of Minnesota
                Appellees.         *
                                   *
Trustee, Brian F. Leonard,         *
                                   *
                Intervenor.        *

                             ____________

                    Submitted:   October 16, 1995

                        Filed: February 6, 1996
                            ____________

Before McMILLIAN, BRIGHT and LOKEN, Circuit Judges.
                           ____________

McMILLIAN, Circuit Judge.

     John A. Cochrane (debtor) appeals from an order of the United
States District Court1 for the District of Minnesota, affirming an
order of the bankruptcy court2 sustaining objections filed by
creditors to an exemption claimed by debtor for a condominium he
owns in Naples, Florida. Cochrane v. Vaquero Investments, Inc.,
Civ. No. 4-94-221 (D. Minn. Aug. 4, 1994), aff'g, Bky.

          1
       The Honorable Diana E. Murphy, then Chief United States
District Judge for the District of Minnesota, now United States
Circuit Judge for the Eighth Circuit Court of Appeals.
      2
       The Honorable Gregory F. Kishel, United States Bankruptcy
Judge for the District of Minnesota.
No. 3-93-2056 (Bankr. D. Minn. Jan. 28, 1994) (Order Sustaining
Objection to Debtor's Claim of Homestead Exemption). For reversal,
debtor argues that the bankruptcy court erred in holding that the
condominium is not exempt from debtor's estate under 11 U.S.C.
§ 522(b)(2)(B)3 because it was not his "homestead," within the
meaning of Article X, Section 4(a), of the Florida Constitution,4
at the time he filed his bankruptcy petition.       Debtor further
argues that the bankruptcy court abused its discretion in excluding
certain evidence at the hearing on the homestead issue and in
imposing a final deadline for amending his Schedule C. For the

     3
        11 U.S.C. § 522(b)(2)(B) provides:

             (b) Notwithstanding section 541 of this title, an
        individual debtor may exempt from property of the estate
        the property listed in either paragraph (1) or, in the
        alternative, paragraph (2) of this subsection. . . .
        Such property is --

                                . . . .

             [(2)](B) any interest in property in which
             the debtor had, immediately before the
             commencement of the case, an interest as a
             tenant by the entirety or joint tenant to the
             extent that such interest as a tenant by the
             entirety or joint tenant is exempt from
             process under applicable nonbankruptcy law.
    4
     Article X, Section 4(a), of the Florida Constitution provides
in pertinent part:

        There shall be exempt from forced sale under process of
        any court, and no judgment, decree or execution shall be
        a lien thereon, . . . the following property owned by a
        natural person:

             (1)   a homestead, . . . if located within a
                   municipality, to the extent of one-half
                   acre of contiguous land, upon which the
                   exemption shall be limited to the
                   residence   of   the   owner   or   his
                   family . . . .

                                  -2-
reasons discussed    below,   we   dismiss   the   appeal   for   lack   of
jurisdiction.

Procedural history

     On December 12, 1992, debtor, an attorney who maintains a law
office in St. Paul, Minnesota, filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Middle District of Florida.            His
Schedule C claimed an exemption for, among other things, a
condominium which he and his wife built in Naples, Florida, in the
late 1980s. The condominium is presently valued at approximately
$350,000.     Debtor claimed this exemption under 11 U.S.C.
§ 522(b)(2)(B) and Article X, Section 4(a) of the Florida
Constitution. Creditors objected on grounds that the condominium
was not debtor's homestead within the meaning of the Florida
constitutional homestead provision, as interpreted by the Florida
state courts.

      On February 18, 1993, the Florida bankruptcy court ordered a
change of venue and transferred the case to the bankruptcy court
for the District of Minnesota. On November 18, 1993, a hearing was
held in the Minnesota bankruptcy court on the homestead exemption
issue and other related matters. Upon review of the evidence, the
bankruptcy court sustained the creditors' objection to debtor's
homestead exemption claim.    In re Cochrane, Bky. No. 3-93-2056
(Bankr. D. Minn. Jan. 28, 1994) (Order Sustaining Objection to
Debtor's Claim of Homestead Exemption). The bankruptcy court found
that debtor neither occupied the condominium as his bona fide home
nor manifested a bona fide present intent to occupy the condominium
as his home, at the time he filed for bankruptcy. Id. at 16, 20.
The bankruptcy court also found, based upon the evidence, that
debtor continued to use a residence in St. Paul as his true home,
despite the fact that a few years earlier he had transferred his
legal interest in the St. Paul house to his wife.       Id. at 18.

                                   -3-
Thus, the bankruptcy court held that the condominium was not
debtor's "homestead" within the meaning of Article X, Section 4(a)
of the Florida Constitution on the date the bankruptcy case was
originally filed. Id. at 21. In another order issued on the same
day, the bankruptcy court addressed debtor's eleventh-hour
assertion -- as an alternative basis for exempting the condominium
from the bankruptcy estate under § 522(b)(2)(B) -- that he held his
interest in the condominium as a tenant by the entirety under
Florida law. In re Cochrane, Bky. No. 3-93-2056 (Bankr. D. Minn.
Jan. 28, 1994) (Order Re: Status of Debtor's Claims of Exemption,
and Objections Thereto). On this issue, the bankruptcy court noted
that debtor had offered no evidence to demonstrate the existence of
a tenancy by the entirety, nor had he even alleged the existence of
the requisite elements. Id. at 4-7. The bankruptcy court then
permitted debtor an opportunity to amend his Schedule C to clarify
his claim of tenancy by the entirety and to submit, on or before
February 18, 1994, a final list of all such claimed exemptions.
Id. at 8.    The bankruptcy court also issued a third order on
January 28, 1994, addressing claims of exemption made by debtor for
assets not in issue in the present appeal and barring debtor from
further amending his Schedule C after February 18, 1994. In re
Cochrane, Bky. No. 3-93-2056 (Bankr. D. Minn. Jan. 28, 1994) (Order
Sustaining Objections to Debtor's Claim of Exemptions).      Debtor
appealed the three bankruptcy court orders of January 28, 1994, to
the district court, pursuant to 28 U.S.C. § 158(a). The district
court affirmed the bankruptcy court's orders. Cochrane v. Vaquero
Investments, Inc., Civ. No. 4-94-221 (D. Minn. Aug. 4, 1994)
(order).   Debtor then filed the present appeal to this court,
pursuant to 28 U.S.C. § 158(d).

     In the meantime, on February 15, 1994, the bankruptcy court
converted the bankruptcy case to a case under Chapter 7 for cause,
based upon findings that debtor had breached his fiduciary duty and
caused unreasonable delay.    Shortly thereafter, the trustee was

                               -4-
appointed.5    Debtor filed an amended Schedule C within the
February 18, 1994, submission deadline. His amended Schedule C
asserted that, at the time he filed for bankruptcy, he held the
condominium (among other assets) as a tenant by the entirety with
his wife, which, he argued was a basis for a § 522(b)(2)(B)
exemption under Florida law. The trustee objected. On April 18,
1994, the bankruptcy court held a hearing on the amended Schedule C
and the trustee's objections thereto, and took the matter under
advisement. On January 30, 1995, the bankruptcy court entered an
order sustaining the trustee's objection with respect to the
condominium. In re Cochrane, Bky. No. 3-93-2056 (Bankr. D. Minn.
Jan. 30, 1995) (Order Sustaining Objections to Debtor's Claim of
Exemption in Certain Florida Real Estate). The bankruptcy court
held that debtor's interest in the condominium was not exempt,
immune, or excluded from debtor's bankruptcy estate under the
Florida law of tenancy by the entirety and that debtor's interest
in the condominium was an asset of the estate which the trustee
could proceed to administer. Id. at 18-19. Debtor appealed the
bankruptcy court's January 30, 1995, order to the district court,
where that appeal is currently pending.      As a consequence, the
litigation over the exempt status of the condominium has been
bifurcated: the issues raised by debtor's homestead exemption claim
are now before this court on appeal from the district court while
the issues raised by debtor's tenancy by the entirety exemption
claim remain pending before the district court.

Jurisdiction under 28 U.S.C. § 158(d)

       At oral argument, on October 16, 1995, we questioned counsel
regarding the basis for our jurisdiction under 28 U.S.C. § 158(d)
and invited counsel to submit supplemental memoranda stating their

     5
      Since the trustee was appointed, the creditors have allowed
the trustee to represent their interests in opposing debtor's
exemption claims.

                               -5-
positions on the jurisdictional issue. The trustee submitted a
memorandum to the court on December 15, 1995, urging dismissal of
the appeal for lack of jurisdiction.

     In bankruptcy cases, jurisdiction in the district courts and
in the courts of appeals is governed by 28 U.S.C. § 158.
Subsection (a), addressing the district court's appellate
jurisdiction, provides:

       (a) The district courts of the United States shall
     have jurisdiction to hear appeals[:]

             (1) from final judgments, orders, and
          decrees;

            (2) from interlocutory orders and decrees
          issued under section 1121(d) of title 11
          increasing or reducing the time periods
          referred to in section 1121 of such title;
          and

             (3) with leave of the court, from other
          interlocutory orders and decrees;

     and, with leave of the court, from interlocutory orders
     and decrees, of bankruptcy judges entered in cases and
     proceedings referred to the bankruptcy judges under
     section 157 of this title.       An appeal under this
     subsection shall be taken only to the district court for
     the judicial district in which the bankruptcy judge is
     serving.

     Our jurisdiction to hear bankruptcy appeals from the district
courts is, however, more limited. Subsection (d) of § 158 provides
"[t]he courts of appeals shall have jurisdiction of appeals from
all final decisions, judgments, orders, and decrees entered under
subsections (a) and (b) of this section." (Emphasis added.)

     In interpreting § 158(d), this court has explained that

          [t]he factors used in deciding the finality of a
     bankruptcy order are the extent to which (1) the order

                               -6-
     leaves the bankruptcy court nothing to do but execute
     the order; (2) delay in obtaining review would prevent
     the aggrieved party from obtaining effective relief; and
     (3) a later reversal on that issue would require
     recommencement of the entire proceeding.

In re Apex Oil Co., 884 F.2d 343, 347 (8th Cir. 1989) (cited in In
re Huebner, 986 F.2d 1222, 1223 (8th Cir.), cert. denied, 114
S. Ct. 272 (1993)). In Heubner, this court considered the finality
requirement of § 158(d) in the context of orders granting or
denying exemptions and noted that, although such orders are
technically interlocutory, "[n]early every circuit to consider the
question has held that an order granting or denying an exemption is
final for purposes of § 158(d) or its predecessor statute." 986
F.2d at 1223. However, this court also observed that "[f]inality
for bankruptcy purposes is a complex subject" and "the test for
finality under § 158(d) must take into account the peculiar needs
of the bankruptcy process."     Id.   While in many cases, as in
Huebner, the peculiar needs of the bankruptcy process dictates that
it is both prudent and necessary to treat a bankruptcy court's
exemption decision as final, such is not the case here for the
simple reason that the orders of the bankruptcy court presently on
appeal do not conclusively resolve the issue of whether the
property in question is or is not exempt from debtor's bankruptcy
estate. Cf. Lewis v. United States Farmers Home Admin., 992 F.2d
767, 773 (8th Cir. 1993) ("[t]his court has held bankruptcy
decisions which resolve singular disputes in isolated, separate
adversary proceedings affecting only one aspect of the bankruptcy
estate to be final"). The bankruptcy court's order of January 30,
1995, rejecting debtor's tenancy by the entirety argument, is still
pending before the district court. Therefore, it cannot be said
that the orders of January 28, 1994, leave the bankruptcy court
nothing to do but execute them; that delay in obtaining review
would prevent debtor from obtaining effective relief; or that a
later reversal on the homestead exemption issue would require
recommencement of the entire proceeding.      To the contrary, an

                               -7-
affirmance of the January 28, 1994, order holding that the
condominium does not qualify for the homestead exemption would have
no practical consequences unless and until there is a final
decision on the tenancy by the entirety exemption issue as well.

     In sum, neither judicial economy nor our statutory authority
under § 158(d) permits the piecemeal litigation that will result if
we prematurely consider the issues raised in this appeal.
Therefore, we hold that we lack jurisdiction under 28 U.S.C.
§ 158(d) to decide the present appeal, and we dismiss it without
prejudice to debtor's right to refile his appeal from the district
court's August 4, 1994, order in a timely manner upon a final
decision by the district court concerning the exempt status of the
condominium.

     A true copy.

           Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                 -8-