707 F.2d 441 (9th Cir. 1983), 81-4435, Matter of Fondiller

Docket Nº:81-4435.
Citation:707 F.2d 441
Party Name:In the Matter of Harry FONDILLER, Debtor. Rosalyn FONDILLER, Appellant, v. Jerome E. ROBERTSON, Appellee.
Case Date:June 03, 1983
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 441

707 F.2d 441 (9th Cir. 1983)

In the Matter of Harry FONDILLER, Debtor.

Rosalyn FONDILLER, Appellant,


Jerome E. ROBERTSON, Appellee.

No. 81-4435.

United States Court of Appeals, Ninth Circuit

June 3, 1983

Argued and Submitted Nov. 5, 1982.

Rosalyn Fondiller, in pro. per.

Edward A. Kent, Palo Alto, Cal., for appellee.

Appeal from the United States Bankruptcy Appellate Panels of the Ninth Circuit.

Before CHOY, SNEED, and FARRIS, Circuit Judges.

SNEED, Circuit Judge:

This appeal involves a challenge by appellant Rosalyn Fondiller to an order of the bankruptcy court. Appellant's husband, Harry Fondiller, is a debtor in proceedings brought under chapter 7 of the Bankruptcy Reform Act of 1978. The order appealed from authorized the employment of the law firm of Gendel, Raskoff, Shapiro & Quittner as special counsel to the bankruptcy trustee. Both appellant and the debtor appealed the bankruptcy court's order to the United States Bankruptcy Appellate Panels of the Ninth Circuit. That court affirmed. In re Fondiller, 15 B.R. 890 (Bkrtcy.App. 9th Cir.1981). Only Mrs. Fondiller seeks review of the panels' decision. We dismiss. Appellant has no standing to appeal. It is also probable that the order, being interlocutory, is not subject to review by this court. 1 We rest our disposition exclusively on the ground of standing, however.

Page 442



Appellant is the wife of Harry Fondiller (debtor), a debtor under chapter 7 of the Bankruptcy Reform Act of 1978 (the Code). Arnold Quittner (and the law firm of Gendel, Raskoff, Shapiro and Quittner) represents several of debtor's creditors. While representing his clients in the previously filed bankruptcy of Holosonics, Inc., a company in which debtor was a principal, Quittner engaged in an extensive investigation regarding concealed assets and fraudulent conveyances in which debtor and appellant allegedly were involved. Debtor and appellant each have pending suits in state court that allege abuses on the part of Quittner and Quittner's clients in the conduct of that investigation.

The trustee in the present bankruptcy case requested authority from the bankruptcy court to employ Quittner and the Quittner firm as special counsel for the specific purpose of continuing to investigate and attempting to recover any assets concealed or fraudulently conveyed. The creditors' committee approved Quittner's employment; only debtor and appellant objected. Appellant's objection was and continues to be that Quittner is ineligible for employment by the trustee because he holds an "interest adverse to the estate," in contravention of section 327(a) and (c) of the Code. Because of appellant's lack of standing, we do not address the merits of her complaint.



Only those persons who are directly and adversely affected pecuniarily by an order of the bankruptcy court have been held to have standing to appeal that order. Hartman Corp. of America v. United States, 304 F.2d 429, 431 (8th Cir.1962); see Skelton v. Clements, 408 F.2d 353 (9th Cir.), cert. denied, 394 U.S. 933, 89 S.Ct. 1202, 22 L.Ed.2d 462 (1969). Thus, a hopelessly insolvent debtor does not have standing to appeal orders affecting the size of the estate. E.g., Skelton v. Clements, 408 F.2d at 354. Such an order would not diminish the debtor's property, increase his burdens, or detrimentally affect his rights. In re Capitano, 315 F.Supp. 105, 107 (E.D.La.1970).

Page 443

This rule of appellate standing, the so-called "person aggrieved" test, derives from section 39c of the Bankruptcy Act of 1898, which permitted appeal by a "person aggrieved by an order of a referee." 11 U.S.C. Sec. 67(c) (1976) (repealed 1978). It exists to fill the need for an explicit limitation on standing to appeal in bankruptcy proceedings. This need springs from the nature of bankruptcy litigation which almost always involves the interests of persons who are not formally parties to the litigation. In the course of administration of the bankruptcy estate disputes arise in which numerous persons are to some degree interested. Efficient judicial administration requires that appellate review be limited to those persons whose interests are directly affected.

There is no statutory provision comparable to section 39c in the 1978...

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