Court Opinion

ID: 1014752
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:22:09.728294+00
Date Added: 2024-06-11T15:27:49.300332
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 03-2163

In   Re:    MARYLAND   PROPERTY    ASSOCIATES,
INCORPORATED; MARYLAND PROPERTY MANAGEMENT,
INCORPORATED;    MARYLAND   PROPERTY    GROUP,
INCORPORATED;   MARYLAND   GROUP   MANAGEMENT,
INCORPORATED;   MARYLAND   PROPERTY   SYSTEMS,
INCORPORATED; MARYLAND PROPERTY SERVICES,
INCORPORATED,

                                                              Debtors.

--------------------

CHARLES R. GOLDSTEIN, Trustee of the Estate of Maryland
Property Associates, Incorporated, et al.,

                                               Plaintiff - Appellee,

           versus

COLOMBOBANK F.S.B.,

                                              Defendant - Appellant.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District Judge.
(CA-02-4010-WDQ; BK-98-53783; AP-00-5578)

Argued:   September 30, 2004             Decided:    November 19, 2004

Before WILLIAMS, TRAXLER, and KING, Circuit Judges.

Dismissed by unpublished per curiam opinion.
ARGUED: Christopher Paul Spera, DECKELBAUM, OGENS & RAFTERY,
CHARTERED, Bethesda, Maryland, for Appellant.     Charles Michael
Campisi, VENABLE, L.L.P., Baltimore, Maryland, for Appellee. ON
BRIEF: Nelson Deckelbaum, Stephen W. Nichols, DECKELBAUM, OGENS &
RAFTERY, CHARTERED, Bethesda, Maryland, for Appellant.    John A.
Roberts, VENABLE, L.L.P., Baltimore, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                               2
PER CURIAM:

       The Chapter 7 Trustee of Maryland Property Associates, Inc.

(MPA) brought an adversarial action in the bankruptcy court against

ColomboBank (the Bank) to avoid as preferences and fraudulent

transfers certain payments MPA made to the Bank.               The bankruptcy

court tried the action without a jury and voided the payments.              The

Bank appealed the bankruptcy court’s decision to the district

court.        The district court affirmed in part and vacated and

remanded in part, with instructions for the bankruptcy court to

make certain factual findings.                The Bank appealed the district

court’s decision to us. Because the district court remanded to the

bankruptcy court for further fact-finding, we lack jurisdiction

over the appeal.

                                         I.

           MPA was a real property management company principally owned

and operated by Monte Greenbaum.1             MPA’s main clients were certain

limited partnerships, which owned low-income apartment complexes

(properties) in Maryland. The U.S. Department of Housing and Urban

Development (HUD) insured the properties and subsidized their

tenants’ rents.        In exchange,      HUD required the partnerships to

keep       their   tenants’   security   deposits     in   accounts   (security

       1
       This recitation of the facts is gleaned from the bankruptcy
court’s order, supplemented for clarity by undisputed and clear
portions of the record.

                                         3
accounts) for the tenants’ benefit.            The partnerships kept the

security accounts at the Bank.

      In violation of HUD’s regulations, Greenbaum began taking

money from the security accounts, putting it into a separate

account (operating account) controlled by MPA, where MPA also kept

its   validly-acquired   money,   and   then    using    the   money   in   the

operating account for his own purposes.          In order to conceal his

acts from HUD and the partnerships, Greenbaum arranged for the Bank

to make loans (share loans) to the partnerships to cover the amount

he had misappropriated.      Greenbaum structured the share loans,

which were deposited into dummy security accounts, such that the

loan proceeds themselves secured the loans.             With the share-loan

money in the dummy security accounts, the total balance on deposit

in the security accounts did not reflect the fact that Greenbaum

had been taking money therefrom.        By filling out false disclosure

forms, Greenbaum and the Bank’s president hid from HUD and the

partnerships the fact that the funds in the dummy security accounts

were encumbered.2

      Greenbaum later decided to end the share loan scheme.                 He

wrote several checks to the Bank on MPA’s operating account to pay

off the share loans.      When the Bank received these checks, it

released its security interest on the funds in the dummy security

      2
       Based on his role in the fraud scheme, the bankruptcy court
found that the Bank’s president “knew or should have known of the
fraud.” (J.A. at 1248.)

                                   4
accounts, leaving those accounts unencumbered.                 Although it is

unclear from the record exactly what happened to the money at that

point,    (J.A.   at   1566-70,    1588),      the   parties   agree   that   it

ultimately ended up in the partnerships.             (Appellant’s Br. at 13;

Appellee’s Br. at 12-13.)

      In addition to the share loans, Greenbaum personally took out

two other loans and unofficially borrowed other money from the Bank

(non-share loans, collectively).3 He paid off these personal loans

on checks written on MPA’s operating account.

                                      II.

      On March 17, 1998, the partnerships and other creditors filed

an involuntary Chapter 7 bankruptcy petition against MPA.4                    On

March 17, 2000, the Trustee, acting on the creditors’ behalf, filed

this adversarial action against the Bank in the bankruptcy court.

The   complaint   sought   to     avoid   as    preferences    and   fraudulent

transfers the checks Greenbaum wrote to the Bank on MPA’s operating

account to pay off the loans.

      3
       The record establishes that Greenbaum took out the non-share
loans before he started the share loan scheme and that his activity
with respect to the non-share loans overlapped with his activity
with respect to the share loans. For clarity’s sake, we describe
the two separately.
      4
       It is unclear from the record whether the other creditors
joined the partnerships in filing the original petition or later
joined in the bankruptcy proceedings. This factual issue is not
relevant for purposes of this appeal.

                                      5
     On May 14, 2001, the bankruptcy court heard the Trustee’s

case.    On October 16, 2002, the bankruptcy court entered judgment

awarding the Trustee the full value of the checks plus interest.

The Bank appealed to the district court.    On August 29, 2003, the

district court affirmed in part and vacated and remanded in part.

The district court affirmed the bankruptcy court’s ruling that the

share-loan checks were avoidable.5    The district court vacated the

bankruptcy court’s ruling that the non-share-loan checks were

avoidable because it found that the bankruptcy court had not made

specific factual findings as to whether MPA received consideration

for its payments on the non-share loans.        The district court

therefore remanded for the bankruptcy court to make specific

findings of fact on that issue.

     The Bank timely noticed an appeal.     After oral argument, we

requested, and the parties submitted, supplemental briefing on

whether we have jurisdiction over the appeal.      We have reviewed

that briefing and now conclude that we lack jurisdiction to hear

the Bank’s appeal.

     5
       In an order dated July 16, 2003, the district court reversed
that portion of the bankruptcy court’s judgment avoiding the share-
loan checks because it found that the Bank had returned the money
to the partnerships, and that the Trustee, as the partnerships’
representative, had therefore suffered no harm by the share-loan
scheme. The Trustee moved for reconsideration, arguing that MPA
had creditors other than the partnerships, and that by paying the
partnerships’ debt with MPA’s money, the share-loan scheme harmed
MPA’s non-partnership creditors.      The district court agreed,
vacated its earlier order as to the share-loan payments, and
affirmed the bankruptcy court’s decision to avoid the share-loan
checks.
                                  6
                                III.

     We have jurisdiction under 28 U.S.C.A. § 158(d) (West 1993) to

hear appeals from cases originating in the bankruptcy court.   See

Capitol Credit Plan of Tenn., Inc. v. Shaffer, 912 F.2d 749, 754

(4th Cir. 1990) (holding that section 158(d) alone provides for

appellate jurisdiction for cases originating in the bankruptcy

court).   Section 158(d), however, does not grant us authority to

hear all such appeals.    Rather, under that section we may only

review “final decisions, judgments, orders, and decrees” entered by

the district court.   28 U.S.C.A. § 158(d).   We have held that a

district court’s order is not “final” under section 158(d) if it

remands the case with an instruction for the bankruptcy court to

conduct further fact-finding.   Shaffer, 912 F.2d at 750 (holding

that district court order remanding to the bankruptcy court to make

additional factual findings was not “final” under section 158(d));

Legal Representative for Future Claimants v. Aetna Cas. & Sur. Co.

(In re The Wallace & Gale Co.), 72 F.3d 21, 24 (4th Cir. 1995)

(LRFC) (same).6

     6
       A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986)
and Cooper v. Delaware Valley Shippers (In re Carolina Motor
Express Inc.), 949 F.2d 107 (4th Cir. 1991), rev’d on other grounds
sub nom. Reiter v. Cooper, 507 U.S. 258 (1993) are not to the
contrary. In Piccinin, we asserted jurisdiction under 28 U.S.C. §
1291, which, like section 158(d), has a finality requirement, over
an appeal from the district court’s order fixing venue in all tort
suits against the debtor. 788 F.2d at 1009. In Cooper we asserted
jurisdiction under section 158(d) over an appeal from the district
court’s order referring certain legal questions to the Interstate
Commerce Commission.    Id. at 108 n. 1.    These holdings do not
conflict with Shaffer and LRFC, which hold that a district court
                                 7
     A majority of our sister circuits also follow this approach.

See In re Lopez, 116 F.3d 1191, 1192 (7th Cir. 1997) (cataloguing

cases and observing that the D.C., First, Second, Fourth, Fifth,

Seventh, Eighth, Tenth, and Eleventh Circuits so hold) (citations

omitted). The minority view is that the finality of district court

orders should be determined by an approach that weighs several

factors to determine whether the appeal would further the goals of

bankruptcy.    See id. at 1193 (noting that the Third, Ninth, and

possibly the Sixth Circuits apply such an approach) (citations

omitted).     Under the minority view, whether the district court

remands to the bankruptcy court with instructions to conduct

additional fact-finding is a relevant, but not dispositive, factor.

See, e.g., Buncher Co. v. Official Comm. of Unsecured Creditors of

GenFarm Ltd. P’ship IV, 229 F.3d 245, 250 (3d Cir. 2000) (in

determining whether a district court’s decision is “final” under

section 158(d) applying four-factor test that examines: (1) the

impact the case has on the assets of the bankruptcy estate; (2) the

necessity of further fact-finding on remand; (3) the preclusive

order remanding to the bankruptcy court to make findings of fact is
not a final order under section 158(d).
     To be sure, the Piccinin and Cooper courts did note that we
generally apply a more “relaxed” definition of finality in the
bankruptcy context. 788 F.2d at 1009; 949 F.2d at 108 n. 1. We do
not disagree with that statement. To resolve the case before us,
however, it is enough to say that whatever it might mean to apply
a “relaxed” definition of finality, it cannot mean that we have
jurisdiction under section 158(d) over a district court order
remanding to the bankruptcy court to make additional findings of
fact. See Shaffer, 912 F.2d at 750; LRFC, 72 F.3d at 24.
                                 8
effect of the decision on the merits of further litigation, and (4)

the interest of judicial economy).

     Ignoring Shaffer and LRFC on this point, the Trustee7 simply

asserts that we must follow Buncher, 229 F.3d at 250.8    Buncher’s

approach, however, is irreconcilable with Shaffer’s and LRFC’s

categorical rule, and we, as a panel, lack the authority to

overrule prior circuit precedent.    See McMellon v. United States,

2004 WL 2303487, *2 (4th Cir. Oct. 14, 2004) (“one panel cannot

overrule a decision issued by a prior panel”).       Moreover, the

     7
       The Bank concedes that we lack jurisdiction over its appeal.
It nevertheless asks us to declare that the Trustee may not execute
the district court’s judgment as to the share-loan transfers. The
Bank does not explain how, if we lack jurisdiction over the appeal,
we have jurisdiction to make such a declaration. We therefore deny
its request.
     8
       The Trustee also argues that we have jurisdiction over the
district court’s judgment insofar as it applies to the share-loan
transactions because the judgment was final as to those
transactions. This argument reveals a fundamental misunderstanding
of the concept of finality. A judgment is not final simply because
the district court has resolved some aspects of the appeal;
instead, the very fact that other aspects remain unresolved is
precisely what makes this appeal interlocutory.
      To the extent that we can construe the Trustee’s argument to
be an implied assertion that we have jurisdiction under the
collateral order doctrine, we would still reject the argument. “To
be reviewable under that doctrine, an order must conclusively
determine the disputed question, resolve an important issue
completely separate from the merits of the action and be
effectively unreviewable on appeal from a final judgment.” LRFC,
72 F.3d at 24 (quotation marks omitted). Far from being separate
from the merits of the action, the share-loan transactions go to
the very heart of the Trustee’s adversarial complaint. Moreover,
the Trustee has not suggested that, and we can decipher no reason
why, the district court’s conclusion regarding the share-loan
payments will not be appealable when the district court enters a
final judgment.
                                9
approach   pressed    by   the   Trustee   is   “terribly   woolly,”    when

“[j]urisdictional rules ought to be simple and precise.”               In re

Lopez, 116 F.3d at 1194 (emphasis in original).             In short, the

approach we adopted in Shaffer and LRFC is the “sounder rule” in

this context.   Id.

                                    IV.

     Under the Shaffer/LRFC rule, we lack jurisdiction over the

Bank’s appeal because the district court remanded to the bankruptcy

court to make additional findings of fact. Accordingly, we dismiss

the appeal.

                                                                DISMISSED

                                    10