In re Texas Extrusion Corp.
| Decision Date | 30 December 1986 |
| Docket Number | 83-00008 and 83-01542.,Bankruptcy No. 82-00387,82-00386,Civ. A. No. 3-84-1057-F to 3-84-1060-F and 3-86-1493-F |
| Citation | 68 BR 712 |
| Parties | In re TEXAS EXTRUSION CORPORATION, Appellant. In re PICKENS INDUSTRIES, INCORPORATED, Appellant. In re Richard W. PICKENS, d/b/a Gold Sun Aluminum, Inc., Appellant. In re Louise PICKENS, Appellant. TEXAS EXTRUSION CORP., Pickens Industries, Inc., Richard W. Pickens, Individually and d/b/a Gold Sun Aluminum Inc., and Louise Pickens, Appellants, v. PALMER, PALMER & COFFEE, Appellee. |
| Court | U.S. District Court — Northern District of Texas |
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Emil Lippe, Lippe and Associates, Dallas, Tex., for appellants.
Sam P. Burford, James B. Harris, Thompson & Knight, Dallas, Tex., for Lockheed Corp., appellees in Civ. A. Nos. 3-84-1057-F to 3-84-1060-F.
Philip I. Palmer, Jr., Palmer, Palmer, & Coffee, Dallas, Tex., for Palmer, Palmer & Coffee, appellee in Civ. A. No. 3-86-1493-F.
This opinion covers five disputes arising from identical facts. Four are bankruptcy appeals; one is an appeal from a set of findings of fact and conclusions of law concerning attorney's fees awarded to appellants' first lawyers.
Richard Pickens, appellant, developed a successful method of extruding aluminum. Mr. Pickens and his wife Louise owned 80% of the stock in Pickens Industries Incorporated, ("PII"), which owned all the stock in Texas Extrusion Corporation ("TEC"). Mr. Pickens' extrusion method was so successful that Lockheed Corporation contracted with his company, TEC, to supply the aluminum that Lockheed would need to build airplanes. Lockheed loaned Mr. Pickens about five million dollars to help him re-tool to meet Lockheed's demands. Mr. and Mrs. Pickens personally guaranteed these loans. Things went well for a while, but later the economy sagged and Lockheed simply did not need as much aluminum as they had contracted for. Even worse for the Pickens and TEC, though Lockheed did not buy as much aluminum as before, the Pickens and TEC remained obligated to repay Lockheed.
These events resulted in basically two lawsuits. TEC sued Lockheed ("the corporate lawsuit") and the Pickens sued Lockheed ("the personal lawsuit"). Both suits alleged breach of contract and fraud.
In both lawsuits, there was an attempt to add plaintiffs. In the personal lawsuit, plaintiffs Richard and Louise Pickens filed a motion for leave to amend the complaint to add PII as a plaintiff. This motion was never granted. Hence, the only party plaintiffs in the personal lawsuit were Richard and Louise Pickens. There was a motion to intervene in the corporate lawsuit, which was also never granted. The would-be Intervenors were Richard and Louise Pickens and PII. Hence, the only party plaintiff in the corporate lawsuit was TEC.
Eventually, because they could not stand the pressure of doing little business and trying to repay Lockheed, both TEC and PII filed for Chapter 11 bankruptcy relief on March 24, 1982. On January 3, 1983, Richard filed for Chapter 11 and his wife did the same on November 21, 1983.
Initially, TEC was a debtor in possession. While debtor in possession, TEC incurred one million dollars in debts. On November 21, 1983, the trustee informed the bankruptcy court that TEC could not operate profitably and that the business should be closed.
The Plan that was eventually confirmed had four basic provisions:
Appellants raise many issues, and each will be handled separately, but they boil down to two things. First, are the fact findings of the bankruptcy court clearly erroneous and second, did the court abuse its discretion in procedural handling or approval on the merits of the Joint Plan of Reorganization. There are two findings of fact that are challenged. The first finding of fact concerns the Joint Plan of Reorganization ("Joint Plan")2 and the second finding of fact concerns attorney's fees that were paid to the first lawyers that appellants had when they were in bankruptcy.
For the reasons stated below, the Court finds that the findings of fact as to the Joint Plan were not clearly erroneous and that the findings of fact as to the attorneys fees were clearly erroneous. The Court further finds that the bankruptcy court did not abuse its discretion in procedural handling of approval on the merits of the Joint Plan.
The following section covers all issues concerning TEC, and most of the issues for the other three debtors. However, since each of the other three debtors has additional issues, those issues will be handled in separate sections. The last section covers the findings of fact concerning attorney's fees.
The first issue is whether this Court has jurisdiction over the bankruptcy court's approval of the disclosure statement.
Though a disclosure statement must be filed before a reorganization plan may be filed,3 appellants never filed a disclosure statement. Hence, to file a plan, the appellees filed a disclosure statement on December 23, 1983. A first amended disclosure statement was filed January 13, 1984. The bankruptcy court approved the first amended disclosure statement and the appellants appeal this. The Court lacks jurisdiction of an appeal that is not timely filed. In re Robinson, 640 F.2d 737, 738 (5th Cir.1981). The issue is whether appellants timely filed their notice of appeal concerning this order approving the disclosure statement so that this Court would have jurisdiction over the question of whether the disclosure statement was properly approved. Bankr.R. 8001(a)4 and Rule 8002(a)5 allow ten days to file the notice of appeal from final orders. The easy question is whether any appellant met the ten day deadline. None of them did. In each case, the order approving the amended disclosure statement was issued on January 25, 1984, and in each case notice of appeal was filed on April 9, 1984.
The difficult question is whether an order from a bankruptcy court approving a disclosure statement is a final order that can be appealed under Rules 8001(a) and 8002(a). The Court has decided that such an order is a final order.
The Court's first independent reason for so holding comes from statutory construction. The language in Rule 8002(c)6 implies that notice of appeal may be filed from orders approving disclosure statements, which suggests that such orders are final.
The second independent reason for considering such orders final comes from an analysis of case law. "Traditionally, every civil action in a federal court has been viewed as a `single judicial unit,' from which only one appeal would lie." In re Saco Local Development Corp., 711 F.2d 441, 443 (1st Cir.1983). In bankruptcy proceedings, however, courts take a different view of what constitutes a final order for the purposes of appeal. Aetna Life Ins. Co. v. Leimer (In re Leimer), 724 F.2d 744, 745 (8th Cir.1984) (). The bankruptcy case is not viewed as a single judicial unit. As noted in In re Saco Local Development Corp.:
Although Congress has defined appellate bankruptcy jurisdiction in terms ("final judgment, order, or decree") similar to those appearing in other jurisdictional statutes . . . the history of prior federal bankruptcy law and the 1978 act convinces us that Congress did not intend the word "final" here to have same meaning — at least not with respect to the application of the traditional "single judicial unit" rule. . . . Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case.
. . . In re Saco Local Development Corp., 711 F.2d at 444.
The Fifth Circuit has adopted the In re Saco reasoning. The Court in In re County Management, Inc., 788 F.2d 311 (5th Cir.1986) stated that the general rule is that a final order must "be `one which ends the litigation * * * and leaves nothing for the court to do but execute the judgment."' Id. at 313. The court stated that "The rules differ somewhat in the bankruptcy context, in that a case need not be appealed as a `single judicial unit' at the termination of the proceeding as a whole." Id. (citing In re Saco Local Development Corp., 711 F.2d 441, 444 (1st Cir.1983)). The Fifth Circuit also recognized that "courts properly view finality more flexibly under 28 U.S.C. 158(d) (and its predecessor § 1293(b)) than under § 1291." In re Delta Services Industries, 782 F.2d 1267, 1269 (5th Cir.1986) (citing In re Saco).7
The appellants did not timely file their notice of appeal from the bankruptcy court's final order. Therefore, this Court does not have jurisdiction to hear the appeals concerning the disclosure statement. Though appellants did not timely file their notice to appeal the approval of the disclosure statement, they did timely file their notice to appeal the other issues discussed in this opinion.
Appellants next ask whether the bankruptcy court's rulings concerning allowance or disallowance of the votes of the creditors concerning the Plan complied with provisions...
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