In re Zahn

• Decision Date: 20 March 2007
• Docket Number: BAP No. 06-6072WM.
• Citation: 367 B.R. 654
• Parties: In re Tenny Shikaro ZAHN, formerly known as Tenny Shikaro Garner, Debtor. Tenny Shikaro Zahn, Debtor-Appellant, v. Richard Fink, Trustee-Appellee.
• Court: U.S. Bankruptcy Appellate Panel, Eighth Circuit

Page 654

367 B.R. 654

In re Tenny Shikaro ZAHN, formerly known as Tenny Shikaro Garner, Debtor Tenny Shikaro Zahn, Debtor-Appellant, v. Richard Fink, Trustee-Appellee.

BAP No. 06-6072WM.

United States Bankruptcy Appellate Panel, of the Eighth Circuit.

Submitted: January 25, 2007.

Filed: March 20, 2007.

Jason G. Roach, Tracy L. Robinson, on brief, Kansas City, MO, for Debtor-Appellant.

Karie Fahrenholz, Richard V. Fink, on brief, Kansas City, MO, for appellee.

Before KRESSEL, Chief Judge, MAHONEY and McDONALD, Bankruptcy Judges.

KRESSEL, Chief, Judge.

The debtor appeals from a bankruptcy court¹ order which confirmed her second amended chapter 13 plan. We dismiss the appeal for lack of jurisdiction.

BACKGROUND

The debtor filed her chapter 13 petition on April 11, 2006. On April 25, 2006, she filed her statement of current monthly income along with her schedules. The statement of current monthly income did not include the distribution that her non-filing spouse had taken from his IRA account. Without the inclusion of the money from the IRA distribution in the debtor's income calculation, her income was below the applicable median income and the applicable plan length was 36 months. See 11 U.S.C. § 1325(b)(4)(A). The debtor's plan required her to pay the trustee $2,265 per month for 36 months. The plan provided that the non-priority unsecured creditors would receive a dividend of 0% over the duration of the plan.

On May 23, 2006, the trustee objected to confirmation of the debtor's plan. The basis for the trustee's objection was the debtor's omission from her statement of current monthly income of the distribution that her husband took from his IRA account during the six months preceding the bankruptcy. The trustee contended that the distribution should have been included in the debtor's income report. If the distribution were included in the income report, then the debtor's income would be above the applicable median income for a family of three in Missouri. The applicable plan commitment period for a debtor with above median income is 60 months versus 36 months for a debtor with below median income. See 11 U.S.C. § 1325(b)(4)(A).

On July 13, 2006, the bankruptcy court denied confirmation of the debtor's plan. The court ruled that the debtor needed to include her husband's IRA distribution in her current monthly income, which would require her to file a plan with a commitment period of 60 months. The court granted the debtor 20 days in which to file an amended plan. The debtor filed an appeal, but we dismissed it as interlocutory.

On August 17, the debtor filed an amended statement of current monthly income, which included her husband's IRA distribution, and an amended plan. The sole change in the amended plan was that the plan length was 60 months instead of 36. Unsecured, non-priority creditors would still receive nothing. The debtor also filed an objection to her own plan. After the trustee objected to confirmation of the first amended plan, the debtor submitted a second amended plan which lowered the monthly payment from $2,265 to $2,190. The plan still had a commitment period of 60 months and the unsecured, non-priority creditors still received nothing. The debtor also filed an objection to the second amended plan on the grounds that the IRA distributions should not be treated as income for purposes of determining plan length.

On September 11, 2006, the court overruled the debtor's objection to her own plan and on October 12, 2006, the court confirmed the debtor's second amended plan.² The debtor appealed the order confirming her plan.

DISCUSSION

Orders. Denying Confirmation of Plans Are Not Final Orders.

We have jurisdiction over final judgments of the bankruptcy courts. See 28 U.S.C. § 158(a)(1). While an order denying confirmation of a plan would seem to be a final order because it is a final determination of the proceeding regarding confirmation of that plan, under. Eighth Circuit precedent, a bankruptcy court order which denies confirmation of a plan, but which does not dismiss the underlying case is not a final order. Lewis v. United States Farmers Home Administration, 992 F.2d 767, 772 (8th Cir.1993); Moix-McNutt v. Coop 212 B.R. 953, 954 (8th Cir. BAP 1997). However, a party may still appeal a non-final order if we grant leave to appeal. See 28 U.S.C. § 158(a)(3).

After dismissal of her first appeal, the debtor was faced with the choice of proposing a new plan consistent with the bankruptcy court's decision or having her case dismissed and appealing from the dismissal order. We recognize that this, is a Hobson's choice. However, we think that the choice is the necessary result the Eighth Circuit's decisions holding orders denying confirmation to be interlocutory and think that by proposing a new plan the debtor has effectively abandoned her old one.

Interlocutory Orders Do Not Later Become Final.

"The prohibition against immediate appeal of most pretrial and trial orders established by the final judgment rule is offset by the rule that once, appeal is taken from a truly final judgment that ends the litigation, earlier rulings generally can be reviewed." 15A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3905.1 (2d ed.1992); see Franklin v. District of Columbia, 163 F.3d 625, 630 (D.C.Cir.1998). An appeal from a final judgment permits the appeal of previously entered non-final orders that shaped the scope of that judgment. Davis v. Fulton County, Arkansas, 90 F.3d 1346, 1354 (8th Cir.1996).

The debtor suggests that the order denying confirmation of her first plan "became final" when the confirmation order was entered. Clearly the order which confirmed the debtor's second amended plan is a final order from which the debtor may appeal. As part of that appeal, we may review any of the orders which led up to the final order. However, the order which denied confirmation of the debtor's original plan did not become final, and thus appealable in its own right, as the debtor contends. The order remains an interlocutory order and may be reviewed only as part of an appeal of a final order, provided that the interlocutory order in some way led to error in the final order.³ But, as we will see in the next section, such review is predicated on an erroneous final order. The Debtor May Not Appeal From Judgment Entered in Her Favor.

In order to have standing to appeal the decision of the bankruptcy court, an appellant must be a person aggrieved. O'Brien v. Vermont (In re O'Brien), 184 F.3d 140, 142 (2nd Cir.1999). "[A] `person aggrieved' ... must be directly and adversely affected pecuniarily by the order of the [bankruptcy] referee which is challenged." Hartman Corp. of America v. United States, 304 F.2d 429, 430 (8th Cir. 1962). "It is an abecedarian rule that a party cannot prosecute an appeal from a judgment in its favor." Elkin v. Metropolitan Prop. & Cas. Ins. (In re Shkolnikov), 470 F.3d 22, 24 (1st Cir.2006). "[A] party may not appeal from a judgment or decree in his favor, for the purpose of obtaining a review of findings he deems erroneous which are not necessary to support the decree." Electrical Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 242, 59 S.Ct. 860, 83 L.Ed. 1263 (1939); see In re Public Service Co. of New Hampshire, 898 F.2d 1, 2 (1st Cir.1990).

The debtor is not an aggrieved party. In" fact she alleges no error in the order from which she has appealed. She concedes that her quarrel is not with the order she has appealed but with the earlier order denying confirmation of her original plan. Even her own objection to her plan did not contend that it was not confirmable. She simply preferred her original plan.

In addition, the debtor received all of the relief that she requested. The debtor proposed her second amended plan to the court in order to obtain its confirmation. When the court confirmed her plan, the debtor got all the relief for which she asked. Because a party may not appeal a judgment that grants all of the relief requested, the debtor may not appeal the order confirming her plan.

The debtor refers us to several cases which, she contends, allow us to review the denial of confirmation of her original plan as part of the appeal of confirmation of her second amended plan. See Lewis, 992 F.2d 767; Pleasant Woods Assocs. Ltd. P'ship v. Simmons First Nat'l Bank (In re Pleasant Woods Assocs. Ltd. P'ship), 2 F.3d 837 (8th Cir.1993); Moix-McNutt, 212 B.R. 953; Vincent v. Fairbanks Capital Corp. (In re Vincent), 301 B.R. 734 (8th Cir. BAP 2003); McConnell v. NWA Credit Union (In re McConnell), 303 B.R. 169 (8th Cir. BAP 2003). However, in all of these cases the courts did not decide the merits of the appeal. Instead, they dismissed the appeals for lack of jurisdiction because no final order had been entered. The courts did state, in dicta, that the debtors could appeal the orders denying confirmation after dismissal of their cases or confirmation of their plans. However, none of the cases involved a debtor who appealed an order confirming a plan that the debtor proposed. Although we sympathize with the debtor's reliance on these cases, like so much dicta, they do not hold up to actual analysis and we think are contrary to law. We decline to follow the dicta in these cases, particularly when to do so would lead us to exceed our jurisdiction.

In another case, the court heard the case on the merits, but only because it held that given the circumstances, the order under review was a final order. Broken Bow Ranch, Inc. v. Farmers Home Admin. (In re Broken Bow Ranch, Inc.), 33 F.3d 1005 (8th Cir.1994). It recites the dicta from the previous cases — that the court may review denial of confirmation of a debtor's plan upon either dismissal of the case or confirmation of a final plan — but does not rely on it because the appeal is not from confirmation of a plan or dismissal. Id. at 1008. In Broken Bow Ranch, the debtor...