Court Opinion

ID: 9688150
Source: CourtListenerOpinion
Date Created: 2023-08-24 17:35:37.932191+00
Date Added: 2024-06-11T12:05:11.448441
License: Public Domain

MAHONEY, Bankruptcy Judge,
joined by KRESSEL, Chief Judge,
concurring.
I agree with the opinion of the majority because of the current state of the law in the Eighth Circuit regarding the finality of bankruptcy court orders which deny confirmation of a chapter 13 plan. I write separately to suggest that the Court of Appeals should revisit the issue of whether an order denying confirmation of a chapter 13 plan is a final order for appeal purposes.
As the majority recites, as a result of the decision in Lewis v. U.S. Farmers Home Admin., 992 F.2d 767 (8th Cir.1993), the law in the Eighth Circuit is that an order denying confirmation of a debtor’s plan is interlocutory and not a final order. If the district court, sitting in an appellate capacity, or the Bankruptcy Appellate Panel refuses to permit the appeal of the interlocutory order such order will most likely never receive appellate review.
Rather than considering the appeal of an order denying confirmation of a plan to be a final order, Lewis requires that if the debtor chooses not to file an amended plan to conform to the bankruptcy judge’s view of what is necessary to be contained in a confirmable plan, the case should be dismissed and the dismissal order will then be considered the final appealable order. The position of the Eighth Circuit is consistent with the position of the majority of circuits that have faced the issue. See Watson v. Boyajian (In re Watson), 309 B.R. 652 (1st Cir. BAP 2004), aff'd, 403 F.3d 1 (1st Cir.2005); In re Massey, 21 Fed.Appx. 113, 2001 WL 1241039 (4th Cir.2001) (unpublished) (per curiam); Lievsay v. W. Fin. Sav. Bank (In re Lievsay), 118 F.3d 661 (9th Cir.1997) (per curiam); Flor v. BOT Fin’l Corp. (In re Flor), 79 F.3d 281 (2d Cir.1996) (per curiam); Simons v. FDIC (In re Simons), 908 F.2d 643 (10th Cir.1990) (per curiam). In re Salem, 465 F.3d 767, 771 (7th Cir.2006) (“A judgment affirming a bankruptcy court’s decision to deny confirmation of a Chapter 13 plan and dismiss a case is typically a final order of the bankruptcy court, as there are no proceedings left to occur.”); But see: In re Armstrong World Indus., Inc., 432 F.3d 507 (3d Cir.2005) (finality is construed more broadly in bankruptcy cases than in other civil cases; Third Circuit’s policy is to quickly resolve issues central to a bankruptcy case’s progress); Bartee v. Tara Colony Homeowners Ass’n (In re Bartee), 212 F.3d 277 (5th Cir.2000) (“Recognition that the denial of a Chapter 13 plan can be a final order is all but compelled by considerations of practicality.”); and Hardy v. Cinco Fed. Credit Union (In re Hardy), 755 F.2d 75 (6th Cir.1985) (court considered an appeal from a denial of the confirmation of a debtor’s chapter 13 plan with no acknowledgment of a jurisdictional problem).
The problem that results from refusing to treat orders denying confirmation as final orders for appeal purposes is that the debtor is left with two ineffective alternatives. The debtor can comply with the findings of the bankruptcy court and file a plan that contains provisions the debtor does not believe are required by the Code, and lose, as in this case, the right to appeal. Alternatively, the debtor is forced to suffer dismissal of the case and then request the bankruptcy court or the appellate court to stay the order of dismissal during an appeal so that the automatic *659stay of 11 U.S.C. § 362(a) is not lost. Frequently, the purpose of filing a chapter 13 case is to save a house from foreclosure or a vehicle from repossession and sale. The chapter 13 petition stays the state law collection procedures. If the case gets dismissed as a result of the denial of confirmation, the whole purpose of the case may be frustrated, especially if the debtor cannot obtain a stay pending appeal.
For “finality” purposes, a bankruptcy case is not the equivalent of a civil case filed in the district court. The bankruptcy case may include several discrete opportunities for litigation and the result of each litigated issue is final or should be considered final as to that issue.
28 U.S.C. § 157(a) differentiates a “case” under Title 11 and a “proceeding” arising in a case under Title 11. 28 U.S.C. § 157(b) identifies various “proceedings” that are “core proceedings” which bankruptcy judges may determine and enter appropriate orders and judgments. Included in the list of core proceedings is 28 U.S.C. § 157(b)(2)(L), “confirmation of plans.” Denial of confirmation on the merits is a determination of a proceeding that should be final and appealable. Such an order is analogous to orders determining other core proceeding litigation which have been found to be final orders for appeal purposes. Examples are Stuart v. Koch (In re Koch), 109 F.3d 1285 (8th Cir.1997) (an order denying dismissal of a case under 11 U.S.C. § 707(b) is final for appeal purposes); Huebner v. Farmers State Bank (In re Huebner), 986 F.2d 1222 (8th Cir.1993) (an order granting or denying an objection to an exemption is final for purposes of appeal), cert. denied, 510 U.S. 900, 114 S.Ct. 272, 126 L.Ed.2d 223 (1993); and Aetna Life Ins. Co. v. Leimer (In re Leimer), 724 F.2d 744 (8th Cir.1984) (an order denying relief from the automatic stay is final for appeal purposes). In Martin v. United States (In re Martin), 761 F.2d 472 (8th Cir.1985), the court, without explicitly addressing whether an order on the use of cash collateral is final for purposes of appeal, did hear and decide the creditor’s appeal of the bankruptcy court’s order granting the debtor’s motion for use of cash collateral.
In each of the cases discussed above the order appealed from terminated a discrete piece of litigation, leaving nothing further for the bankruptcy judge to do with regard to the litigated issue.
This case is a good example of the problems resulting from the current state of the law in this circuit. Here, the bankruptcy court denied confirmation of a plan proposed by the debtor because it did not extend for sixty months as the judge determined was necessary as a matter of law. The debtor lost the litigation concerning that proposed plan. She attempted to appeal the decision of the bankruptcy court, but the Bankruptcy Appellate Panel refused to grant leave to appeal the interlocutory order. Had the order denying confirmation been considered final, that initial appeal would have allowed an appellate determination of the litigated issue, which was: “Was the initial plan confirmable?” Instead, debtor, not willing to risk the downside of a dismissal order, and relying on dicta from Eighth Circuit and B.A.P. cases that appeared to sanction the procedure, filed a plan that conformed to the judge’s finding but made it clear in the plan that filing of the plan was being done over debtor’s objection. Since the objector to the original plan did not object to the new plan, it was confirmed. The debtor appealed, and now has lost the appeal because we conclude that the debtor has received all the relief the debtor is entitled to, i.e., confirmation of a plan. So, the real issue, the litigated issue of whether the original plan was confirmable, will never *660receive appellate review. (I seem to recall a book and a movie entitled Catch-22.)
I believe that when a chapter 13 plan is proposed and objected to by any party it becomes a contested matter with regard to that discrete issue, that is, the confirmability of that particular plan. An order denying confirmation of that particular plan is a final determination by the bankruptcy judge of the plan confirmation proceeding and should be considered a final order for purposes of appeal. Such an order should be considered final because it settles, once and for all, the particular issues being litigated, even though it does not resolve all other issues which may arise in the case. An order denying confirmation of a chapter 13 plan is in exactly the same category as all of the other contested matters described above which the Court of Appeals has agreed are final orders for appeal purposes. In addition to all of the reasons discussed above, such an order should be considered as final for appeal purposes to avoid the risks that dismissal of the case may cause the debtor and to avoid situations such as this one, in which the debtor cannot obtain any appellate relief.