Matter of Berge

• Decision Date: 16 December 1983
• Docket Number: Adv. No. 82-0246.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Western District of Wisconsin
• Parties: In the Matter of Philip Lester BERGE and Betty Jo Berge, Debtors. Philip Lester BERGE and Betty Jo Berge, Plaintiffs, v. Robert J. SWEET, Helen Sweet, and Robert J. Sweet Co., Inc., Defendants.

37 B.R. 705 (1983)

In the Matter of Philip Lester BERGE and Betty Jo Berge, Debtors.

Philip Lester BERGE and Betty Jo Berge, Plaintiffs, v. Robert J. SWEET, Helen Sweet, and Robert J. Sweet Co., Inc., Defendants.

Adv. No. 82-0246.

United States Bankruptcy Court, W.D. Wisconsin.

December 16, 1983.

William J. Rameker, Murphy, Stolper, Brewster & Desmond, S.C., Madison, Wis., for plaintiffs.

Michael E. Kepler, Madison, Wis., for creditors' committee.

Jon P. Axelrod, DeWitt, Sundby, Huggett, Schumacher & Morgan, S.C., Madison,

Wis., Jack U. Shlimovitz, Ludwig & Shlimovitz, Milwaukee, Wis., for defendants.

DECISION ON MOTION TO EXCLUDE ITEMS FROM APPEAL RECORD

ROBERT D. MARTIN, Bankruptcy Judge.

Defendants in this adversary proceeding timely filed notice of appeal from the judgment of this court, dated November 1, 1983, setting aside a strict foreclosure of a Wisconsin land contract as a fraudulent transfer under 11 U.S.C. § 548, 33 B.R. 642.

In designating the record for appeal to the district court, counsel for defendants-appellants included various items which were filed in the bankruptcy case underlying this adversary proceeding,¹ but which are not included in the record of the adversary proceeding.² None of the items from the case file appears patently irrelevant to the issues on appeal. Plaintiffs-appellees have objected to the inclusion in the appeal record of nearly all the items in the case file, and several items in the file of the adversary proceeding.

It is the difference in meaning of the word "case" as applied in the more general Federal Rules of Civil Procedure and the Federal Rules of Appellate Procedure on the one hand, and in the more specialized Federal Rules of Bankruptcy Procedure on the other, which gives rise to at least part of the problem. A non-bankruptcy civil "case" is commenced by a complaint and usually ends, if pursued, in a judgment. Fed.R.Civ.P. 3, 54. A bankruptcy "case" commences with the filing of a petition—11 U.S.C. §§ 301, 302(a), 303(b), Fed.R.Bankr.P. 1002(a), 1003(a), 1004, 1005 —and may include a number of adversary proceedings (commenced by complaint under Fed.R.Bankr.P. 7003) and "contested matters" (begun by motion under Rule 9014). When appeal is taken from a judgment of the district court, the "record on appeal" consists of "the original papers and exhibits filed in the district court" plus a transcript and copy of the docket entries. Fed.R.App.P. 10(a). The parties are free to agree to a more limited record on appeal, subject to review by the trial court for conformity to truth, and subject to supplementation by the court. Id. (d). Differences between the parties as to the proper content of the record may be settled either by the trial or appellate court. Id. (e).

In the bankruptcy setting, appeals to the district court or Bankruptcy Appellate Panel in those circuits which have established one are governed by Part VIII of the Federal Rules of Bankruptcy Procedure. Rule 8006³ provides for the appellant to designate the items to be included in the record on appeal. The Rule provides for the appellee to designate additional items. Further, "the record on appeal shall include the items so designated by the parties (etc)."

Thus the Bankruptcy Rules do not expressly allow the appellee to modify the record by exclusion, an outcome sought by the appellee herein. Should this court construe the Rule so as to allow it to entertain such a motion? This is apparently a matter of first impression in the Seventh Circuit, but has been considered by three bankruptcy courts since adoption of the Bankruptcy Code.

The court is informed of three bankruptcy court decisions which have addressed challenges to an appellant's designation of the record. In In Re Food Fair, Inc., 15 B.R. 569 (Bkrtcy.S.D.N.Y.1981), appellees sought to designate in the record an agreement bearing upon the lease which was the subject of the order appealed from. The bankruptcy court applied Bankruptcy Rule 806 (predecessor to present Fed.R.Bankr.P. 8006 and similar to it in all respects pertinent to this decision) and also held Fed.R. App.P. 10(e) applicable to itself as a trial court.⁴ Under the Appellate Rule, the trial court may modify the record sua sponte or on the suggestion of a party. Reasoning that the reviewing court should have before it "all documents and evidence considered by the bankruptcy judge in reaching his decision," the court ruled that a record on appeal may be supplemented with materials from other adversary proceedings arising from the same bankruptcy case when closely related to the appeal. Id. at 572. In Re T. Michaelis Corvette Supplies, Inc., 14 B.R. 365 (Bkrtcy.N.D.Ohio 1981) is generally in accord in holding that Rule 806 "was meant to afford the litigants broad discretion in designating the record on appeal." 14 B.R. 366 citing 13 Collier on Bankruptcy ¶ 806.04 (14th ed. 1977).

In In Re Saco Local Development Corp., 13 B.R. 226 (Bkrtcy.D.Me.1981), the court carefully distinguished matters arising in related adversary proceedings which were considered by the court in reaching its decision from items in the file of which the court was aware, but which it did not directly consider in reaching the decision appealed from. The latter group of items would be transmitted to the appellate panel in a separate package, along with a statement of the bankruptcy court's view of them, so that the appellate panel could reach its own determination of whether they should be included in the record. Id. at 229-30.

After reviewing the motions and memoranda of the parties and hearing counsel, this court will largely adopt the reasoning and practice of the Saco court for the following additional reasons:

(1) Under the well-accepted rule of statutory construction stated as expressio unius est exclusio alterius, the express inclusion of one item of a class excludes others of the same class. The only kind of modification permitted under R. 8006 would thus be addition to, and not exclusion from, the record. At the same time, the trial court may, under Fed.R.App.P. 10(d), modify the record on appeal by additions.

(2) The record in an adversary proceeding in bankruptcy presumes and in large measure relies upon, the file in the underlying case. The record on appeal, for completeness and fair presentation of the issues to the appellate body, should therefore include those items...