Schwartz

Filing 8

ORDER DISMISSING Appeal from the Bankruptcy Court without prejudice Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

IN RE:
ROBERT L. SCHWARTZ,

Case No. 12-11055
Bankruptcy Case No. 10-71142

Debtor.
/
PAMELA LIGGETT,
Appellant,
v.
ROBERT L. SCHWARTZ,
Appellee.
/
ORDER DISMISSING WITHOUT PREJUDICE
APPEAL FROM THE BANKRUPTCY COURT
On March 29, 2012, the court issued an order directing Appellant/Creditor
Pamela Liggett to show cause why the court should not dismiss as moot this appeal,
which challenges the bankruptcy court’s decision that she has a unsecured claim in the
amount of $60,485.10 against Appellee/Debtor Robert Schwartz. Because the court,
pursuant to a separate appeal by Liggett, had vacated the bankruptcy court’s
confirmation of Schwartz’s reorganization plan on the grounds that he was ineligible for
relief under Chapter 13 of the Bankruptcy Code, it seemed that the parties no longer
had a legally cognizable interest in a determination of Liggett’s proof of claim against
Schwartz’s bankruptcy estate. See Powell v. McCormack, 395 U.S. 486, 496 (1969).
Liggett timely responded on April 9, 2012, urging the court not to dismiss her appeal as

moot because, in the event that the bankruptcy court allowed Schwartz to convert his
Chapter 13 petition into a Chapter 7 or Chapter 11 petition, the order disposing of
Liggett’s proof of claim would be binding as law of the case in the subsequent
proceedings.
While Liggett’s response raises a legitimate concern, the court ultimately finds it
unpersuasive. As an initial matter, the bankruptcy court has yet to determine whether
Schwartz’s petition will go forward under Chapter 7 or Chapter 11 or instead be
dismissed. Liggett does not dispute that this appeal would be moot if the bankruptcy
court opts for dismissal—a course of action she apparently prefers, as evinced by her
filing of a motion to dismiss in the bankruptcy court. If the bankruptcy court does
convert Schwartz’s case to a Chapter 7 or Chapter 11 proceeding, Liggett will still be
required to file another proof of claim. It will be the bankruptcy court’s ruling on that
filing that actually creates a “live” dispute affecting the parties’ rights. See Powell, 395
U.S. at 496. Under those circumstances, the order that forms the basis of this appeal
cannot be considered a final, appealable order of the bankruptcy court, see 28 U.S.C.
§ 158(a)(1), as it will be relevant only if, as Liggett predicts, the bankruptcy court
concludes that it must treat Liggett’s renewed claim in a manner consistent with its prior
rulings in the now-defunct Chapter 13 proceedings.
In light of all these contingencies—which, even if they occur, will undoubtedly
alter the scope of the existing appeal—the court still deems it appropriate to dismiss this
matter on jurisdictional grounds. Notwithstanding, the dismissal will be without
prejudice to Liggett’s ability to challenge the legal determinations made by the

2

bankruptcy court in the course of determining her proof of claim, should that decision be
implicated in a future appeal from the bankruptcy court. Accordingly,
IT IS ORDERED that this matter is DISMISSED WITHOUT PREJUDICE. Liggett
retains the right to a review on the merits of the bankruptcy court’s disposition of her
proof of claim in connection with Schwartz’s vacated Chapter 13 reorganization plan, to
the extent that the bankruptcy court later relies upon that decision in any subsequent
proceedings.

s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: April 27, 2012

I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, April 27, 2012, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

S:\Cleland\JUDGE'S DESK\C2 ORDERS\12-11055.SCHWARTZ.DismissWithoutPrejudice.set.wpd

3