Ozenne v. Chase Manhattan Bank (In re Ozenne)

• Decision Date: 25 March 2016
• Docket Number: No. 11–60039.,11–60039.
• Citation: 818 F.3d 514
• Parties: In re Gary Lawrence OZENNE, Debtor, Gary Lawrence Ozenne, Appellant, v. Chase Manhattan Bank; Ocwen Loan Servicing ; Ocwen Federal Bank FSB, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

818 F.3d 514

In re Gary Lawrence OZENNE, Debtor,Gary Lawrence Ozenne, Appellant,

v.Chase Manhattan Bank; Ocwen Loan Servicing ; Ocwen Federal Bank FSB, Appellees.

No. 11–60039.

United States Court of Appeals, Ninth Circuit.

Submitted Dec. 9, 2014.^*

Filed March 25, 2016.

Gary Lawrence Ozenne, Corona, CA, pro se Appellant.

Jeffrey S. Allison and Eric D. Houser, Houser & Allison, Irvine, CA, for Appellees.

Before: J. CLIFFORD WALLACE, EDWARD LEAVY, and JAY S. BYBEE, Circuit Judges.

Opinion by Judge WALLACE

; Partial Concurrence and Partial Dissent by Judge BYBEE.

OPINION

WALLACE, Senior Circuit Judge:

Gary Ozenne appeals from the Ninth Circuit bankruptcy appellate panel's (BAP) denial of his petition for a writ of mandamus. Because the BAP is not a "court[ ] established by Act of Congress" under the All Writs Act, 28 U.S.C. § 1651(a), we hold that the BAP did not have jurisdiction to consider the petition.

I.

Several years after his bankruptcy case was closed, Ozenne filed a motion for sanctions in the bankruptcy court. [Bankr. Ct. Dkt. No. 111] The bankruptcy court ruled that it lacked jurisdiction to grant relief [Id. No. 119 ] and Ozenne filed a petition for writ of mandamus before the BAP [BAP Dkt. 1 ]. Relying on its previous decision In re Salter, 279 B.R. 278 (B.A.P. 9th Cir.2002), the BAP held that it had jurisdiction pursuant to 28 U.S.C. § 1651 to consider the petition, and then denied the petition. [Id. No. 4 ] Ozenne appealed from that denial. [Id. No. 6 ].

II.

Although the question of whether the BAP has jurisdiction to address a petition for a writ of mandamus has not been raised on appeal, we are "bound to consider jurisdictional defects sua sponte." United States v. S. Pac. Transp. Co., 543 F.2d 676, 682 (9th Cir.1976). The BAP cited subsection (a) of the All Writs Act as the source of its authority to decide a writ of mandamus. Subsection (a) states that "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a).

The question therefore is whether the BAP is one of the "courts established by Act of Congress." We conclude that the answer is no.

A.

The statute authorizing the BAP answers the question. The BAP was not established by an "Act of Congress"; rather, Congress gave the judicial council of each circuit discretion to establish a bankruptcy appellate panel service.

The statute authorizing the creation of the BAP states that

[t]he judicial council of a circuit shall establish a bankruptcy appellate panel service composed of bankruptcy judges ... appointed by the judicial council ... to hear and determine, with the consent of all the parties, appeals [from certain final judgments, orders, and decrees of bankruptcy judges] unless the judicial council finds that—

(A) there are insufficient judicial resources available in the circuit; or

(B) establishment of such a service would result in undue delay or increased cost to parties in [bankruptcy cases].

28 U.S.C. § 158(b)(1). The statute does not simply mandate that the judicial council establish a BAP. Instead, a circuit's judicial council may establish a BAP based on its assessment of the judicial resources available in the circuit and whether the service would cause undue delay or increased cost to the parties. 28 U.S.C. § 158(b)(1)(A)-(B). In addition, the BAP continues only so long as the Judicial Council of the Circuit wishes it to. 28 U.S.C. § 158(b)(2). The BAP is, in effect, a temporary panel to be used only so long as the judicial council chooses to keep it operational. BAP membership is also on a temporary basis, as it is staffed by bankruptcy judges who serve by request, in addition to their assigned role as bankruptcy judges. 28 U.S.C. § 158(b) ; Judicial Council of the Ninth Circuit, "Amended Order Continuing the Bankruptcy Appellate Panel of the Ninth Circuit" (effective November 18, 1988; as amended May 4, 2010), pg. 3. It has none of the permanency of a court.

Pursuant to congressional authorization, the Judicial Council of the Ninth Circuit established a BAP and has continued the BAP's service from time to time since then. See Judicial Council of the Ninth Circuit, "Amended Order Continuing the Bankruptcy Appellate Panel of the Ninth Circuit." Because the BAP is a panel service established by the Judicial Council of the Ninth Circuit, not a "court established by Act of Congress," it does not have writ power under the All Writs Act.¹ Indeed, its "service" status is demonstrated by the authority of the Judicial Council of the Ninth Circuit to terminate the BAP at any time.

B.

The BAP itself previously concluded it had mandamus power in In re Salter, but it was incorrect. In re Cardelucci, 285 F.3d 1231, 1234 (9th Cir.2002) (concluding that "this Court is not bound by a[BAP] decision"). In reaching its conclusion, the BAP first considered various dictionary definitions of the word "establish," such as " ‘[t]o set up on a secure or permanent basis; to found,’ " and " ‘to bring into existence.’ " In re Salter, 279 B.R. at 281, quoting Oxford English Dictionary Online and Webster's New Collegiate Dictionary 391 (1975). The BAP concluded that under such definitions "Congress could be said to have ‘established’ BAPs ... because BAPs did not exist until Congress provided the authority for them." Id.

Although the definitions used by the BAP do not differ meaningfully from definitions in current legal sources, see, e.g., Black's Law Dictionary (10th ed. 2014) (defining "establish" as "[t]o make or form; to bring about or into existence"), the BAP's application of these definitions stretches the meaning of "established" too far, since under its logic any tribunal whose existence is logically dependent in some way upon action by Congress (including any tribunal that receives any kind of federal funding or authorization) could be empowered under the All Writs Act. The most obvious meaning of the phrase "established by Act of Congress" is that it covers those entities directly created by a Congressional Act, such as the United States Court of Appeals for Veterans Claims. See Veterans for Common Sense v. Shinseki, 678 F.3d 1013, 1022 (9th Cir.2012) ("The Veterans Court also has authority under the All Writs Act to issue ‘writs necessary or appropriate in aid of [its] jurisdiction [ ].’ "); cf. 38 U.S.C. § 7251 ("There is hereby established, under Article I of the Constitution of the United States, a court of record to be known as the United States Court of Appeals for Veterans Claims"). The phrase may even be broad enough to include entities created by a third party at the express direction of Congress. Compare United States v. Draughon, 42 C.M.R. 447, 1970 WL 7129 (1970)with Combest v. Bender, 43 C.M.R. 899, 1971 WL 12909 (1971).

However, a tribunal created by the independent actions, choices, or judgment of a third party has not been "established by Act of Congress," even if authorization or support from Congress was a logically necessary part of the tribunal's creation (such as a Judicial Council of the Circuit). Thus, since the BAP was created by the Judicial Council of the Ninth Circuit based on its own independent decision and action, the BAP was not "established by Act of Congress" even though a Congressional Act first suggested and authorized its creation.

The BAP in In re Salter also reasoned that it possessed writ power because the purpose of the All Writs Act was to give federal courts the power to issue writs in aid of their jurisdiction, and since "Congress ... has given [the BAP] general appellate powers over appeals from orders and judgments of bankruptcy courts" and "[n]othing in 28 U.S.C. § 158 limits the powers implied from the fact of the BAPs' creation as an appellate tribunal," the BAP's powers "must include the traditional power to issue writs that aid in their jurisdiction." 279 B.R. at 282. This line of reasoning, however, ignores the BAP's limited jurisdiction.

The BAP could only exercise power under the All Writs Act insofar as it is "in aid of" the BAP's existing jurisdiction because the All Writs Act does not confer an independent source of jurisdiction. 28 U.S.C. § 1651(a) ; see, e.g., United States v. Denedo, 556 U.S. 904, 914, 129 S.Ct. 2213, 173 L.Ed.2d 1235 (2009), citing Clinton v. Goldsmith, 526 U.S. 529, 534–35, 119 S.Ct. 1538, 143 L.Ed.2d 720 (1999) ("[T]he All Writs Act and the extraordinary relief the statute authorizes are not a source of subject-matter jurisdiction").

The BAP's jurisdiction is contingent upon parties' consent. 28 U.S.C. § 158(b)(1) enshrines this consent requirement, stating the BAP service will "hear and determine, with the consent of all the parties, appeals" from final judgments, orders, and decrees. Section 158(c)(1) specifies how parties express their consent (or lack thereof) to the BAP's jurisdiction. While the default position is that appeals from the bankruptcy court proceed to the BAP, section 158(c)(1) provides both appellants and appellees the opportunity to "opt-out" of having the BAP hear their case. 28 U.S.C. § 158(c)(1) states:

Subject to subsections (b) and (d)(2), each appeal under subsection (a) shall be heard by a 3–judge panel of the bankruptcy appellate panel service established under subsection (b)(1) unless—

(A) the appellant elects at the time of filing the appeal; or(B) any other party elects, not later than 30 days after service of notice of the appeal;

to have such appeal heard by the district court.

Under the statute, appellants can choose to have the district court hear their appeal. Otherwise, when appellants appeal to the BAP, a notice of appeal issues and a 30–day time period is triggered in which appellees can choose to have the district court hear the case.

Petitions brought under the All Writs Act, however, do not require the consent of the opposing party, which would allow one party to bring unilaterally its case...