Court Opinion

ID: 3001878
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:21:55.980465+00
Date Added: 2024-06-11T11:45:47.121633
License: Public Domain

United States Court of Appeals
                                 For the Seventh Circuit
                                 Chicago, Illinois 60604
                                        June 24, 2008

                                          Before

                             FRANK H. EASTERBROOK , Chief Judge

                             JOEL M. FLAUM , Circuit Judge

                             MICHAEL S. KANNE , Circuit Judge

No. 07-1286
                                                         Appeal from the United
NAJIB ZEDAN.,                                            States District Court for the
      Plaintiff-Appellant,                               Northern District of Illinois,
                                                         Eastern Division.
              v.
                                                         No. 06 C 4047
BASEM E. HABASH and SUSAN HABASH,                        Elaine E. Bucklo, Judge.
     Defendants-Appellees.

                                           Order

       Chief Judge Frank H. Easterbrook’s concurrence to the opinion in this case
issued on June 16, 2008, has been modified. Please substitute the attached concurrence.
No. 07-1286
Zedan v. Habash
   Easterbrook, Chief Judge, concurring. Although I join the court’s opinion without
reservation, a few additional observations about appellate jurisdiction are appropriate.
   The terminating order of an adversary action in bankruptcy is a “final decision” for
the purpose of 28 U.S.C. §158(d). Many decisions in this circuit, and elsewhere, so hold.
Any effort to sort the final decisions of adversary proceedings into appealable and non-
appealable bins would lead to pointless grief and expense. A clear rule on jurisdictional
issues beats a fuzzy standard. See Budinich v. Becton Dickinson & Co., 486 U.S. 196
(1988). So we have appellate jurisdiction because Zedan filed an adversary action, in
which both the bankruptcy judge and the district judge rendered final decisions.
   But should this have happened? As the court’s opinion observes, Fed. R. Bankr. P.
4004(d) and 7001(4) say that creditors must initiate adversary actions if they want the
court to block or revoke a discharge. These rules appear to be inconsistent with a stat-
ute that classifies objections to discharge as contested matters in core proceedings. 28
U.S.C. §157(b)(2)(J); Kontrick v. Ryan, 540 U.S. 443, 453 (2004). Rule 7001(4), which gov-
erns this subject (Rule 4004(d) is just a pointer), was adopted before 1984, when
§157(b)(2)(J) was enacted, and has not been revisited.
   If Zedan’s objection had been presented as a contested matter, then we would lack
appellate jurisdiction. A decision rebuffing one objection to another litigant’s request is
not “final” in the sense that matters for appellate review. After the bankruptcy judge
found Zedan’s position wanting, the question whether Habash’s debts would be dis-
charged remained open; the judge did not reach the ultimate decision until after
Zedan’s appeal had been argued in this court. One might as well appeal from an order
denying a motion for discovery or a grant of summary judgment on some but not all of
a litigant’s legal theories. But because Zedan’s motion was handled as an adversary ac-
tion, the disposition is appealable. I do not think that we can dismiss the appeal from the
No. 07-1286                                                                             Page 2

terminating decision of the proceeding actually conducted, just because the bankruptcy
court might have conducted a different kind of proceeding.
   Even if we were to hold that §157(b)(2)(J) supersedes Rule 7001(4), the fact would
remain that this was an adversary action. I recognize that adversary actions can be ap-
propriate within core proceedings, but an objection to a discharge is better handled as a
contested matter, as every bankruptcy entails a potential dispute about discharge. Ar-
guments pro and con about discharge do not (at least, need not) entail third parties, as
preference-recovery actions commonly do.
   As this case shows, the choice between contested matters and adversary proceed-

ings affects appellate review as well as the style and service list of papers filed in the
bankruptcy court. I do not see any good reason why the rules should employ a form
that can produce appellate review of one creditor’s arguments against a discharge, be-
fore the bankruptcy court has decided whether the debtor receives one. After Zedan
filed his appeal, the bankruptcy judge might have denied Habash a discharge following
an objection from the Trustee or a creditor who filed within the deadline. Separating
Zedan’s arguments from those of other participants in the bankruptcy, and dispatching
them for immediate appeal while the bankruptcy judge has yet to decide the main ques-
tion, presents abstract issues and squanders judicial resources. The appropriate com-
mittees should take a look at this subject.