In re Sorrells

• Decision Date: 18 February 1998
• Docket Number: Bankruptcy No. 97-15762-TS.,BAP No. WO-97-052
• Parties: In re Darrell Douglas SORRELLS and Linda Lee Sorrells, Debtors. UNITED STATES TRUSTEE, Appellant, v. Darrell Douglas SORRELLS and Linda Lee Sorrells, Appellees.
• Court: U.S. Bankruptcy Appellate Panel, Tenth Circuit

218 B.R. 580 (1998)

In re Darrell Douglas SORRELLS and Linda Lee Sorrells, Debtors UNITED STATES TRUSTEE, Appellant, v. Darrell Douglas SORRELLS and Linda Lee Sorrells, Appellees.

BAP No. WO-97-052, Bankruptcy No. 97-15762-TS.

United States Bankruptcy Appellate Panel of the Tenth Circuit.

February 18, 1998.

John E. Foulston, United States Trustee, Herbert M. Graves, Assistant United States Trustee, on the briefs, Oklahoma City, OK, for Appellant.

S. Brent Sorenson and Deborah L. Brooks, on the briefs, Oklahoma City, OK, for Appellees.

Before McFEELEY, Chief Judge, CLARK, and PEARSON, Bankruptcy Judges.

OPINION

CLARK, Chief Judge.

The United States Trustee ("UST") appeals an order of the United States Bankruptcy Court for the Western District of Oklahoma denying its motion to dismiss the Debtors' chapter 7 case due to improper venue or, alternatively, to transfer the case to the Eastern District of Oklahoma. For the reasons set forth below, we GRANT leave to permit this interlocutory appeal, REVERSE the order of the bankruptcy court, and REMAND this case to the bankruptcy court to determine whether the Debtors' bankruptcy case should be dismissed or transferred to the Eastern District of Oklahoma.¹

I. Background

The Debtors filed a petition seeking relief under chapter 7 in the United States Bankruptcy Court for the Western District of Oklahoma despite the fact they were residents of the Eastern District of Oklahoma. It is undisputed that the Debtors never resided in the Western District or owned property in the Western District. No secured creditors are located in the Western District. Three unsecured creditors are located in the Western District, but all of these creditors are governmental entities that can be served in any of the federal judicial districts within Oklahoma. Only one creditor is located in the Eastern District. It appears that the Debtors have few nonexempt assets available for liquidation, and this may be a no-asset case.

The UST filed a motion objecting to venue of the Debtors' case in the Western District, and requested that the case be dismissed or transferred to the Eastern District of Oklahoma. The Debtors admit that they are residents of the Eastern District, but contend they moved to Oklahoma approximately one year prior to filing chapter 7 and have not had time to develop strong ties to any Oklahoma venue. They argue that since only one creditor is located in the Eastern District, and it has agreed to venue in the Western District, nobody is prejudiced by allowing venue to lie in the Western District. There is no evidence in the record to support the Debtors' contention that the creditor located in the Eastern District consented to venue in the Western District.

The bankruptcy court denied the UST's motion, stating, in relevant part, that: "The Court commends the United States Trustee for bringing matters of this nature to its attention and appreciates the service the United States Trustee provides. However, in this case, it would appear the convenience of the parties would be best served by this Court retaining jurisdiction in this case." Bankruptcy Court Order, p. 1. This appeal followed.

II. Appellate Jurisdiction

The parties have not raised any issues regarding our jurisdiction over this appeal. Nonetheless, we must independently assess whether we have jurisdiction to hear this appeal. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89 L.Ed.2d 501 (1986) (federal appellate court must satisfy itself that it has jurisdiction over appeal even if the parties concede it); accord City of Chanute v. Williams Natural Gas Co., 31 F.3d 1041, 1045 n. 8 (10th Cir.1994), cert. denied, 513 U.S. 1191, 115 S.Ct. 1254, 131 L.Ed.2d 135 (1995).

This Court has "jurisdiction to hear appeals from . . . final judgments, orders, and decrees." 28 U.S.C. § 158(a)(1); see id. at § 158(c). "A decision is ordinarily considered final and appealable under § 1291 and § 158(a) only if it `ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712, 116 S.Ct. 1712, 1718, 135 L.Ed.2d 1 (1996) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). Orders may also be considered "final" if they meet the requirements of the collateral order doctrine. See, e.g., Quackenbush, 517 U.S. at 710-12, 116 S.Ct. at 1718; Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994); Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). An order is "final" under the collateral order doctrine if it (1) conclusively determines a disputed question that is completely separate from the merits of the action, (2) is effectively unreviewable on appeal from a final judgment, and (3) is too important to be denied review. Quackenbush, 517 U.S. at 712-16, 116 S.Ct. at 1719-20 (relying on Richardson-Merrell Inc. v. Koller, 472 U.S. 424, 431, 105 S.Ct. 2757, 2761, 86 L.Ed.2d 340 (1985); Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457-58, 57 L.Ed.2d 351 (1978); Cohen, 337 U.S. at 546, 69 S.Ct. at 1225-26). The Tenth Circuit has made it clear that venue orders, such as the bankruptcy court's order in this case, are not "final" under 28 U.S.C. § 158(a) and should not be treated as "final" under the collateral order doctrine. (Dalton v. United States (In re Dalton), 733 F.2d 710, 714-15 (10th Cir.1984)); see FDIC v. McGlamery, 74 F.3d 218, 221-22 (10th Cir. 1996) (venue order in nonbankruptcy case was not "final" for purposes of appeal). Accordingly, this Court does not have jurisdiction to hear this appeal under 28 U.S.C. § 158(a)(1).

The Court may, however, exercise jurisdiction over an interlocutory order of a bankruptcy court if leave to hear the appeal is granted. 28 U.S.C. § 158(a)(3); see id. at § 158(c); Fed.R.Bankr.P. 8001(b) and 8003. A timely-filed notice of appeal may be considered a motion for leave to appeal if, as in this case, the appellant has not filed such a motion. Fed.R.Bankr.P. 8003(c). Treating the UST's notice of appeal as a motion for leave to appeal, we conclude that the motion should be granted.

We have stated:

Leave to hear appeals from interlocutory orders should be granted with discrimination and reserved for cases of exceptional circumstances. Appealable interlocutory orders must involve a controlling question of law as to which there is substantial ground for difference of opinion, and the immediate resolution of the order may materially advance the ultimate termination of the litigation.

Personette v. Kennedy (In re Midgard Corp.), 204 B.R. 764, 769 (10th Cir. BAP 1997) (citing 28 U.S.C. § 1292(b); Fed. R.Bankr.P. 8018(b)); (American Freight Sys., Inc. v. Transport Ins. Co. (In re American Freight Sys., Inc.), 194 B.R. 659, 661 (D.Kan.1996); Intercontinental Enters., Inc. v. Keller (In re Blinder Robinson & Co.), 132 B.R. 759, 764 (D.Colo.1991))hereinafter the "Traditional Strict Test for Interlocutory Review". Some courts, relying on a leading bankruptcy treatise, have found that this Traditional Strict Test for Interlocutory Review should be lessened in determining the appealability of interlocutory venue orders in bankruptcy cases because such orders are not final until the bankruptcy case is closed, and at that point there is "a very small chance of success on an appeal." 1 Collier on Bankruptcy ¶ 4.052 (Lawrence P. King ed., 15th ed. rev.1997) hereinafter Collier, quoted in, ICMR, Inc. v. Tri-City Foods, Inc., 100 B.R. 51, 53 (D.Kan.1989); In re Steele Cattle, Inc., 101 B.R. 263, 265 (D.Kan. 1988); Landmark Capital Co. v. North Cent. Dev. Co. (In re Landmark Capital Co.), 20 B.R. 220, 222 (S.D.N.Y.1982); cited in, Hadar Leasing Int'l Co. v. D.H. Overmyer Telecasting Co. (In re Hadar Leasing Int'l Co.), 14 B.R. 819, 820 (S.D.N.Y.1981); accord Brumlik v. United States (In re Brumlik), 132 B.R. 495, 497 (M.D.Ga.1991). This argument is premised on the notion that bankruptcy cases are different than a typical nonbankruptcy civil proceeding "in which the order regarding venue can be appealed at the conclusion of the proceeding." 1 Collier at ¶ 4.052. We do not see the distinction. In bankruptcy and nonbankruptcy civil cases involving disputes over venue, a contested venue order will become final at the close of the bankruptcy case or the conclusion of the civil litigation. After a particular bankruptcy court has administered a case or a particular district court has resolved a civil action, reversal of a venue order will be very difficult. This fact, however, should not govern whether leave to appeal an interlocutory venue order should be granted. See Dalton, 733 F.2d at 715 (stating that a venue order was not appealable under the collateral order doctrine even though "`postponing review forces the would-be appellant to litigate in the forum he seeks to avoid, and creates the risk that the entire proceeding will be rendered nugatory'") (quoting U.S. Tour Operators Ass'n v. Trans World Airlines, 556 F.2d 126, 129 (2d Cir.1977)). Indeed, a "success on appeal" standard does not apply to other interlocutory orders involving equally important issues in a bankruptcy case. In short, we find no reason to carve out an exception to the Traditional Strict Test for Interlocutory Review for venue orders entered by bankruptcy courts. Accord EDP Medical Computer Sys., Inc. v. United States (In re EDP Medical Computer Sys., Inc.), 178 B.R. 57 (M.D.Pa.1995); K-Mart Corp. v. Swann Ltd. Partnership (In re Swann Ltd. Partnership), 128 B.R. 138 (D.Md.1991); In re Delaware and Hudson Ry. Co., 96 B.R. 469 (D.Del.), aff'd, 884 F.2d 1383 and 884 F.2d 1384 (3d Cir.1989); In re Manville Forest Prods. Corp., 47 B.R. 955 (S.D.N.Y.1985).

More important, the application of the Traditional Strict Test for Interlocutory Review is compelled under Dalton, 733 F.2d...