In re Tidewater Group, Inc.
| Decision Date | 13 August 1982 |
| Docket Number | C82-796A.,Civ. A. No. C82-517A |
| Citation | 22 BR 500 |
| Parties | In re TIDEWATER GROUP, INC., Debtor. PROVIDERS BENEFIT LIFE INSURANCE COMPANY, Plaintiff and Third-Party Plaintiff, v. TIDEWATER GROUP, INC., Debtor-in-Possession, Defendant, and American Centennial Life Insurance Company, Third-Party Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
William F. Welch, John T. Ruff, Neely & Player, Atlanta, Ga., for plaintiff and third-party plaintiff.
Frank W. Scroggins, Hicks & Scroggins, Atlanta, Ga., for Tidewater Group.
John L. Taylor, Jr., and Alan L. Dye, McDaniel, Chorey & Taylor, Atlanta, Ga., for American Centennial Life.
Stanford H. Franklin, Rocklin, Franklin & Karlin, Baltimore, Md., for defendant.
The appellant in these consolidated cases seeks review of a bankruptcy court order, Bkrtcy., 13 B.R. 764, refusing to enforce a settlement agreement reached by parties to an adversary proceeding. Before reaching the merits, the court must determine whether an appeal of this matter should be heard at the present time.
Appellee Tidewater Group, Inc. ("Tidewater") filed an application with the Bankruptcy Court on October 1, 1979, seeking authority to sell its stock in American Centennial Life Insurance Company ("American Centennial") to Dardoff, Inc. The court set the matter down for hearing on October 30, 1979. On October 26, 1979, Appellant Providers Benefit Life Insurance Company ("Providers") announced that it wished to enter a competing offer for American Centennial. The offer, which was apparently higher than Dardoff's, was made October 29, 1979. The next day, the scheduled hearing was held. On November 1, 1979, the Bankruptcy Court entered an order approving the sale of American Centennial Stock to Providers, and thereafter Providers paid a $75,000 deposit into the registry of the Bankruptcy Court.
By November 14, Providers concluded that it had been the victim of material misrepresentations regarding American Centennial's financial condition, and that purported warranties in its purchase contract had been breached. Based on these claims, Providers unsuccessfully sought return of its deposit. On November 20, Providers instituted an adversary proceeding against Tidewater to recover its deposit and to secure a discharge from the November 1, 1979, Order Confirming Sale. Tidewater counterclaimed for damages, and Providers then added American Centennial as a third-party defendant. American Centennial followed with a counterclaim against Providers.
Over the next twelve months a tentative settlement was reached between Providers and Tidewater. Although Tidewater later had second thoughts and sought to repudiate the settlement, on February 10, 1981, the Bankruptcy Court ruled that the agreement was enforceable, and should be submitted to the Court for review. After extensive review, including multiple briefings and hearings, the Bankruptcy Court concluded that the settlement agreement was not in the best interest of the estate, and denied confirmation. Order of August 28, 1981, vacated and re-entered November 18, 1981. Providers then sought reconsideration, which the Bankruptcy Court denied on March 2, 1982.
On March 12, 1982, Providers appealed the Order Denying Confirmation both as a final and interlocutory order. Thus, Providers filed both a Notice of Appeal in the Bankruptcy Court and a Motion For Leave to Appeal in this court.1 The motion for leave to appeal was docketed March 12 and assigned to this Judge. The Notice of Appeal was transmitted to this court, docketed on April 19, and assigned to another judge. The cases were consolidated before this Judge in May, 1982. Because certain portions of the record were filed in the bankruptcy, but not the adversary proceeding, the complete record was not transmitted to this court until July 30, 1982.2
The appellate procedure established by the Bankruptcy Act of 1978, Pub.L. 95-598, 92 Stat. 2549 ("the Act"), allows parties two levels of appeals before Supreme Court review, and provides several avenues to each appeal level. Bankruptcy court orders may be appealed to a bankruptcy appellate panel, if one exists, 28 U.S.C. § 160 (1976 ed. Supp. III), to a district court, in the absence of a panel, 28 U.S.C. § 1334, or directly to the court of appeals, if the order is final and the parties agree to bypass lower level review, 28 U.S.C. § 1293(b). Generally, if an appeal is first taken to a bankruptcy appellate panel or a district court, appeal may then be sought at the court of appeals, 28 U.S.C. § 1293.
The Act does not take full effect until April, 1984. However, during the transition period before that date, the new appellate procedures are already operative. Bankruptcy Act of 1978 § 405, 92 Stat. 9685.
The Act contains no provisions regarding the procedure for taking appeals from an order of the bankruptcy court. Until new rules are drafted, bankruptcy procedure is governed by the Bankruptcy Rules in effect October 1, 1979, to the extent they do not conflict with the Act, and, pursuant to an order of the Bankruptcy Court, by the Suggested Interim Bankruptcy Rules. Order, October 1, 1979 (Bkrtcy.N.D.Ga.). See 1 Collier on Bankruptcy ¶ 3.03(b)i (15th ed. 1979) hereafter this edition is referred to as "Collier".
In this Circuit, absent a direct appeal to the Court of Appeals, appeals proceed to district courts pursuant to 28 U.S.C. § 1334.3 The appeals procedure under § 1334 marks a substantial departure from former practice. Under the Bankruptcy Act of 1898 no requirement of finality applied to appeals from a bankruptcy referee's or judge's orders to a district court. Thus, in theory, all orders were immediately appealable, although in practice, appeals of interlocutory orders related to administrative or preliminary matters was discouraged. Nonetheless, a district court's decision to accept an order for review, even one that was preliminary or interlocutory, was not reversible error. 1 Collier, supra, ¶ 3.03f; See In re Radtke, 411 F.Supp. 105 (E.D.Wis.1976).
The appealability of district court orders to the court of appeals turned on whether the order arose from a "proceeding in bankruptcy" or a "controversy arising in a proceeding in bankruptcy." The distinction between proceedings and controversies was extremely fine; in some instances, so fine as to be unfathomable. 1 Collier, supra at X-XXX-X-XXX. Despite this confusion, the rule governing appealability was that orders in proceedings in bankruptcy were appealable whether interlocutory or final; orders in "controversies arising in proceedings in bankruptcy" were appealable only to the extent that they could be appealed in ordinary civil actions, as final judgments or as interlocutory orders appealable under 28 U.S.C. § 1292. Collier, supra at 3-290.
Under the new Act, interlocutory appeals to the district court may no longer be taken of right, and appeals from the district court to the court of appeals no longer depend on the distinction between "proceedings" and "controversies." Section 1334(a) provides that the district court has jurisdiction over all final judgments, orders and decrees of the bankruptcy courts. Section 1334(b) provides that the district court has jurisdiction over appeals from interlocutory orders if leave to appeal is obtained from the district court to which an appeal is taken. An order, whether from the district court, or on direct appeal from the bankruptcy court, is appealable to the court of appeals only if it is final. 28 U.S.C. § 1293(b).4
The new Act has thus brought bankruptcy appeals procedure closer to the traditional finality doctrines of 28 U.S.C. § 1291. Still, notable exceptions to, and questions about, the finality doctrine remain in bankruptcy proceedings. One such question is whether or how a district court or appellate panel decision denying leave to appeal an interlocutory order is itself appealable under §§ 1292 or 1293. See Collier, supra at 3-310 & n. 258b.
A notice of appeal may be treated in the alternative as a motion for leave to appeal. Rule 8004(d) Suggested Interim Bankruptcy Rules. See note 1, supra. Moreover, the appellant in this case explicitly sought review under both §§ 1334(a) and 1334(b). Accordingly, this court's task is first to determine whether the order appealed from is final and appealable as of right. If the order is not final, the court must determine whether leave should be granted for an interlocutory appeal. Obviously, the court might determine if the order is appealable even if interlocutory, without ever determining whether or not the order is final. But a characterization of the order as final or interlocutory, in the first instance by the district courts, and ultimately by the Eleventh Circuit, is crucial to future litigants since, unless a particular type of order is cast as a final order, direct appeal to the court of appeals is not possible under § 1293. See Collier, supra, at 3-308.
At the outset, the court notes that no clear precedent exists as to whether a bankruptcy court's order refusing to approve a settlement pursuant to its powers under Bankruptcy Rule 919 is appealable as a final order under § 1334(a). The parties have found only three bankruptcy appeals which involved a bankruptcy court's refusal to confirm a settlement. In two of these cases the court of appeals allowed appeal without analysis of the appealability of the order at issue. In re Continental Investment Corporation, 637 F.2d 8 (1st Cir. 1980); In re Woodmar Realty Co, 284 F.2d 815 (7th Cir. 1960). In the third case, In re Merle's Inc., 481 F.2d 1016 (9th Cir. 1973), the court found the order in question was interlocutory, and therefore unappealable because it arose from a controversy in a proceeding in bankruptcy.
The basic definition of a final order is an...
To continue reading
Request your trial