County Management, Inc., In re

• Decision Date: 30 April 1986
• Docket Number: No. 85-2513,85-2513
• Citation: 788 F.2d 311
• Parties: 14 Collier Bankr.Cas.2d 1292, Bankr. L. Rep. P 71,131 In re COUNTY MANAGEMENT, INC., Debtor. COUNTY MANAGEMENT, INC. and Pampell Interests, Inc., Plaintiffs-Appellees, v. Charles William KRIEGEL, Receiver, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 311

788 F.2d 311

14 Collier Bankr.Cas.2d 1292, Bankr. L. Rep. P 71,131

In re COUNTY MANAGEMENT, INC., Debtor COUNTY MANAGEMENT, INC. and Pampell Interests, Inc. Plaintiffs-Appellees, v. Charles William KRIEGEL, Receiver, et al., Defendants-Appellants.

No. 85-2513.

United States Court of Appeals Fifth Circuit.

April 30, 1986.

Richel Rivers, Hilgers & Watkins, Austin, Tex., for defendants-appellants.

Thomas Kirkendall, Maddox, Perrin & Kirkendall, David Kirkendall, Houston, Tex., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before THORNBERRY, POLITZ and RANDALL, Circuit Judges.

RANDALL, Circuit Judge:

This is an appeal from an order of the district court reversing an order of the bankruptcy court, which had granted summary judgment for defendants. The district court remanded the case to the bankruptcy court for an accounting and other proceedings. Because this court has no jurisdiction to hear an appeal from such an order, we dismiss the appeal.

I.

This is a relatively straight-forward matter, which through procedural maneuvering has grown into a tangled skein. For the purposes of this appeal, the facts are as follows. Debtor County Management, Inc. ("CMI") and Lucille White jointly owned mineral interests in a 113-acre tract of land in Lee County, Texas, together with an individual named Sylvin Mersiovsky. A dispute over development of the land arose, and in 1978 Mersiovsky filed a complaint in state court seeking partition of the tract, which implicated matters of heirship necessary to determine the various interests in the property. In 1979, White sold her interest to Pampell Interests, Inc. ("Pampell"). A second suit was brought in state court, this one by a potential mineral lessee, which sought appointment of a receiver to execute a mineral lease over the entire parcel. The state court in 1982, over the objection of CMI and Pampell and before resolution of the partition action, appointed a receiver to execute a mineral lease over the parcel, which was subsequently effected. One well eventually was drilled on the property, which has produced commercial amounts of oil or gas.

Shortly thereafter, in May 1982, an involuntary petition for liquidation under Chapter 7 of the Bankruptcy Code was filed against CMI by two creditors. In August 1982, CMI converted the bankruptcy case to a Chapter 11 reorganization proceeding. The partition proceeding, still pending in the state court, was removed to the Bankruptcy Court. CMI and Pampell (referred to collectively as "plaintiffs") then filed in the bankruptcy proceeding a complaint against the receiver, Mersiovsky, the lessee of the mineral rights, the past and current operators of the oil well, and various other individuals and entities whose role in this morass is not clear ¹ (collectively referred to as "defendants"). The complaint alleges that plaintiffs "have not received any payments on production from the well," and seeks (1) an order that the receiver "turnover all property of the debtor found in his possession"; (2) a declaration that the lease executed by the receiver was null and void as to plaintiffs' interests under Texas state law; and (3) an accounting from the receiver of all funds from production of the tract. The complaint contends that the state district court did not confirm the lease entered into by the receiver, which plaintiffs contend is a requirement of Texas law. CMI argues that, in the absence of a confirmation order, its interest in the property became property of the estate under 11 U.S.C. Secs. 541, 544, and should have been turned over by the receiver upon the initiation of the bankruptcy proceeding, Sec. 543. If the lease is invalid, and the property is in effect unleased, plaintiffs believe that they would be entitled to more than if the lease is valid. Regardless of whether the lease is valid or invalid, it seems likely that something must be turned over to the estate, at least if plaintiffs' allegations concerning production from the well prove to be accurate. The issue will be who will turn over how much.

All parties filed cross-motions for summary judgment on the merits in July 1983. Defendants, not content with the summary judgment motion they had filed, added a "Motion to Dismiss or, Alternatively, Motion to Abstain and Remand [to State Court], or Alternatively, Motion to Transfer" to the file three weeks later. They argued that only the state court had subject matter jurisdiction over the action.

The bankruptcy court granted defendants' motion for summary judgment on May 24, 1984, held that the lease executed by the receiver was valid, and dismissed the complaint. The court did not mention defendants' motion to dismiss for lack of subject matter jurisdiction. Plaintiffs appealed the order to the district court.

In an order filed on July 12, 1985, the district court disagreed with the bankruptcy court's assessment of the need for a confirmation order under Texas state law. The court concluded that absent confirmation, the conveyance of interests in the lease executed by the receiver was invalid. The court reversed the dismissal of the proceedings and remanded the case to the bankruptcy court "so that it may consider [CMI's] contention that the receiver was required under 11 U.S.C. Sec. 543 to turn over property of estate to the Debtor-in-Possession and render a complete accounting of all payments made and received" under the terms of the lease, and to determine the partition and heirship issue. Like the bankruptcy court, the district court did not expressly address the merits of defendants' argument regarding the federal courts' jurisdiction over the dispute, perhaps because defendants failed to include the question in their statement of issues for review. Defendants appeal from that order.

II.

This case presents a basic issue of appellate jurisdiction which, although not raised by the parties, we must review on our own motion. Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 740, 96 S.Ct. 1202, 1204, 47 L.Ed.2d 453 (1976). An appeal from the district court to this court may be taken only from a final order of the district court. ² A final order "must generally be 'one which ends the litigation * * * and leaves nothing for the court to do but execute the judgment.' " In re Kutner, 656 F.2d 1107, 1110 (5th Cir.1981) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)), cert. denied, 455 U.S. 945, 102 S.Ct. 1443, 71 L.Ed.2d 658 (1982). The order must "conclusively determine substantive rights of parties" in order to be final. In re Delta Services Industries, 782 F.2d 1267, 1270 (5th Cir.1986). The rules differ somewhat in the bankruptcy context, in that a case need not be appealed as a "single judicial unit" at the termination of the proceeding as a whole. See In re Saco Local Development Corp., 711 F.2d 441, 444 (1st Cir.1983); 16 C. Wright, A. Miller, E. Cooper, Federal Practice and Procedure Sec. 3926, at 60-61 (Supp.1985); Levin, Bankruptcy Appeals, 58 N.C.L.Rev. 967, 985 (1980). However, even in a bankruptcy case, there must be a "final determination of the rights of the parties to secure the relief they seek in this suit" for an order to be considered final. In re Emerald Oil Co., 694 F.2d 88, 89 (5th Cir.1982). See also In re Ben Hyman & Co., 577 F.2d 966, 968 (5th Cir.1978) ("final order is one in which nothing remains to be done but the mechanical entry of judgment by the trial court").

The district court's order falls far short of "finally resolving" the dispute between these plaintiffs and defendants. Although the court determined the lease was invalid, it remanded the matter to the bankruptcy court for a determination of the propriety of a turn over order and for an accounting of the proceeds from production. That, in turn, will require a determination of heirship issues. In other words, the rights and liabilities of the parties are merely sketched in pencil within a frame; much painting remains to be done. This remand for further factual findings simply is not a final order. In re Stanton, 766 F.2d 1283, 1287-88 (9th Cir.1985). ³ Even if the district court had merely remanded for an accounting, without requiring that the numerous additional factual and legal issues be decided, its order would not have been final. "Case law interpreting finality under 28 U.S.C. Sec. 1291 establishes the general rule that an order determining the rights and liabilities of the parties and remanding for an accounting is interlocutory." In re Goldblatt Bros., Inc., 758 F.2d 1248, 1250 (7th Cir.1985) (citing Wetzel, 424 U.S. at 744, 96 S.Ct. at 1206). See also Craighead v. Wilson, 59 U.S., (18 How.) 199, 201, 15 L.Ed. 332 (1855) (court decree fixing rights of parties and referring case to subordinate court for a judicial purpose, such as an accounting, upon which a further decree will be entered is not final); In re Commercial Contractors, Inc., 771 F.2d 1373, 1374-75 (10th Cir.1985). ⁴

The salutary purpose of the rule set forth in Sec. 158 is to avoid piecemeal appeals. Delta Services Industries, 782 F.2d at 1269. Accordingly, if we were satisfied that the remand order required the bankruptcy court to fulfill a purely ministerial, rather than judicial, function so that no further appeal would be taken, we might be inclined to treat the district court order as final. See In re Fox, 762 F.2d 54, 55 (7th Cir.1985) (order is final if "all that remains to do on remand is a purely mechanical, computational, or in short 'ministerial' task, whose performance is unlikely to generate a new appeal or to affect the issue that the disappointed party wants to raise on appeal from the order of remand"). However, we are not confident that the function of the bankruptcy court on remand will be "purely ministerial." Clearly it will be required to take further evidence in order to determine who owns what percentage of the tract...