Bullard v. Hyde Park Sav. Bank (In re Bullard)

• Citation: 752 F.3d 483
• Decision Date: 14 May 2014
• Docket Number: No. 13–9009.,13–9009.
• Parties: In re Louis B. BULLARD, Debtor. Louis B. Bullard, Appellant, v. Hyde Park Savings Bank, Appellee. Carolyn A. Bankowski, Trustee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

752 F.3d 483

In re Louis B. BULLARD, Debtor.

Louis B. Bullard, Appellant,

v.Hyde Park Savings Bank, Appellee.

Carolyn A. Bankowski, Trustee.

No. 13–9009.

United States Court of Appeals,First Circuit.

May 14, 2014.

David G. Baker for appellant.

Andrew E. Goloboy, with whom Ronald W. Dunbar Jr. and Dunbar Law PC were on brief, for appellee.

Before THOMPSON, STAHL, and KAYATTA, Circuit Judges.

STAHL, Circuit Judge.

This appeal presents an important and unsettled question of bankruptcy law that, in the case's present posture, we lack jurisdiction to resolve. Accordingly, we dismiss this appeal.

I. Facts & Background

Like many mortgagors, Appellant Louis Bullard owns real property whose value is substantially lower than the amount he still owes the mortgagee. Appellee Hyde Park Savings Bank (Hyde Park) holds a mortgage on the property that secures a promissory note in the original principal amount of $387,000 and with a maturity date of June 1, 2035. Bullard filed a Chapter 13 petition in December 2010, at which time he was current on his payment obligations to Hyde Park. Hyde Park filed a proof of claim in the amount of $346,006.54. The value of the property is disputed, but all parties agree that it is worth substantially less than the amount of Hyde Park's claim.

On January 17, 2012, Bullard filed his third amended plan. The plan, a so-called “hybrid” plan, proposed to bifurcate Hyde Park's claim into secured and unsecured portions per 11 U.S.C. § 506(a), with the secured portion being reduced to the value of the property. The plan called for paying a dividend of approximately 5.26% on the unsecured portion over sixty months under 11 U.S.C. § 1322(b)(2) and paying the secured portion according to the terms of the promissory note under § 1322(b)(5). Hyde Park objected, arguing that the plan could invoke either the modification provision of § 1322(b)(2) or the cure-and-maintain provision of § 1322(b)(5), but not both. The bankruptcy court agreed, sustaining Hyde Park's objection, denying confirmation of the plan, and ordering Bullard to file an amended plan within thirty days or else face dismissal. On Bullard's motion, the bankruptcy court continued the deadline to file an amended plan pending the outcome of his appeal.

Bullard appealed to the Bankruptcy Appellate Panel for the First Circuit (BAP). Recognizing, though disagreeing with, BAP precedent holding that denial of confirmation of a reorganization plan is not a final order appealable as of right, see28 U.S.C. § 158(a)(1); Watson v. Boyajian (In re Watson), 309 B.R. 652, 659 (1st Cir. BAP 2004) (per curiam), aff'd,403 F.3d 1 (1st Cir.2005), Bullard also filed a motion for leave to appeal the bankruptcy court's interlocutory order, see28 U.S.C. § 158(a)(3), (b) (granting bankruptcy appellate panels discretionary jurisdiction over appeals of interlocutory orders of the bankruptcy court). The BAP granted the motion and, on May 24, 2013, affirmed the bankruptcy court's denial of confirmation (albeit with a slightly different rationale).

Bullard filed with the BAP a notice of appeal to this court and, a few days later, a motion for certification of the appeal under 28 U.S.C. § 158(d)(2), which the BAP denied. This court issued an order to show cause why the case should not be dismissed for lack of jurisdiction because the BAP's order affirming the denial of confirmation did not appear to be a final order, as required by 28 U.S.C. § 158(d)(1). After receiving Bullard's response, we determined that the case should proceed to full briefing of both the jurisdictional and merits questions.

II. Analysis

We start and, as it turns out, end with the jurisdictional question.¹ Congress has granted the courts of appeals “jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered” by a BAP or district court sitting in an appellate capacity in bankruptcy proceedings. 28 U.S.C. § 158(d)(1). With the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub.L. No. 109–8, 119 Stat. 23, it extended our jurisdiction to reach direct appeals of the bankruptcy court's orders (final or interlocutory), upon certification by the bankruptcy court, district court, or BAP and authorization by the court of appeals, see28 U.S.C. § 158(d)(2).²

Because this appeal comes to us under § 158(d)(1), we have jurisdiction only if the BAP's order rejecting Bullard's proposed plan is a final order.³ We have noted that an order of the BAP cannot be final unless the underlying bankruptcy court order is final. Watson v. Boyajian (In re Watson), 403 F.3d 1, 4 (1st Cir.2005). “[B]ecause bankruptcy cases typically involve numerous controversies bearing only a slight relationship to each other, ‘finality’ is given a flexible interpretation in bankruptcy.” Bourne v. Northwood Props., LLC (In re Northwood Props., LLC), 509 F.3d 15, 21 (1st Cir.2007) (internal quotation marks omitted). This flexibility means that an order may be final even if it does not resolve all issues in the case, “but it must finally dispose of all the issues pertaining to a discrete dispute within the larger proceeding.” Perry v. First Citizens Fed. Credit Union (In re Perry), 391 F.3d 282, 285 (1st Cir.2004). We have recognized that, when an intermediate appellate court “remands a matter to the bankruptcy court for significant further proceedings, there is no final order for purposes of § 158(d) and the court of appeals lacks jurisdiction.” In re Gould & Eberhardt Gear Mach. Corp., 852 F.2d 26, 29 (1st Cir.1988). Conversely, “[w]hen a remand leaves only ministerial proceedings, for example, computation of amounts according to established formulae, then the remand may be considered final.” Id.

We have previously suggested that an order denying confirmation of a reorganization plan may not be a final order so long as the bankruptcy case has not been dismissed and the debtor remains free to propose a modified plan. See Watson, 403 F.3d at 4–5. In Watson, the parties conceded that the bankruptcy court's order denying confirmation was not final, so this court did not expressly rule on the issue. Id. at 4. Instead, we held that, even if the order was not final when issued, it became final when the bankruptcy court entered an order dismissing the case. Id. at 5. The question thus remains open in this circuit.

The finality of an order denying confirmation of a reorganization plan is the subject of a circuit split. A pair of recent cases covers the terrain. The Sixth Circuit joined the Second, Eighth, Ninth, and Tenth ⁴ Circuits in holding that such an order is not final if the case has not been dismissed and the debtor remains free to propose another plan. See Lindsey v. Pinnacle Nat'l Bank (In re Lindsey), 726 F.3d 857, 859 (6th Cir.2013). The Fourth Circuit, over a strong dissent, joined the Third and Fifth Circuits in holding that such an order can be final, even if the underlying bankruptcy case has not been dismissed. See Mort Ranta v. Gorman, 721 F.3d 241, 248 (4th Cir.2013).

Bullard urges us to eschew a rigid standard by which an order denying confirmation is per se not a final order, and, more expansively, to hold not only that such an order can be final, but that it should be presumed to be final unless the appellee can show otherwise. Hyde Park urges us to join the majority of the circuits and hold that an order denying confirmation is not a final order if the debtor may still propose an amended plan. It argues in the alternative that, even if such an order could be final, Bullard has not satisfied any flexible standard we might adopt.

The principles set forth in Perry and Gould & Eberhardt dictate the result in this case. An order of an intermediate appellate tribunal affirming the bankruptcy court's denial of confirmation of a reorganization plan is not a final order so long as the debtor remains free to propose an amended plan. The rejection of Bullard's plan plainly does not “finally dispose of all the issues pertaining to a discrete dispute within the larger proceeding,” ⁵Perry, 391 F.3d at 285, nor are the bankruptcy court's responsibilities on remand “only ministerial,” Gould & Eberhardt, 852 F.2d at 29. The bankruptcy court gave Bullard a thirty-day deadline to file an amended plan, a deadline that, on Bullard's motion, the court continued pending the outcome of his appeal. Once Bullard files a new plan, his creditors will have an opportunity to file objections and the bankruptcy court must determine whether to sustain those objections or confirm the new plan. “Nothing about these tasks is mechanical or ministerial....” Lindsey, 726 F.3d at 859; see also Gordon v. Bank of Am., N.A. (In re Gordon), 743 F.3d 720, 723 (10th Cir.2014) (“[T]he bankruptcy court will have to give creditors notice of the new amended plan, permit time for any objections, and then conduct another confirmation hearing. All of which is to say, the district court remanded the [debtors'] case to the bankruptcy court for significant further proceedings.”) (internal quotation marks omitted). “Essentially everything remains unresolved in the Chapter 13 bankruptcy below.... [A]n order cannot sensibly be final when it not only fails to dismiss the underlying case but additionally advises that a party may revise its own court filings.” Mort Ranta, 721 F.3d at 258 (Faber, J., dissenting).

Bullard argues that the ability to propose an alternative plan is illusory in this case, as the plan he proposed is the only feasible plan. He says that, if he cannot appeal the denial of his plan, his only options are to propose an unwanted plan, object to it, and appeal its confirmation, or to allow his petition to be dismissed and appeal the dismissal. See also Mort Ranta, 721 F.3d at 248 (noting that the first option is inefficient and the second risks loss of the automatic stay, and thus vulnerability to foreclosure or collection activities, if a stay pending appeal is not granted); Bartee v. Tara Colony...