Casal, In re

• Decision Date: 02 March 1993
• Docket Number: No. 92-2220,92-2220
• Citation: 998 F.2d 28
• Parties: , Bankr. L. Rep. P 75,335 In re Ulpiano UNANUE CASAL, Debtor. Gerardo A. QUIROS LOPEZ, et al., Plaintiffs, Appellees, v. Ulpiano UNANUE CASAL, et al., Defendants, Appellees, Liliane Unanue, Emperor Equities, Inc., Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 28

998 F.2d 28

24 Bankr.Ct.Dec. 701, Bankr. L. Rep. P 75,335

In re Ulpiano UNANUE CASAL, Debtor Gerardo A. QUIROS LOPEZ, et al., Plaintiffs, Appellees, v. Ulpiano UNANUE CASAL, et al., Defendants, Appellees Liliane Unanue, Emperor Equities, Inc., Defendants, Appellants.

No. 92-2220.

United States Court of Appeals First Circuit.

Heard March 2, 1993.

Decided July 7, 1993.

Andres Guillenard-Noble, San Juan, PR, with whom Harvey B. Nachman and The Law Offices of Harvey B. Nachman, Santurce, PR, were on brief for defendants, appellants.

Arturo J. Garcia-Sola, with whom Dora M. Penagaricano, McConnell, Valdes, Kelley, Sifre, Griggs & Ruiz-Suria, Hato Rey, PR, were on brief for plaintiffs, appellees.

Carlos Lugo Fiol, Asst. Sol. Gen., Dept. of Justice, with whom Reina Colon De Rodriguez, Acting Sol. Gen., was on brief for intervenor.

Before BREYER, Chief Judge, SELYA and CYR, Circuit Judges.

CYR, Circuit Judge.

Liliane Unanue ("Liliane") and Emperor Equities, Inc. ("Emperor") challenge the constitutionality of various provisional remedies imposed by a bankruptcy court pursuant to P.R.Laws Ann. tit. 32 App. III, R. 56 et seq. We lack jurisdiction over most of their claims, and find no merit in the others.

I BACKGROUND

Ulpiano Unanue Casal ("Unanue"), a former chief executive officer of Goya Foods ("Goya"), filed a voluntary chapter 7 petition in August 1990, scheduling liabilities totaling $1.1 million and assets of nominal value. Goya, a creditor, charged that Unanue was continuing to lead a life of luxury, traveling between seven "fabulously furnished" apartments which he had fraudulently transferred to Liliane, his wife, prior to bankruptcy. After extensive discovery, Goya moved for leave to commence an adversary proceeding, in the name and behalf of the chapter 7 estate, see 11 U.S.C. § 503(b)(3)(B), against Liliane and Emperor, a shell corporation apparently controlled by Liliane. Although Liliane and Emperor were served with the Goya motion in July 1991, neither responded.

On August 24, 1991, Goya learned that Emperor had sold one of Unanue's former condominium apartments some months earlier, in May 1991, netting approximately $400,000. Goya promptly renewed its motion for leave to commence adversary proceedings on behalf of the chapter 7 estate, and sought an immediate ex parte order of attachment on the apartment-sale proceeds, alleging that the proceeds were assets of the chapter 7 estate and at risk of removal from the jurisdiction. On September 4, 1991, the bankruptcy court authorized Goya to commence an adversary proceeding, and issued an ex parte order of attachment under P.R. Rule 56 ("September 4 order"). ¹ On September 9, Goya provided appellants with copies of the summons, complaint, and motion for provisional remedies.

In the course of executing the writ of attachment, it was discovered that Liliane had transferred most of the apartment-sale proceeds to a Swiss bank account. On September 12, 1991, alarmed by the apparent removal of the sale proceeds from the jurisdiction, Goya sought additional provisional remedies under Rule 56, including "cautionary notices" and a "prohibition against alienation" of Liliane's remaining properties in Puerto Rico, Paris, New York and Spain. After notice to Liliane and Emperor, and a hearing on appellants' constitutional claims, the bankruptcy court authorized the additional provisional remedies on September 26 ("September 26 orders").

The September 4 and September 26 orders were appealed to the district court on the ground that the provisional remedies imposed by the bankruptcy court were unconstitutional under Connecticut v. Doehr, --- U.S. ----, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991). The Commonwealth of Puerto Rico intervened. See 28 U.S.C. § 2403(b). The district court upheld the challenged provisional remedies, see In re Unanue Casal, 144 B.R. 604 (D.P.R.1992), and the present appeal followed.

II THE SEPTEMBER 4 ORDER

Although the parties have not done so, we inquire into our jurisdiction to entertain the interlocutory appeal of the ex parte order entered on September 4. See In re Spillane, 884 F.2d 642, 644 (1st Cir.1989); In re Recticel Foam Corp., 859 F.2d 1000, 1002 (1st Cir.1988) ("a court has an obligation to inquire sua sponte into its subject matter jurisdiction"). The courts of appeals may derive jurisdiction to review a district court appellate order in a bankruptcy case from either of two statutory sources: (1) the bankruptcy appeal provisions of 28 U.S.C. § 158(d); or (2) the interlocutory appeal provisions in 28 U.S.C. § 1292 applicable to civil actions generally. See Connecticut Nat'l Bank v. Germain, --- U.S. ----, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). ² We trace these avenues of appeal in turn.

A. Section 158(d)

Section 158(d) affords a right of appeal to the courts of appeals from all "final decisions, judgments, orders [or] decrees" entered by district courts in bankruptcy cases. See 28 U.S.C. § 158(d) (emphasis added). It is often difficult to determine what constitutes a "final" judgment or order under section 158(d). There is somewhat less difficulty in doing so in an adversary proceeding, however, as the finality determination in such proceedings "closely resembles [that] in 'an ordinary case [between the parties] in a district court.' " In re Harrington, 992 F.2d 3, 6 n. 3, No. 92-2212 (1st Cir.1993) (quoting In re Public Serv. Co., 898 F.2d 1, 2 (1st Cir.1990)). Accordingly, a district court order in an adversary proceeding is not appealable as of right under section 158(d) unless it ends the entire adversary proceeding "on the merits and leaves nothing for the court to do but enter the judgment." See Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370, 375, 107 S.Ct. 1177, 1181, 94 L.Ed.2d 389 (1987) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)).

Even though a somewhat loosened standard of finality obtains in bankruptcy appeals, on a showing of "special justification," see Harrington, supra, at 6 n. 3, the exceptions are narrowly limited in order to avoid piecemeal review. Nevertheless, as in an ordinary civil action, the "collateral order" doctrine established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), is applicable to an appeal from an interlocutory order entered in an adversary proceeding, see In re Martin, 817 F.2d 175, 178 (1st Cir.1987), where the non-final order is, inter alia, "effectively unreviewable on appeal from a final judgment," see In re Newport Sav. & Loan Assn., 928 F.2d 472, 474 (1st Cir.1991) (quoting Van Cauwenberghe v. Biard, 486 U.S. 517, 108 S.Ct. 1945, 100 L.Ed.2d 517 (1988)).

On this reasoning, we must decline review of the September 4 order, as "non-final" under section 158(d). We adhere to our earlier holding that an interlocutory order allowing an attachment to remain in place is not an appealable "collateral order," since " 'the rights of all parties can be adequately protected while the litigation on the main claim proceeds.' " Lowell Fruit Co. v. Alexander's Market, Inc., 842 F.2d 567, 569 (1st Cir.1988) (per curiam) (quoting Swift & Co. Packers v. Compania Colombiana del Caribe, S.A., 339 U.S. 684, 689, 70 S.Ct. 861, 865, 94 L.Ed. 1206 (1950)); the district court provided adequate protection of appellants' rights in the present case by conditioning its September 4 attachment order on Goya's posting of a $50,000 surety bond, and there is no indication that appellants' property is at further significant risk or peril. Moreover, the validity of the September 4 attachments remains subject to challenge on eventual appeal from a final judgment, even if the claimant prevails. See Lowell Fruit, 842 F.2d at 570 (citing Drys Shipping Corp. v. Freights, Sub-Freights, Charter Hire, 558 F.2d 1050, 1052 (2d Cir.1977)). In the meantime, appellants can secure release of the attached property by posting a surety bond of their own, see P.R. Rule 56.3, its cost presumably recoverable from the claimant in the event the defendant prevails on the underlying claim. Cf. Lowell Fruit, 842 F.2d at 570 (Massachusetts law). Given these procedural and remedial safeguards, the present case clearly falls within the rule in Lowell Fruit: " '[a]lthough the imposition of provisional remedies may impose a hardship--an unjust hardship if the imposition is improper--the hardship is not so substantial as to justify wasting judicial resources through piecemeal appeal.' " Id. at 569 (quoting Trustees of HMG v. Compania Aseguradora Inter-Americana S.A. Panama, 672 F.2d 250, 251 (1st Cir.1982) (per curiam)).

B. Section 1292

We also lack jurisdiction over the September 4 order under 28 U.S.C. § 1292(a)(1), which permits interlocutory appeals of district court orders "granting, continuing, modifying, refusing or dissolving injunctions." Traditionally, section 1292(a)(1) has been construed narrowly, in light of its language and its potential for eroding the "finality" doctrine. See, e.g., Carson v. American Brands, Inc., 450 U.S. 79, 84, 101 S.Ct. 993, 996, 67 L.Ed.2d 59 (1981); Kartell v. Blue Shield of Massachusetts, Inc., 687 F.2d 543, 551 (1st Cir.1982); see also Sierra Club v. Marsh, 907 F.2d 210, 214 (1st Cir.1990) ("we are unwilling to adopt a more expansive reading of section 1292(a)(1) than is logically required"); see generally 16 Charles A. Wright et al., Federal Practice and Procedure (1977 & 1992 supp.) [hereinafter: Wright & Miller ] at § 3921 n. 10. Thus, "[f]or historical reasons, court-ordered 'attachments,' even where coercive and designed to protect ultimate relief, are typically considered to be 'legal,' not 'equitable' in nature, and therefore are not 'injunctions' for § 1292(a)(1) purposes." Bogosian v. Woloohojian Realty Corp., 923 F.2d 898, 901 (1st Cir.1991); see also Wright & Miller § 3922 n. 46. Moreover, where the challenged order is not expressly captioned as an injunction, see ...