Gould, Matter of, 91-3473

• Decision Date: 10 September 1992
• Docket Number: No. 91-3473,91-3473
• Citation: 977 F.2d 1038
• Parties: Bankr. L. Rep. P 74,908 In the Matter of John Charles Cooper GOULD and Janice M. Gould, Debtors-Appellees. Appeal of Donald B. FISHER.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1038

977 F.2d 1038

Bankr. L. Rep. P 74,908

In the Matter of John Charles Cooper GOULD and Janice M. Gould, Debtors-Appellees Appeal of Donald B. FISHER.

No. 91-3473.

United States Court of Appeals Seventh Circuit.

Argued June 1, 1992.

Decided Sept. 10, 1992.

Jack E. Roebel, Fort Wayne, Ind. (argued), for appellant Donald B. Fisher.

John R. Burns, III (argued), David P. Irmscher, Baker & Daniels, Fort Wayne, Ind., for appellees John D. Weaver and Susan L. Weaver.

William E. Harris, Moss, Crowell, Harris, Yates & Long, Fort Wayne, Ind. (argued), for debtors-appellees John Charles Cooper-Gould and Janice M. Gould.

Before CUMMINGS, FLAUM, and MANION, Circuit Judges.

FLAUM, Circuit Judge.

In the late 1970s, the Trafalgar Corporation and John Gould (collectively "Gould"), commenced plans to develop "Scotia," an upscale residential community located on 200 acres of prime real estate in Allen County, Indiana. In the course of planning the development, Gould negotiated a sewer easement across a contiguous plot of land owned by John and Susan Weaver. In exchange, Gould granted the Weavers a right of first refusal (i.e., the right to match any bona fide purchase offers) in the event Gould decided to sell a 7.5 acre tract of Scotia that bordered the Weavers' property.

In 1984, Gould and Trafalgar filed simultaneous petitions for bankruptcy, and in March 1985 their estates conducted a joint sale of the entire Scotia development, which brought in a high bid of $412,000 from the appellant Donald Fisher. After gaining reassurance that all interested parties had received notice of the proposed sale, the bankruptcy court confirmed the transaction in May 1985. Fisher paid the agreed-upon purchase price, received a warranty deed from Gould, and proceeded with the development of Scotia. However, it appears that the title search of the Scotia property, which had been conducted prior to the sale by attorneys for Fisher and Gould--and which, incidentally, is the subject of a separate malpractice action--failed to uncover the Weavers' easement, despite the fact it was of record. Consequently, the Weavers were left off the clerk's mailing matrix and never received notice of the March 1985 bankruptcy sale, all of which left Fisher with a clouded title.

The Weavers filed an adversary proceeding against Gould and Fisher seeking to compel transfer of the 7.5 acre parcel to them at a pro-rata price, but it was dismissed on procedural grounds unrelated to this suit. Notwithstanding that dismissal, Gould apparently decided he had better find a way to deliver a clear title to Fisher, so he filed a Motion to Vacate, in Part, the Sale of the Real Estate to Fisher, which the bankruptcy court granted. In re Cooper Gould, No. 84-10620 (Bankr.N.D.Ind. May 19, 1989) (the "May 1989 rebidding order"). The legal effect of that order was to return the 7.5 acre parcel to Gould's estate, which in turn rendered it amenable to the jurisdiction of the bankruptcy court. (As will become relevant later, Fisher did not receive a refund for the redacted portion of property.) Given the circumstances, the bankruptcy court decided that the most equitable course was to reopen bidding on the 7.5 acre parcel.

Significant for our purposes, Fisher did not appeal that decision. Rather, he acquiesced by submitting a second bid on the 7.5 acre tract, this time giving the Weavers notice of the offer. Under the terms of the second bid, which once again was submitted to the bankruptcy court for approval, Fisher agreed to pay the bankruptcy estate $420,000 for the 7.5 acre parcel, and the estate agreed in turn to pay Fisher $420,000 --making the whole transaction a wash--to relinquish any claim he might have for breach of warranty from the first sale. The Weavers filed an objection to this transaction, reasserting their right of first refusal, but this time they alleged that the offer was a bogus one that the court should reject. The Weavers maintained that the bid was merely an attempt to foreclose their right to match all bids by offering more money than they (or anyone else) would reasonably pay for the 7.5 acre tract. (Recall that Fisher originally paid $412,000 for the entire Scotia development.) The value of the "warranty claim" Fisher allegedly could assert against Gould was worthless, the Weavers asserted, because a title delivered by judicial sale never carries any warranties.

In an attempt to unravel this knot, the bankruptcy court issued two orders on September 4, 1990. In the first, it agreed with the Weavers that Fisher's second offer was a sham and declined to approve it; accordingly, the court ordered the property rebid once again, this time instituting detailed bidding procedures (the "September 1990 rebidding order"). In the second order, the court concluded that the Weavers' right of first refusal was an executory contract which Gould was entitled to reject (the "executory contract order"). The Weavers appealed the latter order to the district court. Fisher, for his part, filed a Motion to Alter or Amend which asked the bankruptcy court to set aside both the September 1990 and May 1989 rebidding orders, and to confirm the sale of the 7.5 acre parcel upon its original terms and conditions. ¹ The bankruptcy court denied Fisher's motion in December 1990, and Fisher appealed that ruling to the district court pursuant to Bankruptcy Rule 8001 et seq.

In a consolidated appeal, the district court affirmed the rebidding and executory contract orders. In re Cooper Gould, Nos. 91-00001, 91-00078 (N.D.Ill. Sept. 26, 1991). Regarding the rebidding orders, the district court ruled that (1) the May 1989 order was a final judgment, making Fisher's attempt to set aside that order untimely; and (2) the bankruptcy court did not abuse its discretion in instituting detailed rebidding procedures in the September 1990 order. Fisher challenges both of these rulings on appeal. The interests of Gould and Fisher are aligned, as both would like to go back to the original sale, a fact reflected in the nearly identical arguments contained in their respective briefs. The Weavers elected not to appeal the district court's affirmance of the executory contract order.

Fisher's principal argument on appeal raises a formidable procedural hurdle: he continues to challenge the efficacy of the bankruptcy court's May 1989 order--which, to reiterate, vacated the sale in part and directed rebidding on the 7.5 acre parcel--despite the fact that he never appealed that order. If the May 1989 order was a final order, subject to immediate appeal, then we are precluded from reaching Fisher's argument since he failed to appeal that order in a timely fashion. Fisher asserts that his rights as a creditor were not finalized until the September 1990 order; the May 1989 order lacked finality, he contends, because it contemplated a rebidding process, and did not refund a portion of the original purchase price even though he was forced to relinquish the 7.5 acre parcel.

We have jurisdiction over final decisions of a district court reviewing final decisions of a bankruptcy court pursuant to 28 U.S.C. § 158(d). The definition of finality in a bankruptcy appeal taken under 28 U.S.C. § 158(d) is considerably more flexible than in an ordinary civil appeal taken under 28 U.S.C. § 1291. ² See In re Irvin, 950 F.2d 1318, 1321 (7th Cir.1991); In re Official Committee of Unsecured Creditors, 943 F.2d 752, 755 (7th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1292, 117 L.Ed.2d 515 (1992); In re Unroe, 937 F.2d 346, 348 (7th Cir.1991). That broader approach to finality stems from

the need to tie up the many subsidiary matters that litter the road to the distribution of assets in bankruptcy. A court cannot wait until the end of the case to allow the appeal, because final disposition in bankruptcy ... depends on prior, authoritative disposition of subsidiary disputes.

In re Kilgus, 811 F.2d 1112, 1116 (7th Cir.1987). Thus, an order is considered "final" for purposes of 28 U.S.C. § 158(d) when it "finally determines" one creditor's position, even though there is continuing action in...