Lakeshore Village Resort, Ltd., In re

• Decision Date: 05 April 1996
• Docket Number: No. 94-16365,94-16365
• Parties: , Bankr. L. Rep. P 76,951, 96 Cal. Daily Op. Serv. 2326, 96 Daily Journal D.A.R. 3915 In re LAKESHORE VILLAGE RESORT, LTD., Debtor. Linda E. STANLEY, United States Trustee for Region 17, Appellant, v. CROSSLAND, CROSSLAND, CHAMBERS, MacARTHUR & LASTRETO, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 103

81 F.3d 103

28 Bankr.Ct.Dec. 1134, Bankr. L. Rep. P 76,951,

96 Cal. Daily Op. Serv. 2326,

96 Daily Journal D.A.R. 3915

In re LAKESHORE VILLAGE RESORT, LTD., Debtor.

Linda E. STANLEY, United States Trustee for Region 17, Appellant, v. CROSSLAND, CROSSLAND, CHAMBERS, MacARTHUR & LASTRETO, Appellee.

No. 94-16365.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 7, 1995.

Decided April 5, 1996.

Jeanne M. Crouse, Executive Office for United States Trustees, Department of Justice, Washington, D.C., for the appellant.

Rene Lastreto, II, Crossland, Crossland, Chambers, Lastreto & Knudson, Fresno, California, for the appellee.

Appeal from the United States District Court for the Eastern District of California Robert E. Coyle, District Judge, Presiding. No. CV-93-05784-REC.

Before: WALLACE and THOMPSON, Circuit Judges, and SEDWICK, ^* District Judge.

WALLACE, Circuit Judge:

United States Trustee Stanley appeals from the district court's decision reversing and remanding a bankruptcy court order that had denied an attorneys' fee award. After determining that 11 U.S.C. § 330(a) authorized a fee award, the district court remanded for the bankruptcy court to determine the amount. The district court exercised jurisdiction pursuant to 28 U.S.C. § 158(a). Although the United States Trustee timely filed her notice of appeal, we dismiss the appeal for lack of jurisdiction pursuant to 28 U.S.C. §§ 158(d) and 1291.

I

Lakeshore Village Resort, Ltd., a limited partnership, filed a petition for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 1101-1174, on March 8, 1985. Chapter 11 Trustee Ford retained Crossland, Crossland, Chambers, MacArthur & Lastreto (Crossland) as his counsel and converted the bankruptcy proceeding to a liquidation under Chapter 7 of the Bankruptcy Code, 11 U.S.C. §§ 701-766. On November 6, 1992, Ford filed a Final Report and Proposed Distribution (Final Report), which included a request for reimbursement of $3,633 in attorneys' fees. The United States Trustee raised four objections to the Final Report: (1) as the Chapter 7 trustee, Ford had incurred a tax penalty of $3,300 for failure to file a partnership tax return; (2) Ford retained in a personal account $846.14 in interest derived from estate funds; (3) Ford did not pursue legal action against Lakeshore Village general partners; and (4) Ford failed to produce documents required at a Rule 2004 examination. Crossland represented Ford in his defense against the latter three objections, and Ford eventually prevailed on all but the second objection.

A fee application was submitted pursuant to 11 U.S.C. § 330, which requested $10,015 in fees and $1,184.83 in expenses for Crossland's work in connection with defending Ford's Final Report. The United States Trustee objected to the fee application, arguing that the fees were incurred for Ford personally, not for services benefitting the estate. The bankruptcy court agreed and denied the fee application, holding that Crossland "should not be able to seek compensation with regard to matters affecting the trustee's conduct in the administration of the estate." Because the bankruptcy court held that Crossland's services could not be charged against the estate, it declined to consider whether they were "necessary" under 11 U.S.C. § 330(a).

Crossland appealed to the district court, which vacated the bankruptcy court's order and remanded because the bankruptcy court improperly applied "section 330 and its case progeny; and without citing authority for doing so, employed an unsupported test of whether attorney services bear on the trustee personally." The United States Trustee appealed from the district court's decision. She argues, as does Crossland, that the district court decision was final under 28 U.S.C. § 158(d). She asks us to reverse and remand with instructions to affirm the order of the bankruptcy court.

II

Although both parties contend that we have jurisdiction over this appeal, we have an independent duty to examine the propriety of our subject matter jurisdiction. United States v. Stone (In re Stone), 6 F.3d 581, 583 n. 1 (9th Cir.1993). In this case, the district court exercised appellate jurisdiction over a decision of the bankruptcy court pursuant to 28 U.S.C. § 158(a). That provision gives district courts jurisdiction to hear appeals from "final judgments, orders, and decrees, and with leave of the court, from interlocutory orders and decrees" of the bankruptcy court. Id. The bankruptcy court's order denying Crossland's fee application constituted a final decision under section 158(a). Thus, the district court properly asserted jurisdiction.

Section 158(d) provides that "[t]he courts of appeal shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered under subsections (a) and (b) of this section." Id. § 158(d). Our jurisdiction under section 158(d) therefore requires a final decision from the district court. Where, as here, the district court acts in its bankruptcy appellate capacity, 28 U.S.C. § 1291 may also give us appellate jurisdiction to review final decisions. See Connecticut National Bank v. Germain, 503 U.S. 249, 253, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) (Germain ); Vylene Enterprises, Inc. v. Naugles, Inc. (In re Vylene Enterprises, Inc.), 968 F.2d 887, 891 (9th Cir.1992) (Vylene ). The issue presented in this case, therefore, is whether vacating the bankruptcy court's order and remanding for further proceedings constitutes a "final decision" of the district court under either section 158(d) or section 1291.

Ordinarily, a district court order is final if it affirms or reverses a final bankruptcy court order. King v. Stanton (In re Stanton), 766 F.2d 1283, 1287 (9th Cir.1985) (Stanton ) (determining whether decision of bankruptcy appellate panel (BAP) was final under section 158(d)). Finality is more difficult to determine where the district court reverses a final order of the bankruptcy court and remands the case. Vylene, 968 F.2d at 895. Prior to the Supreme Court's decision in Germain, our decisions held that the finality standard applied in bankruptcy proceedings is more flexible than that applied in other civil proceedings, because the "unique nature of bankruptcy procedure dictate[d] that we take a pragmatic approach to finality." Bonner Mall Partnership v. U.S. Bancorp Mortgage Co. (In re Bonner Mall Partnership), 2 F.3d 899, 903-04 & n. 10 (9th Cir.1993) (Bonner Mall ), dismissed as moot, --- U.S. ----, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994); see also Vylene, 968 F.2d at 894-95; Stanton, 766 F.2d at 1285-86, Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3926.2 at 174 (1995 Supp.) ("Virtually all decisions agree that the concept of finality applied to appeals in bankruptcy is broader and more flexible than the concept applied in ordinary civil litigation."). This liberal finality standard allowed us to exercise appellate jurisdiction over a substantially greater number of cases than the traditional finality standard applied in nonbankruptcy proceedings under section 1291, which asks merely whether the district court decision "ends the litigation on the merits and leaves nothing for the district court to do but execute the judgment." Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373, 101 S.Ct. 669, 673, 66 L.Ed.2d 571 (1981) (internal quotations omitted).

Germain cast some doubt on our cases holding that section 158(d) provides broader appellate jurisdiction in bankruptcy proceedings than that provided by section 1291 in other civil litigation. Germain did not define "final decision" under section 158(d); it determined whether courts of appeals have jurisdiction over appeals from interlocutory orders issued by a district court sitting as a court of appeals in bankruptcy. Germain, 503 U.S. at 250, 112 S.Ct. at 1147-48. The Court held that such interlocutory orders are appealable only under 28 U.S.C. § 1292(b). Id. at 251-52, 112 S.Ct. at 1148-49. Section 158(d) does not confer jurisdiction over interlocutory orders, even under a flexible finality standard. See id. at 252, 254, 112 S.Ct. at 1148-50. The difference between the scope of jurisdiction under section 158(d) and section 1291, the Court stated, is only that section 158(d) "confers jurisdiction over final decisions of the appellate panels in bankruptcy acting under [section] 158(b)." Id. at 253, 112 S.Ct. at 1149. Because sections 158(d) and 1291 afford essentially the same jurisdiction, it is logical to conclude that "both statutes would have to have the same finality standards in bankruptcy proceedings." Vylene, 968 F.2d at 892. Thus, Germain implies that a decision appealable under section 158(d) also should be appealable under traditional applications of section 1291 in nonbankruptcy proceedings. Id. at 894.

Germain did not specifically address the flexible approach courts of appeals have given finality in bankruptcy proceedings. Although some courts have speculated that Germain may have curtailed the more liberal standard applied under section 158(d), none has thus far so ruled. See, e.g., Conroe Office Bldg. Ltd. v. Nichols (In re Nichols), 21 F.3d 690, 692 n. 8 (5th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 422, 130 L.Ed.2d 337 (1994); Vylene, 968 F.2d at 892, 894; but see Bonner Mall, 2 F.3d at 904 n. 11 (stating in dicta that "nothing in Germain casts doubt upon the liberal standard for finality we have adopted regarding § 158(d)"). We too have no need to determine whether Germain stands for the proposition that the finality standard applied to appeals in bankruptcy proceedings is the same as that applied in other civil appeals because we hold that the district court's decision remanding this case to the bankruptcy court is not final under either standard.

III

Stanton held that when an intermediate appellate court remands a case to the bankruptcy court, "the...