PC v. Empresas Martínez ValentíN Corp. (In re Empresas Martínez ValentíN Corp.)

• Decision Date: 28 January 2020
• Docket Number: No. 18-2103,18-2103
• Citation: 948 F.3d 448
• Parties: IN RE: EMPRESAS MARTÍNEZ VALENTÍN CORP., Debtor. PC Puerto Rico, LLC, Appellant, v. Empresas Martínez Valentín Corp., Appellee.
• Court: U.S. Court of Appeals — First Circuit

948 F.3d 448

IN RE: EMPRESAS MARTÍNEZ VALENTÍN CORP., Debtor.PC Puerto Rico, LLC, Appellant,

v.Empresas Martínez Valentín Corp., Appellee.

No. 18-2103

United States Court of Appeals, First Circuit.

January 28, 2020

Kenneth C. Suria, Old San Juan, PR, with whom Paul J. Hammer, San Juan, PR, and Estrella, LLC were on brief, for appellant.

Nelson Robles Díaz, with whom Nelson Robles-Diaz Law Offices, P.S.C. was on brief, for appellee.

Before Torruella, Thompson, and Kayatta, Circuit Judges.

KAYATTA, Circuit Judge.

This appeal turns primarily on a rule of appellate practice. The Supreme Court has twice explained that the time limit within which an appeal of a final judgment need be made starts running even if the lower court still has before it a request for attorneys' fees or costs incurred in litigating the case. See Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Eng'rs & Participating Emp'rs, 571 U.S. 177, 186, 134 S.Ct. 773, 187 L.Ed.2d 669 (2014) ; Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). Federal Rule of Civil Procedure 58(e) expressly reminds counsel of this important point, stating that "[o]rdinarily, the entry of judgment may not be delayed, nor the time for appeal extended, in order to tax costs or award fees."

The appellant PC Puerto Rico ("PCPR") has run afoul of this rule in this case. After the bankruptcy court issued a decision on the merits of all claims before it, PCPR did not promptly file a notice of appeal. Instead, it waited 237 days, appealing only after the bankruptcy court later decided a long-pending motion for attorneys' fees and costs incurred by the prevailing party, Empresas Martínez Valentín Corp. ("EMV"), in litigating this case. In this opinion we explore several possible, somewhat complicated rationales for bridging that 237-day gap. Ultimately, though, we are unable to find a basis for deeming the notice of appeal timely as applied to anything other than the award of fees and costs. We therefore dismiss the appeal from the district court's ruling on the merits. And while we are able to review the award of fees and costs, we affirm that award for reasons that we will explain.

I.

EMV, its president Angel Martínez Valentín, and PCPR tussled over their respective rights under a lease and sublease to a commercial property located in Sabana Grande, Puerto Rico. After EMV filed for Chapter 11 bankruptcy protection, PCPR continued to pursue claims asserted by it against Mr. Martínez in a separate, previously filed action in the United States District Court for the District of Puerto Rico, eventually seizing and disposing of personal property owned by EMV located on the commercial property. After a six-day bench trial, the bankruptcy court found that PCPR's seizure and disposal of EMV's property after EMV filed for bankruptcy protection constituted a willful violation of the Bankruptcy Code's automatic stay, which enjoins the exercise of unauthorized control over property of the debtor's estate upon the filing of a bankruptcy petition, see 11 U.S.C. § 362(a)(3). In an "opinion and order" dated and docketed on April 4, 2017, the bankruptcy court awarded EMV damages against PCPR in the amount of $408,153 under section 105(a) of the Bankruptcy Code, 11 U.S.C. § 105(a), which has been interpreted to give bankruptcy courts civil contempt powers to enforce their orders. The bankruptcy court's April 4 ruling otherwise disposed of all claims and issues in the case, save for EMV's request for costs and attorneys' fees "incurred in the prosecution of this adversary proceeding," with the amount to be determined by further submissions by the parties.

On April 18, 2017, EMV filed a motion under Bankruptcy Rules 9023 and 9024, which incorporate Federal Rules of Civil Procedure 59 and 60, asking the bankruptcy court to reconsider its April 4 opinion so as to order even more damages in favor of EMV. The bankruptcy court denied EMV's motion by order entered on May 30, 2017. On November 27, 2017, the bankruptcy court then issued two more opinions and orders: the first awarding EMV $107,627.56 in attorneys' fees incurred in litigating this adversary proceeding, the second awarding costs of the proceeding in the amount of $6,364.99. Both opinions and orders appeared on the docket that day, along with a separate two-page judgment encompassing both the April 4 ruling and the awards of fees and costs.

PCPR then appealed, on December 8, 2017, to the district court pursuant to 28 U.S.C. § 158(a)(1), and EMV moved to dismiss or limit the appeal as untimely. The district court denied the motion without explanation, proceeded to review the bankruptcy court rulings and awards on the merits, and affirmed them in all respects. On October 25, 2018, PCPR then appealed to this court pursuant to 28 U.S.C. §§ 158(d) and 1291 and Federal Rules of Appellate Procedure 4(a)(1) and 6(b). In its brief, PCPR challenges both the award of damages and the award of attorneys' fees.

II.

We first discuss EMV's contention that PCPR waited too long to appeal the bankruptcy court's order of damages. In a bankruptcy case, appeals from decisions of the bankruptcy court proceed first either to a bankruptcy appellate panel (BAP) or to the district court. In re Hill, 562 F.3d 29, 32 (1st Cir. 2009). After either the BAP or the district court rules, an unsatisfied party may then seek direct review of the bankruptcy court's judgment from a court of appeals. Id. PCPR chose to appeal to the district court. By rule, such an appeal must be filed by notice with the bankruptcy clerk "within 14 days after entry of the judgment, order, or decree being appealed." Fed. R. Bankr. P. 8002(a)(1). We have previously held that failure to comply with this time limit for filing a notice of appeal strips the district court of appellate jurisdiction, necessitating dismissal of the appeal. See In re Vázquez Laboy, 647 F.3d 367, 371 (1st Cir. 2011) (citing In re Abdallah, 778 F.2d 75, 77 (1st Cir. 1985) ). And even if we were now to treat the fourteen-day deadline as a nonjurisdictional, claim-processing rule, we are required to enforce it if a failure to comply is properly brought to our attention (an issue we discuss below). See Hamer v. Neighborhood Hous. Servs. of Chi., ––– U.S. ––––, 138 S. Ct. 13, 17, 199 L.Ed.2d 249 (2017) (noting that claim-processing rules "must be enforced" (emphasis added)). And if the district court lacked the ability to review a judgment of the bankruptcy court due to an untimely notice of appeal, then we by extension lack the ability to review that judgment. Abdallah, 778 F.2d at 77.

To determine the extent to which PCPR timely filed its appeal from the April 4 rulings with the district court, we begin by calculating the last possible date on which such an appeal could have been filed, assuming that Ray Haluch's "uniform rule" requires us to put to one side as collateral the request for attorneys' fees. The April 4 opinion and order fully resolved all other claims, so it was otherwise a final judgment for appeal purposes. See Fed. R. Civ. P. 54(b) ; Fed. R. Bankr. P. 7054(a) (applying Rule 54(b) to adversary proceedings). But the time for appealing begins to run not when the court finally decides a case, but rather from when the decision is "entered" in the docket. Fiore v. Wash. Cty. Cmty. Mental Health Ctr., 960 F.2d 229, 232 (1st Cir. 1992) ; see Fed. R. App. P. 4(a).

There are three ways in which a judgment is deemed to be entered. First, and normally, a judgment is entered by preparing and docketing a "separate document" setting out the judgment. Fed. R. Civ. P. 58(a), (c)(2)(A) ; see Fed. R. Bankr. P. 7058 (incorporating Rule 58 in adversary proceedings). This requires a document "separate from an opinion or memorandum of the court," In re Smith Corset Shops, Inc., 696 F.2d 971, 975 (1st Cir. 1982), that does not contain "a substantial discussion of the law and the facts," Jeffries v. United States, 721 F.3d 1008, 1013 (8th Cir. 2013). Second, if the court delays for more than 150 days in preparing and docketing the separate document entering judgment, then the rules deem judgment to have been entered when "150 days ha[d] run from the entry in the civil docket" of the ruling that should have been entered via a separate document. Fed. R. Civ. P. 58(c)(2)(B). Third, certain rulings on motions need not be set out in a separate document to be deemed entered. Id. 58(a)(1)–(5).

In this case, the April 4 opinion and order is not the type of ruling on a motion for which no separate document need be entered. See id. Rather (assuming the attorneys' fees issue is collateral), the April 4 opinion and order is a final judgment for which a separate document need be prepared and entered under Rule 58(c)(1). The bankruptcy court did not prepare and enter such a separate document by September 1 (within 150 days of April 4). So, using the second option above (with one possible tweak we will next discuss), we must deem the April 4 judgment to have been entered on September 1 for purposes of triggering the fourteen-day deadline for appeal, which would have expired on September 15, well before PCPR filed its notice of appeal on December 8.

The possible tweak we might make arises from the fact that, before fourteen days had run from the April 4 decision, EMV filed its Rule 59 and 60 motion, requesting either "relief from" the April 4 decision or "to alter and/or [a]mend" the same. That filing would have postponed (until its denial on May 30) the running of the time within which to appeal the April 4 decision had a separate document previously been prepared and entered. See Fed. R. App. P. 4(a)(4)(A). But even if we assume, arguendo, that we can still add those 56 days onto the 150 days permitted by Rule 58(c), we only get to October 28, which would have required the filing of a notice of appeal by November 11.

The foregoing makes clear that the December 8 notice of appeal from the ...