Appellant Stephen Nicolas Lynch appeals from the bankruptcy court's Order Denying Motion for Reconsideration and Directing Debtor to Produce Documents and Appear for 2004 Exam (the "Reconsideration
Appellant and his spouse, Gwenna Kay Lynch, filed a Chapter 11 case in August 2011. The case was converted to Chapter 7 in October 2011 and Patrick J. Malloy ("Trustee") was appointed as Trustee. Appellant filed an adversary proceeding in November 2014, naming the Trustee and the Honorable Terrence L. Michael as defendants, among other parties.
Thereafter, the Trustee filed Trustee's Renewed Motion for 2004 Exam of Debtor (the "Second 2004 Exam Motion") on September 16, 2015 [Bankr.Dkt. Entry 201], which the bankruptcy court granted the following week. [Bankr.Dkt. Entry 203]. Appellant moved to quash that Second 2004 Exam Motion on October 8, 2015 [Bankr.Dkt. Entry 205], which the bankruptcy court denied the following day. [Bankr.Dkt. Entry 209]. The Trustee then filed his Motion for Order Compelling Debtor to Answer 2004 Exam Questions (the "Motion to Compel") [Bankr. Dkt. Entry 208], which the bankruptcy court granted on October 27, 2015 [Bankr. Dkt. Entry 210] without holding a hearing or waiting for a response from Appellant.
After the bankruptcy court granted the Motion to Compel, Appellant requested additional time to object. The bankruptcy court approved the request for additional time and Appellant filed his objection to the Order granting the Motion to Compel (the "Objection") on November 5, 2015 [Bankr.Dkt. Entry 213]. The Trustee replied to the Objection on November 9, 2015 [Bankr.Dkt. Entry 214], and the bankruptcy court entered a second Order granting the Motion to Compel on November 12, 2015 [Bankr.Dkt. Entry 215]. The Trustee filed a motion requesting an amendment to the Order granting that Motion to Compel [Bankr.Dkt. Entry 216] and the bankruptcy court entered the Order Setting Deadline for Production of Documents and Rescheduling 2004 Examination (the "Amended Order") on November 17, 2015 [Bankr.Dkt. Entry 217].
Appellant filed the Motion for Reconsideration and Vacation of Amended Order and Order Granting Trustee's Motion for Order Compelling Debtor to Answer Rule 2004 Exam Questions; To Compel Debtor to Produce Documents; to Reschedule 2004 Exam for Purposes of Complying
This Court immediately entered its Order to Show Cause [BAP ECF No. 3], ordering Appellant to file a memorandum of law regarding whether the appeal was of an interlocutory order(s) or whether leave to appeal should be granted. The Order to Show Cause noted that the Notice of Appeal referenced orders that the bankruptcy court may not have considered or ruled on within the Reconsideration Order. In effort to clarify the order appealed, Appellant filed an amended Notice of Appeal (the "Amended Notice of Appeal") on December 3, 2015, indicating Appellant intended to appeal only the Reconsideration Order [BAP ECF No. 4].
Appellant timely filed his Response to Order to Show Cause [BAP ECF No. 5], and the Trustee timely replied [BAP ECF No. 13]. In addition to his reply, the Trustee also filed Appellee's Motion for Sanctions Pursuant to Fed. R. Bank.App. Pro. 8020 and This Court's Inherent Power (the "Motion for Sanctions") [BAP ECF No. 15], requesting that the Court impose sanctions against Appellant for filing a frivolous appeal.
This Court has jurisdiction to hear timely-filed appeals from "final judgments, orders, and decrees ... entered in cases and proceedings" of bankruptcy courts within the Tenth Circuit, unless one of the parties elects to have the district court hear the appeal.
Appellant argues the Reconsideration Order is a final order because it determines a discrete discovery dispute within the broader scope of the bankruptcy case. Accordingly, Appellant asserts that upon entry of the Reconsideration Order, all that was left to do was to execute the Amended Order.
In ordinary litigation in federal district court, and in adversary proceedings in bankruptcy court, the litigation ordinarily ends when the court issues its final
In Bullard, the Supreme Court addressed what is the relevant "proceeding," as that term is used in § 158(a), to determine whether an order is final and appealable. The Court held that in a Chapter 13 case the relevant "proceeding" for purposes of determining whether an order relating to confirmation of a plan is a final order is not necessarily the discrete contested matter in which plan confirmation is litigated but instead is the "process of attempting to arrive at an approved plan."
Appellate courts have reached different conclusions on whether an order for a Rule 2004 examination is a discrete dispute that sufficiently concludes a "proceeding." For example, the court in In re Gray held that "[t]he fact that issues might arise that require further action from the Bankruptcy Court is sufficient to establish that [a] Rule 2004 order did not finally dispose of the discrete dispute" between the parties, rendering the order interlocutory.
With respect to the Motion for Sanctions, the Trustee appears to suggest Appellant should be sanctioned based on the Trustee's allegations of Appellant's bad faith actions in the court below and for filing the Notice of Appeal. This Court is not the appropriate forum to seek redress in the first instance for Appellant's alleged sanctionable conduct before the bankruptcy court. Further, simply filing a notice of appeal of an interlocutory order is not typically grounds for requesting sanctions, particularly in this case where, as the previously cited authority suggests, a Rule 2004 examination order may be final in certain circumstances.
For the reasons stated above, it is HEREBY ORDERED that: