Court Opinion

ID: 71804
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:22:47+00
Date Added: 2024-06-11T09:39:01.099593
License: Public Domain

Case: 09-30491     Document: 00511050877          Page: 1    Date Filed: 03/15/2010

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                           March 15, 2010

                                       No. 09-30491                    Charles R. Fulbruge III
                                                                               Clerk

In the Matter of: SAM JUDE HOLLOWAY,

                                                   Debtor

KIM STANSBURY,

                                                   Appellant
v.

SAM JUDE HOLLOWAY,

                                                   Appellee

                   Appeal from the United States District Court
                      for the Western District of Louisiana
                             USDC No. 6:09-CV-0068

Before KING, JOLLY, and STEWART, Circuit Judges.
PER CURIAM:*
        The issue in this appeal is whether a bankruptcy court order denying the
enforcement of a settlement agreement is an appealable order for purposes of
appellate review by the district court and this court. The bankruptcy court order

        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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. 09-30491

did not adjudicate all the claims in the adversary proceeding, the district court
did not grant leave to appeal the interlocutory order, and the parties did not
obtain certification to appeal the interlocutory order to this court. Consequently,
the district court lacked jurisdiction, as do we. Therefore, we dismiss this appeal
for lack of jurisdiction and vacate the district court’s judgment.
                               I. BACKGROUND
      Kim Stansbury (“Stansbury”) and Sam Holloway (“Holloway”) were
shareholders in the same corporation. In exchange for loaning money to the
corporation, Stansbury received a promissory note from the corporation in the
amount of $357,856.99; Holloway cosigned the note.          On January 2, 2008,
Holloway filed a petition for relief under Chapter 7 of the Bankruptcy Code. The
bankruptcy court set April 28, 2008, as the discharge date of Holloway’s case and
ordered that objections to discharge be filed by then. No objections to discharge
were filed, and a discharge was entered on April 28.
      The   following   day,   Stansbury    filed   a   complaint    to   determine
dischargeability and a motion for relief from the order. Over the course of three
months, the parties engaged in a series of settlement negotiations.           After
initially reaching agreement over the general terms of a settlement, negotiations
between Stansbury and Holloway broke down over a dispute concerning the form
of the settlement, in particular whether a consent judgment would be entered
or the agreement would be classified as a compromise. Throughout the entire
settlement negotiation process, Stansbury’s complaint was still pending before
the bankruptcy court.
      When further discussions failed to produce an agreement on the form of
the settlement, Stansbury filed a motion to enforce the settlement agreement.

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The bankruptcy court denied Stansbury’s motion, finding that there was no
meeting of the minds on whether a consent judgment would be entered. Without
seeking leave of the court, Stansbury filed a direct appeal of the bankruptcy
court’s order to the district court. The district court affirmed the bankruptcy
court’s order and dismissed Stansbury’s action with prejudice. Stansbury then
appealed to this court, but neither the bankruptcy court nor the district court
certified the issue for appeal.
        We raised the question of our own jurisdiction sua sponte and ordered
supplemental briefing on the issue. After reviewing the supplemental briefs, we
conclude that the bankruptcy court’s order is not an appealable order for
purposes of appellate review by the district court or this court.
                                  II. DISCUSSION
        District courts have appellate jurisdiction over “final judgments, orders,
and decrees” issued by the bankruptcy court.         28 U.S.C. § 158(a)(1). This
jurisdiction includes interlocutory orders and decrees which it has granted leave
to appeal. Id. § 158(a)(3). This court views finality in bankruptcy proceedings
in a practical and less technical light to preserve judicial and other resources.
England v. FDIC (In re England), 975 F.2d 1168, 1171 (5th Cir. 1992) (citations
omitted). We have determined that “an order which ends a discrete judicial unit
in the larger case concludes a bankruptcy proceeding and is a final judgment .
. . .   Finality in bankruptcy cases is contingent upon the conclusion of an
adversarial proceeding within the bankruptcy case, rather than the conclusion
of the entire litigation.” Id. at 1172 (citations omitted).
        In this case, the bankruptcy court’s order, while treated as a final
appealable order by the district court, was interlocutory. See, e.g., Providers

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Benefit Life Ins. Co. v. Tidewater Group, Inc. (In re Tidewater Group, Inc.), 734
F.2d 794, 796–97 (11th Cir. 1984) (holding that the denial of a motion to enforce
a settlement agreement is not a final, appealable order). It was interlocutory
because, after it ruled on the enforceability of the settlement agreement, the
bankruptcy court was still left with an adversary proceeding, namely
Stansbury’s initial complaint to determine dischargeablity and his motion
seeking relief from the discharge order, that must be resolved.
      Having determined that the bankruptcy court’s order was interlocutory,
we recognize that if the bankruptcy court had granted leave to appeal, the
district court would have had jurisdiction. As noted above, in addition to having
jurisdiction over final orders of bankruptcy courts, district courts have
jurisdiction over interlocutory bankruptcy court orders which they have granted
leave to appeal. Id. § 158(a)(3).
      Bankruptcy Rules 8001–8004 govern appeal by leave.              Rule 8001(b)
provides that “[a]n appeal from an interlocutory judgment, order or decree of a
bankruptcy judge . . . shall be taken by filing a notice of appeal . . . accompanied
by a motion for leave to appeal.” Rule 8003(a) requires that a motion for leave
to appeal contain a statement of the facts necessary to an understanding of the
questions presented by the appeal, a statement of those questions and the relief
sought, a statement of the reasons why an appeal should be granted, and a copy
of the order. If a motion for leave to appeal is not filed, but a notice of appeal is
timely filed, “the district court or bankruptcy appellate panel may grant leave
to appeal or direct that a motion for leave to appeal be filed.” F ED. R. B ANKR. P.
8003(c). The Advisory Committee note to subsection (c) explains that the district

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court has three options: (1) direct that a motion be filed; (2) grant leave to appeal
exclusively on the papers already filed; or (3) deny leave to appeal.
      Here, Stansbury filed a notice of appeal to the district court but failed to
file a motion for leave to appeal. Nothing in the record indicates that the district
court chose any of the three alternatives that are sanctioned by the Advisory
Committee notes when such situations arise. In other words, the record does not
reveal any district court order allowing an appeal or any request for such by the
parties. Nor could the district court impliedly grant Stansbury leave to appeal,
after the fact, by simply issuing a ruling on the appeal. See Clark v. First State
Bank (In Re White Beauty View, Inc.), 841 F.2d 524, 527 (3d Cir. 1988) (holding
that a district court cannot impliedly grant leave to appeal by merely ruling on
an appeal before it from the bankruptcy court). Therefore, the district court
lacked jurisdiction, and we must vacate its judgment.
      In any event, were we to assume that the district court had impliedly
granted leave, we would still lack jurisdiction under 28 U.S.C. § 158(d)(1).
Under 28 U.S.C. § 158(d)(1), the courts of appeals have jurisdiction over “all final
decisions, judgments, orders and decrees” issued by the district court. For
reasons explained above, in this case, no final order exists, and we therefore lack
jurisdiction under 28 U.S.C. § 158(d)(1). See, e.g., In re Tidewater, 734 F.2d at
796–97.
      While other bases for this court’s exercise of appellate jurisdiction exist
under 28 U.S.C. § 158(d)(2)(A)–(B), our review of the record reveals that neither
the bankruptcy court nor the district court certified this question for appeal after
determining, for example, that “an immediate appeal from the judgment, order
or decree may materially advance the progress of the case or proceeding in which

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the appeal is taken.” 28 U.S.C. § 158(d)(2)(A)(iii); see also id. § 158(d)(2)(B)(i).
      Because we do not have jurisdiction under § 158(d)(2), we consider
whether there are alternative bases for jurisdiction that would allow us to
review the bankruptcy court’s interlocutory order. There are two possibilities.
First, 28 U.S.C. § 1292(b), when its requirements are satisfied, can provide a
court of appeals with jurisdiction to entertain an appeal from an interlocutory
order of a district court sitting in its bankruptcy appellate capacity. See Conn.
Nat’l Bank v. German, 503 U.S. 249, 251–52 (1992). As noted above, the district
court in this case lacked jurisdiction over the bankruptcy court’s interlocutory
order, and even if it had jurisdiction, it failed to certify its decision for appeal as
required by § 1292(b). Thus, § 1292(b) does not provide a basis for jurisdiction.
      The second possible basis for jurisdiction is the collateral-order exception
to the final judgment rule established in Cohen v. Beneficial Industrial Loan
Corp., 337 U.S. 541, 546 (1949). In order to be reviewable under the collateral
order doctrine, an order must: (1) conclusively determine the disputed question;
(2) resolve an important issue completely separate from the merits of the action;
and (3) be effectively unreviewable on appeal from a final judgment. Will v.
Hallock, 546 U.S. 345, 349 (2006); see also Collateral Control Corp. v. Deal (In
re Covington Grain Co.), 638 F.2d 1357, 1360 (5th Cir. 1981) (applying the
collateral-order exception to bankruptcy appeals).
      Here, however, neither the second nor the third requirement is satisfied.
The bankruptcy court’s order cannot be separated from the merits of the action
for appellate review of the proposed settlement. See, e.g., In re Tidewater, 734
F.2d at 797 (holding that the collateral order doctrine is inapplicable to cases
involving the enforcement of settlement agreements because “the bankruptcy

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court order cannot be separated from the merits of the action for appellate
review of the proposed settlement”).         The collateral order doctrine is also
inapplicable because immediate review is not necessary to protect important
interests.   The bankruptcy court order denying the enforcement of the
settlement agreement can be reviewed on appeal after entry of final judgment
in the bankruptcy proceedings.
                                III. CONCLUSION
      For the reasons stated above, we conclude that the district court did not
have jurisdiction over the bankruptcy court’s order denying Stansbury’s motion
to enforce the settlement agreement, and neither do we. We nevertheless have
jurisdiction to require the district court to vacate its judgment, which we do.
See, e.g., Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 95 (1998);
Nat’l Benevolent Ass’n of the Christian Church (Disciples of Christ) v. Weil,
Gotshal & Manges, LLP (In re Nat’l Benevolent Ass’n of the Christian Church
(Disciples of Christ)), 333 F. App’x 822, 828 (5th Cir. 2009); Howery v. Allstate
Ins. Co., 243 F.3d 912, 921 (5th Cir. 2001); Alvidres v. Reyes Reno, 180 F.3d 199,
206 (5th Cir. 1999).
      The judgment of the district court is VACATED.               This appeal is
DISMISSED for lack of subject matter jurisdiction. Stansbury shall bear the
costs of this appeal.

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