Court Opinion

ID: 3044503
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:14:00.80845+00
Date Added: 2024-06-11T09:16:31.038430
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 07-1974
                                 ___________

In re:                                 *
                                       *
Tenny Shikaro Zahn,                    *
                                       *
          Debtor.                      *
_______________________
                                     * Appeal from the United States
Tenny Shikaro Zahn,                  * Bankruptcy Appellate Panel
                                     * for the Eighth Circuit.
              Appellant,             *
                                     *
         v.                          *
                                     *
Richard Fink,                        *
                                     *
              Appellee.              *
                                 __________

                            Submitted: December 14, 2007
                               Filed: May 22, 2008
                                ___________

Before RILEY, COLLOTON, and BENTON, Circuit Judges.
                            ___________

RILEY, Circuit Judge.

     The bankruptcy court denied confirmation of Tenny Shikaro Zahn’s (Zahn)
Chapter 13 plan because Zahn failed to include distributions from her non-filing
husband’s individual retirement account (IRA). Zahn appealed to the Bankruptcy
Appellate Panel (BAP). The BAP dismissed the appeal as interlocutory. Zahn then
amended her plan to include the IRA distributions, and filed an objection to her own
plan. Zahn’s amended plan was confirmed. Zahn then appealed the confirmation of
her amended plan. The BAP also dismissed that appeal, concluding Zahn lacked
standing to appeal the order granting confirmation of her own amended plan. Zahn
now appeals the BAP’s standing determination. We reverse.

I.     BACKGROUND
       The facts of this case are undisputed. Zahn filed a bankruptcy petition under
Chapter 13 of the United States Bankruptcy Code. Zahn’s petition did not include the
distributions her non-filing husband received from an IRA account. Without the
inclusion of the IRA income, Zahn’s income fell below the applicable median income
for a Chapter 13 debtor, thereby allowing Zahn a plan length of 36 months.

        The trustee objected to the confirmation of Zahn’s plan arguing Zahn must list
her husband’s IRA income in her statement of current monthly income. The inclusion
of this extra income would place Zahn above applicable median income for a Chapter
13 debtor, and would result in extending the required period of Zahn’s plan from 36
months to 60 months. The bankruptcy court agreed with the trustee and denied
confirmation of Zahn’s plan. Zahn appealed to the BAP, and the BAP denied the
appeal as interlocutory.

       Zahn filed an amended statement of current monthly income to include her
husband’s IRA income. Zahn also filed an amended plan, changing only the plan
length from 36 months to 60 months. Zahn then objected to her own plan, contending
Zahn’s non-filing husband’s IRA distributions were not part of her income. After the
trustee objected to confirmation of the amended plan, Zahn submitted a second
amended plan, and Zahn again filed the objection to her second amended plan. The
bankruptcy court subsequently confirmed Zahn’s second amended plan.

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      Zahn appealed the confirmation of her second amended plan to the BAP. The
BAP determined Zahn “is not an aggrieved party because she prevailed in the
bankruptcy court,” and the BAP dismissed Zahn’s appeal for lack of standing. Zahn
appeals, claiming the BAP erred in concluding she lacks standing to appeal the
confirmation of her plan.

II.    DISCUSSION
       “Like the BAP, we review the bankruptcy court’s interpretation of the
Bankruptcy Code de novo and its findings of fact for clear error.” In re Farmland
Indus., Inc., 397 F.3d 647, 650 (8th Cir. 2005) (citation omitted). “We review issues
committed to the bankruptcy court’s discretion for an abuse of that discretion.” Id. at
650-51 (citation omitted). “The bankruptcy court abuses its discretion when it fails
to apply the proper legal standard or bases its order on findings of fact that are clearly
erroneous.” Id. at 651 (citation omitted).

       A.     Standing as Aggrieved Party
       The BAP correctly recognized, “[i]n order to have standing to appeal the
decision of the bankruptcy court, an appellant must be a person aggrieved.” The BAP
then concluded “[Zahn] is not an aggrieved party.” The BAP reasoned that because
the bankruptcy court approved a plan Zahn proposed, the bankruptcy court’s approval
resulted in a judgment in favor of Zahn. Quoting Elkin v. Metropolitan Prop. & Cas.
Ins. (In re Shkolnikov), 470 F.3d 22, 24 (1st Cir. 2006), the BAP stated, “a party
cannot prosecute an appeal from a judgment in its favor.” The BAP reasoned,
“[w]hen the court confirmed her plan, [Zahn] got all the relief for which she asked.”
We believe there is a flaw in the BAP’s reasoning.

       Zahn was forced, over her express objection, to propose an amended plan. As
the BAP noted, Zahn “preferred her original plan.” Zahn amended her plan with
provisions she believed were erroneous and not required by the Bankruptcy Code, in
order to avoid dismissal. “That a party may appeal from a judgment in his favor when

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there has been some error prejudicial to him, or he has not received all he is entitled
to, has quite generally been held by the courts, and there is no sound reason
otherwise.” Houchin Sales Co. v. Angert, 11 F.2d 115, 118-19 (8th Cir. 1926). The
extended length of Zahn’s plan—a consequence of the inclusion of her non-filing
husband’s IRA distributions—is material and prejudicial to Zahn. Zahn is thereby an
aggrieved party.

       B.      Appealability of Confirmation Denial
       Zahn argues Eighth Circuit case law allows a review of her original plan as part
of an appeal of the order confirming her second amended plan despite the fact the
bankruptcy court approved a plan she proposed. Zahn cites to Lewis v. United States
Farmers Home Admin., 992 F.2d 767, 773 (8th Cir. 1993) where this court explained:
“[after final confirmation or a dismissal,] [e]ither party may then appeal from the final
disposition of the bankruptcy proceeding and obtain effective, timely resolution of this
case.” (citations omitted). Zahn also cites In re Pleasant Woods Assoc. Ltd. P’ship,
2 F.3d 837, 838 (8th Cir. 1993), where the court stated, “the rejection of debtor’s
proposed plan may yet be considered on appeal from a final judgment either
confirming an alternative plan, or dismissing the underlying petition or proceeding.”
(citations and alteration omitted). The BAP stated this language was dicta and
contrary to law. We disagree. Whether or not the language of these cases is dicta, we
cannot ignore the fact that the statements made by this court in Lewis and In re
Pleasant Woods emanate from the principle that confirmation of a plan generally acts
as a final order and this court has jurisdiction over final orders, including the events
and rulings leading to a final order.

       In this case, it is undisputed (1) the confirmation order leaves the bankruptcy
court nothing to do but execute the order, and (2) a delay of review could prevent the

                                          -4-
debtor from obtaining relief.1 Therefore, confirmation of Zahn’s plan is a final order
and it is appealable. See 28 U.S.C. § 158(a)(1) and (d); In re Farmland, 397 F.3d at
650 (stating, “an order entered before the conclusion of a complex bankruptcy case
is not appealable . . . unless it finally resolves a discrete segment of that proceeding,
that is, a relevant judicial unit of the proceeding. To decide that pragmatic question,
we examine three factors, the extent to which (1) the order leaves the bankruptcy court
nothing to do but to execute the order; (2) the extent to which delay in obtaining
review would prevent the aggrieved party from obtaining effective relief; [and] (3) the
extent to which a later reversal on that issue would require recommencement of the
entire proceeding.”) (internal quotations and citations omitted); see also In re Broken
Bow Ranch, 33 F.3d 1005, 1008 (8th Cir. 1994) (concluding “an order [denying
confirmation] is interlocutory—until either a modified plan is confirmed, or the
bankruptcy case is dismissed. . . .”) (citation omitted).

       Not to allow a debtor to appeal confirmation of her own plan would require a
debtor to comply with a plan that contains provisions the debtor does not believe are
required by the Bankruptcy Code, while losing her right to appeal those provisions.
In this case, the pre-confirmation requirement by the bankruptcy court to include the
IRA distributions received by the non-filing spouse as part of Zahn’s income is an
issue strongly disputed by Zahn because she believes the Bankruptcy Code does not
mandate such inclusion. Zahn’s confirmed amended plan may be contrary to
bankruptcy law and should be subject to appellate review.

       Concerned that orders denying confirmation “never receive appellate review”
because they are not considered final orders, the BAP invites us to revisit the current
state of the law in this circuit regarding the finality of such orders. We decline the
BAP’s invitation. Under Eighth Circuit law, which is consistent with the views of

      1
        The trustee’s brief represents he agrees with Zahn that confirmation of a plan
is a final order.

                                          -5-
other circuits, an order denying confirmation of a plan, which does not dismiss the
case, is not a final order and cannot be appealed. See Lewis, 992 F.2d at 772 (holding
a “bankruptcy order, which neither confirms a plan nor dismisses the underlying
petition, is not final”); see also In re Groves, 39 F.3d 212, 214 (8th Cir. 1994); and In
re Pleasant Woods, 2 F.3d at 838; see also, for example, In re Watson, 403 F.3d 1, 4-5
(1st Cir. 2005); In re Massey, 21 F. App’x. 113, 114 (4th Cir. 2001); and In re
Lievsay, 118 F.3d 661, 662-63 (9th Cir. 1997). Such orders leave the way open for
negotiations and approval of a modified plan. Because a debtor can obtain meaningful
relief either by amending her plan or, as in this case, objecting to her own amended
plan and appealing the amended plan’s confirmation, we do not see the need to alter
our precedent that an order denying confirmation, without dismissal of the case, is not
an appealable final order.

III.  CONCLUSION
      We hold that a debtor who objects to her own plan may be an aggrieved party
and have standing to appeal confirmation of such plan. Based on the foregoing, we
reverse and remand for further proceedings consistent with this opinion.
                      ______________________________

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