Court Opinion

ID: 4445430
Source: CourtListenerOpinion
Date Created: 2019-10-09 18:00:18.80428+00
Date Added: 2024-06-11T09:24:50.831244
License: Public Domain

Case: 18-51055      Document: 00515151412         Page: 1    Date Filed: 10/09/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                      No. 18-51055                 United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                    October 9, 2019
In the Matter of: GLORIA ARTESIA PENN
                                                                     Lyle W. Cayce
              Debtor                                                      Clerk

GLORIA ARTESIA PENN, Debtor,

              Appellant

v.

MARY K. VIEGELAHN

              Appellee

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 5:18-CV-354

Before CLEMENT, ELROD, and DUNCAN, Circuit Judges.
PER CURIAM:*
                                   BACKGROUND
       Gloria Penn filed a Chapter 13 bankruptcy petition in the Western
District of Texas. Among her assets, she listed an income-tax refund for $5,832.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                 No. 18-51055
The form Chapter 13 plan adopted by the Western District allows debtors to
retain only the first $2000 of a tax refund as nondisposable income, with the
rest being paid into the plan. See Fed. R. Bankr. P. 3015.1 (authorizing a
district to require the use of a local form for a Chapter 13 plan). But Penn
submitted a plan to the bankruptcy court that included a “nonstandard”
provision “reserv[ing] [her] right to file [a] relevant motion to retain [a] tax
refund should a special need arise, to the extent said potential refund is not
disposable income.” She then filed a motion to retain her entire 2017 refund to
use for home repairs. The Chapter 13 Trustee objected to the plan on several
grounds, including that the plan included a nonstandard provision contrary to
the form plan.
      At a hearing on Penn’s motions, the bankruptcy court told Penn that,
pursuant to the Western District’s form plan, she could not retain her full
refund and continue with her Chapter 13 proceedings. The court offered Penn
several alternatives, including modifying the plan to allow her to keep more
monthly income for home repairs, dismissing her petition to allow her to use
her tax refund as she saw fit, or converting her case to a Chapter 7 liquidation.
The court offered to grant a continuance to permit her to review her options.
Penn declined the continuance and asked the court to enter orders denying the
motion to retain the refund, denying the motion to confirm the plan, and
dismissing the bankruptcy petition. The bankruptcy court entered the orders
as Penn requested. With the case dismissed, the court had no occasion to
address the Trustee’s other objections to the proposed plan.
      Penn appealed to the district court, arguing that the Western District’s
form plan violates various provisions of the Bankruptcy Code and that she
should have been permitted to retain her entire tax refund. The Trustee
disagreed on the merits, but also argued that Penn’s request for a dismissal

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                                  No. 18-51055
mooted her case. The district court held that it had jurisdiction and affirmed
the bankruptcy court’s judgment. Penn now appeals to this court.
                                 DISCUSSION
      Before we can reach the merits of Penn’s appeal, we must verify that the
district court had subject-matter jurisdiction. The district court has
“jurisdiction to hear appeals . . . from final judgments, orders, and decrees . . .
of bankruptcy judges entered in cases and proceedings” before the bankruptcy
court. 28 U.S.C. § 158(a). The denial of a motion to confirm is not itself a final
order because the relevant “proceeding”—“the process of attempting to arrive
at an approved plan”—continues so long as the court gives the debtor a chance
to submit a revised plan to the bankruptcy court. Bullard v. Blue Hills Bank,
135 S. Ct. 1686, 1692 (2015). There is no final order on a motion to confirm
until the court either confirms a plan or denies confirmation “and the case is
dismissed as a result.” Id.
      This rule serves important purposes in bankruptcy proceedings, where
“expedition is always an important consideration.” Id. at 1694. It avoids
“delays and inefficiencies” from “piecemeal appeals.” Id. at 1693. And it “should
encourage the debtor to work with creditors and the trustee to develop a
confirmable plan as promptly as possible.” Id. at 1694.
      At first glance, this case appears to have the quintessential elements of
a final, appealable order. The bankruptcy court denied Penn’s motion to retain
her entire tax refund, denied her motion to confirm the plan, and dismissed
her bankruptcy petition. Not quite, though. After the bankruptcy court ruled
on the tax return issue, it dismissed the petition at Penn’s request. Penn
declined the court’s offer of additional time to revise her plan and requested
dismissal before the court had ruled on any other aspects of her plan.
      No doubt Penn was “convinced that the original plan complied with the
Code and that the bankruptcy court was wrong to deny confirmation.” Id. at
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                                 No. 18-51055
1690. But a party may not “manufactur[e] . . . appellate jurisdiction” over a
non-final order by voluntarily dismissing remaining claims “without an
adjudication on the merits.” Marshall v. Kansas City S. Ry. Co., 378 F.3d 495,
499–500 (5th Cir. 2004). By requesting an immediate dismissal, Penn
prevented the bankruptcy court from addressing the Trustee’s remaining
objections to other aspects of her proposed plan. Were we to reach the merits
and conclude that the bankruptcy court erred in denying the request to retain
the entire tax refund, the bankruptcy court could deny confirmation on remand
based on one of the Trustee’s other objections. Penn might request another
dismissal and again appeal to the district court, and then again to this court.
And so on. This is precisely the scenario that the final-judgment rule is
designed to prevent. See Bullard, 135 S. Ct. at 1693–94.
      Penn had potential avenues for appellate review of the bankruptcy
court’s ruling regarding her tax return. See id. at 1695–96 (describing the
options of (1) seeking certification for interlocutory review under 28 U.S.C.
§ 158, (2) accepting dismissal after the bankruptcy court rules on the entire
plan and “risking [the] entire bankruptcy case on the appeal,” or
(3) “propos[ing] an amended plan and appeal[ing] its confirmation”). But this
was not one of them, and the district court lacked jurisdiction.
      Given our conclusion that the district court lacked jurisdiction over the
appeal from its inception, we need not address the Trustee’s argument that
Penn mooted her appeal by renegotiating her debts directly with her creditors
after the bankruptcy court dismissed her petition.
      We therefore VACATE the district court’s judgment and REMAND the
case for the district court to dismiss the appeal. We DENY the Trustee’s
pending motions to supplement the record and to dismiss this appeal as moot.

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