Gould & Eberhardt Gear Machinery Corp., In re, 87-2081
| Decision Date | 05 May 1988 |
| Docket Number | No. 87-2081,87-2081 |
| Citation | 852 F.2d 26 |
| Parties | 19 Collier Bankr.Cas.2d 407 In re GOULD & EBERHARDT GEAR MACHINERY CORPORATION, Debtor. Appeal of GOULD & EBERHARDT GEAR MACHINERY CORPORATION. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Richard J. Innis with whom John D. Sigel, Raymond L. Miolla, Jr., and Hale and Dorr, Boston, Mass., were on brief for appellant.
Jeffrey S. Ogilvie with whom James M. Shannon, Atty. Gen., and Lawrence P. Fletcher-Hill, Asst. Atty. Gen., Boston, Mass., were on brief for appellee Massachusetts Dept. of Revenue.
Linda E. Mosakowski, Tax Div., Dept. of Justice, with whom William S. Rose, Asst. Atty. Gen., Washington, D.C., Frank J. McNamara, Jr., U.S. Atty., Boston, Mass., and Gary R. Allen and Wynette J. Hewett, Tax Div., Dept. of Justice, Washington, D.C., were on brief for appellee U.S.
Before BREYER and TORRUELLA, Circuit Judges, and FUSTE, * District Judge.
Debtor-appellant Gould & Eberhardt Gear Machinery Corp. ("Gould") appeals from a district court decision, 80 B.R. 614, reversing a bankruptcy court's confirmation of a reorganization plan filed pursuant to Chapter 11 of the Bankruptcy Code, 69 B.R. 944. Because we find that we lack jurisdiction on this matter, we dismiss Gould's appeal.
In order to explain the posture of this appeal, we must outline the history of the proceedings below. Then we will analyze the jurisdictional statute applicable to this case.
The pertinent facts are as follows. In 1982 the debtor filed for relief under Chapter The plan provided for payment of all taxes due, over a period of two years. Under the plan the debtor would be relieved of paying both penalties and interest on the taxes owed. Both tax authorities objected to the plan, on the grounds that all taxes, and interest and penalties thereon, were administrative expenses under section 503(b)(1)(B) of the Bankruptcy Code. As administrative expenses, both authorities claimed, interest and penalties resulting from late payment of the taxes were entitled to first priority under section 507(a)(1) of the Bankruptcy Code.
11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Massachusetts. From 1982 to 1986 the debtor failed to pay on a current basis taxes owed to the United States and to the Commonwealth of Massachusetts. The treasury departments of both governments agreed to withhold any action until the filing of the reorganization plan, which occurred in October 1986.
The bankruptcy court agreed that taxes and penalties had to be paid immediately upon confirmation of the plan. It concluded, however, that interest was not part of the debt. The reorganization plan was confirmed on this basis.
Both taxing authorities appealed to the United States District Court for the District of Massachusetts. The district court found that interest on the taxes owed was a part in equal standing of that debt, thus reversing the bankruptcy court.
The debtor filed the present appeal, questioning the status of interest on unpaid, post-petition taxes. Before addressing the merits of the appeal the Commonwealth of Massachusetts moved to dismiss the appeal on jurisdictional grounds. The jurisdictional issue is whether this is an appeal from an appealable "final order" under 28 U.S.C. Sec. 158(d). 1 We deferred consideration of that issue until the merits of the case were briefed and argued.
At oral argument we urged the parties to stipulate whether any issues were still actually in dispute and, if any were still in dispute, to describe the issue for this court. One issue remains, namely, whether the Commonwealth is entitled to pre-judgment, post-confirmation interest. The presence of that issue precludes the jurisdiction of this court.
The problem before this court is that a district court, exercising its appellate jurisdiction over a bankruptcy court, reversed a "final" bankruptcy court order--undoing the finality of the prior order. "Section 158(d) makes clear [that] our jurisdiction is limited to appeals from final judgments, orders, and decrees of the district courts." In re Giles World Marketing, Inc. v. Boekamp Mfg., Inc., 787 F.2d 746, 748 (1st Cir.1986). But "final" is a pregnant word. We stated in Giles:
We need not address the question whether, under section 158(d), it might be appropriate in certain circumstances to assess finality with regard to the judgment, order, or decree of the bankruptcy court, because the district court's action here was in full accord with that of the bankruptcy court. Where a bankruptcy court issues a final judgment, order, or decree that is subsequently reversed on appeal to the district court, the courts are divided as to whether finality is to be measured with regard to the non-final order of the district court or the final order of the bankruptcy court. See In re Commercial Contractors, Inc., 771 F.2d 1373, 1374-75 (10th Cir.1985) ().
Id. at n. 1. Such is the question we now face, which may be reformulated as: what is a "final decision, judgment, order or decree" for purposes of Sec. 158(d)?
Whether a district court opinion remanding a case to bankruptcy court is a final order has been the subject of a fairly extensive debate.
More difficult questions arise when the district court, hearing an appeal from a final order of the bankruptcy court, remands to that court for further action. There are both intra-circuit and inter-circuit disputes on this issue, leaving it hopelessly unresolved. One view has it that, when the bankruptcy court has issued a final order, and the district court issues an order affirming or reversing, the district court's order is also final. The contrary view is that the district court's decision is not final if it remands the matter back to the bankruptcy judge for "significant further proceedings."
I Collier on Bankruptcy p 3.03[b] (L. King, ed. 15th ed. 1987) (footnotes omitted); see In re Commercial Contractors, Inc., 771 F.2d 1373, 1374-75 (10th Cir.1985) and cases cited therein. We are convinced of the soundness of the second approach, which bases finality on the practical judgment of what remains to be done.
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