John E. Burns Drilling Co. v. Central Bank of Denver

• Decision Date: 20 July 1984
• Docket Number: Nos. 83-8023,83-1837,s. 83-8023
• Parties: , Bankr. L. Rep. P 69,941 JOHN E. BURNS DRILLING CO., Respondent, v. CENTRAL BANK OF DENVER, Petitioner. CENTRAL BANK OF DENVER, Petitioner, v. Honorable Clarence A. BRIMMER, Chief Judge, and Honorable Ewing T. Kerr, District Judge, Respondents, John E. Burns Drilling Co., a Wyoming Corporation, Real Party in Interest.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1489

739 F.2d 1489

12 Bankr.Ct.Dec. 266, Bankr. L. Rep. P 69,941

JOHN E. BURNS DRILLING CO., Respondent, v. CENTRAL BANK OF DENVER, Petitioner.

CENTRAL BANK OF DENVER, Petitioner, v. Honorable Clarence A. BRIMMER, Chief Judge, and Honorable

Ewing T. Kerr, District Judge, Respondents,

John E. Burns Drilling Co., a Wyoming Corporation, Real

Party in Interest.

Nos. 83-8023, 83-1837.

United States Court of Appeals, Tenth Circuit.

July 20, 1984.

Randall F. Komisarek, Denver, Colo., for petitioner Central Bank of denver.

Thomas J. Constantine and Cynthia Hodge Shearer, Denver, Colo., and John Burk of Burk & Hunter, Casper, Wyo., for respondent John E. Burns Drilling Co.

Before HOLLOWAY, BARRETT and DOYLE, Circuit Judges.

PER CURIAM.

John E. Burns Drilling Company ("Burns Drilling") filed a Chapter 11 ¹ bankruptcy petition in the United States Bankruptcy Court for the District of Wyoming on August 30, 1982. On December 23, 1982, Burns Drilling filed a complaint in the bankruptcy court seeking to avoid or subordinate Central Bank of Denver's ("Central Bank's") security interest under 11 U.S.C. Sec. 544(a), and alternatively to recover a preferential transfer under 11 U.S.C. Sec. 547(a).

On January 20, 1983, Central Bank filed a motion to dismiss, challenging the bankruptcy court's jurisdiction. The bankruptcy court denied the motion, holding that the issues raised by the bankruptcy petition were "clearly within the purview and operation" of the Referral Order adopted by the United States District Court for the District of Wyoming in response to Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) (plurality opinion). The bankruptcy court held that Central Bank's challenge to the Referral Order "should not be decided by this Court, but should be addressed to the District Court or to the Court of Appeals."

On February 28, 1983, Central Bank moved the district court for leave to appeal the bankruptcy court's denial of the motion to dismiss. After a hearing, the district court denied the application for permission to appeal. ²

Central Bank has filed two related proceedings in this court seeking review of the bankruptcy court's denial of the motion to dismiss. In Misc. No. 83-8023, Central Bank asserts that we have jurisdiction to hear its appeal under 28 U.S.C. Secs. 1291 or 1293, and under Gillespie v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964). In No. 83-1837, Central Bank seeks a writ of mandamus or a writ of prohibition to compel Chief Judge Brimmer and Judge Kerr to withdraw the Referral Order, to "accept and review" Central Bank's application for leave to appeal the bankruptcy court's interlocutory order denying the motion to dismiss, or to refrain from exercising jurisdiction over Central Bank in the bankruptcy proceeding.

We conclude that we lack jurisdiction to hear an interlocutory appeal in Misc. No. 83-8023. In No. 83-1837, we are persuaded that the petitioner has not shown that the bankruptcy court lacks jurisdiction and we deny the writ.

I Misc. No. 83-8023: Interlocutory Appeal

We lack jurisdiction to review the bankruptcy court's denial of Central Bank's motion to dismiss. Jurisdiction can not be based on Secs. 1291 ³ or 1293 ⁴ because the denial of a motion to dismiss is not a "final decision." ⁵ See Catlin v. United States, 324 U.S. 229, 236, 65 S.Ct. 631, 635, 89 L.Ed. 911 (1945) ("[D]enial of a motion to dismiss, even when the motion is made on jurisdictional grounds, is not immediately reviewable" under predecessor to Sec. 1291.); see also Texaco, Inc. v. Cottage Hill Operating Co., 709 F.2d 452, 453 (7th Cir.1983); United States v. Layton, 645 F.2d 681, 683 (9th Cir.), cert. denied, 452 U.S. 972, 101 S.Ct. 3128, 69 L.Ed.2d 984 (1981); In re Durensky, 519 F.2d 1024, 1028 (5th Cir.1975); 1 Collier on Bankruptcy Sec. 3.03[d][iii], at 3-299 to -300 (1984) ("The denial of a motion to dismiss, even when the motion is based on jurisdictional grounds, ... is interlocutory."). Section 1292(b) ⁶ does not provide a jurisdictional basis because the district court refused to certify the interlocutory appeal as required by that section.

Moreover, the bankruptcy court's denial of the motion to dismiss does not fit within the "collateral order" exception. Under this doctrine, first applied by the Supreme Court in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), a certain "small class" of decisions may be excepted from the final judgment requirement. To qualify as a collateral order subject to immediate appellate review, "the order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." ⁷ Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978); see also Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 8, 103 S.Ct. 927, 933, 74 L.Ed.2d 765 (1983); United States v. Hollywood Motor Car Co., 458 U.S. 263, 265, 102 S.Ct. 3081, 3083, 73 L.Ed.2d 754 (1982) (per curiam); Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375, 101 S.Ct. 669, 674, 66 L.Ed.2d 571 (1981); In re Dalton, 733 F.2d 710, 715 (10th Cir.1984); see generally 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3911 (1976 & Supp.1984). ⁸

We must conclude that the bankruptcy court's denial of Central Bank's motion to dismiss lacks the third component of the collateral order doctrine because the order may be effectively reviewed on appeal from a final judgment in the bankruptcy proceeding. Cf. Evilsizor v. Eagle-Picher Industries, Inc., 725 F.2d 97, 98-99 (10th Cir.1984) (district court's denial of defendants' motion to stay diversity action pending resolution of bankruptcy proceedings involving other defendants who were granted automatic stay of diversity action pursuant to 11 U.S.C. Sec. 362(a) failed third prong of collateral order test); Jesko v. United States, 713 F.2d 565, 567-68 (10th Cir.1983) (district court's order transferring case to court of claims lacked third component of collateral order doctrine); Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1325 (10th Cir.1978) (district court's order adding new party defendant failed third part of collateral order test because court "will be able to completely review the joinder order if appeal is taken from any final judgment").

We therefore hold that we lack jurisdiction to hear the appeal in Misc. No. 83-8023 and dismiss the petition.

II No. 83-1837: Petition for Extraordinary Writ

In No. 83-1837, Central Bank requests that we issue a writ of mandamus or prohibition directing Chief Judge Brimmer and Judge Kerr to withdraw the Referral Order, to accept Central Bank's application for leave to appeal the bankruptcy court's interlocutory order denying the motion to dismiss, or to refrain from exercising jurisdiction over Central Bank in the bankruptcy proceeding.

Under the All Writs Act, "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. Sec. 1651(a). The Supreme Court has recognized that the writ of mandamus "has traditionally been used in the federal courts only 'to confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it has a duty to do so.' " Will v. United States, 389 U.S. 90, 95, 88 S.Ct. 269, 273, 19 L.Ed.2d 305 (1967) (quoting Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 26, 63 S.Ct. 938, 941, 87 L.Ed. 1185 (1943)). The Court has emphasized that "the remedy of mandamus is a drastic one, to be invoked only in extraordinary situations." Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34, 101 S.Ct. 188, 190, 66 L.Ed.2d 193 (1980) (per curiam).

Mandamus may not be used as a substitute for appeal. See, e.g., Will, supra, 389 U.S. at 97, 88 S.Ct. at 274; In re Grand Jury Proceedings, 723 F.2d 1461, 1466-67 (10th Cir.1983); Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1324 (10th Cir.1978). A writ of mandamus will not be issued unless the petitioner demonstrates that no other adequate relief is available and that his right to the writ is "clear and indisputable." Allied Chemical Corp., supra, 449 U.S. at 35-36, 101 S.Ct. at 190-91; Will, supra, 389 U.S. at 96, 88 S.Ct. at 274; In re Dalton, 733 F.2d 710, 716 (10th Cir.1984); ⁹ United States v. West, 672 F.2d 796, 799 (10th Cir.), cert. denied, 457 U.S. 1133, 102 S.Ct. 2959, 73 L.Ed.2d 1350 (1982); see also United States v. Sorren, 605 F.2d 1211, 1215 (1st Cir.1979) ("Mandamus is not, however, a substitute for interlocutory appeal for parties attacking the court's jurisdiction: it is appropriate only when the lower court is clearly without jurisdiction and the party seeking the writ has no adequate remedy by appeal.").

We are convinced that Central Bank's jurisdictional challenge does not justify mandamus relief. Central Bank challenges the jurisdiction of the bankruptcy court under the Referral Order and of the district court in these bankruptcy proceedings under Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) (plurality opinion). In Matter of Colorado Energy Supply, Inc., 728 F.2d 1283 (10th Cir.1984), we rejected a similar jurisdictional challenge. We stated that the holding in Marathon is "quite limited" and requires only that "related proceedings" in bankruptcy must be adjudicated by Article III courts or by State courts. ¹⁰ We held that bankruptcy courts under Marathon may adjudicate claims arising directly out of Title 11. Id. at 1285-86.

The proceeding here arises directly out of Title 11. Burns Drilling filed a complaint to avoid or to subordinate Central...