In re Henriquez

• Decision Date: 11 April 2001
• Docket Number: No. MB 00-100.,MB 00-100.
• Parties: In re Edward H. HENRIQUEZ, Debtor. Caterpillar Financial Services Corporation, Appellant, v. Joseph Braunstein, Chapter 7 Trustee for the Estate of Edward H. Henriquez, Appellee.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, First Circuit

261 B.R. 67 (2001)

In re Edward H. HENRIQUEZ, Debtor.

Caterpillar Financial Services Corporation, Appellant, v. Joseph Braunstein, Chapter 7 Trustee for the Estate of Edward H. Henriquez, Appellee.

No. MB 00-100.

United States Bankruptcy Appellate Panel of the First Circuit.

April 11, 2001.

Thomas E. Nannicelli, Norwood, MA, for Caterpillar Financial Services Corporation, creditor — appellant.

Michael P. Cashman, Cashman Law Offices, P.C., Boston, MA, for Edward H. Henriquez, debtor — appellee.

Michael H. Theodore, Riemer & Braunstein, LLP, Boston, MA, for Joseph Braunstein, trustee — appellee.

Before VOTOLATO, DE JESÚS, HAINES, U.S. Bankruptcy Appellate Panel Judges.

HAINES, Bankruptcy Judge.

Caterpillar Financial Services Corporation (Caterpillar) appeals from the bankruptcy court's order denying its motion for relief from stay. The bankruptcy court determined that Caterpillar was not entitled to relief because it failed to demonstrate at the motion hearing that it held a valid, perfected security interest in the debtor's backhoe/loader. For the reasons set forth below, we dismiss this appeal for lack of jurisdiction.

Background

Edward H. Henriquez filed for relief under chapter 7 of the Bankruptcy Code¹ on October 9, 1998. About two months before filing, Henriquez purchased a 1993 Caterpillar 416B Backhoe Loader (Loader) from a dealer in Milford, Massachusetts. The purchase was financed by Caterpillar. Henriquez signed a secured promissory note and granted Caterpillar a lien on the Loader. Undertaking to perfect its interest in the Loader, Caterpillar filed financing statements with the Secretary of State and the Clerk of the City of Newton on August 14, 1998. Five months later, and several months after filing his Chapter 7 petition, Henriquez registered the Loader by filing a certificate of title with the Massachusetts Registry of Motor Vehicles.

Presumably confident, as a result of Henriquez's postpetition registration of the Loader, that Caterpillar held only a junior interest in the Loader, see 11 U.S.C. § 544(a), the trustee commenced an adversary proceeding on or about June 13, 2000, seeking, inter alia, a declaration that his interest in the Loader was senior to that of Caterpillar. Shortly thereafter, Caterpillar moved for relief from stay, or, in the alternative, for an order compelling the trustee to abandon the Loader.²

The court's order denying relief from stay entered following a nonevidentiary hearing. Caterpillar's motion proceeded to such a hearing under the Massachusetts local rule providing that the hearing for a motion for relief from stay will generally be a consolidated (preliminary and final) nonevidentiary hearing.³ This appeal ensued.

Discussion

Pursuant to 28 U.S.C. §§ 158(a) and (c), the panel may hear appeals from "final judgments, orders, and decrees," 28 U.S.C. § 158(a)(1), or "with leave of the court, from interlocutory orders and decrees." 28 U.S.C. § 158(a)(3). A party takes an appeal of a 28 U.S.C. § 158(a)(1) final order "as of right" by filing a timely notice of appeal. Fed.R.Bankr.P. 8001(a).

Caterpillar asserts that "where, as in this appeal, a secured creditor has been denied relief from the automatic stay, the order of the Bankruptcy Court is a `final order' appealable as a matter of right." As authority for this statement, Caterpillar cites Sun Valley Foods Co. v. Detroit Marine Terminals, Inc. (In re Sun Valley Foods Co.), 801 F.2d 186 (6th Cir.1986), and Tringali v. Hathaway Machinery Company, Inc., 796 F.2d 553 (1st Cir.1986) The trustee does not challenge Caterpillar's assertion that the bankruptcy court's order is final for purposes of 28 U.S.C. § 158(a)(1).⁴

We are, nonetheless, "duty-bound to determine our jurisdiction over this appeal before proceeding to the merits." Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R. 643, 645 (1st Cir. BAP 1998). See also, Berner v. Delahanty, 129 F.3d 20, 23 (1st Cir.1997) ("The general rule is that a court should first confirm the existence of rudiments such as jurisdiction and standing before tackling the merits of a controverted case."); Williams v. United States (In re Williams), 215 B.R. 289, 297 (D.R.I. 1997) (stating that "it is incumbent on the court to establish that it may exercise jurisdiction" before embarking on the merits of the appeal); Kelly, Howe & Scott v. Giguere (In re Giguere), 188 B.R. 486, 487 (D.R.I.1995) ("Although neither party has raised the question of jurisdiction, it is a question that must be addressed.").

I. Finality

The concept of finality in bankruptcy cases is, in a word, "complicated." Brandt v. Wand Partners, 242 F.3d 6 (1st Cir. 2001) (recognizing that although "a `final judgment' rule of some kind applies to appeals from the bankruptcy court to the district court, . . . the concept . . . is more flexibly applied than with regard to district court judgments"). Indeed, it is well known that "no uniform and well-developed set of rules exists and on many points there is a good deal of uncertainty." Id. (Citations omitted).

This court not long ago had occasion to examine the state of affairs with regard to final orders in bankruptcy cases. In In re Bank of New England Corp., 218 B.R. 643, 648 (1st Cir. BAP 1998), the panel ruled that the bankruptcy court's grant of summary judgment as to one count in a multi-count complaint was not a final order within the meaning of 28 U.S.C. § 158(a)(1). In doing so, the panel set forth the considerations required to reach a determination of finality. Except for that which is relevant to our decision here, we need not restate the analysis. It suffices to say that within any given bankruptcy case may reside myriad "discrete disputes." E.g., In re Saco Local Dev. Corp., 711 F.2d 441, 444 (1st Cir.1983). In order to be appealable, a bankruptcy court order must fully and finally dispose of such a discrete dispute. Tringali v. Hathaway Machinery Company, Inc., 796 F.2d at 558 (citing In re American Colonial Broadcasting Corp., 758 F.2d 794, 801 (1st Cir. 1985)).

II. Finality and the Automatic Stay

As noted above, Caterpillar cites two cases for the proposition that an order denying relief from stay is a final order within the meaning of 28 U.S.C. § 158(a)(1), Sun Valley Foods and Tringali. In both cases, however, the order appealed from was an order granting relief from stay. In re Sun Valley Foods Co., 801 F.2d at 190; Tringali v. Hathaway Machinery Company, Inc., 796 F.2d at 557-58.

With regard to these issues, "all seem to agree that orders lifting the automatic stay are final." In re Sonnax Industries, Inc., 907 F.2d 1280, 1283 (2nd Cir.1990); see also Chunn v. Chunn (In re Chunn), 106 F.3d 1239, 1241 (5th Cir.1997) (order granting relief from stay is a final and appealable order); Benedor Corp. v. Conejo Enters., Inc. (In re Conejo Enters., Inc.), 96 F.3d 346, 351 (9th Cir.1996) (orders granting or denying relief from the automatic stay are deemed to be final orders); Eddleman v. United States Dep't of Labor, 923 F.2d 782, 784 (10th Cir.1991), overruled in part on other grounds, Temex Energy, Inc. v. Underwood, Wilson, Berry, Stein & Johnson, 968 F.2d 1003 (10th Cir. 1992); Barclays-American/Business Credit, Inc. v. Radio WBHP, Inc. (In re Dixie Broadcasting, Inc.), 871 F.2d 1023, 1026 (11th Cir.1989), cert. denied, 493 U.S. 853, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989); Sun Valley Foods Co. v. Detroit Marine Terminals, Inc. (In re Sun Valley Foods Co.), 801 F.2d 186 (6th Cir.1986); Tringali v. Hathaway Machinery Company, Inc., 796 F.2d 553 (1st Cir.1986); Moxley v. Comer (In re Comer), 716 F.2d 168, 172 (3d Cir. 1983) (district court's grant of relief from automatic stay appealable as final order because property in question subject to foreclosure without appellate review).

The proposition makes sense because once a party is granted relief from the automatic stay, it is then free to pursue remedies against the debtor, or property of the estate, outside the jurisdictional reach of the bankruptcy court, whether through self-help or in another judicial forum. In other words, within the bankruptcy case a discrete dispute has been finally determined, and unless appellate review is immediately available, it most likely will not be available at all. We thus agree that an order granting relief from stay is, for purposes of 28 U.S.C. § 158(a)(1), a final order.⁵

Such is not always the case, however, when, as in the matter before us, the bankruptcy court denies the moving party relief from the automatic stay. The question for us here, unanswered as of yet by our circuit court, is in what circumstances an order denying relief from stay is final for purposes of 28 U.S.C. § 158(a)(1).

Given that "a bankruptcy judge's order is final if it `completely resolves all of the issues pertaining to a discrete claim, including issues as to the proper relief.'" Pegasus Agency, Inc. v. Grammatikakis (In re Pegasus Agency, Inc.), 101 F.3d 882, 885 (2nd Cir.1996) (citations omitted), for the bankruptcy court's order denying Caterpillar's motion to be final, it would have to completely resolve all issues between Caterpillar and the trustee with regard to the Loader. The order before us did not do so. It is not a final order under 28 U.S.C. § 158(a)(1).

The result we reach in this case is necessarily determined by our circuit court's articulation of what relief from stay proceedings actually entail. Grella v. Salem Five Cent Savings Bank, 42 F.3d 26, 31-33 (1st Cir.1994), held that a hearing on a motion for relief from stay "is meant to be a summary proceeding." Such hearings "do not involve a full adjudication on the merits of claims, defenses, or counterclaims, but are instead simply a determination as to whether a creditor has a colorable claim to property of the estate." Id. at 32.

Indeed, as an example of what matters may not be decided in the context of a relief from stay hearing, the Grella court cites actions to...