In re: Collins

Filing 18

ORDER Granting Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Roger T. Benitez on 9/18/2017.(knb)

1

'iT'I
I

2
r

3

I

LED

©SEP 19 m«i|£

CLERK. U,S.i}l:STRlCI. GQ-URT .

4

SCOtlifcAW DHrtftt'tW CA.ii OHNiA

5

**v

DEPUTE

6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

IN RE: CHADWICK C. COLLINS,

12

Case No.: 3:16-cv-03112-BEN-WVG

Debtor.

Bankruptcy No. 13-05478-MM7

13

14

CHARLES G. COLLINS; JANELLE L.
COLLINS; CHADWICK C. COLLINS,

15
16
17

ORDER GRANTING MOTION TO
DISMISS FOR LACK OF
JURISDICTION

Appellants,
v.
NANCY L. WOLF, Chapter 7 Trustee,

18

Appellee.

19
20

Appellants Charles G. Collins (“Charles”) and Janelle L. Collins (“Janelle”), and

21

Appellant-Debtor Chadwick C. Collins (“Chadwick,” collectively “Appellants”) filed this

22

appeal from a December 13, 2016 “Order for Turnover of Property to Chapter 7 Trustee”

23

(“Turnover Order”) issued by Chief Bankruptcy Judge Laura S. Taylor of the Bankruptcy

24

Court for the Southern District of California (hereinafter “Bankruptcy Court”). (Docket

25

No. 1.) The Turnover Order ordered Appellants to turn over the real property located at

26

1480 Beechtree Road, San Marcos, California 92078 (the “Beechtree Road Property”)

27

III

28

l
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

and made findings concerning the chain of title and ownership interest in the Beechtree

2

Road Property. (Docket No. 1-2.)
Appellee Nancy L. Wolf, Chapter 7 Trustee, moves to dismiss the appeal for lack

3
4

of jurisdiction. (Docket No. 14.)1 The motion is fully briefed. The Court finds the

5

motion suitable for determination on the papers without oral argument, pursuant to Civil

6

Local Rule 7.1.d.l. For the reasons set forth below, Wolfs motion to dismiss is

7

GRANTED.

8

BACKGROUND AND PROCEDURAL HISTORY
On December 7, 2011, Appellant-Debtor Chadwick filed his Chapter 7 bankruptcy

9
10

case. (Docket No. 1-2.) On March 7, 2013, Wolf filed an adversary complaint in the

11

Bankruptcy Court against Appellants seeking declaratory relief pursuant to 11 U.S.C. §

12

541 that the Beechtree Road Property was part of Chadwick’s bankruptcy estate, and an

13

order under 11 U.S.C. § 542 for turnover of said property to Wolf for sale pursuant to 11

14

U.S.C. § 363. (Docket No. 5-1 atpp. 11-23.)
During the course of the adversary proceedings, Judge Taylor bifurcated the issues

15
16

for trial into two phases; Phase I was conducted on February 1, 2, and 3, 2016. (Docket

17 No. 1-2.) Thereafter, the parties submitted post-Phase 1 trial-related briefings, and Judge
18

Taylor heard oral arguments before issuing the December 13, 2016 Turnover Order. (Id.)

19

The Turnover Order found that the Beechtree Road Property is the property of

20

Chadwick’s bankruptcy estate, and that the property was Chadwick and Janelle’s

21

community property at the time Chadwick filed his Chapter 7 bankruptcy case on

22

December 7, 2011. (Id.) The Turnover Order further found that Charles did not hold any

23

interest or estates in the Beechtree Road Property, was not entitled to a lien, and did not

24
25
26
27
28

The docket reflects that Wolf filed a Motion to Dismiss and an Amended Motion to
Dismiss, which are identical except that the Amended Motion removed the contention
that the Appellants’ appeal was untimely filed. (Compare Docket Nos. 13 & 14.) The
Court’s ruling in this Order shall resolve both motions.
i

2

3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

have a lien against the property. (Id.) Judge Taylor ordered Appellants to turn over the

2

Beechtree Road Property, and reserved “for further determination and entry of final

3

judgment” the issue of Wolf s claim against Charles for monetary damages pursuant to

4

11U.S.C. §542. (Id.)

5

On December 27, 2016, Appellants filed the instant appeal to the Turnover Order.

6

On March 27, 2016, Appellee filed the pending Amended Motion to Dismiss for lack of

7

jurisdiction. (Docket No. 14.)

8

LEGAL STANDARD

9

Federal district courts generally have jurisdiction over appeals of “final judgments,

10

orders, and decrees” of bankruptcy courts. See 28 U.S.C. § 158(a)(1).2 In contrast, with

11

limited exceptions not relevant here, district courts lack appellate jurisdiction over

12

appeals from interlocutory orders of bankruptcy judges except where the district court

13

grants leave to appeal under 28 U.S.C. § 158(a)(3).
In considering whether to grant leave to appeal, a district court “looks to the

14
15

standards set forth in 28 U.S.C. § 1292(b), which concerns the taking of interlocutory

16

appeals from the district court to the court of appeals.” In re Roderick Timber Co., 185

17

B.R. 601, 604 (B.A.P. 9th Cir. 1995); see also In re Belli, 268 B.R. 851, 858 (B.A.P. 9th

18

Cir. 2001) (“We look for guidance to the standards developed under 28 U.S.C. § 1292(b)

19

to determine if leave to appeal should be granted [under section 158(a)(3) ].”).

20

Additionally, “[ijnterlocutory appeals are generally disfavored and should only be

21

granted where extraordinary circumstances exist.” In re Cameron, No. C 13-02018 SI,

22

2014 WL 1028436, at *4 (N.D. Cal. Mar. 17, 2014).

23

III

24

III

25

26
27
28

2 Unless otherwise noted, all section references in the remainder of this Order are to Title
28 of the United States Code.
3

3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

2

DISCUSSION
Wolf argues that this Court lacks jurisdiction over the Appellants’ appeal because

3

the Turnover Order was not a final order within the meaning of section 158(a)(1), and

4

because the circumstances do not justify the Court’s exercise of discretionary review

5

under section 158(a)(3). The Court agrees.

6

Ordinarily, a final order is one that “ends the litigation on the merits and leaves

7

nothing for the Court to do but execute the judgment.” Kirkland v. Legion Ins. Co., 343

8

F.3d 1135, 1139 (9th Cir. 2003) (quoting Catlin v. United States, 324 U.S. 229, 233

9

(1945) (internal quotation marks omitted). Applying this traditional concept of finality to

10

bankruptcy appeals “has bedeviled courts because the idiosyncrasies of bankruptcy

11

sometimes make it difficult to discern whether orders entered in bankruptcy cases are

12

final in the classic sense of ending litigation on the merits and leaving nothing for the

13

court to do but execute the judgment.” Belli, 268 B.R. at 854 (citing Catlin, 324 U.S. at

14

233 (finality); Frontier Props., 979 F.2d at 1362-64 (bankruptcy finality); Edith H. Jones,

15

Bankruptcy Appeals, 16 T. Marshall L. Rev. 245, 253 (1991)).

16

Appellants urge the Court to apply the “flexible finality” approach that has been

17

applied by the Ninth Circuit to determine finality in bankruptcy cases. (Appellants’

18

Opp’n. at 5-7.) Appellants contend that under flexible finality analysis, the Turnover

19

Order is a final order.3 {Id.) It is true that the Ninth Circuit has held that “the finality

20 rules are to be given additional flexibility in the context of bankruptcy proceedings.” In
21

re Frontier Props., Inc., 979 F.2d 1358, 1362 (9th Cir. 1992). However, in the context of

22

an adversary proceeding, an order is final if it would be considered an appealable final

23
24
25
26
27
28

3 Appellants’ opposition suggests Appellants also contend that Judge Taylor’s August 29,
2016 “Memorandum Decision” is a final order from which they seek to appeal. {See
Appellants’ Opp’n at 2-5.) However, Appellants’ Notice of Appeal only challenges the
Turnover Order. (Docket No. 1.) The Court shall not consider an appeal to an order not
properly before it.
4

3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

order in an ordinary federal civil action under 28 U.S.C. § 1291. See In re King City

2

Transit Mix, Inc., 738 F.2d 1065, 1066 (9th Cir. 1984) (explaining that in an adversary

3

proceeding “even the unique nature of a bankruptcy proceeding does not warrant a

4

departure from final order jurisprudence developed in the context of 28 U.S.C. § 1291”);

5

see also Belli, 268 B.R. at 855 (“Finality for purposes of jurisdiction over ‘as of right’

6

appeals under 28 U.S.C. § 158(a)(1) in adversary proceedings does not differ from

7

finality in ordinary federal civil actions under 28 U.S.C. § 1291.”).

8
9
10
11
12
13
14

As the Ninth Circuit Bankruptcy Appellate Panel explained in Belli:
Adversary proceedings are merely federal civil actions under
another name, and do not ordinarily present the types of
uncertainties that necessitate “flexible finality” analysis.
Adversary proceedings are a “single judicial unit.” The parties
are named in the pleadings; the claims are those presented in
the respective counts of the complaint. The litigation is
conducted under the Federal Rules of Civil Procedure ... and
follows the ordinary pattern of summons and complaint,
answer, discovery, pretrial, trial, and judgment[.]

15

16 Id. at 854-55. “Under this analysis, the ordinary standards of 28 U.S.C. § 1291 and
17 Federal Rule of Civil Procedure 54(b) control the determination of finality for the
18

purposes of appeals from adversary proceedings, not flexible finality.” Brady v. Otton,

19 No. 15-CV-00757-WHO, 2015 WL 1906204, at *4 (N.D. Cal. Apr. 27, 2015) (citing
20 Belli, 268 B.R. at 855-57; King City, 738 F.3d at 1066.
21

Here, Appellants acknowledge that the Turnover Order arises from an adversary

22 proceeding related to Chadwick’s bankruptcy. (Appellants’ Opp’n at 2) (“The subject
23

order was entered in an adversary proceeding in the bankruptcy case filed by the Trustee

24

against Appellants.”) As explained above, the flexible finality approach is not applicable

25

to adversary proceedings. Moreover, Appellants do not offer any persuasive explanation

26 why “traditional finality rules are [in]adequate” for purposes of this case. Belli, 268 B.R.
27
28

at 854. Accordingly, the Court shall proceed to determine whether the Turnover Order is
5
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

a final order applying the traditional analysis under 28 U.S.C. § 1291 and Federal Rule of

2

Civil Procedure 54(b).

3

Under Rule 54(b),4 a trial court may enter an early final order that disposes of

4

fewer than all the claims or fewer than all the parties.5 Fed. R. Civ. P. 54(b). “The court

5

does so by making an express determination that there is no just reason for delay,

6

together with an express direction that judgment be entered.” Belli, 268 B.R. at 855

7

(emphasis added). An order that fails to expressly use this “mandated express language”

8

is interlocutory and not appealable as a final order. Id. at 855-56. Moreover, “such an

9

order may be revised ‘at any time before the entry of judgment adjudicating all the claims

10

and the rights and liabilities of all the parties.’” Id. at 856 (quoting Fed. R. Civ. P. 54(b)).

11

When an order is issued in an adversary proceeding that does not resolve all claims

12

against all parties, a district court’s jurisdiction “depends on whether the requisite Rule

13

54(b) certification appears on the face of the record.” Belli, 268 B.R. at 856. “If there is

14

a Rule 54(b) certification, it is treated as a final order over which appellate jurisdiction

15

exists ‘as of right’ under 28 U.S.C. § 158(a)(1).” Id. On the other hand, “[i]f there is no

16
17
18
19
20

21
22
23
24
25

26
27

28

4 Unless otherwise noted, all references to rules in the remainder of this Order are to the
Federal Rules of Civil Procedure.
5 Rule 54(b) provides:
When an action presents more than one claim for reliefwhether as a claim, counterclaim, crossclaim, or third-party
claim - or when multiple parties are involved, the court may
direct entry of a final judgment as to one or more, but fewer
than all, claims or parties only if the court expressly determines
that there is no just reason for delay. Otherwise, any order or
other decision, however designated, that adjudicates fewer than
all the claims or the rights and liabilities of fewer than all the
parties does not end the action as to any of the claims or parties
and may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and
liabilities.
Fed. R. Civ. P. 54(b), incorporated by Fed. R. Bankr. P. 7054(a).
6
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

Rule 54(b) certification, then the order is interlocutory, and appellate jurisdiction depends

2

on whether the appellate court grants leave to appeal under 28 U.S.C. § 158(a)(3).” Id.

3

Applying the traditional concept of finality to this case, it is clear that the Turnover

4

Order is not a final order. Nowhere in the Turnover Order is there an express direction

5

for entry of final judgment and statement that there is no just reason for delay an appeal.

6

Thus, the Turnover Order lacks the requisite Rule 54(b) certification on its face. In fact,

7

the Turnover Order expressly states its reservation of one the issues for later

8

determination and entry of final judgment. (Docket No. 1-2.) (“The issue of the [Wolfs]

9

claim against [Appellant] Charles G. Collins, for monetary damages pursuant to 11

10

U.S.C. § 542, is reserved for further determination and entry of a final judgment by the

11

Court.”)

12

Appellants’ argument that the remaining issue was not properly pled in the

13

adversary complaint may have been relevant if the Court applied the flexible finality

14

approach. {See Appellants’ Opp’n at 2-4.) However, under traditional finality principles,

15

this argument is not relevant because in any event, the Bankruptcy Court did not

16

expressly provide Rule 54(b) certification to the portions of the Turnover Order that are

17 the gravamen of Appellants’ appeal. As a result, until such time that the Bankruptcy
18

Court resolves the remaining issue or expressly enters judgment on the issues for which

19

Appellants seek appellate review, it remains free under Rule 54(b) “to change its mind”

20

about the other findings. Belli, 268 B.R. at 857. Therefore, Appellants’ are not entitled

21

to an appeal as of right under 28 U.S.C. § 158(a)(1), and the Court must determine

22

whether to grant them leave to appeal under 28 U.S.C. § 158(a)(3).

23

There are “[f]our judge-made exceptions to the final judgment rule - the collateral

24

order, practical finality, death knell, and pragmatic finality doctrines.” Belli, 268 B.R. at

25

857 (citing 18 James Wm. Moore, Moore's Fed. Prac. 3d §§ 202.07-202.10 (2001)),

26 none of which apply to this appeal. Id. (“The collateral order doctrine is inapplicable
27 because the issue is neither separate from the merits of the appeal nor effectively
28

7
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

1

unreviewable after final judgment.... The practical finality doctrine requires irreparable

2

injury that is not entailed by this appeal.... The death knell doctrine, to the extent it

3

retains vitality, requires that the appellant have been put effectively out of court, which

4

has not happened here... . The pragmatic finality doctrine requires, among other

5

elements, an unsettled issue of national significance.”) (internal citations omitted).

6

Consequently, the Court declines to exercise jurisdiction under 28 U.S.C. § 158(a)(3).

7

Finally, in their opposition Appellants request leave to file an appeal to the

8

Turnover Order if the Court finds the Turnover Order is interlocutory. The Court finds

9

interlocutory review is not warranted here. First, Appellants have not even attempted to

10

explain why there is no just reason to delay hearing of their appeal until the bankruptcy

11

judge has entered final judgment. See Cameron, supra, 2014 WL 1028436, at *4

12

(“Interlocutory appeals are generally disfavored and should only be granted where

13

extraordinary circumstances exist.”) Second, it does not appear to the Court that denying

14

leave to appeal now would result in “wasted litigation and expense,” that the appeal

15

“involves a controlling question of law as to which there is a substantial ground for

16

difference of opinion,” or that “an immediate appeal would materially advance the

17

ultimate termination of the litigation.” See In re NSB Film Corp., 167 B.R. 176, 180

18

(B.A.P. 9th Cir. 1994) (citing In re Caribbean Tubular Corp., 44 B.R. 283, 285 (D.P.R.

19

1984)). In short, the Court “decline[s] to intermeddle with the [Bankruptcy Court’s]

20

handling of the adversary proceeding until it has completed the task.” Belli, 268 B.R. at

21

858.

22

III

23

III

24

III

25

III

26

III

27

III

28

8
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7

CONCLUSION

1
2

For the reasons stated above, the Court finds the Turnover Order is an interlocutory

3

order, interlocutory review is not warranted, and Appellants have not identified another

4

basis for jurisdiction. Accordingly, Appellee’s motion to dismiss the appeal for lack of

5

jurisdiction is GRANTED, and Appellants’ request for leave to file an appeal to the

6

Turnover Order is DENIED.

7

IT IS SO ORDERED.

8
9

10

DATED: September/£_, 2017
HOJ>k
Umted States District Court Judge

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

9
3:16-cv-03112-BEN-WVG
Bankruptcy No. 11-19790-LT7