Apex Oil Co., In re, 88-2741

• Decision Date: 13 October 1989
• Docket Number: No. 88-2741,88-2741
• Citation: 884 F.2d 343
• Parties: In re APEX OIL COMPANY, et al. Raymond KUBICIK, Bobby Franklin, Appellants, v. APEX OIL COMPANY, Clark Oil & Refining Corporation, Apex R.E. & T., Inc., d/b/a Apex Towing Company, Petroleum Fuel & Terminal Company, Inc., Crest Tankers, Inc., Clayton Tankers, Inc., Appellees, Examiner, Amicus.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 343

884 F.2d 343

In re APEX OIL COMPANY, et al.

Raymond KUBICIK, Bobby Franklin, Appellants, v. APEX OIL COMPANY, Clark Oil & Refining Corporation, Apex

R.E. & T., Inc., d/b/a Apex Towing Company,

Petroleum Fuel & Terminal Company, Inc.,

Crest Tankers, Inc., Clayton

Tankers, Inc., Appellees,

Examiner, Amicus.

No. 88-2741.

United States Court of Appeals,

Eighth Circuit.

Submitted June 14, 1989.

Decided Aug. 28, 1989.

Rehearing Denied Oct. 13, 1989.

Roy C. Dripps, Alton, Ill., for appellants.

John Talbot Sant, Jr., St. Louis, Mo., and Arnold M. Quittner, Los Angeles, Cal., for appellees.

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit Judge, and MAGILL, Circuit Judge.

HENLEY, Senior Circuit Judge.

Raymond Kubicik and Bobby Franklin appeal the bankruptcy court's ¹ denial of their motions filed pursuant to 11 U.S.C. Sec. 362(d) to terminate the automatic stay provision of 11 U.S.C. Sec. 362(a) in Apex Oil's (Apex) Chapter 11 bankruptcy case. The case is before this court pursuant to a transfer of an appeal by the district court ² pursuant to 28 U.S.C. Sec. 1631. ³

I. FACTS

Kubicik and Franklin had prepetition claims seeking damages based on a wrongful death and a personal injury, respectively, filed pursuant to the Jones Act and general maritime law against Apex in Illinois state court. Kubicik, Franklin and eight other Jones Act movants filed postpetition motions to terminate the bankruptcy stay, and pursuant to 11 U.S.C. Secs. 1104 and 1106, the bankruptcy court referred these motions to an examiner for investigation.

The examiner concluded that based on the large number of Jones Act claims and the resulting defense cost of each, the $50,000.00 to $500,000.00 deductible provision of Apex's insurance policies, and the "indemnity" nature of these policies, the potential cost to Apex would prejudice Apex's estate. The examiner recommended that the motions for relief from the stay be denied, with the automatic stay continuing subject to a "Claims Resolution Procedure" whereby a multiple-step process would be initiated by the claimants, culminating in negotiation, mediation, arbitration, or a trial on the merits in the United States District Court for the Eastern District of Missouri.

The parties filed timely objections to these findings, and after arguments the bankruptcy court issued an order signed May 16, 1988 by Chief Judge John F. Nangle, and signed May 20, 1988 by Bankruptcy Judge Barry S. Schermer. After considering the pleadings, evidence, statements of counsel, and the report and recommendations of the examiner, the court denied the Jones Act movants' motions and modified the automatic stay to permit each movant to follow a claims resolution procedure pursuant to 28 U.S.C. Sec. 157 as set forth by the court. ⁴ The court found that if Apex were required to defend separately the large number of pending claims at a cost estimated at $35,000.00 per claim, Apex's reorganization would be seriously prejudiced. The court thus concluded that a balancing of the parties' interests mandated a modification of the stay to permit all claimants to follow the claim resolution procedure requiring either proof of claims negotiation or mediation and, failing resolution, either binding arbitration or trial in the appropriate district court. Some provision was made for collection of arbitration awards from insurance proceeds; otherwise, in general, Jones Act claimants were precluded from perfecting or enforcing asserted liens against property of Apex.

Moreover, the order provided that further actions taken by the court would include (1) amending the claims procedure as deemed advisable; (2) approving of the proof of claim settlement which resulted in a claimant becoming a creditor of Apex; (3) selecting a mediator; (4) setting forth the procedures for and an appointment of a panel of arbitrators; and (5) ordering, upon trial in district court, the bankruptcy court to submit to the district court proposed findings of fact and conclusions of law as to the appropriate venue for trial of the case pursuant to 28 U.S.C. Sec. 157(b)(5) and (c). ⁵

The May 16, 1988 order was amended on June 8, 1988 by Judge Schermer to clarify the mediation procedure, and amended again on August 2, 1988 by Judge Schermer and Chief Judge Nangle to include a provision that the Chief Judge of the District Court would appoint an arbitrator when appropriate.

On May 26, 1988 Kubicik and Franklin appealed the order to the district court. A hearing was held where the examiner argued a motion to dismiss asserting that the signature of Chief Judge Nangle resulted in the order serving as an order of the district court, and that any appeal should be made to the court of appeals. In the alternative, the examiner contended the order was interlocutory and that Kubicik and Franklin had not sought permission to appeal such a nonfinal order. Kubicik and Franklin filed a motion to strike the examiner's motion or, in the alternative, to allow an appeal of the order in the event that the court found it interlocutory.

The district court concluded that based on a signature by the district judge it lacked jurisdiction over the appeal; that because of the apparent confusion of all parties as to the May 16, 1988 order and the Bankruptcy Amendments and Federal Judgeship Act of 1984, the interest of justice would be served by transferring the appeal to the Court of Appeals for the Eighth Circuit; and that to the extent that the May 16, 1988 order was a final order, the appeal could have been timely brought in the Court of Appeals for the Eighth Circuit on May 26, 1988. ⁶ The court denied as moot the examiner's motion and denied, without prejudice, Kubicik and Franklin's motions to appeal the order to the extent that it might be deemed interlocutory. Finally, the court concluded that, if the order be deemed an interlocutory order, Kubicik and Franklin might still have the opportunity to file a timely motion seeking permission to appeal an interlocutory order from Chief Judge Nangle under 28 U.S.C. Sec. 1292(b), but that the interest of justice required that the appeal be transferred. ⁷

II. APPELLATE JURISDICTION

A. 28 U.S.C. Sec. 1631 Transfer

Although the order transferring this appeal pursuant to 28 U.S.C. Sec. 1631 has not been appealed by the parties, it is incumbent upon this court to establish that it has jurisdiction as a result of that transfer as "[t]his court has only the jurisdiction that Congress has conferred upon it by statute." Hempstead County & Nevada County Project v. United States Environmental Protection Agency, 700 F.2d 459, 461 (8th Cir.1983); see also McGowne v. Challenge-Cook Bros., 672 F.2d 652, 658 (8th Cir.1982) (appellate court obligated to raise jurisdictional issues not raised by the parties).

As previously noted, Sec. 1631 grants the district court power to transfer a case to the proper federal court when it determines that it lacks jurisdiction, provided that the transfer will be in the interest of justice, and that, had the case been originally filed in the proper court, the filing would have been timely and jurisdictionally proper in that court. See Hempstead County, 700 F.2d at 462.

We believe the district court was correct to transfer this appeal as it lacked jurisdiction over the bankruptcy order. See In re Manoa Fin. Co., 781 F.2d 1370, 1372 (9th Cir.1986) (per curiam) (appeals from decisions of district court judges should not be heard by other district court judges), cert. denied, 479 U.S. 1064, 107 S.Ct. 948, 93 L.Ed.2d 997 (1987). Moreover, because the dual signing of the order could have confused the parties as to the correct appellate procedure, it is in the interest of justice to transfer this appeal. See In re McCauley, 814 F.2d 1350, 1351-52 (9th Cir.1987) (28 U.S.C. Sec. 1631 created for appellants who experience confusion as to correct appellate forum). Finally, the appeal would have been timely filed, had the appellants originally filed their appeal in this court. See Fed.R.Civ.P. 4. Consequently, we assume jurisdiction pursuant to 28 U.S.C. Sec. 1631. This assumption, however, is contingent on the May, 1988 order being a final appealable order.

B. Finality of the May 1988 Order

"The district court has jurisdiction to review appeals from final bankruptcy court orders. 28 U.S.C. Sec. 158(a). This court has jurisdiction of all 'final decisions, judgments, orders and decrees' entered by the district court reviewing final bankruptcy court orders. Id. Sec. 158(d)." In re Schneider, 873 F.2d 1155, 1156 (8th Cir.1989). ⁸ Consequently, the underlying question becomes whether the bankruptcy court decision was a final decision appealable to the district court, and thus, available for transfer to this court.

The factors used in deciding the finality of a bankruptcy order are the extent to which (1) the order leaves the bankruptcy court nothing to do but execute the order; (2) delay in obtaining review would prevent the aggrieved party from obtaining effective relief; and (3) a later reversal on that issue would require recommencement of the entire proceeding. See In re Olson, 730 F.2d 1109 (8th Cir.1984) (jurisdiction established pursuant to 28 U.S.C. Sec. 1293). We are aware that this test for finality "is more liberal than that generally applied in determining the finality of orders in non-bankruptcy proceedings," id. at 1109, but believe this to be the more appropriate test, see id. at 1109-10. But see Grippando, Circuit Court Review of Orders on Stays Pending Bankruptcy Appeals to U.S. District Courts or Appellate Panels, 62 Am.Bankr.L.J. 353, 360-62 (1988) (questioning whether 28 U.S.C. Sec. 158, the jurisdictional provision added by the 1984 Amendments to the Bankruptcy Act of 1978, has changed the more "liberal" standard of finality as interpreted by the courts pursuant to 28 U.S.C. Sec. 1293).

When a "final order denying relief from a stay functions as a permanent injunction, it is final for...