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By Mireya Navarrro
New York City and state officials have thrown their weight behind an elderly widow fighting to keep her rent-stabilized lease from becoming an asset with which to pay off her creditors, arguing that it would undermine the safeguards that both bankruptcy and rent laws are supposed to provide.In a brief filed jointly this week with the state’s Court of Appeals, lawyers from the state attorney general’s office and New York City’s Law Department said that, under current law, a lease for a rent-regulated apartment is not property that can be sold. Such a lease, they argued, amounts to a public benefit, just like disability or unemployment benefits, that is exempted from a bankruptcy estate and cannot be seized as an asset in a personal bankruptcy.
The friend of the court brief filed by the state and the city underscores the importance of a case that bankruptcy lawyers say poses a major risk to New Yorkers who seek protection and happen to live in rent-stabilized apartments. The case, the brief argues, also threatens to circumvent rent-stabilization laws enacted by both the city and the state. It comes at a time of high demand for affordable housing amid the steady loss of rent-regulated apartments to market-rate conversions.
“Rent-stabilized housing provides millions of vulnerable New Yorkers with the guarantee of an affordable place to live,” said Matt Mittenthal, a spokesman for Eric T. Schneiderman, the New York State attorney general. “State law simply does not allow the benefits that come with that crucial program to be seized and sold in a bankruptcy.”
The bankruptcy case was brought in 2011 by Mary Veronica Santiago, 79, who has lived in a two-bedroom apartment in the East Village of Manhattan for more than 50 years and who sought Chapter 7 protection after accumulating a debt of $23,000, mostly in credit card bills.
Ms. Santiago was not behind on her $703 rent, but her landlord, who was not among her creditors, stepped into her bankruptcy case with an offer to buy her rent-stabilized lease and produce the money to pay off her debt. The bankruptcy trustee in charge of marshaling her assets, John S. Pereira, accepted the offer. But Ms. Santiago, fearing her eventual eviction despite an agreement to let her stay in her apartment, challenged that decision.
After both a bankruptcy court and a Federal District Court sided with the bankruptcy trustee, Ms. Santiago appealed to the United States Court of Appeals for the Second Circuit, which for the first time will weigh in on whether a rent-stabilized lease can be treated as an asset in bankruptcy cases, like a car or a piece of land.
But before ruling on the matter, the federal court sent the case to the New York Court of Appeals in March to decide on a question of state law: whether the lease is exempt from a tenant’s assets for the purposes of bankruptcy proceedings.
A lawyer for Mr. Pereira said that trustees, who get a commission on the assets they are able to gather, have an obligation to marshal all assets to get a debt paid. Under federal bankruptcy law, states can decide which assets can be exempted from an estate. Mr. Pereira’s lawyer argues that the state does not specify rent-stabilized leases in such a list of exemptions and that the State Legislature did not intend to include them.
“If the city and state now believe that these leases should be included, the appropriate way to deal with this issue is by enacting legislation addressing rent-stabilized leases in the context of an individual’s bankruptcy estate,” the lawyer, J. David Dantzler Jr., said.
But the city and the state said that such an exemption already existed, under public benefits, and that the “state law has long barred creditors from enforcing a money judgment against the value of a rent-stabilized lease.”
In their brief, the officials noted that rent-stabilized tenants have a median income “appreciably lower” than tenants paying the market rate, and that without rent law protections, “the result would be a metropolis largely consisting of the very rich and very poor.”
The trustee has proposed an arrangement in which the landlord would pay Ms. Santiago’s debt, pay the trustee and his lawyer, and allow her to live out her years in her apartment.
Copyright 2014 The New York Times Company. All rights reserved.
The recent Middle District of Florida decision in In re Nabavi, 2014 WL 3939595 (M.D. Florida, August 12, 2014) made reference to the 11th Circuit Court of Appeal’s longtime adoption of the "civil plain error rule" - an exception to the general rule that an appellate court will not consider an issue not raised in the lower court. In the In re Nabavi appeal to the District Court from the Bankruptcy Court, the creditor raised arguments which it had failed to before the Bankruptcy Court. The District Court held that the creditor thereby waived its right to bring the arguments on appeal as the “civil plain error rule” exception did not apply.
Bankruptcy ContextThe In re Lett Court explained that the “civil plain error rule” is particularly true in the bankruptcy context. The Court stated that “[o]rdinarily an appellate court does not give consideration to issues not raised below” because “bankruptcy cases are to be tried in front of bankruptcy court.” The Court cited a prior decision that related that it is within the court’s discretion to resolve an issue decided in the bankruptcy court “if the record thoroughly presents the issue” but “if the record reflects an issue that was presented in a cursory manner and never properly presented to the Bankruptcy Court, the issue is not preserved for appeal.” This decision further explained that “it is not enough that the record provides facts which may permit the resolution of an issue; rather the record must be adequately developed, to the point that the Bankruptcy Court could have passed on the issue …”
The recent case of In re Biscayne Park, LLC, 540 Fed. Appx. 952 (11th Cir. 2013) cites In re Lett and further explained that where a party does not raise an issue below, the Court will evaluate it under the "plain error rule", which allows consideration of an issue not raised in the lower courts under five circumstances:
- it involves a pure question of law and if refusal to consider it would result in a clear miscarriage of justice
- where the appellant raises an objection to an order which he had no opportunity to raise at the lower court level
- where the interest of substantial justice is at stake
- where the proper resolution is beyond doubt
- if the issue presents significant questions of general impact or of great public concern
Certain Bankruptcy Code Provisions Never Waived?The author of a 2011 post on Weil Gotshal's "Bankruptcy Blog", wrote that the In re Lett decision suggested that certain provisions of the Bankruptcy Code may never be waived, such as in the context of a chapter 11 confirmation order, even if the party could have raised - but did not raise the argument before the bankruptcy court. The blog post points out that the In re Lett Court "ultimately concluded that the district court had actually erred in relying on the civil plain error rule in declining to address whether the plain complied with the absolute priority rule." The author relates that 11th Circuit in In re Leff concluded that the confirmation related issue had been preserved for appeal because the requirement of section 1129(b) had "sufficiently present[ed] the absolute priority rule in the bankruptcy court as to preserve the issue for review..." and that the debtor himself had placed the absolute priority rule squarely before the court when he proffered compliance with section 1129(b) and sought confirmation of the chapter 11 plan.
References
As related in this short video, preservation of the record can make the difference between life and death in a criminal proceeding.
Jones Day blog post on In re Lett.
Rogers Towers blog post. (implications of substantial consummation as barrier to appeal)Attached: Untitled documentGoogle Docs: Create and edit documents online. 
Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
"The recent Middle District of Florida decision in In re Nabavi, 2014 WL 3939595 (M.D. Florida, August 12, 2014) made reference to the 11th Circuit Court of Appeal’s longtime adoption of the "civil plain error rule" - an exception to the general rule that an appellate court will not consider an issue not raised in the lower court. In the In re Nabavi appeal to the District Court from the Bankruptcy Court, the creditor raised arguments which it had failed to before the Bankruptcy Court. The District Court held that the creditor thereby waived its right to bring the arguments on appeal as the “civil plain error rule” exception did not apply.
Bankruptcy ContextThe In re Lett Court explained that the “civil plain error rule” is particularly true in the bankruptcy context. The Court stated that “[o]rdinarily an appellate court does not give consideration to issues not raised below” because “bankruptcy cases are to be tried in front of bankruptcy court.” The Court cited a prior decision that related that it is within the court’s discretion to resolve an issue decided in the bankruptcy court “if the record thoroughly presents the issue” but “if the record reflects an issue that was presented in a cursory manner and never properly presented to the Bankruptcy Court, the issue is not preserved for appeal.” This decision further explained that “it is not enough that the record provides facts which may permit the resolution of an issue; rather the record must be adequately developed, to the point that the Bankruptcy Court could have passed on the issue …”
The recent case of In re Biscayne Park, LLC, 540 Fed. Appx. 952 (11th Cir. 2013) cites In re Lett and further explained that where a party does not raise an issue below, the Court will evaluate it under the "plain error rule", which allows consideration of an issue not raised in the lower courts under five circumstances:
- it involves a pure question of law and if refusal to consider it would result in a clear miscarriage of justice
- where the appellant raises an objection to an order which he had no opportunity to raise at the lower court level
- where the interest of substantial justice is at stake
- where the proper resolution is beyond doubt
- if the issue presents significant questions of general impact or of great public concern
Certain Bankruptcy Code Provisions Never Waived?The author of a 2011 post on Weil Gotshal's "Bankruptcy Blog", wrote that the In re Lett decision suggested that certain provisions of the Bankruptcy Code may never be waived, such as in the context of a chapter 11 confirmation order, even if the party could have raised - but did not raise the argument before the bankruptcy court. The blog post points out that the In re Lett Court "ultimately concluded that the district court had actually erred in relying on the civil plain error rule in declining to address whether the plain complied with the absolute priority rule." The author relates that 11th Circuit in In re Leff concluded that the confirmation related issue had been preserved for appeal because the requirement of section 1129(b) had "sufficiently present[ed] the absolute priority rule in the bankruptcy court as to preserve the issue for review..." and that the debtor himself had placed the absolute priority rule squarely before the court when he proffered compliance with section 1129(b) and sought confirmation of the chapter 11 plan.
References
As related in this short video, preservation of the record can make the difference between life and death in a criminal proceeding.
Jones Day blog post on In re Lett.
Rogers Towers blog post. (implications of substantial consummation as barrier to appeal)Attached: Untitled documentGoogle Docs: Create and edit documents online. Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
"The recent Middle District of Florida decision in In re Nabavi, 2014 WL 3939595 (D.C. M.D. Florida, August 12, 2014) made reference to the 11th Circuit Court of Appeal’s longtime adoption of the "civil plain error rule" - an exception to the general rule that an appellate court will not consider an issue not raised in the lower court. In the Nabavi appeal to the District Court from the Bankruptcy Court, the creditor raised arguments which it had failed to bring before the Bankruptcy Court. The District Court held that the creditor waived its right to bring his arguments on appeal as the “civil plain error rule” exception did not apply.
But the Supreme Court in Hormel held that its general principle is not unyielding and “[t]here may always be exceptional cases or particular circumstances which will prompt a reviewing or appellate court, where injustice might otherwise result, to consider questions of law which were neither pressed nor passed upon by the court or administrative agency below.” Justice Black added that Rules of practice and procedure are devised to promote the ends of justice, not to defeat them. A rigid and undeviating judicially declared practice under which courts of review would invariably and under all circumstances decline to consider all questions which had not previously been specifically urged would be out of harmony with this policy. Orderly rules of procedure do not require sacrifice of the rules of fundamental justice11th Circuit
In the case of In re Lett, 632 F. 3d 1216 (11th Cir. 2011), the 11th Circuit reviewed its prior adoption of Hormel's “civil plain error rule” and its exceptions. The 11th Circuit explained that the rule's exception permits consideration of a pure question of law not raised below, if the failure to consider that issue on appeal would result in a "miscarriage of justice." The In Re Lett Court explained that a “miscarriage of justice” is a decision or outcome of a legal proceeding that is prejudicial or inconsistent with the substantial rights of a party. Another 11th Circuit case explained that “[a]ny wrong result resting on the erroneous application of legal principles is a miscarriage of justice in some degree.”
The recent case of In re Biscayne Park, LLC, 540 Fed. Appx. 952 (11th Cir. 2013) cited In Re Lett and further explicated the circumstances in which the "plain error rule" will apply. The Court explained that it will consider an issue not raised in the lower courts under five circumstances:
- it involves a pure question of law and if refusal to consider it would result in a clear miscarriage of justice
- where the appellant raises an objection to an order which he had no opportunity to raise at the lower court level
- where the interest of substantial justice is at stake
- where the proper resolution is beyond doubt
- if the issue presents significant questions of general impact or of great public concern
Bankruptcy ContextThe In re Lett Court explained that the “civil plain error rule” is particularly true in the bankruptcy context. The Court stated that “[o]rdinarily an appellate court does not give consideration to issues not raised below” because “bankruptcy cases are to be tried in front of bankruptcy court.” The Court cited a prior decision that related that it is within the court’s discretion to resolve an issue decided in the bankruptcy court “if the record thoroughly presents the issue” but “if the record reflects an issue that was presented in a cursory manner and never properly presented to the Bankruptcy Court, the issue is not preserved for appeal.” This decision further explained that “it is not enough that the record provides facts which may permit the resolution of an issue; rather the record must be adequately developed, to the point that the Bankruptcy Court could have passed on the issue …”
Certain Bankruptcy Code Provisions Never Waived?The author of a 2011 post on Weil Gotshal's "Bankruptcy Blog", wrote that the In re Lett decision suggested that certain provisions of the Bankruptcy Code may never be waived, such as in the context of a chapter 11 confirmation order, even if the party could have raised - but did not raise the argument before the bankruptcy court. The blog post points out that the In re Lett Court "ultimately concluded that the district court had actually erred in relying on the civil plain error rule in declining to address whether the plain complied with the absolute priority rule" as that the involved confirmation related issue had been preserved for appeal because the requirement of section 1129(b) of the Bankruptcy Code had "sufficiently present[ed] the absolute priority rule in the bankruptcy court as to preserve the issue for review..." and that the debtor himself had placed the absolute priority rule squarely before the court when he proffered compliance with section 1129(b) and sought confirmation of the chapter 11 plan.
ReferencesAs related in this short video, preservation of the record can make the difference between life and death in a criminal proceeding.
Jones Day blog post on In re Lett.
Rogers Towers blog post. (implications of substantial consummation as barrier to appeal)Attached: Untitled document
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
Detroit has reached a final settlement with its greatest opponent, bond insurer Syncora Guarantee Inc., this Monday, according to a lawyer for the city.
Under the deal, Syncora will recover roughly 14 percent of money owed, which they've long claimed totals more than $333 million. Syncora will receive two sets of notes from Detroit, a lease to control a tunnel to Canada, land near the tunnel, and the possibility of leasing and controlling a parking structure.
With this settlement, Syncora is fully exiting the Chapter 9 bankruptcy case , including any future appeals.
David Heiman of Jones Day, a lawyer for Detroit, said to U.S. Bankruptcy Judge Steven Rhodes in Monday’s hearing that both parties have “laid down their swords.”
While the agreement with Syncora is an important cleared hurdle for Detroit’s bankruptcy emergence, the city still faces creditor Financial Guaranty Insurance Co., who is seeking roughly $1.1 billion from the pension debt it insured.
On Monday, FGIC asked Judge Rhodes to suspend the trial until September 22 so the company can modify its approach in the wake of Syncora’s settlement. The trial is currently on hold since last week so Detroit and Syncora could finalize their deal.
Detroit’s Grand Bargain is centered around an estimated $816 in pension debt. FGIC may be held responsible for payment if investors end up taking losses.
The Grand Bargain aims to relieve $7 billion in liabilities while supporting state retirement arrangements from state and private contributors. Detroit has guaranteed it will not sell off any pieces from its art collection to pay back any debts.
Syncora apologized in a court filing Monday. The company has been a longtime adversary in the case and recently accused court appointed mediators of inappropriate conduct and conflict of interest.
Because of the apology, Rhodes has stated he will no longer sanction Syncora in its attorneys.
The post Detroit Reaches Settlement With Largest Creditor appeared first on The Bankruptcy Blog.
Detroit reaches a settlement with its greatest opponent, bond insurer Syncora Guarantee Inc., this Monday, according to a lawyer for the city.
Under the deal, Syncora will recover roughly 14 percent of money owed, which they've long claimed totals more than $333 million. Syncora will receive two sets of notes from Detroit, a lease to control a tunnel to Canada, land near the tunnel, and the possibility of leasing and controlling a parking structure.
With this settlement, Syncora is fully exiting the Chapter 9 bankruptcy case, including any future appeals.
David Heiman of Jones Day, a lawyer for Detroit, said to U.S. Bankruptcy Judge Steven Rhodes in Monday’s hearing that both parties have “laid down their swords.”
While the agreement with Syncora is an important cleared hurdle for Detroit’s bankruptcy emergence, the city still faces creditor Financial Guaranty Insurance Co., who is seeking roughly $1.1 billion from the pension debt it insured.
On Monday, FGIC asked Judge Rhodes to suspend the trial until September 22 so the company can modify its approach in the wake of Syncora’s settlement. The trial is currently on hold since last week so Detroit and Syncora could finalize their deal.
Detroit’s Grand Bargain is centered around an estimated $816 in pension debt. FGIC may be held responsible for payment if investors end up taking losses.
The Grand Bargain aims to relieve $7 billion in liabilities while supporting state retirement arrangements from state and private contributors. Detroit has guaranteed it will not sell off any pieces from its art collection to pay back any debts.
Syncora apologized in a court filing Monday. The company has been a longtime adversary in the case and recently accused court appointed mediators of inappropriate conduct and conflict of interest.
Because of the apology, Rhodes has stated he will no longer sanction Syncora in its attorneys.
The post Detroit Reaches a Settlement With Largest Creditor appeared first on The Bankruptcy Blog.
An indictment a few days ago against a chapter 7 debtor in Palm Beach County provides an occasion to review the bankruptcy crimes provisions of title 18 of the United States Code. This indictment gives credence to the rule of thumb to beware of the debtor who mentions the words "Rolex watch."
Recent IndictmentThe indictment for a bankruptcy crime against the former chapter 7 debtors in alleged that they "did knowingly and fraudulently conceal and cause to be concealed property belonging to the bankruptcy estate" in violation of 18 U.S.C §152. First on the list of undisclosed property - a Rolex watch.
18 U.S.C. §152Section 152 of title 11 provides that [a] person who - (1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States trustee, any property belonging to the estate of a debtor (2) knowlingly and fraudulently makes a false oath or account in or in relation to any case under title 11; . . . shall be fined under this title, imprisoned not more than 5 years, or both
The U.S. Attorney Manual provides some guidance. It explains that that elements of the offense of concealment under 18 U.S.C. § 152(1) are
1. the bankruptcy proceeding was in existence
2. the defendant fraudulent concealed the property from the custodian (such as the bankruptcy trustee)
3. the property belong to the estate
The manual makes reference to the cases of United States v. Guiliano, 644 F.2nd 85, 87 (2nd Cir., 1981) and United States v. Beery, 678 F. 2nd 856 (10th Cir. 1982), cert. denied, 471 U.S. 1066 (1985).
Jury not a Bankruptcy Judge
The U.S. Attorney's manual sets forth that it is a question for a jury to determine whether assets are property of the debtor and belong to the bankruptcy estate. Query how this difference to this same determination being made by a bankruptcy judge in a bankruptcy case. Interestingly enough, the manual makes reference to a bankruptcy judge testifying in the criminal case, but that the bankruptcy judges testimony "that property is an asset of the estate is inadmissible to prove that the assets in question belong to the bankruptcy estate."
"Might Be" Property of the EstateThe U.S. Attorney's refers to the case of United States v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984), cert. denied, and takes the position that the all-encompassing definition of "estate" in section 541 of the Bankruptcy Code, even requires the debtor to disclose information about all property that "might be" property of the bankruptcy estate and to disclose "the existence of assets whose immediate status is uncertain." It further takes the position that even if the asset is not ultimately determined to be property of the estate under the Bankruptcy Code, section 152 of title 11 "properly imposes sanctions on those who pre-empt a court's determination by failing to report the asset."
Concealment The U.S. Attorney's manual also sets forth its position on the definition of concealment. It states that conceal "does not mean merely to secrete or hide away" but concealment also means to "prevent the discovery of the asset or to withhold knowledge of the asset." United States v. Schireson, 116 F.2d 881, 884 (3d Cir. 1941); Burchinal v. United States, 342 F.2d 982, 985 (10th Cir.), cert. denied, 382 U.S. 843 (1965). It further explains that the concealment may take prior to the filing of the bankruptcy as well as after the filing of the bankruptcy. Concealment prior to the filing of a bankruptcy constitutes a single offense as there is only a single duty to disclose the existence of all assets but that each asset concealed after the filing of the bankruptcy petition constitutes a separate offense because each concealment represents a separate act with intent.
Further ReferencesOutlines on the topic of bankruptcy and related crimes is available here and here. Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
An indictment was filed a few days ago against former chapter 7 debtors in Palm Beach County. It provides an occasion to review the bankruptcy crimes provisions of title 18 of the United States Code.
Recent IndictmentThe indictment for a bankruptcy crime against the former chapter 7 debtors alleged that they "did knowingly and fraudulently conceal and cause to be concealed property belonging to the bankruptcy estate" in violation of 18 U.S.C §152. First on the list of undisclosed property - a Rolex watch.
18 U.S.C. §152Section 152 of 18 U.S.C. provides
A person who—(1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor; (2) knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11; . . .shall be fined under this title, imprisoned not more than 5 years, or both.
ElementsThe U.S. Attorney Manual explains that the elements of the proof for the offense of "concealment" under 18 U.S.C. § 152(1) are
1. the bankruptcy proceeding was in existence
2. the defendant fraudulently concealed the property from the custodian (such as the bankruptcy trustee)
3. the property belong to the estate
The manual makes reference to the cases of United States v. Guiliano, 644 F.2nd 85, 87 (2nd Cir., 1981). Jury Determination The U.S. Attorney's manual sets forth that it is a question for a jury to determine whether the assets are property of the debtor and belong to the bankruptcy estate. It appears that the determination of whether the asset is part of the "estate" under the "technical rules" of the Bankruptcy Code, is not co-determinative of whether it is property of the estate for purposes of this criminal bankruptcy statute. (See footnote 10 in law review article on bankruptcy crimes was written by Nevin M. Gewertz.) One commentator states that Interestingly enough, the manual makes reference to the bankuptcy judge testifying in the criminal case, but that the bankruptcy judges testimony "that property is an asset of the estate is inadmissible to prove that the assets in question belong to the bankruptcy estate."
"Might Be" Property of the EstateThe U.S. Attorney's refers to the case of United States v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984), cert. denied, and takes the position that the all-encompassing definition of "estate" in section 541 of the Bankruptcy Code, even requires the debtor to disclose information about all property that "might be" property of the bankruptcy estate and to disclose "the existence of assets whose immediate status is uncertain." The manual takes the position that even if the asset is not ultimately determined to be property of the estate under the Bankruptcy Code, section 152 of title 11 "properly imposes sanctions on those who pre-empt a court's determination by failing to report the asset."
Concealment The U.S. Attorney's manual also sets forth its position on the definition of "concealment." It states that conceal "does not mean merely to secrete or hide away" but concealment also means to "prevent the discovery of the asset or to withhold knowledge of the asset." United States v. Schireson, 116 F.2d 881, 884 (3d Cir. 1941); Burchinal v. United States, 342 F.2d 982, 985 (10th Cir.). It further explains that the concealment may take prior to the filing of the bankruptcy as well as after the filing of the bankruptcy. Concealment prior to the filing of a bankruptcy constitutes a single offense as there is only a single duty to disclose the existence of all assets but that each asset concealed after the filing of the bankruptcy petition constitutes a separate offense because each concealment represents a separate act with intent.
Further ReferencesOutlines on the topic of bankruptcy and related crimes is available here and here. Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The 11th Circuit Court of Appeals recent decision in In re Donald J. Donovan, 532 F. 3rd 1134 (11th Cir. 2008) dealt with an appeal of the Bankruptcy Court's denial of an unsecured creditor's motion to dismiss a chapter 7 case as being "abusive". The Circuit Court held that it lacked jurisdiction as the order denying the motion was not a "final" order and no exception applied.
First, the Court reviewed the differences in scope of appellate review of district court and appellate courts in the bankruptcy context as set forth in 28 U.S.C. §158(a) and (d). In general, district courts may review final orders as well as interlocutory orders from bankruptcy proceeding, but circuit courts may only hear appeals of final orders.
Final Order The Court reviewed that the general requirement that an order be "final" in order to be appealed. For an order to be "final" it must "end the litigation on the merits, leaving nothing to be done but execute the judgment." The Court explained that in the bankruptcy context, the finality requirement is applied to "discrete controversies within the administration of the [bankruptcy] estate." The Court further explained that in the bankruptcy context, the finality requirement is given a "more flexible interpretation".
Exceptions to the Finality RulePrior 11th Circuit decisions discuss the three exception to the final order requirement.
- collateral order doctrine
- doctrine of practical finality
- intermediate resolution of issues fundamental to the merits of the case
Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
A recent decision from the 11th Circuit Court of Appeals gives occasion to review the finality rule and its three exceptions. The 11th Circuit Court of Appeals decision in In re Donald J. Donovan, 532 F. 3rd 1134 (11th Cir. 2008) dealt with an appeal of the Bankruptcy Court's denial of an unsecured creditor's motion to dismiss a chapter 7 case as being "abusive". The Circuit Court held that it lacked jurisdiction to hear the appeal as the order denying the motion to dismiss was not a "final" order and no exception applied.
FinalityThe Court also reviewed the general requirement that an order must be "final" in order to be appealed. In general, to be "final" under 28 U.S.C. §158(d) and §1291, an order must "end the litigation on the merits, leaving nothing to be done but execute the judgment." The Court explained that in the bankruptcy context, the finality requirement is applied to "discrete controversies within the administration of the estate."Three ExceptionsIn prior cases, the 11th Circuit explained that there are three exceptions to the "finality" requirement as follows:
- collateral order doctrine
- doctrine of practical finality
- intermediate resolution of issues fundamental to the merits of the case
The Court in Donovan explained that in a bankruptcy context "finality" is given a more "flexible interpretation" as bankruptcy is an "aggregation of controversies and suits". It gave the example that it is "generally the particular adversary proceeding or controversy that must have have been finally resolved rather than the entire bankruptcy litigation."1. Collateral Order DoctrineThe 11th Circuit explained in the case of In re F.D.R. Hickory House, Inc., 60 F. 3rd 724 (11th Cir. 1995) explained that the collateral order doctrine applies to orders that (1) finally determine a claim separate and independent from the other claims in the action, (2) cannot be reviewed after the final judgment because by then effective review will be precluded and that the rights conferred will be lost and (3) are too important to be denied review because they present a significant and unresolved question of law.2. Practical FinalityThe "practical finality" rule, which is referred to as the Fogay-Conrad rule, permits a circuit court to review an interlocutory order thatdecides the right to the property in contest, and directs it to be delivered up by the defendant to the complainant, or directs it to be sold, or directs the defendant to pay a certain sum of money to the complainant, and the complainant is entitled to have such decree carried immediately into executionin Walker, the 11th Circuit explained that this exception is applied "where practical considerations require it" and that "judicial economy" would be "turned on its head" if the appellate court could not review the case.3. Fundamental Issues"Fundamental Issues" is the third exception to the finality rule. The 11th Circuit explains that this exception is the “most extreme” exception to the final judgment rule, applicable “even [to] an order of marginal finality [is] if the question presented is fundamental to further conduct of the case.”Further ReferencesFurther material is available in this article in the Florida Bar Journal, an article on practice tips, a blog post on Weil Gotshal's "Bankruptcy Blog", and an article "Bankruptcy Appeals - Useful Reminders."
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
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