Filed: Sep. 10, 2019
Latest Update: Mar. 03, 2020
Summary: By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c). File Name: 19b0007n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT IN RE: RONALD JOSEPH SMITH, + Debtor. ¦ ¦ _ ¦ RONALD J. SMITH, ¦ Appellant, > No. 19-8021 ¦ ¦ v. ¦ ¦ U.S. BANK NATIONAL ASSOCIATION, ¦ ¦ Appellee. ¦ + Appeal from the United States Bankruptcy Court for the Northern District of Ohio
Summary: By order of the Bankruptcy Appellate Panel, the precedential effect of this decision is limited to the case and parties pursuant to 6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c). File Name: 19b0007n.06 BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT IN RE: RONALD JOSEPH SMITH, + Debtor. ¦ ¦ _ ¦ RONALD J. SMITH, ¦ Appellant, > No. 19-8021 ¦ ¦ v. ¦ ¦ U.S. BANK NATIONAL ASSOCIATION, ¦ ¦ Appellee. ¦ + Appeal from the United States Bankruptcy Court for the Northern District of Ohio a..
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By order of the Bankruptcy Appellate Panel, the precedential effect
of this decision is limited to the case and parties pursuant to
6th Cir. BAP LBR 8024-1(b). See also 6th Cir. BAP LBR 8014-1(c).
File Name: 19b0007n.06
BANKRUPTCY APPELLATE PANEL
OF THE SIXTH CIRCUIT
IN RE: RONALD JOSEPH SMITH, ┐
Debtor. │
│
___________________________________________
│
RONALD J. SMITH, │
Appellant, > No. 19-8021
│
│
v. │
│
U.S. BANK NATIONAL ASSOCIATION, │
│
Appellee.
│
┘
Appeal from the United States Bankruptcy Court
for the Northern District of Ohio at Youngstown.
No. 4:19-bk-40227—Russ Kendig, Judge.
Decided and Filed: September 10, 2019
Before: BUCHANAN, OPPERMAN, and WISE, Bankruptcy Appellate Panel Judges.
_________________
COUNSEL
ON MOTION: Ronald J. Smith, Canfield, Ohio, pro se. ON RESPONSE: David A. Wallace,
CARPENTER LIPPS & LELAND LLP, Columbus, Ohio, for Appellee.
_________________________
OPINION AND ORDER
_________________________
BETH A. BUCHANAN, Bankruptcy Appellate Panel Judge. This matter is before the
Panel on the Debtor’s motion for leave to appeal. For the reasons that follow, the motion is
DENIED and the appeal is DISMISSED.
No. 19-8021 In re Smith Page 2
PROCEDURAL HISTORY
On July 23, 2019, Ronald Joseph Smith (the “Debtor”) filed a notice of appeal and
statement of election. The Debtor appeals the bankruptcy court’s order vacating the dismissal of
his chapter 13 bankruptcy case and reinstating the case (“June 5 Order”), as well as the
bankruptcy court’s subsequent order denying the Debtor’s motion to alter or amend the order
reinstating the case (“July 15 Order”). On July 26, 2019, after concluding that the orders were
not final, the Debtor filed a motion for leave to appeal pursuant to 28 U.S.C. § 158(a)(3). The
Debtor also requested an expedited briefing schedule and expedited treatment of the appeal.
Creditor U.S Bank NA, Successor Trustee to Bank of America, NA, Successor in Interest to
LaSalle Bank National Association, as Trustee, on Behalf of the Holders of the Bear Sterns Asset
Backed Securities I Trust 2004-HE5, Asset Backed Certificates, Series 2004-HE5 (“U.S. Bank,
as Trustee”) filed a response in opposition to the motion. Then, on August 19, 2019, the Debtor
filed a motion to withdraw his motion for leave to appeal, asserting that the orders on appeal are
final and the motion for leave was not necessary. The August 19, 2019 motion made clear that
the Debtor still seeks expedited treatment of his appeal.
DISCUSSION
To begin, the Panel will address whether the June 5 Order and the July 15 Order are final
orders that trigger an appeal of right pursuant to 28 U.S.C. § 158(a)(1) or interlocutory orders for
which he needs leave to appeal pursuant to 28 U.S.C. § 158(a)(3). Courts, including this Panel,
have long cited the standard that to be final, “an order must end the litigation on the merits,
leaving nothing to be done but execute the judgment.” In re Lane, 591 B.R. 298, 303 (B.A.P. 6th
Cir. 2018) (citations omitted). But as the Panel recently noted, and the Debtor has discovered,
because the concept of finality is applied more flexibly in bankruptcy cases, “courts have
struggled to define the concept of finality in the bankruptcy setting.”
Id. Several recent cases
guide the Panel.
In 2015, the Supreme Court reexamined the concept of finality in bankruptcy cases,
noting: “Congress has long provided that orders in bankruptcy cases may be immediately
appealed if they finally dispose of discrete disputes within the larger case.” Bullard v. Blue Hills
No. 19-8021 In re Smith Page 3
Bank, __ U.S.__, 135 S. Ct. 1686, 1692 (2015) (internal quotation marks and citation omitted).
The Supreme Court then looked at “how to define the immediately appealable ‘proceeding’ in
the context of the consideration of Chapter 13 plans.”
Id. In that case, the debtor argued that the
order denying confirmation of his chapter 13 plan was final and immediately appealable. The
Supreme Court disagreed, concluding that: “The relevant proceeding is the process of attempting
to arrive at an approved plan that would allow the bankruptcy to move forward. This is so, first
and foremost, because only plan confirmation—or case dismissal—alters the status quo and fixes
the rights and obligations of the parties.”
Id. The Supreme Court held that while “[a]n order
denying confirmation does rule out the specific arrangement of relief embodied in a particular
plan,” it is not a final decision in the process.
Id. at 1693. The Supreme Court noted that
allowing an appeal of each version of a plan would create unnecessary delays:
Avoiding such delays and inefficiencies is precisely the reason for a rule of
finality. It does not make much sense to define the pertinent proceeding so
narrowly that the requirement of finality would do little work as a meaningful
constraint on the availability of appellate review.
Id. at 1693.
In 2018, the Sixth Circuit applied the teachings of Bullard to the question of whether an
order denying a motion for relief from the automatic stay was final. Ritzen Group, Inc. v.
Jackson Masonry, LLC (In re Jackson Masonry, LLC), 906 F.3d 494 (6th Cir. 2018), cert.
granted,
139 S. Ct. 2614,
204 L. Ed. 2d 263 (2019). The Sixth Circuit described a two-step
approach, noting that: “a bankruptcy court’s order may be immediately appealed if it is
(1) ‘entered in [a] . . . proceeding’ and (2) ‘final’— terminating that proceeding.”
Id. at 497-98.
The Sixth Circuit explained that “a ‘proceeding[ ]’ under § 158(a) is a discrete dispute within the
overall bankruptcy case, resolved through a series of procedural steps.”
Id. at 500. It then
concluded that a “stay-relief adjudication fits this description. . . . there is a discrete claim for
relief, a series of procedural steps, and a concluding decision based on the application of a legal
standard.”
Id.
No. 19-8021 In re Smith Page 4
In determining the second step of its test, the Sixth Circuit looked again to Bullard for the
definition of finality:
The finality of a bankruptcy order is determined “first and foremost” by whether
it “alters the status quo and fixes the rights and obligations of the parties.”
Bullard, 135 S. Ct. at 1692. Additionally, courts should look to whether the order
completely resolves all substantive litigation within the proceeding. See id. at
1692–93.
Jackson
Masonry, 906 F.3d at 501. To be treated as final for purposes of appeal, an order must
be “both procedurally complete and determinative of substantive rights.”
Id. (citation omitted).
In concluding that an order denying relief from stay is final, the Sixth Circuit found:
a stay-relief denial is procedurally complete—once entered there are no more
“rights and obligations” at issue in the stay-relief proceeding. The stay-relief
denial prohibits the moving party from pursuing its pre-bankruptcy claim against
the debtor. The “judicial unit” is the stay-relief proceeding, and that unit is over
once a stay-relief denial is issued. This is unlike the plan confirmation denial
addressed by Bullard, which was just one step in a back-and-forth process. And it
is also unlike, for example, a denial of a motion to dismiss or a motion for
summary judgment in an ordinary civil case. Those motions address the same
question that the ultimate decision-maker will—whether the plaintiff can win on
the merits.
Id. (internal citations omitted).
The Panel recently applied these principles in two appeals seeking review of orders
denying motions to dismiss bankruptcy cases. The results differed due to the status of the
bankruptcy case at the time dismissal was sought. The outcome of the motions reveals the
importance of the principles articulated in Bullard and Jackson Masonry to determine the
proceeding or judicial unit and whether the order at issue resolves the judicial unit while
determining substantive rights.
In Lane, the Panel determined the bankruptcy case itself was the relevant judicial unit. In
re Lane, 591 B.R. 298, 302 (B.A.P. 6th Cir. 2018). The Panel then held that the order denying
dismissal of the bankruptcy case did not alter the parties’ legal rights or the status quo, therefore,
it was not final for purposes of appeal.
Id. at 304-305. In that case, the plan confirmation
process had already concluded, and the creditor had not timely appealed the order confirming
No. 19-8021 In re Smith Page 5
plan.
Id. Instead, the creditor sought dismissal of the bankruptcy case on grounds that should
have been raised as part of the confirmation process.
Id. The Panel found that “the [creditors’]
motion, which sought dismissal of the entire case, did not aim to lock-in a mere piece of the
puzzle but instead proposed to sweep the puzzle off the table and put it back on the shelf.”
Id. at
302-03. The Panel further held that the confirmation order was the order that had determined the
parties’ substantive rights and was, thus, final and appealable.
Id. at 305. “The order denying
the [creditors’] dismissal motion is not itself preclusive on any issues because it simply enforced
the preclusive effect of the confirmation order, which was no longer appealable given the
passage of time. And, . . . judicial economy is not served by allowing what amounts to an
untimely appeal of the confirmation order by disappointed unsecured creditors.”
Id. at 304.
In contrast, in In re Dan Mazzola, Inc., the Panel found that an order denying a motion to
convert or dismiss a chapter 11 case was final for purposes of appeal. In re Dan Mazzola, Inc.,
BAP Case No. 19-8007, 2019 Bankr. LEXIS 1553 (B.A.P. 6th Cir. May 20, 2019). The Panel
distinguished Lane noting that in Dan Mazzola, Inc, while seeking conversion or dismissal of the
chapter 11 case, the creditor argued that because the franchise agreement had been terminated
prepetition, a chapter 11 reorganization was not feasible. Id. at 3. The bankruptcy court found
that the franchise agreement had not been terminated and denied the motion on that basis.
Id.
The Panel held that unlike in Jackson Masonry and Lane, the creditor’s motion in Dan Mazzola,
Inc. did aim to lock-in a piece of the puzzle, namely whether the franchise agreement was in
effect.
Id. at 3-4. Moreover, the “determination that the franchise agreement had not been
terminated is an important piece of the puzzle in this case. It is one that sets the parties’
substantive rights and will play a crucial role in the remainder of the bankruptcy case.”
Id. at 3.
Accordingly, the Panel held the order denying the motion to dismiss was a final order and the
creditor could appeal as of right.
Id. at 4.
Using this guidance, the Panel looks at the present appeal. Here, the Debtor sought
dismissal of his chapter 13 case by filing a motion which was routinely granted. After the
dismissal of the case, U.S Bank, as Trustee filed a motion to vacate the dismissal and reinstate
the case so that it could pursue in rem relief against the Debtor’s property under 11 U.S.C.
§ 362(d)(4). The bankruptcy court granted the motion, finding that due to the Debtor’s pattern of
No. 19-8021 In re Smith Page 6
filing cases, obtaining the benefit of the automatic stay, then dismissing when opportune, the
Debtor did not have an unfettered right to dismiss his current case. Further, the bankruptcy court
found that “[r]einstating this case will not immediately prejudice the Debtor, outside the fact he
will be in a chapter 13 case unwillingly. However, his participation will be limited, and the
reinstatement is for a specific, limited purpose.” (Mem. of Op. at 6-7, Bankr Case No. 19-40227,
ECF No. 32 (June 5, 2019).) The Debtor now seeks review of the June 5 Order vacating the
dismissal order and reinstating the case and the July 15 Order denying the Debtor’s motion to
alter or amend.
The Debtor argues that the proceeding or judicial unit was the contested matter which
began when U.S Bank, as Trustee filed a motion to alter or amend the dismissal order.
He asserts that denial of his motion to alter or amend the order vacating the dismissal and
reinstating the case brought finality to the specific issue of whether he would be forced to remain
in bankruptcy. While the Panel agrees that the contested matter began with U.S. Bank, as
Trustee’s motion, the Panel disagrees that either the June 5 Order vacating the dismissal and
reinstating the bankruptcy case, or the July 15 Order denying the Debtor’s motion to alter or
amend is final. Those orders do not set the parties’ substantive rights or alter the status quo,
rather those orders simply allow the case to move forward towards the final determination of
U.S. Bank, as Trustee’s right to in rem relief against the property in future bankruptcy cases.
Whether the Panel views the bankruptcy case itself as the proceeding, or the motion to vacate the
dismissal for a specific purpose as the proceeding, the proceeding is not complete.
The bankruptcy court still has pending the motion which will determine the parties’ substantive
rights with regard to the property. Whichever way the bankruptcy court rules on the motion for
relief from stay, an appeal is likely. At that point in time, the Debtor will have the opportunity to
argue that he has an unfettered right to dismiss his case and that the bankruptcy court should not
have granted the motion to vacate the dismissal.
In his motion to withdraw the motion for leave to appeal, the Debtor asserts he made an
error “in thinking that since the bankruptcy case continued, the Order was not final as would
likely be the case in non-bankruptcy litigation.” (Debtor’s Mot. to Withdraw Mot. for Leave to
Appeal at 3, BAP Case 19-8021 ECF No. 6, August 19, 2019.) For the reasons stated, the Panel
No. 19-8021 In re Smith Page 7
finds that the Debtor did not err in his initial conclusion that the orders appealed were not final.
Accordingly, the Panel DENIES the motion to withdraw the motion for leave to appeal.
Having determined that the orders appealed were not final, the Panel must decide whether
to grant discretionary leave for an interlocutory appeal. Appellate courts considering review of
interlocutory decisions from bankruptcy courts have applied the standards set forth in 28 U.S.C.
§ 1292(b). Cardwell v. Chesapeake & Ohio Ry. Co., 504 F.2d 444, 446 (6th Cir. 1974); Wicheff
v. Baumgart (In re Wicheff),
215 B.R. 839, 844 (B.A.P. 6th Cir. 1998). Under § 1292(b), an
appellant seeking review of an interlocutory order must show:
(1) The question involved is one of law; (2) the question is controlling; (3) there is
substantial ground for difference of opinion respecting the correctness of the
[bankruptcy] court’s decision; and (4) an immediate appeal would materially
advance the ultimate termination of the litigation.
Wicheff, 215 B.R. at 844 (quoting Vitols v. Citizens Banking Co.,
984 F.2d 168, 170 (6th Cir.
1993)).
In applying the test to this appeal, the Panel finds the elements are lacking. In his
statement of issues on appeal, the issues identified by the Debtor turn on the bankruptcy court’s
factual finding that U.S Bank, as Trustee has a pecuniary interest in the case and thus has
standing to seek reinstatement of the chapter 13 case. The issues identified do not involve a
controlling question of law, much less one which is subject to substantial ground for difference
of opinion.1 Moreover, the Debtor has not articulated how an immediate appeal would
materially advance the ultimate termination of the litigation. Indeed, the Panel finds that
allowing an interlocutory appeal would only delay the ultimate determination of whether U.S.
Bank, as Trustee should be granted in rem relief against the property.
1In
his motion for leave to appeal, the Debtor makes a passing reference to an “unfettered right to dismiss”
his bankruptcy case. This argument is not developed. “It is well-established that issues adverted to in a perfunctory
manner, unaccompanied by some effort at developed argumentation, are deemed waived.” Church Joint Venture,
L.P. v. Bedwell (In re Blasingame), 598 B.R. 864, 874 (B.A.P. 6th Cir. 2019) (quoting Dillery v. City of Sandusky,
398 F.3d 562, 569 (6th Cir. 2005) (internal quotation marks and citations omitted)).
No. 19-8021 In re Smith Page 8
CONCLUSION
The motion for leave to appeal is hereby DENIED and the appeal is hereby DISMISSED.
Because the appeal is dismissed, the Panel does not need to address the Debtor’s motion to
expedite.
