Phillips, Matter of
| Decision Date | 06 May 1988 |
| Docket Number | No. 87-1452,87-1452 |
| Citation | 844 F.2d 230 |
| Parties | , 18 Collier Bankr.Cas.2d 1105, 17 Bankr.Ct.Dec. 951, Bankr. L. Rep. P 72,309 In the Matter of Patsy D. PHILLIPS, a/k/a d/b/a Market Fitness, Creekside Plaza, Second Wind, Debtor. PROMENADE NATIONAL BANK, Appellant, v. Patsy D. PHILLIPS, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Paul W. Brown, David B. Seybold, Dallas, Tex., for appellant.
Mark E. Andrews, Charles S. Fuquay, Laura Worsham, Dallas, Tex., for appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before TIMBERS *, KING, ** and HIGGINBOTHAM, Circuit Judges.
Appellant Promenade National Bank (the "Bank") appeals from an order entered May 19, 1987 in the Northern District of Texas, Barefoot Sanders, District Judge. The order dismissed as moot the Bank's appeal from an order of the bankruptcy court denying the Bank's motion to dismiss the petition of the debtor, Patsy D. Phillips ("Phillips"). The Bank had moved to dismiss the debtor's petition on the ground that the debtor was ineligible under Sec. 109(g)(2) of the Bankruptcy Code 1 because she voluntarily had dismissed a previous petition within 180 days.
On appeal, the Bank has claimed that the district court erred in dismissing its appeal as moot. The Bank reasons that the bankruptcy court lacked subject matter jurisdiction on the ground that Phillips was ineligible to be a debtor since she had failed to comply with Sec. 109(g)(2). The Bank contends that it was unnecessary for it to obtain a stay of the bankruptcy court proceedings. The Bank also contends that the actions of Phillips' counsel were so egregious as to warrant sanctions under Bankruptcy Rule 9011 and 28 U.S.C. Sec. 1927 (1982).
A federal appellate court must satisfy itself of its own jurisdiction, even if the parties have failed to raise the issue on appeal. On February 25, 1988, we requested the parties to submit supplemental letter briefs no later than March 7, 1988 to address the question whether we lacked appellate jurisdiction in accordance with In the Matter of Greene County Hosp., 835 F.2d 589 (5th Cir.1988), decided eight days after the argument of the instant appeal.
After reviewing the supplemental letter briefs, we hold that we indeed do lack appellate jurisdiction, since the bankruptcy court's order from which the Bank appealed was not a final order, and the district court's order did not in any way "cure" this lack of finality. Accordingly, we dismiss the appeal for lack of appellate jurisdiction.
We summarize only those facts believed necessary to an understanding of the issues raised on appeal.
Phillips executed promissory notes in favor of the Bank on July 2, 1985 and August 6, 1985. She failed to repay the Bank when the notes matured. As a result, on April 30, 1986, the Bank commenced a state court action in the 101st Judicial District Court of Dallas County, Texas, to collect on the notes. The Bank did not serve Phillips with process in this action until May 10, 1986.
On May 5, 1986, before the Bank had served Phillips with process, Phillips filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code ("Chapter 13 proceeding"). The automatic stay provided by Sec. 362 of the Bankruptcy Code prevented the Bank from continuing with its state court litigation. The Bank was a creditor in the Chapter 13 proceeding.
Phillips also was indebted to a second creditor, American Savings & Loan Association ("American"), which had an interest in certain properties held by Phillips. According to Phillips, at the time she commenced the Chapter 13 proceeding, she believed that American already had foreclosed on those properties. On August 25, 1986, after Phillips had moved to convert the Chapter 13 proceeding to a Chapter 11 or Chapter 7 proceeding, American filed a motion for relief from the stay because it had not yet foreclosed on these properties. Phillips and American agreed to an order lifting the stay. On September 2, 1986, before the hearing on American's motion to lift the stay, Phillips filed a motion voluntarily to dismiss the Chapter 13 proceeding. The bankruptcy court granted this motion and entered its order of dismissal on September 8, 1986. As luck would have it, however, the agreed order lifting the stay was not signed by the bankruptcy judge until September 8 and was not entered until September 9, after the Chapter 13 proceeding had been dismissed.
On or about September 30, 1986, the Bank commenced another state court action. The Bank had been compelled to dismiss its previous state court action because of the stay. Phillips filed her answer to the second state court action on October 16, 1986. On October 24, 1986, Phillips was notified that this action was set for trial on January 26, 1987.
On November 5, 1986, Phillips filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Code ("Chapter 7 proceeding"). This second filing took place less than 180 days after the Chapter 13 filing. On November 20, 1986, the Bank filed a motion to dismiss the debtor's petition on the ground that Phillips was not eligible to be a debtor under Sec. 109(g)(2) because her second petition had been filed within 180 days of the filing of her first petition and a creditor (American) had filed a motion to lift the automatic stay during the pendency of the Chapter 13 proceeding. At a hearing on this motion, held January 22, 1987, Phillips testified that she had not dismissed her Chapter 13 proceeding in order to frustrate or injure the Bank, and that she did not know at that time what had happened to the first state court action.
On February 12, 1987, the bankruptcy court denied the Bank's motion to dismiss the debtor's petition and filed findings of fact and conclusions of law. The court held that the Bank had not shown that Phillips had abused the bankruptcy system; that the Bank had not shown any prejudice resulting from the prior dismissal of the Chapter 13 proceeding; and that Phillips in effect had converted her Chapter 13 case to a Chapter 7 case.
The Bank did not file a complaint to determine the dischargeability of Phillips' debt although it had received notice of the April 6, 1987 discharge hearing, referred to below. According to Phillips, she then attempted to simplify the proceedings by agreeing to the entry of judgment against her in the Bank's state court action.
On February 20, 1987, the Bank filed a notice of appeal to the district court for the Northern District of Texas from the bankruptcy court's order denying the Bank's motion to dismiss the debtor's petition. The Bank, however, did not attempt to stay the bankruptcy proceeding pending appeal, as permitted under Bankruptcy Rule 8005. As a result, the bankruptcy proceeding continued. On April 6, 1987, Phillips was granted an order of discharge.
Although the bankruptcy court order from which the Bank had appealed was interlocutory, the Bank did not make a motion in the district court under 28 U.S.C. Sec. 158(a) (Supp. III 1985) for leave to appeal from an interlocutory order of the bankruptcy court. On May 4, 1987, Phillips filed a motion to dismiss the Bank's appeal as moot (since she had obtained an order of discharge), but did not raise the issue of finality. Both parties apparently assumed the bankruptcy court order was final. On May 19, 1987, the district court entered an order dismissing the appeal as moot. From that order this appeal was taken.
The issue of appellate jurisdiction arises in this case because the bankruptcy court's order, which denied a motion to dismiss for ineligibility of the debtor, was non-final. While the district court did not address this non-finality problem on appeal from the bankruptcy court, and dismissed the appeal on a different ground, we are required to address the issue of whether the original interlocutory nature of the bankruptcy order deprives us of jurisdiction.
Jurisdiction over appeals from the bankruptcy courts is governed by 28 U.S.C. Sec. 158 (Supp. III 1985). Section 158(a), which governs the jurisdiction of the district courts over appeals from the bankruptcy courts, provides:
Section 158(d), which governs appeals to the courts of appeals from district court orders with respect to bankruptcy appeals under section 158(a), provides in pertinent part:
"(d) The courts of appeals shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered under subsection[ ] (a) ... of this section."
Thus, the district courts may hear appeals from final judgments of the bankruptcy courts or appeals from interlocutory orders, if they grant leave. As stated in Greene County Hosp., however, we have jurisdiction only over final orders of the district court, and have no discretion to hear appeals from interlocutory orders. Greene County Hosp., supra, 835 F.2d at 591.
The statute and the decision in Greene County Hosp. leave one important matter unclear: whether the courts of appeals have jurisdiction to hear an appeal when the bankruptcy court order was interlocutory, but the district court (which entertained the appeal either by granting its leave or through error) subsequently entered a final order. Section 158(d) provides only that the courts of appeals have jurisdiction over appeals from all "final" decisions entered under section 158(a). This is not particularly helpful. Similarly, the impact of our holding in Greene County Hosp. might be said...
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