Fugazy Exp., Inc., In re

Citation982 F.2d 769
Decision Date17 December 1992
Docket NumberD,Nos. 1418,1655,s. 1418
PartiesBankr. L. Rep. P 75,058 In re FUGAZY EXPRESS, INC., Debtor. Zachary SHIMER, Chapter 7 Trustee of Fugazy Express, Inc., and Metromedia Company, Plaintiffs-Appellees, v. William D. FUGAZY, Fugazy Limousine Limited, formerly known as R.D.F. Limousine Corp., Roy D. Fugazy, Defendants-Appellants. ockets 92-5005, 92-5007.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Margaret Groarke, New York City (Zachary Shimer, Robert Najarian, Chadbourne & Parke, on the brief), for plaintiff-appellee Zachary Shimer.

Martin I. Shelton, New York City (Mary Gail Gearns, Shea & Gould, on the brief), for plaintiff-appellee Metromedia Co.

Anderson Kill Olick & Oshinsky, P.C., New York City (Anthony Princi, Steven Cooper, Jordan W. Siev, of counsel), for defendant-appellant William D. Fugazy, joined the brief filed by defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.

James Lawrence Garrity, New York City (George Kuntu-Blankson, Garrity & McCusker, on the brief), for defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.

Arnold I. Burns, New York City (Proskauer Rose Goetz & Mendelsohn, of counsel), for defendants-appellants Fugazy Limousine Ltd. and Roy D. Fugazy.

Before OAKES *, KEARSE, and WALKER, Circuit Judges.

KEARSE, Circuit Judge:

Defendants William D. Fugazy ("William Fugazy" or "William"), Fugazy Limousine Limited ("Limousine"), and Roy D. Fugazy ("Roy Fugazy" or "Roy") (collectively the "Fugazy Parties") appeal from an order entered in the United States District Court for the Southern District of New York, Kevin Thomas Duffy, Judge, affirming an order of the United States Bankruptcy Court for the Southern District of New York, Burton R. Lifland, Chief Judge, which, inter alia, (1) ruled that William Fugazy had improperly transferred a broadcast license that was property of the estate of bankruptcy Chapter 7 debtor Fugazy Express, Inc. ("Debtor"), to Limousine and Roy Fugazy, and (2) ordered the payment of damages, to be determined after an accounting, and attorneys' fees to plaintiffs-appellees Zachary Shimer, who is

                the Chapter 7 trustee of the Debtor ("Trustee"), and Metromedia Company ("Metromedia").   Resolution of the damages and fees issues has been stayed by the bankruptcy court pending the outcome of this appeal.   On appeal, the Fugazy Parties contend that these orders should be reversed on the ground that the license was not properly regarded as property of the Debtor's estate and that its transfer was properly approved by the pertinent regulatory authority.   For the reasons below, we conclude that the order of the bankruptcy court was not a final order within the meaning of 28 U.S.C. § 158(a) (1988), that the order of the district court is therefore not sufficiently final to be appealable under 28 U.S.C. § 158(d) (1988) or 28 U.S.C. § 1291 (1988), and that the orders are not injunctive orders appealable under 28 U.S.C. § 1292(a)(1) (1988).   Accordingly, we dismiss the appeal for lack of appellate jurisdiction
                
I. BACKGROUND

Prior to July 1986, the Debtor was engaged in the business of selling and servicing franchises for livery and limousine services to independent limousine operators who conducted their operations using the "Fugazy" name. William Fugazy was chairman of the Debtor's board of directors. Roy, William's son, was formerly the Debtor's vice president for marketing and is the controlling shareholder of Limousine.

A. The Events

Pursuant to its franchise agreements, the Debtor provided radio dispatching services for its franchisees. The dispatches were broadcast over several radio frequencies, for which the Debtor had obtained six licenses and permits from the Federal Communications Commission ("FCC"). In July 1986, the Debtor filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code ("Code"), 11 U.S.C. § 101 et seq. (1988), see id. §§ 1101-1174. In or about January 1987, William caused the Debtor to transfer its FCC license for the call sign KXY-610 and two specified frequencies ("KXY License" or "License") to Limousine without consideration. Limousine applied to the FCC for, and in April 1987 received, approval of the transfer. The bankruptcy court had neither been asked to approve, nor been informed of, the transfer; the FCC had not been informed of the Debtor's filing for bankruptcy.

In the meantime, in March 1987, the bankruptcy court entered an order converting the reorganization proceeding into one for liquidation under Chapter 7 of the Code, 11 U.S.C. §§ 701-766, and promptly appointed the Trustee to oversee the liquidation. In June 1987, a court-authorized auction was held, following which the Trustee sold and transferred all right, title, and interest in the Debtor's six FCC licenses, including the KXY License, to Metromedia.

Metromedia soon discovered William's purported prior transfer of the KXY License to Limousine, and in August 1987, the Trustee and Metromedia commenced the present adversarial proceeding against the Fugazy Parties, seeking, inter alia, a declaration that the purported transfer was null and void because it had occurred without the permission of the bankruptcy court, and an accounting.

William conceded that in making the transfer he had acted without authority. On the basis of this concession, the bankruptcy court promptly entered an order in September 1987, which was consented to by William, the Trustee, and Metromedia ("Consent Order"), declaring the assignment null and void and directing the Trustee to convey the License to Metromedia. William and Metromedia were also directed to send a copy of the Consent Order to the FCC and to take whatever actions were requested by the FCC to effectuate the order's provisions. Counsel for Limousine and Roy Fugazy were present at all hearings relevant to the Consent Order. Immediately following entry of the order, Metromedia applied to the FCC to void the unauthorized assignment of the KXY License. Limousine opposed the application, and the FCC granted Limousine temporary In a letter dated October 26, 1988, the FCC refused to act on Metromedia's request that the purported transfer to Limousine be voided, stating in pertinent part as follows:

authorization to use the License pending resolution of the dispute.

While the rights and obligations of the various parties vis-a-vis each other may be somewhat complex, their obligations to the Commission are quite simple. Fugazy Express, Inc., licensee of record, assigned the license for KXY-610 to R.D.F. Limousine, who then became the licensee of record for our purposes. Information submitted to us, the Consent Order of the Bankruptcy Court in particular, casts doubt upon the validity of this transaction, and would under other circumstances require an administrative inquiry on our part. Here, however, the particular facts before us make such action unnecessary.

Affidavits submitted with the pleadings establish that KXY-610 ceased operations in December, 1986. Under Section 90.157 of our Rules, 47 C.F.R. § 90.157, the license for KXY-610 has therefore cancelled and must be returned to the Commission.

Though the FCC letter did not state specifically as of what date the KXY License had been cancelled, the cited regulation provided that for purposes of return of licenses to the Commission, a broadcast station is considered to have been permanently discontinued if it "has not operated for 1 year or more." 47 C.F.R. § 90.157(c). It is undisputed that Limousine used the frequencies covered by the KXY License at least from the time of the unauthorized assignment until December 1, 1988, when Limousine obtained a new license from the FCC to use those frequencies under a new call sign.

B. The Decisions Below

In early 1989, Limousine and Roy moved for summary judgment dismissing the present action, asserting that the FCC had "cancelled" the License prior to January 1987 and arguing that thereafter the License was not property that could be deemed part of the bankruptcy estate, and hence the bankruptcy court had no jurisdiction over William's transfer to Roy. William joined the motion. The Trustee and Metromedia cross-moved for summary judgment and sought sanctions against all the Fugazy Parties. In a Memorandum Decision dated May 14, 1990 ("Memorandum Decision"), the bankruptcy court granted the motion of the Trustee and Metromedia and denied the motions of the Fugazy Parties. The bankruptcy court held (1) that the KXY License was property of the Debtor's estate within the meaning of § 541(a)(6) of the Code, 11 U.S.C. § 541(a)(6); (2) that the assignment of the Debtor's interest in the KXY License by William to Roy and Limousine constituted an improper postpetition transfer of estate property, in violation of § 549 of the Code, 11 U.S.C. § 549; (3) that the assignment of the Debtor's interest in the KXY License was "a less than arms-length transaction" by William in "connivance" with Roy, and constituted "serious misconduct" "in direct, willful contravention" of the automatic stay, in violation of § 362(a)(3) of the Code, 11 U.S.C. § 362(a)(3); (4) that the cancellation of the KXY License by the FCC had no effect on this proceeding; and (5) that pursuant to §§ 549, 550, and 362(h) of the Code, 11 U.S.C. §§ 549, 550, and 362(h), the Trustee and Metromedia were entitled to recover damages, costs, and attorneys' fees from Limousine and Roy, and the Trustee was entitled to recover attorneys' fees from William.

In accordance with its rulings, the bankruptcy court entered an order dated June 20, 1990 ("1990 Bankruptcy Court Order" or "Order") directing, inter alia, that there be an accounting with respect to the revenues received by Limousine with respect to its use of the KXY License:

ORDERED that Limousine shall, within fifteen (15) of [sic ] service of Notice of Entry of this Order, file with the Court and serve the Trustee and counsel for...

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