__ U.S. __ (2015), 14-116, Bullard v. Blue Hills Bank

Docket Nº:14-116
Citation:__ U.S. __, 135 S.Ct. 1686, 191 L.Ed.2d 621, 83 U.S.L.W. 4288, 25 Fla.L.Weekly Fed. S 228
Opinion Judge:ROBERTS, CHIEF JUSTICE
Party Name:LOUIS B. BULLARD, PETITIONER v. BLUE HILLS BANK, FKA HYDE PARK SAVINGS BANK
Attorney:James A. Feldman argued the cause for petitioner. Zachary D. Tripp argued the cause for the United States, as amicus curiae. Douglas Hallward-Driemeier argued the cause for respondent.
Case Date:May 04, 2015
Court:United States Supreme Court

Page __

__ U.S. __ (2015)

135 S.Ct. 1686, 191 L.Ed.2d 621, 83 U.S.L.W. 4288, 25 Fla.L.Weekly Fed. S 228

LOUIS B. BULLARD, PETITIONER

v.

BLUE HILLS BANK, FKA HYDE PARK SAVINGS BANK

No. 14-116

United States Supreme Court

May 4, 2015

Argued April 1, 2015

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

SYLLABUS

[191 L.Ed.2d 623] After filing for Chapter 13 bankruptcy, petitioner Bullard submitted a proposed repayment plan to the Bankruptcy Court. Respondent Blue Hills Bank, Bullard's mortgage lender, objected to the plan's treatment of its claim. The Bankruptcy Court sustained the Bank's objection and declined to confirm the plan. Bullard appealed to the First Circuit Bankruptcy Appellate Panel (BAP). The BAP concluded that the Bankruptcy Court's denial of confirmation was not a final, appealable order, see 28 U.S.C. § 158(a)(1), but heard the appeal under a provision permitting interlocutory appeals " with leave of the court," § 158(a)(3), and agreed with the Bankruptcy Court that Bullard's proposed plan was not allowed. Bullard appealed to the First Circuit, but it dismissed for lack of jurisdiction. It concluded that its jurisdiction depended on the finality of the BAP's order, which in turn depended on the finality of the Bankruptcy Court's order. And it found that the Bankruptcy Court's order denying confirmation was not final so long as Bullard remained free to propose another plan.

Held : A bankruptcy court's order denying confirmation of a debtor's proposed repayment plan is not a final order that the debtor can immediately appeal. Pp. 4-12.

(a) Congress has long treated orders in bankruptcy cases as immediately appealable " if they finally dispose of discrete disputes within the larger case," Howard Delivery Service, Inc. v. Zurich American Ins. Co., 547 U.S. 651, 657, n. 3, 126 S.Ct. 2105, 165 L.Ed.2d 110. This approach is reflected in the current statute, which provides that bankruptcy appeals as of right may be taken not only from final judgments in cases but from " final judgments, orders, and decrees . . . in cases and proceedings." 28 U.S.C. § 158(a). Bullard argues that a bankruptcy court conducts a separate proceeding each time it reviews a proposed plan, and therefore a court's order either confirming or denying a plan terminates the proceeding and is final and immediately appealable. But the relevant proceeding is the entire process of attempting to arrive at an approved plan that would allow the bankruptcy case to move forward. Only plan confirmation, or case dismissal, alters the status quo and fixes the parties' rights and obligations; denial of confirmation with leave to amend changes little and can hardly be described as final. Additional considerations--that the statute defining core bankruptcy proceedings lists " confirmations of plans," § 157(b)(2)(L), but omits any reference to denials; that immediate appeals from denials would result in delays and inefficiencies that requirements of finality are designed to constrain; and that a debtor's inability to immediately appeal a denial encourages the debtor to work with creditors and the trustee to develop a confirmable plan--bolster the conclusion that the relevant proceeding is the entire process culminating in confirmation [191 L.Ed.2d 624] or dismissal. Pp. 4-8.

(b) The Solicitor General suggests that because bankruptcy disputes are generally classified as either " adversary proceedings" or " contested matters," and because an order denying confirmation and an order granting confirmation both resolve a contested matter, both should be considered final. This argument simply assumes that confirmation is appealable because it resolves a contested matter, and that therefore anything else that resolves the contested matter must also be appealable. But one could just as easily contend that confirmation is appealable because it resolves the entire plan consideration process, while denial is not because it does not. Any asymmetry in denying the debtor an immediate appeal from a denial while allowing a creditor an immediate appeal from a confirmation simply reflects the fact that confirmation allows the bankruptcy to go forward and alters the legal relationships among the parties, while denial lacks such significant consequences. Nor is it clear that the asymmetry will always advantage creditors. Finally, Bullard contends that unless denial orders are final, a debtor will be required to choose between two untenable options: either accept dismissal of the case and then appeal, or propose an amended but unwanted plan and appeal its confirmation. These options will often be unsatisfying, but our litigation system has long accepted that certain burdensome rulings will be " only imperfectly reparable" by the appellate process. Digital Equipment Corp. v. Desktop Direct, Inc., 511 U.S. 863, 872, 114 S.Ct. 1992, 128 L.Ed.2d 842. That prospect is made tolerable by the Court's confidence that bankruptcy courts rule correctly most of the time and by the existence of several mechanisms for interlocutory review, e.g., § § 158(a)(3), (d)(2), which " serve as useful safety valves for promptly correcting serious errors" and resolving legal questions important enough to be addressed immediately. Mohawk Industries, Inc. v. Carpenter, 558 U.S. 100, 111, 130 S.Ct. 599, 175 L.Ed.2d 458. Pp. 8-12.

752 F.3d 483, affirmed.

James A. Feldman argued the cause for petitioner.

Zachary D. Tripp argued the cause for the United States, as amicus curiae.

Douglas Hallward-Driemeier argued the cause for respondent.

OPINION

ROBERTS, CHIEF JUSTICE

Chapter 13 of the Bankruptcy Code affords individuals receiving regular income an opportunity to obtain some relief from their debts while retaining their property. To proceed under Chapter 13, a debtor must propose a plan to use future income to repay a portion (or in the rare case all) of his debts over the next three to five years. If the bankruptcy court confirms the plan and the debtor successfully carries it out, he receives a discharge of his debts according to the plan.

The bankruptcy court may, however, decline to confirm a proposed repayment plan because it is inconsistent with the Code. Although the debtor is usually given an opportunity to submit a revised plan, he may be convinced that the original plan complied with the Code and that the bankruptcy court was wrong to deny confirmation. The question presented [191 L.Ed.2d 625] is whether such an order denying confirmation is a " final" order that the debtor can immediately appeal. We hold that it is not.

I

In December 2010, Louis Bullard filed a petition for Chapter 13 bankruptcy in Federal Bankruptcy Court in Massachusetts. A week later he filed a proposed repayment plan listing the various claims he anticipated creditors would file and the monthly amounts he planned to pay on each claim over the five-year life of his plan. See 11 U.S.C. § § 1321, 1322. Chief among Bullard's debts was the roughly $346,000 he owed to Blue Hills Bank, which held a mortgage on a multifamily house Bullard owned. Bullard's plan indicated that the mortgage was significantly " underwater" : that is, the house was worth substantially less than the amount Bullard owed the Bank.

Before submitting his plan for court approval, Bullard amended it three times over the course of a year to more accurately reflect the value of the house, the terms of the mortgage, the amounts of creditors' claims, and his proposed payments. See § 1323 (allowing preconfirmation modification). Bullard's third amended plan--the one at issue here--proposed a " hybrid" treatment of his debt to the Bank. He proposed splitting the debt into a secured claim in the amount of the house's then-current value (which he estimated at $245,000), and an unsecured claim for the remainder (roughly $101,000). Under the plan, Bullard would continue making his regular mortgage payments toward the secured claim, which he would eventually repay in full, long after the conclusion of his bankruptcy case. He would treat the unsecured claim, however, the same as any other unsecured debt, paying only as much on it as his income would allow over the course of his five-year plan. At the end of this period the remaining balance on the unsecured portion of the loan would be discharged. In total, Bullard's plan called for him to pay only about $5,000 of the $101,000 unsecured claim.

The Bank (no surprise) objected to the plan and, after a hearing, the Bankruptcy Court declined to confirm it. In re Bullard, 475 B.R. 304 (Bkrtcy. Ct. Mass. 2012). The court concluded that Chapter 13 did not allow Bullard to split the Bank's claim as he proposed unless he paid the secured portion in full during the plan period. Id., at 314. The court acknowledged, however, that other Bankruptcy Courts in the First Circuit had approved such arrangements. Id., at 309. The Bankruptcy Court ordered Bullard to submit a new plan within 30 days. Id., at 314.

Bullard appealed to the Bankruptcy Appellate Panel (BAP) of the First Circuit. The BAP first addressed its jurisdiction under the bankruptcy appeals statute, noting that a party can immediately appeal only " final" orders of a bankruptcy court. In re Bullard, 494 B.R. 92, 95 (2013) (citing 28 U.S.C. § 158(a)(1)). The BAP concluded that the order denying plan confirmation was not final because Bullard was " free to propose an alternate plan." 494 B. R., at 95. The BAP nonetheless exercised its discretion to hear the appeal under a provision that allows interlocutory appeals " with leave of the court." § 158(a)(3). The BAP granted such leave because the confirmation dispute involved a " controlling question of law . . . as to which there is substantial ground for difference of opinion," and " an immediate [191 L.Ed.2d 626] appeal [would] materially advance the ultimate termination of the litigation." 494 B. R., at 95, and n. 5....

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