In re Porto

• Decision Date: 08 July 2011
• Docket Number: 09–15251.,Nos. 09–15249,s. 09–15249
• Citation: 23 Fla. L. Weekly Fed. C 88,645 F.3d 1294,55 Bankr.Ct.Dec. 25
• Parties: In re Ralph F. PORTO, Debtor.Richard DeLauro, Plaintiff–Appellant–Cross–Appellee,v.Ralph F. Porto, Defendant–Appellee–Cross–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

645 F.3d 1294

55 Bankr.Ct.Dec. 25

23 Fla. L. Weekly Fed. C 88

In re Ralph F. PORTO, Debtor.Richard DeLauro, Plaintiff–Appellant–Cross–Appellee,

v.Ralph F. Porto, Defendant–Appellee–Cross–Appellant.

Nos. 09–15249

09–15251.

United States Court of Appeals, Eleventh Circuit.

July 8, 2011.

Scott Alan Orth, Law Offices of Scott A. Orth, P.A., Hollywood, FL, Thomas P. Monahan, Jr., Garfield, NJ, for Appellant.Shannon L. Akins, Robert Bailey Branson, Orlando, FL, for Appellee.Appeals from the United States District Court for the Middle District of Florida.Before TJOFLAT, CARNES and HILL, Circuit Judges.CARNES, Circuit Judge:

For nearly a quarter of a century Richard DeLauro has been trying to collect a $725,000 judgment debt from Ralph F. Porto. DeLauro's latest efforts not only proved unsuccessful but also resulted in his being ordered to pay more than $15,000 in attorney's fees to Porto as a sanction for what the bankruptcy court viewed as his frivolous objection to the discharge of Porto's debt to him. DeLauro viewed this turn of events in which he as a creditor was ordered to pay his debtor as not only ironic but bitterly so. He has appealed the district court's order affirming the bankruptcy court's sanctions order against him. He also has attempted to appeal the district court's order affirming the discharge of Porto's debt to him, but there is a jurisdictional problem with that aspect of the appeal, as we will discuss.

I.

Porto filed his Chapter 7 bankruptcy proceeding on March 16, 2007. One of the debts he sought to discharge was a personal injury judgment debt he had owed DeLauro since 1985. DeLauro filed a complaint objecting to the discharge of Porto's debt to him on the ground that Porto had fraudulently avoided satisfying that debt since the judgment underlying it was entered 22 years before. Although DeLauro's complaint contained multiple factual allegations of fraud, the only legal remedy it sought was the denial of Porto's discharge pursuant to 11 U.S.C. § 727(a)(5), which forbids discharge where “the debtor has failed to explain satisfactorily ... any loss of assets or deficiency of assets to meet the debtor's liabilities.”

The bankruptcy court entered judgment in favor of Porto, denying the relief that DeLauro sought under 11 U.S.C. § 727(a)(5), and it awarded attorney's fees to Porto as a sanction for DeLauro's meritless complaint. DeLauro appealed both orders to the district court. In an order dated May 26, 2009, the district court affirmed the bankruptcy court's judgment on the merits of DeLauro's claims, but it requested further briefing on the issue of whether the bankruptcy court properly granted Porto's motion to sanction DeLauro.¹ In the meantime, Porto filed motions in the district court for additional sanctions and to tax costs against DeLauro for pursuing a frivolous appeal from the bankruptcy court. After further briefing, the district court in an order dated September 15, 2009 affirmed the bankruptcy court's judgment awarding attorney's fees to Porto, but it later denied Porto's renewed request for additional sanctions against DeLauro for appealing the bankruptcy court orders because it concluded that those appeals were colorable.

DeLauro filed two separate notices of appeal to this Court on October 15, 2009. One of them appealed the district court's order affirming the bankruptcy court's order overruling his objections and discharging Porto's debt to him. The other one appealed the district court's order affirming the bankruptcy court's award of attorney's fees to Porto as a sanction against DeLauro for filing the objections. Porto cross-appealed the district court's order denying his motion for sanctions and costs against DeLauro for having filed what Porto characterized as frivolous appeals to the district court.

II.

The threshold issue regarding DeLauro's appeal from the district court's decision affirming the bankruptcy court's order rejecting his objections to Porto's discharge is whether we have jurisdiction over that decision. See In re Donovan, 532 F.3d 1134, 1136 (11th Cir.2008). That jurisdictional issue turns on the timeliness of DeLauro's October 15, 2009 notice of appeal from the district court's decision. Under Federal Rule of Appellate Procedure 4(a)(1), DeLauro had 30 days to file a notice of appeal from the final order resolving the matter. See Fed. R.App. P. 4(a)(1); see also 28 U.S.C. §§ 158(d)(1) and 1291 (giving the courts of appeals jurisdiction over final orders and decisions of district courts in bankruptcy cases).

The timeliness of that October 15, 2009 notice of appeal in turn depends on whether the district court's May 26, 2009 order affirming the bankruptcy court's judgment that there was no merit in DeLauro's objections was a final, which is to say, appealable order. If it was, DeLauro's notice of appeal came three-and-a-half months too late. If, on the other hand, the district court's May 26, 2009 order on the merits of the objections did not become final until September 15, 2009 when that court entered its order resolving the sanctions issue, then DeLauro's October 15 notice of appeal came in time to bring up both of the district court's orders.

A final order is “ ‘one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” Jove Eng'g, Inc. v. IRS, 92 F.3d 1539, 1547 (11th Cir.1996) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). The question is whether an undecided attorney's fees issue means that the litigation on the merits is not ended for final judgment purposes. The answer is that the Supreme Court has established a bright line rule that the issue of attorney's fees is always collateral to the merits, and a decision on the merits, even if the attorney's fees issue remains unresolved, is immediately appealable under 28 U.S.C. § 1291. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202–03, 108 S.Ct. 1717, 1722, 100 L.Ed.2d 178 (1988). Thus, “[w]here an order disposes of a party's substantive claims, but does not dispose of claims relating to attorney's fees, the time for appeal of the substantive claims starts to run from the date of the first order unless the district court grants a delay.” Fluor Constructors, Inc. v. Reich, 111 F.3d 94, 96 (11th Cir.1997). Although we have applied Budinich to appeals under 28 U.S.C. § 1291 and appeals from administrative agency decisions, this is the first time we have had occasion to apply that decision to cases appealed to this Court from a district court exercising appellate review of a bankruptcy court's order under 28 U.S.C. § 158(a). See, e.g., Fluor Constructors, 111 F.3d at 96 (appeal from an administrative agency decision); Golub v. J.W. Gant & Assoc., 863 F.2d 1516, 1518 (11th Cir.1989) (appeal from a district court judgment). There is no reason not to apply Budinich to appeals from the district court in bankruptcy cases.

In Budinich the plaintiff had filed in the district court motions for a new trial and for attorney's fees. Budinich, 486 U.S. at 197, 108 S.Ct. at 1719. The district court issued an order denying the plaintiff's motion for a new trial and finding that he was entitled to attorney's fees, but the court requested further briefing on the issue of the amount of fees it should award. The district court's final order setting the amount of attorney's fees did not come until several months later. After that order was issued, the plaintiff appealed all of the district court's orders, including the earlier one denying his motion for a new trial. The court of appeals concluded that the appeal from the district court's order denying the plaintiff's motion for a new trial was untimely because that order was a final, appealable one despite the fact that the issue of attorney's fees remained unsettled. Id., 108 S.Ct. at 1719.

The Supreme Court affirmed. Id. at 202–03, 108 S.Ct. at 1722. In doing so, the Court explained that “[c]ourts and litigants are best served by the bright-line rule, which accords with traditional understanding, that a decision on the merits is a ‘final decision’ for purposes of § 1291 whether or not there remains for adjudication a request for attorney's fees attributable to the case.” Id. at 202–03, 108 S.Ct. at 1722. The Supreme Court insisted on a bright-line rule because “[t]he time of appealability, having jurisdictional consequences, should above all be clear.” Id. at 202, 108 S.Ct. at 1722. In the interests of clarity, the Court determined that “the § 1291 effect of an unresolved issue of attorney's fees for the litigation at hand should not turn upon the characterization of those fees [as part of the relief on the merits] by the statute or decisional law that authorizes them.” Id. at 201, 108 S.Ct. at 1721. It stated that “what is of importance here is not preservation of conceptual consistency in the status of a particular fee authorization as ‘merits' or ‘nonmerits,’ but rather preservation of operational consistency and predictability in the overall application of § 1291.” Id. at 202, 108 S.Ct. at 1722. “This requires, we think, a uniform rule that an unresolved issue of attorney's fees for the litigation in question does not prevent judgment on the merits from being final.” Id., 108 S.Ct. at 1722.

The circuits that have considered this issue have held that Budinich applies to appeals brought under 28 U.S.C. § 158(d) where, as here, the district court entered a final order on the merits of the underlying dispute but left unresolved the issue of attorney's fees. See In re Pratt, 524 F.3d 580, 585 (5th Cir.2008) (“[I]rrespective of [the district court's] remand of the issue of attorney's fees, the district court's order affirming the bankruptcy court's denial of sanctions is a final judgment on the merits appealable under § 158(d).”); In re Johnson, 501 F.3d 1163 (10th Cir.2007) (same); In re Rivera Torres, 432 F.3d 20, 22–23 (1st Cir.2005) ( “The...