In re Hamakua Sugar Co., Inc.

Decision Date03 October 1994
Docket NumberBankruptcy No. 92-00865. Civ. No. 94-00602MP.
Citation173 BR 693
PartiesIn re HAMAKUA SUGAR COMPANY, INC., a Hawaii corporation, Debtor. CARLSMITH BALL WICHMAN MURRAY CASE & ICHIKI, Appellant, v. WESTERN FARM CREDIT BANK, Appellee.
CourtU.S. District Court — District of Hawaii

Presley Pang, Carlsmith Ball Wichman Murray Case & Ichiki, Honolulu, HI, for appellant.

Paul A. Schraff, Dwyer Imanaka Schraff Kudo Meyer & Fujimoto, Honolulu, HI, for defendant.

ORDER DISMISSING APPEAL FOR LACK OF JURISDICTION; AND ORDER DISMISSING EX PARTE MOTION TO EXTEND BRIEFING SCHEDULE AS MOOT

PENCE, Senior District Judge.

BACKGROUND

On September 20, 1994, this court heard Feder & Mills' Application For Designation as a Party to Appeal And For Authority to File Briefs and Participate in Oral Argument ("Application"). The Application referred to a notice of appeal filed by Carlsmith Ball Wichman Murray Case & Ichiki ("Carlsmith Ball") on July 19, 1993 from the bankruptcy court's Order Approving Turnover of Funds to Western Farm Credit Bank ("Turnover Order"), entered July 14, 1993. Simultaneously, the court also considered the Ex Parte Motion of Carlsmith Ball to Extend Briefing Schedule of its appeal in view of Feder & Mills' Application.1

In considering Feder & Mills' Application, this court reviewed the record on appeal to determine, sua sponte, whether the order of the bankruptcy court appealed from was final or interlocutory, and, also, whether this court has appellate jurisdiction. See In re Ryther, 799 F.2d 1412 (9th Cir.1986).

The bankruptcy court's Turnover Order of July 14, 1993, resulted from the court's oral ruling of June 11, 1993, and contained the following:

"For the reasons stated by the Court at the hearing and in the Findings of fact and Conclusions of Law to be filed hereafter2. . . . "

The bankruptcy court also ordered that:

"4. The turnover of the funds to WFCB Western Farm Credit Bank is subject to an audit of the operations and expenditures of Hamukua sic for the week ended March 31, 1993 . . . ,"

and

"9. This order is certified as a final order."

This is the order from which Carlsmith Ball appealed.

Bankruptcy court records further reveal that subsequently, the bankruptcy court issued a Memorandum Opinion Concerning Motion for Turnover of Cash Collateral, entered May 27, 1994. In its memorandum opinion, the court stated:

"Bank\'s proposed findings and conclusions were not submitted until February, 1994 . . . Bank\'s proposed findings and conclusions will not be used. This memorandum opinion will serve as the court\'s statement of reasons for granting Bank\'s Motion for Turnover of Cash Collateral."
ANALYSIS
A. Finality of Order.

District courts have jurisdiction to hear appeals from final bankruptcy orders, and may grant leave to hear appeals from interlocutory orders. 28 U.S.C. § 158(a). A "final decision" generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633-34, 89 L.Ed. 911 (1945). Interlocutory orders are not appealable as of right. They may be reviewed at the discretion of the district courts. 28 U.S.C. § 1334(b). In re Mason, 709 F.2d 1313, 1315 (9th Cir.1983).

The first issue to be resolved here is which of the court's two orders represented its final order — the July 14, 1993 Order or the May 27, 1994 Memorandum Opinion.

1. The July 14, 1993 Order.

The court's July 14, 1993 Order referred to its reasons stated at the June 11, 1993 hearing. A review of the transcript of the June 11, 1993 hearing, however, fails to elicit "its reasons" and law in support of the court's July 14, 1993 Order. In U.S. v. Schaefer Brewing Co., 356 U.S. 227, 78 S.Ct. 674, 2 L.Ed.2d 721 (1958). The Court stated:

"While an opinion may embody a final decision, the question whether it does so depends upon whether the judge has or has not clearly declared his intention in this respect in his opinion . . . When all of these elements determination that language of opinion embodies the essential elements of a judgment and clearly evidences the judge\'s intention that it shall be his final act in the case, and, thereafter, entry of judgment by brief notation of judgment in the docket showing substance of court\'s judgment, as provided by Rule 79(a) clearly appear final judgment has been both pronounced and entered, and the time to appeal starts to run under the provisions of Rule 73(a) . . . and . . . the later filing and entry of a more formal judgment could not constitute a second final judgment in the case nor extend the time to appeal".

Id., at 232 and 233, 78 S.Ct. at 678.

Applying The Court's two-prong test to determine finality of an order, it appears that the court's July 14, 1993 order was not a final order because finality hinged on the filing of the Findings of Fact and Conclusions of Law, as well as an audit of Hamakua's operations and expenditures for a specified period. See also Maddox v. Black, Raber-Kief & Associates, 303 F.2d 910 (9th Cir.1962) (Order entered by trial judge which read, "Judgment for Petitioner. Counsel for Petitioner to prepare Findings of Fact, Conclusions of Law, and Judgment" was not a final judgment from which an appeal could be taken); and Zucker v. Maxicare Health Plans, Inc., 14 F.3d 477 (9th Cir.1994) (judgment not final since court record has no record of the filing of any notice that the conditions imposed by the court had been met).

2. The May 27, 1994 Order.

The Proposed Findings of Fact and Conclusions of Law prepared by the Western Farm Credit Bank at the court's request had not been submitted until sometime in February, 1994, and, though submitted, was never filed with the bankruptcy court, as directed by the July 14, 1993 Order. Notwithstanding those Findings and Conclusions, the court, sua sponte, on May 26, 1994, issued its Memorandum Opinion Concerning Motion for Turnover of Cash Collateral. That Memorandum Opinion, entered May 27, 1994, though effectively dispensing with the necessity of any findings of fact and conclusions of law and ignoring any mention of the previously ordered audit, included the court's cursory statement of reasons for issuing the July 14, 1993 Order.

Subsequent to the "non-final" holding of Maddox, 303 F.2d 910, supra, and faced with the court's May 27, 1994 Memorandum Opinion, this court notes that in In re Slimick, 928 F.2d 304, 307 (9th Cir.1990), the court held that the absence of accompanying findings and conclusions did not prevent an order from fully adjudicating an issue, and, reiterating its holding in Steccone v. Morse-Starrett Products Co., 191 F.2d 197, 200 (9th Cir.1951), that the absence of findings of fact required by Fed.R.Civ.P. 52(a) did not, per se, undermine the finality of a memorandum opinion. As both United States v. Lee, 786 F.2d 951, 955 (9th Cir.1986), and Spates v. Manson, 619 F.2d 204, 209 n. 3 (2nd Cir. 1980) state, appealability turns on the effect of the ruling, not the label assigned to it.

Here, however, the bankruptcy court's July 14, 1993 order included its statement that "the reasons stated at the hearing and the forthcoming findings of fact and conclusions of law to be filed hereafter" emphasis added, as well as its order that the turnover of funds was subject to an audit, thereby rendered the order conditional and non-final. Were it not for the fact that the court's July 14, 1993 Order specifically set forth those conditions, that Order might well be construed as its final order, and the court's May 27, 1994 Memorandum Opinion, though issued more than ten months later and after notice of appeal had been filed, could have been regarded as simply the court's more formal judgment—not a second final judgment—and, as such, could not extend the time to appeal. Under the circumstances, however, the July 14, 1993 Order, must be deemed a non-final order, and the court's May 27, 1994 Memorandum Opinion, which omitted the conditions set forth in its July 14, 1993 Order but stated its reasoning and legal conclusions, must be deemed its final order.

B. Appealability of Order.

The second issue to be resolved is whether the court's May 27, 1994 Memorandum Opinion was, though "final", an interlocutory order subject to appeal. As previously noted, a "final decision" generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. Catlin v. United States, supra. Clearly, neither of the court's orders ended the litigation nor settled the substantive rights of all of the parties involved. Both, therefore, are interlocutory orders.

The Motion for Turnover of Cash Collateral by Western Farm Credit Bank, a secured creditor, is a contested matter in bankruptcy under Rule 9014, Federal Rules of Bankruptcy Procedure. As such, Rules 7052, 7054, and 9021 also apply. Fed.Bankr.Rule 7052 and related F.R.Civ.Pro. Rule 52(a) provides:

In all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon, and judgment shall be entered pursuant to rule 58 . . . It will be sufficient if the findings of fact and conclusions of law are stated orally and recorded in open court following the close of the evidence or appear in an opinion or memorandum of decision filed by the court. Emphasis added.

F.R.Civ.Pro. Rule 58, mandates that, subject to the provisions of Rule 54(b):

(1) upon . . . a decision by the court . . . that all relief shall be denied, the clerk, unless the court otherwise orders, shall forthwith prepare, sign, and enter the judgment without awaiting any direction by that court . . . Every judgment shall be set forth on a separate document. A judgment is effective only when so set forth and when entered as provided in Rule 79(a). . . . Emphasis added.

and Rule 54 (related Bankruptcy Rule 7054) provides:

(a) "Judgment" .
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