The Law Firm of Frank R. Bayger, P.C. v. Dolson

Filing 8

DECISION AND ORDER dismissing debtor's appeal for lack of jurisdiction. Clerk of court to close case. Signed by Hon. Richard J. Arcara on 5/24/2010. (JMB)

UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF NEW YORK

IN RE: THE LAW FIRM OF F R A N K R. BAYGER, P.C., D e b to r.

D E C IS IO N AND ORDER 0 9 -C V -7 3 5 A

IN T R O D U C T IO N O n August 20, 2009, the debtor in this case, The Law Firm of Frank R. B a yg e r, P.C. (the "debtor"), filed a notice of appeal from an order of the United S ta te s Bankruptcy Court for the W e s te rn District of New York (Kaplan, J.) filed on J u ly 7, 2009 (the "Bankruptcy Order"). In the Bankruptcy Order, Judge Kaplan o ve rru le d objections to two claims filed by one of the debtor's former clients. The C o u rt held oral argument for the appeal on May 17, 2010. Although the parties s u b m itte d thorough briefing regarding the underlying merits of those two claims, th e Court's primary concern at oral argument was whether the Bankruptcy Order c o n s titu te s an appealable order within the meaning of 28 U.S.C. § 158(a). For th e reasons below, the Court finds that it does not, and accordingly dismisses the a p p e a l for lack of jurisdiction. B AC K G R O U N D T h e events underlying the Bankruptcy Order trace back to a personal injury la w s u it that the debtor prosecuted in the late 1990s. In 1996, the debtor

commenced a personal injury lawsuit in state court on behalf of Donald L. Dolson ("D o ls o n "). In the lawsuit, Dolson alleged that he suffered injuries when his head s tru c k a screw sticking out of the side of a water slide at a local theme park. In A u g u s t 2001, a jury awarded Dolson $15,000. The debtor timely took an appeal w ith the New York State Supreme Court, Appellate Division. That appeal never w a s perfected.1 T h e debtor's management of Dolson's case became an issue in the b a n k ru p tc y proceedings that the debtor commenced in 2002. On January 27 and D e c e m b e r 10, 2003, Dolson filed two claims against the debtor. Both claims c o n c e rn e d allegations of legal malpractice in the handling of Dolson's personal in ju ry case. Dolson asserted that the two claims together were worth $11 million. On November 29, 2005, the bankruptcy trustee filed a motion to object to D o ls o n 's claims. After Dolson responded to the trustee's motion, Judge Kaplan d ire c te d the debtor to address both the claims and the trustee's motion. In re s p o n s e , the debtor submitted a filing that Judge Kaplan deemed unresponsive. Judge Kaplan gave the debtor another opportunity to respond to Dolson's claims. The debtor again submitted a filing that Judge Kaplan deemed unresponsive. After reviewing all of the papers concerning Dolson's claims and after hearing o ra l argument, Judge Kaplan issued the Bankruptcy Order. In the Bankruptcy The Court will not concern itself with the details in the parties' briefing c o n c e rn in g who may have had responsibility for perfecting the appeal or why the a p p e a l was not perfected. 2
1

Order, Judge Kaplan noted that Dolson submitted a total of 93 paragraphs of text in opposition to the trustee's motion and that "[f]ew of the 93 paragraphs have b e e n responded-to by Bayger. At the most, Bayger argues that Debtor did not c o m m it legal malpractice, as a matter of law." Judge Kaplan stated later in the B a n k ru p tc y Order that "[t]here are other failures, by Bayger, to address the C o u rt's direction to address the 93 paragraphs." On this basis, Judge Kaplan o ve rru le d the objection contained in the trustee's motion. Notably, although J u d g e Kaplan concluded the Bankruptcy Order by urging the parties to settle the c la im and suggesting a wide settlement range between $100,000 and $999,999, h e did not determine the amount of the claim, as he could have done under 11 U .S .C . § 502(b). This appeal followed the filing of the Bankruptcy Order. D IS C U S S IO N "W e have . . . recognized that Congress intended to allow for immediate a p p e a l in bankruptcy cases of orders that finally dispose of discrete disputes w ith in the larger case. By `disputes' we do not mean merely competing c o n te n tio n s with respect to separable issues; rather, we apply the same s ta n d a rd s of finality that we apply to an appeal under 28 U.S.C. § 1291. Given th e strong federal policy against piecemeal appeals, a `dispute,' for appealability p u rp o s e s in the bankruptcy context, means at least an entire claim on which relief m a y be granted." In re The Bennett Funding Group, Inc., 439 F.3d 155, 160 (2d 3

Cir. 2006) (internal quotation marks and citations omitted). The parties did not a d d re s s the appealability of the Bankruptcy Order until the Court raised the issue a t oral argument, but the Court has its own obligation to confirm its jurisdiction o ve r its cases. See United Food & Commercial Workers Union, Local 919, A F L -C IO v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1 9 9 4 ) ("[I]n our federal system of limited jurisdiction any party or the court sua s p o n te , at any stage of the proceedings, may raise the question of whether the c o u rt has subject matter jurisdiction. W h e re jurisdiction is lacking, moreover, d is m is s a l is mandatory.") (internal quotation marks and citations omitted); see a ls o Herrick Co., Inc. v. SCS Commc'ns, Inc., 251 F.3d 315, 322 (2d Cir. 2001) ("W e cannot avoid addressing the threshold question of jurisdiction simply b e c a u s e our finding that federal jurisdiction does not exist threatens to prove b u rd e n s o m e and costly, or because it may undermine an expensive and s u b s ta n tia lly completed litigation.") (citation omitted). Here, the Bankruptcy Order did not assign any value to Dolson's claims. But cf. In re Moody, 849 F.2d 902, 904 (5th Cir. 1988) (holding that any b a n k ru p tc y order that "effectively settles the amount due the creditor" is a final o rd e r). It did not affect the priority of Dolson's claims in any way. But cf. In re P re m ie r Operations, 290 B.R. 33, 44­45 (S.D.N.Y. 2003) (holding that a b a n k ru p tc y order establishing priority of claims was a final order). Judge Kaplan h e ld only that the debtor did not respond to Dolson's opposition to the trustee's 4

motion. Essentially, the Bankruptcy Order was the minimum action necessary for J u d g e Kaplan to allow Dolson's claims to survive for now, pending an evaluation o n the merits. Because the parties in the bankruptcy proceedings are no closer to knowing the final value of Dolson's claims now than before the Bankruptcy O rd e r issued, the Court does not consider the Bankruptcy Order a final order. For the same reason, the Bankruptcy Order also is not an interlocutory order that "in vo lve s a controlling question of law as to which there is substantial ground for d iffe re n c e of opinion [such] that an immediate appeal from the order may m a te ria lly advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). Consequently, the Court lacks jurisdiction to review the other issues that the p a rtie s raised in this appeal. CONCLUSION F o r all of the foregoing reasons, the Court hereby dismisses the debtor's a p p e a l for lack of jurisdiction. The Clerk of the Court is directed to close this case. SO ORDERED.

s/ Richard J. Arcara
HONORABLE RICHARD J. ARCARA UNITED STATES DISTRICT JUDGE DATED: May 24, 2010

5