In re Turner

• Citation: 574 F.3d 349
• Decision Date: 20 July 2009
• Docket Number: No. 08-2163.,08-2163.
• Parties: In re Joel Anthony TURNER, Debtor.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

574 F.3d 349

In re Joel Anthony TURNER, Debtor.

No. 08-2163.

United States Court of Appeals, Seventh Circuit.

Argued May 12, 2009.

Decided July 20, 2009.

David J. Jurkiewicz, Attorney (argued), Bose McKinney & Evans, LLP, Indianapolis, IN, for Appellant.

James J. Haller, Attorney (argued), Mueller & Haller, Belleville, IL, for Appellee.

William A. McNeal, Becket & Lee, LLP, Malvern, PA, for Amicus Curiae, Ecast Settlement Corporation.

David I. Gold, P. Matthew Sutko (argued), Department of Justice, Executive Office for U.S. Trustees, Washington, DC, for Amicus Curiae, United States of America.

Before POSNER and SYKES, Circuit Judges, and VAN BOKKELEN, District Judge.^*

POSNER, Circuit Judge.

Joel Turner filed a petition for bankruptcy under Chapter 13 of the Bankruptcy Code. With the petition, he submitted— as he was required to do—a plan that would distribute his entire "projected disposable income" to his unsecured creditors in installments. When he filed his plan he was making monthly mortgage payments of $1,521. The mortgage expense of a Chapter 13 such as Turner, whose family income exceeds the median income of families in his state is deducted from his income to determine his "disposable income." 11 U.S.C. § 1325(b)(1); id., § 707(b)(2)(A)(ii)(I); Form B22C ("Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income", www.uscourts. gov/rules/BK_Forms_08_Official/B_022C_ 0108f.pdf (visited June 3, 2009)); see Schultz v. United States, 529 F.3d 343, 352 (6th Cir.2008); In re Lanning, 380 B.R. 17, 20-21 (10th Cir. BAP 2007); In re Kagenveama, 541 F.3d 868, 880 n. 3 (9th Cir.2008) (separate opinion). (Another consequence of the fact that Turner's family income exceeds the median family income in his state is that he has to pay installments for "not less than" five years. 11 U.S.C. § 1325(b)(4)(A)(ii). His plan proposes a five-year payment period.)

Although Turner stated in the plan that he intended to abandon the house to the mortgagee, which would have the same effect as foreclosure in canceling the mortgage, he subtracted the $1,521 monthly mortgage payments from his projected disposable income for the entire period over which he would be paying his unsecured creditors. Yet the mortgage and the debt it secures (for he does not contend that the mortgagee will seek a deficiency judgment against him) will be canceled before Turner is required to make any payments to his unsecured creditors under an approved Chapter 13 plan.

The trustee in bankruptcy, representing the unsecured creditors, objected to the deduction of the monthly mortgage payment (multiplied by 60, the number of months the plan was to remain in effect) from Turner's disposable income and thus from the amount available to the unsecured creditors. The bankruptcy judge rejected the objection, In re Turner, 384 B.R. 537 (Bankr.S.D.Ind.2008), but because of the importance of the issue certified his order for a direct appeal to this court. He was right to do that. The issue is indeed important. In the wake of the bursting of the housing bubble, which precipitated the current economic downturn, many mortgagors either cannot meet their mortgage obligations, or, because their house is now worth less than the unpaid balance of their mortgage, consider the house a bad investment. In either event they may want to abandon the house to the mortgagee, as in this case, hoping that, spared the expense of a foreclosure proceeding, the mortgagee will not seek (in those states where he is permitted to do so) a deficiency judgment for the difference between the unpaid balance of the mortgage and the market value of the house. But Turner contends that the trustee's appeal was not perfected and must therefore be dismissed for want of appellate jurisdiction, and we begin our discussion of the appeal with that issue.

Section 1233(b) of the awkwardly named Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. No. 109-8, 119 Stat. 23, 202-03, specified temporary procedures, applicable to this case but since superseded, for taking direct appeals from the bankruptcy court to the court of appeals. The appellant was required to file a notice of appeal in the bankruptcy court within 30 days after that court's decision; either that court or all the parties to the potential appeal had to certify that the ruling sought to be appealed satisfied criteria set forth in 28 U.S.C. § 158(d)(2)(A); see also id., § 158(a); the appellant had to petition the court of appeals, within 10 days of the docketing of the certification, for leave to appeal; and "subject to any other provision of this subsection, [the] appeal ... shall be taken in the manner prescribed in subdivisions (a)(1), (b), (c) and (d) of rule 5 of the Federal Rules of Appellate Procedure."

The appellant (the trustee) filed his notice of appeal within the specified time (30 days), the bankruptcy court entered its certification order, and on the same day the clerk of that court transmitted to our court both the certification order and the trustee's request for certification, which he had filed with the bankruptcy court and which that court had granted. Our court docketed the appeal, and after the bankruptcy court transmitted the record of the case to us and the trustee filed a docketing statement we granted leave to appeal. But the trustee had not filed a petition for leave to file an appeal, and we must decide whether his oversight was fatal.

The material that the bankruptcy court transmitted to this court contained everything that the petition for review would have contained, and was filed within the 10-day deadline for filing such a petition. It contained the information concerning the identity of the parties and the order being appealed that the petition would have contained, plus the reasons why this court should grant leave to appeal—for they were the same reasons that the trustee, in the request for certification that he had filed with the bankruptcy court, had presented to that court when it asked that court to certify the case for direct appeal to this court. (For remember that the request was included in the papers transmitted to this court by the bankruptcy court.) Turner, the appellee, did not oppose the trustee's request for certification; nor does he present any opposition to it in this court.

So the filing in this court was both complete and timely, and the only irregularity besides the lack of the proper label ("petition for review") was that the "petition" was transmitted to our court by the clerk of the bankruptcy court rather than by the appellant. Notices of appeal, petitions for review, and other pleadings are generally submitted by an agent of the litigant rather than by the litigant himself, unless he is unrepresented. Normally the agent is the litigant's lawyer. In this case it was the clerk of the bankruptcy court. No purpose behind the statutory requirements for perfecting a direct appeal to the court of appeals in a bankruptcy case was disserved. Rule 5(b) of the appellate rules specifies the information that a petition for leave to appeal must contain; the transmittal by the bankruptcy court's clerk to our court contained it. Had the trustee filed a petition for review, it would have been a copy of the certification and of the request for certification; since Turner did not object to the request for certification, there was nothing for the trustee to respond to in a petition for review.

Turner was not fooled by the label. He proceeded exactly as he would have done had the label been correct. He did not think to challenge appellate jurisdiction until his appeal brief, which was filed long after a motions panel of this court had granted leave to appeal. The point is not that Turner waived his right to challenge our jurisdiction but that the trustee's failure to file a notice of appeal confused no one.

The circumstances that we have described bring the case within the principle that "if a litigant files papers in a fashion that is technically at variance with the letter of a procedural rule, a court may nonetheless find that the litigant has complied with the rule if the litigant's action is the functional equivalent of what the rule requires." Torres v. Oakland Scavenger Co., 487 U.S. 312, 316-17, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988). (We do not take "a litigant files" to confine the principle to cases in which the appellant is proceeding pro se and thus files his pleadings himself rather than through an agent; Torres was represented, and the jurisdictional default resulted from a mistake by his lawyer's secretary.) It is true that the Court refused to excuse the failure of the notice of appeal to list Torres as an appellant. But it did so because it interpreted Rule 3(c) of the federal appellate rules, in light of an advisory committee note and Rules 4 and 26(b), to make the requirement of naming the appellant jurisdictional. And it pointed out that noncompliance with the requirement "would leave the appellee and the court unable to determine with certitude whether a losing party not named in the notice of appeal should be bound by an adverse judgment or held liable for costs or sanctions." 487 U.S. at 318, 108 S.Ct. 2405. Those rules, and that consideration, are not present in this case.

In Smith v. Barry, 502 U.S. 244, 248, 112 S.Ct. 678, 116 L.Ed.2d 678 (1992), the Supreme Court treated an appeal brief as a notice of appeal, and in Casey v. Long Island R.R. Co., 406 F.3d 142, 146 (2d Cir.2005), the Second Circuit treated an appeal brief as the equivalent of a petition for review. We treated a petition for interlocutory appeal as a notice of appeal in Remer v. Burlington Area School District, 205 F.3d 990, 994-95 (7th Cir.2000), because it contained all the information required in such a notice, and more. In Listenbee v. City of Milwaukee, 976 F.2d 348, 350-51 (7th Cir.1992), we treated as the notice of...