Boomgarden, Matter of

• Decision Date: 19 December 1985
• Docket Number: No. 85-2040,85-2040
• Parties: Bankr. L. Rep. P 70,891 In the Matter of Leslie BOOMGARDEN, Debtor-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 657

780 F.2d 657

Bankr. L. Rep. P 70,891

In the Matter of Leslie BOOMGARDEN, Debtor-Appellant.

No. 85-2040.

United States Court of Appeals Seventh Circuit.

Argued Nov. 12, 1985.

Decided Dec. 19, 1985.

Gregory K. Stern, Chicago, Ill., for debtor-appellant.

Joel A. Brodsky, Stone & Hughes, Chicago, Ill., for appellee.

Before CUMMINGS, Chief Judge, RIPPLE, Circuit Judge, and PELL, Senior Circuit Judge.

PELL, Senior Circuit Judge.

Debtor-appellant Leslie G. Boomgarden appeals from the district court's decision affirming the bankruptcy court's order, which lifted the automatic stay as to the creditor, Five Avco Financial Services, Inc. (Avco).

Procedural History:

Leslie Boomgarden and his wife Barbara own the beneficial interest in Land Trust 9471 of the First Bank of Oak Park. This land trust secures the Boomgardens' principal residence at 1931 Dean Street in Des Plaines, Illinois. Avco made loans to Boomgarden, and it accepted an assignment of the beneficial interest as collateral. The Boomgardens previously had a purchase money mortgage on their home from Clyde Savings and Loan Association, which Avco subsequently acquired from Clyde. In July 1984, when Boomgarden was nine months late in making payments on the loan secured by the land trust, Avco scheduled a Uniform Commercial Code (UCC) sale of the beneficial interest. Barbara Boomgarden filed a Chapter 13 bankruptcy petition on July 10, 1984, three days before the sale. This filing triggered the automatic stay provision of 11 U.S.C. Sec. 362(a), and thus prevented Avco from holding the sale. On September 5, 1984, Bankruptcy Judge McCormick lifted the stay. Barbara Boomgarden never attempted to appeal or vacate this order. ¹

Avco planned a second UCC sale of the beneficial interest for October 10, 1984, but Leslie Boomgarden filed a Chapter 13 petition on October 5, 1984, thus invoking the automatic stay again. When Avco presented an emergency motion to modify the stay on October 9, 1984, Judge McCormick again cancelled the sale and set a hearing for November 7, 1984. At this hearing, the bankruptcy court lifted the stay against Avco, and it refused Boomgarden's request for an "evidentiary hearing" on Avco's motion. Two months later, on January 5, 1985, Boomgarden's Chapter 13 plan was confirmed.

Boomgarden appealed the bankruptcy court's order to the district court, and on April 26, 1985, Judge Moran affirmed the court's decision to lift the automatic stay. He subsequently denied Boomgarden's motion for a rehearing on May 21, 1985, and this appeal followed.

I.

Because "only final orders by the district courts in bankruptcy cases are appealable to the courts of appeals," In re Fox, 762 F.2d 54, 55 (7th Cir.1985); Firestone Tire & Rubber Co. v. Goldblatt Bros., Inc., 758 F.2d 1248, 1249 (7th Cir.1985); In re Riggsby, 745 F.2d 1153, 1155 (7th Cir.1984); see also 28 U.S.C. Sec. 1293(b), we must first determine whether we properly have jurisdiction of this case. Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 96 S.Ct. 1202, 47 L.Ed.2d 435 (1976); In re Cash Currency Exchange, Inc., 762 F.2d 542, 545 (7th Cir.1985).

This court and others have held that a district court's decision on an appeal from a bankruptcy court's interlocutory order generally is not a final order for purposes of further appellate review under section 1293(b). In re Riggsby, 745 F.2d at 1154; In re Tidewater Group, Inc., 734 F.2d 794 (11th Cir.1984); In re Comer, 716 F.2d 168 (3d Cir.1983). And a district court's decision on an appeal from a bankruptcy court's final order will be reviewed only if it also is final. Riggsby, 745 F.2d at 1155. Thus, an order by the district court remanding the case to the bankruptcy court for further significant proceedings will not be automatically and immediately appealable to this court, provided the order may be effectively reviewed on appeal from the bankruptcy court's "final final" decision. Id. at 1156.

"A 'final decision' generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). While the courts do not treat the finality requirement lightly, they recognize some special exceptions to the requirement, generally so as to avoid causing serious harm by delaying the appeal. See, e.g., Gillespie v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964) ("danger of denying justice by delay" outweighed "inconvenience and costs of piecemeal reviews."); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) (collateral order doctrine); Forgay v. Conrad, 47 U.S. (6 How.) 201, 12 L.Ed. 404 (1848) (Forgay-Conrad rule, order treated as final if it directs delivery of property and irreparable harm would result if appeal delayed).

Under the recently enacted Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L.No. 98-353, 98 Stat. 333 (July 10, 1984), Boomgarden was allowed to appeal the bankruptcy judge's lifting of the automatic stay provided the lifting was a final decision by the bankruptcy judge. See 28 U.S.C. Secs. 157(b)(2)(B) and 158(a), added in 1984; In re UNR Industries, Inc., 725 F.2d 1111, 1116 (7th Cir.1984). Even if it was not a final decision by the bankruptcy judge, the district court could still review it under 28 U.S.C. Sec. 158(a), which gives the court discretion to hear interlocutory appeals from the bankruptcy court. Yet the district court's decision would not necessarily be a final order for purposes of a subsequent appeal to this court. See In re Tidewater Group, Inc., 734 F.2d 794 (11th Cir.1984).

We believe that the bankruptcy court's lifting of the automatic stay here which permitted Avco to proceed with its UCC sale of the beneficial interest covering Boomgarden's real estate, is a final order. While the proceedings before the bankruptcy court were summary in nature, the district court did not remand the case to the bankruptcy judge for significant further proceedings. See In re Fox, 762 F.2d 54, 55 (7th Cir.1985) (remand not final unless only a ministerial task remains to be done).

In holding that we properly have jurisdiction of this case, we adopt the reasoning of the court in In re American Mariner Industries, 734 F.2d 426, 429 (9th Cir.1984). See also In re Regency Woods Apartments, 686 F.2d 899, 902 (11th Cir.1984). In In re American Mariner Industries, the court questioned whether a decision which affirms an order that denies relief from an automatic stay is final for the purpose of appellate jurisdiction. After examining the provisions of the bankruptcy case for expedited and ex parte proceedings in complaints for relief from the automatic stay, see 11 U.S.C. Sec. 362(e), the court concluded that Congress intended the courts to adjudicate conclusively and expeditiously, apart from the bankruptcy proceedings as available, complaints for relief from the automatic stay. Therefore, the court held that decisions of the bankruptcy courts granting or denying relief from the automatic stay under section 362(d) are final decisions. In re American Mariner Industries, 734 F.2d at 429. We similarly hold that the bankruptcy court's lifting of the automatic stay as to Boomgarden's beneficial interest was a final decision for the purposes of appellate review under 28 U.S.C. Sec. 1293(b) (1985). ²

II.

A second threshold issue involves this court's standard of review. We must accept the bankruptcy court's findings of fact unless they are clearly erroneous. In re X-Cel, Inc., 776 F.2d 130, 131 (7th Cir.1985); In re Hellums, 772 F.2d 379, 381 (7th Cir.1985); In re Kimzey, 761 F.2d 421, 423 (7th Cir.1985); see also Fed.R.Civ.P. 52(a). We can, however, apply de novo review to conclusions of law of any lower court. Pullman-Standard v. Swint, 456 U.S. 273, 287, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66 (1982); In re Tynan, 773 F.2d 177, 178 (7th Cir.1985); In re Evanston Motor Co., 735 F.2d 1029, 1031 (7th Cir.1984).

Because 11 U.S.C. Sec. 362(d) commits the decision of whether to lift the stay to the discretion of the bankruptcy judge, his decision may be overturned only upon a showing of abuse of discretion. In re Holtkamp, 669 F.2d 505, 507 (7th Cir.1982). In reviewing the bankruptcy court's lifting of the stay, we thus need to consider the two major issues on appeal: (1) whether Boomgarden's due process rights were violated by the bankruptcy judge's purported failure to provide appellant with an adequate hearing prior to lifting the automatic stay; and (2) whether the decision of the bankruptcy court was an abuse of discretion.

III.

It is well-recognized that procedural due process requires adequate notice and a hearing before an individual may be deprived of his or her property. Wolff v. McDonnell, 418 U.S. 539, 558, 94 S.Ct. 2963, 2975, 41 L.Ed.2d 935 (1974). See also Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (action challenging replevin statutes); Sniadach v. Family Finance Corp., 395 U.S. 337, 339, 89 S.Ct. 1820, 1821, 23 L.Ed.2d 349 (1969) (state prejudgment garnishment procedure held unconstitutional). Due process considerations also apply in the exercise of bankruptcy jurisdiction. In re Smith Corset Shops, 696 F.2d 971, 976 (1st Cir.1982) (citing Bank of Marin v. England, 385 U.S. 99, 102, 87 S.Ct. 274, 276, 17 L.Ed.2d 197 (1966)). See also Mullane v. Central Hanover Bank & Trust, 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). In bankruptcy proceedings, both debtors and creditors have a constitutional right to be heard on their claims, and "the denial of that right to them [is] the denial of due process which is never harmless error." Republic National Bank v. Crippen, 224 F.2d 565, 566 (5th Cir.1955) (quotingInterstate Commerce Commission v. Louisville & Nashville Railroad Company, 227 U.S. 88, 91, 33 S.Ct. 185, 186, 57 L.Ed. 431 (1913)). At the November 7, 1984, hearing,...