Sabram Estates West, LLC v. U.S. Trustee
ORDER, as set forth. ( Appellee Brief due by 7/2/2012.) Signed by Honorable P. K. Holmes, III on June 18, 2012. (lw)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
SABRAM ESTATES WEST, LLC
Case No. 2:12-CV-02086
UNITED STATES TRUSTEE
On June 5, 2012, the Court issued the parties an Order to Show Cause as to why this action
should not be dismissed for lack of jurisdiction. The parties submitted written responses to the Order
to Show Cause, and the Court is now informed of the issues pertinent to the Court’s jurisdiction over
On February 7, 2012, the U.S. Bankruptcy Court for the Western District of Arkansas, Fort
Smith Division, issued an order (“the February order”) denying debtors’1 motion to compel, among
other things, payment of a refund or credit by Appellee Arvest Bank. The Bankruptcy Court decided
that Arvest Bank was not legally obligated to pay Appellant the credit it claimed it was owed.
Months after the February order was entered, and after Appellant had filed a Notice of Appeal of that
order in this Court, the Bankruptcy Court issued an amended order, dated June 4, 2012, in which the
Bankruptcy Court struck from its February order certain language regarding the order’s finality and
appealability. The Bankruptcy Court accordingly “made no determination that the previous
[February] order was a final and appealable order...” (Doc. 13-1). It is now for this Court to decide
The “debtors” referred to in the Bankruptcy Court proceedings are, collectively, the
Appellant in the case at bar and the Appellants in four other cases pending before this Court (Case
Nos. 2:12-CV-2084, 2:12-CV-2085, 2:12-CV-2087, and 2:12-CV-2088).
whether the February order of the Bankruptcy Court, which is the subject of the instant appeal, was
a final and appealable order.
The district courts “shall have jurisdiction to hear appeals from final judgments, orders and
decrees” of the bankruptcy courts. 28 U.S.C. § 158(a)(1). To determine whether the February order
is “final,” the Court must conduct a specialized inquiry. “[I]n bankruptcy proceedings the courts take
a more liberal view of what constitutes a separate dispute for purposes of appeal.” In re Leimer, 724
F.2d 744, 745 (8th Cir. 1984). “Congress has long provided that orders in bankruptcy cases may be
immediately appealed if they finally dispose of discrete disputes within the larger case . . .” In re
Saco Local Development Corp., 711 F.2d 441, 445 (1st Cir. 1983) (cited to with approval by the
Eighth Circuit in Leimer). Specifically, the Eighth Circuit directs the district courts to consider the
following when determining whether a bankruptcy order is final: (1) the extent to which the order
leaves the Bankruptcy Court nothing to do but 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. In
re Olson, 730 F.2d 1109 (8th Cir. 1984).
Applying these three factors, the Court concludes that the February order of the Bankruptcy
Court is final for purposes of appeal. First, it is clear that the parties have settled the matter as
between Appellant and its only secured creditor, Appellee Arvest Bank. See Settlement Agreement,
Doc. 11-4. Therefore, as between Appellant and Arvest, there remains nothing more for the
Bankruptcy Court to do than enforce the Settlement Agreement and potentially appoint Chapter 11
trustees to assist in developing a reorganization plan. The Bankruptcy Court’s decision regarding
the alleged credit owed by Arvest to Appellant, which is not set forth as part of the written
Settlement Agreement, was a decision made on the merits and resulted in a final determination that
Arvest did not owe Appellant a credit and that the payment terms of the Settlement were to be
followed, as set forth in the Settlement Agreement. Second, delaying review of the matter of the
alleged credit would prevent Appellant from obtaining effective relief, as Appellant would be
required to go without payment of its alleged $70,000 credit and wait until the conclusion of the
entire bankruptcy proceedings to appeal this discrete issue. Third, although the Court is without
sufficient facts to be convinced that a later reversal on the issue of the alleged credit would require
recommencement of the entire bankruptcy proceedings, it is conceivable that other creditors could
present themselves prior to the conclusion of all proceedings, and the issue of the alleged credit
would thereby affect the ultimate distribution of the remaining assets in the estate.
It is therefore the Court’s determination that the February order is a final judgment as to the
issue of Appellee Arvest Bank’s legal obligation to issue a credit to Appellant to offset payments
made pursuant to the parties’ Settlement Agreement. The Court shall have jurisdiction to hear the
appeal of this discrete matter pursuant to 28 U.S.C. § 158(a)(1). Accordingly, and pursuant to this
Court’s Order of June 13, 2012, Appellee’s Response Brief shall be due fourteen (14) days from
today, on July 2, 2012.
IT IS SO ORDERED this 18th day of June, 2012.
/s/P. K. Holmes, III
P.K. HOLMES, III
CHIEF U.S. DISTRICT JUDGE
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