Ritzen Grp., Inc. v. Jackson Masonry, LLC

• Decision Date: 14 January 2020
• Docket Number: No. 18-938,18-938
• Citation: 205 L.Ed.2d 419,140 S.Ct. 582
• Parties: RITZEN GROUP, INC., Petitioner v. JACKSON MASONRY, LLC
• Court: U.S. Supreme Court

140 S.Ct. 582

205 L.Ed.2d 419

RITZEN GROUP, INC., Petitioner

v.JACKSON MASONRY, LLC

No. 18-938

Supreme Court of the United States.

Argued November 13, 2019

Decided January 14, 2020

James K. Lehman, Columbia, SC, for the petitioner.

Griffin S. Dunham, Nashville, TN, for the respondent.

Vivek Suri, for the United States as amicus curiae, by special leave of the Court supporting the respondent.

James K. Lehman, A. Mattison Bogan, William C. Wood, Jr., Nelson Mullins Riley & Scarborough, LLP, Columbia, SC, G. Eric Brunstad, Jr., Dechert, LLP, Hartford, CT, Shane G. Ramsey, John T. Baxter, Nelson Mullins Riley & Scarborough, LLP, Nashville, TN, for petitioner.

Jeffrey T. Green, Northwestern Supreme, Court Practicum, Chicago, IL, Andrew B. Talai, Lindsay N. Walter, Alexandria V. Ruiz, Sidley Austin llp, Los Angeles, CA, Griffin S. Dunham, Counsel of Record, Henry E. Hildebrand, IV, Dunham Hildebrand, pllc, Nashville, TN, for respondent.

Justice GINSBURG delivered the opinion of the Court.

Under the Bankruptcy Code, filing a petition for bankruptcy automatically "operates as a stay" of creditors’ debt-collection efforts outside the umbrella of the bankruptcy case. 11 U.S.C. § 362(a). The question this case presents concerns the finality of, and therefore the time allowed for appeal from, a bankruptcy court's order denying a creditor's request for relief from the automatic stay. In civil litigation generally, a court's decision ordinarily becomes "final," for purposes of appeal, only upon completion of the entire case, i.e. , when the decision "terminate[s the] action" or "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Gelboim v. Bank of America Corp. , 574 U.S. 405, 409, 135 S.Ct. 897, 190 L.Ed.2d 789 (2015) (internal quotation marks omitted). The regime in bankruptcy is different. A bankruptcy case embraces "an aggregation of individual controversies." 1 Collier on Bankruptcy ¶5.08[1][b], p. 5–43 (16th ed. 2019). Orders in bankruptcy cases qualify as "final" when they definitively dispose of discrete disputes within the overarching bankruptcy case. Bullard v. Blue Hills Bank , 575 U.S. 496, 501, 135 S.Ct. 1686, 191 L.Ed.2d 621 (2015).

The precise issue the Court today decides: Does a creditor's motion for relief from the automatic stay initiate a distinct proceeding terminating in a final, appealable order when the bankruptcy court rules dispositively on the motion? In agreement with the courts below, our answer is "yes." We hold that the adjudication of a motion for relief from the automatic stay forms a discrete procedural unit within the embracive bankruptcy case. That unit yields a final, appealable order when the bankruptcy court unreservedly grants or denies relief.

I

In civil litigation generally, 28 U.S.C. § 1291 governs appeals from "final decisions." Under that provision, a party may appeal to a court of appeals as of right from "final decisions of the district courts." Ibid. A "final decision" within the meaning of § 1291 is normally limited to an order that resolves the entire case. Accordingly, the appellant must raise all claims of error in a single appeal. See In re Saco Local Development Corp. , 711 F.2d 441, 443 (C.A.1 1983) (Breyer, J.) ("Traditionally, every civil action in a federal court has been viewed as a ‘single judicial unit,’ from which only one appeal would lie."). This understanding of the term "final decision" precludes "piecemeal, prejudgment appeals" that would "undermin[e] efficient judicial administration and encroac[h] upon the prerogatives of district court judges." Bullard , 575 U.S. at 501, 135 S.Ct. 1686 (quoting Mohawk Industries, Inc. v. Carpenter , 558 U.S. 100, 106, 130 S.Ct. 599, 175 L.Ed.2d 458 (2009) ; internal quotation marks omitted).

The ordinary understanding of "final decision" is not attuned to the distinctive character of bankruptcy litigation. A bankruptcy case encompasses numerous "individual controversies, many of which would exist as stand-alone lawsuits but for the bankrupt status of the debtor." Bullard , 575 U.S. at 501, 135 S.Ct. 1686 (internal quotation marks omitted). It is thus common for bankruptcy courts to resolve discrete controversies definitively while the umbrella bankruptcy case remains pending. Delaying appeals from discrete, controversy-resolving decisions in bankruptcy cases would long postpone appellate review of fully adjudicated disputes. Moreover, controversies adjudicated during the life of a bankruptcy case may be linked, one dependent on the outcome of another. Delaying appeal until the termination of the entire bankruptcy case, therefore, could have this untoward consequence: Reversal of a decision made early on could require the bankruptcy court to unravel later adjudications rendered in reliance on an earlier decision.

The provision on appeals to U. S. district courts from decisions of bankruptcy courts is 28 U.S.C. § 158(a). Under that provision, an appeal of right lies from "final judgments, orders, and decrees" entered by bankruptcy courts "in cases and proceedings." Ibid. By providing for appeals from final decisions in bankruptcy "proceedings," as distinguished from bankruptcy "cases," Congress made "orders in bankruptcy cases ... immediately appeal[able] if they finally dispose of discrete disputes within the larger [bankruptcy] case." Bullard , 575 U.S. at 501, 135 S.Ct. 1686 (quoting Howard Delivery Service, Inc. v. Zurich American Ins. Co. , 547 U.S. 651, 657, n. 3, 126 S.Ct. 2105, 165 L.Ed.2d 110 (2006) ); see In re Saco Local Development Corp. , 711 F.2d at 444–447. In short, "the usual judicial unit for analyzing finality in ordinary civil litigation is the case, [but] in bankruptcy[,] it is [often] the proceeding." Brief for United States as Amicus Curiae 10.

Correct delineation of the dimensions of a bankruptcy "proceeding" is a matter of considerable importance. An erroneous identification of an interlocutory order as a final decision may yield an appeal over which the appellate forum lacks jurisdiction. Conversely, an erroneous identification of a final order as interlocutory may cause a party to miss the appellate deadline.

II

The dispute at hand involves a contract in which Ritzen Group, Inc. (Ritzen) agreed to buy land in Nashville, Tennessee from Jackson Masonry, LLC (Jackson). The land sale was never effected. Blaming Jackson for the deal's unraveling, Ritzen sued for breach of contract in Tennessee state court. After over a year of litigation, just days before trial was to begin, Jackson filed for bankruptcy under Chapter 11 of the Bankruptcy Code. By operation of the Bankruptcy Code's automatic stay provision, 11 U.S.C. § 362(a), the state-court litigation was put on hold.

Ritzen filed a motion in the Federal Bankruptcy Court for relief from the automatic stay, seeking an order allowing the trial to proceed in state court. Ritzen argued that relief would promote judicial economy and that Jackson had filed for bankruptcy in bad faith. After a hearing, the Bankruptcy Court denied the motion. The Bankruptcy Code and Federal Rules of Bankruptcy Procedure require parties to appeal from a final order "within 14 days after entry of the ... order ... being appealed." 28 U.S.C. § 158(c)(2) ; Fed. Rule Bkrtcy. Proc. 8002 (a). Ritzen did not appeal from the order refusing to lift the stay within the prescribed period.

In pursuit of the breach-of-contract claim initially commenced in state court, Ritzen filed a proof of claim against the bankruptcy estate. Following an adversary proceeding, the Bankruptcy Court found that Ritzen, not Jackson, was the party in breach of the land-sale contract because Ritzen failed to secure financing by the closing date. The court therefore disallowed Ritzen's claim against the bankruptcy estate. Without objection from Ritzen, the court confirmed Jackson's plan of reorganization. The plan permanently enjoined all creditors from the "commencement or continuation of any ... proceeding against [d]ebtor ... on account of [c]laims against [d]ebtor." Debtor's Plan of Reorganization in No. 3:16–bk–02065 (MD Tenn.), p. 15.

Thereafter, Ritzen filed two separate notices of appeal in the District Court for the Middle District of Tennessee. First, Ritzen challenged the Bankruptcy Court's order denying relief from the automatic stay. Second, Ritzen challenged the court's resolution of its breach-of-contract claim.

The District Court rejected the first of Ritzen's appeals as untimely, holding that under § 158(c)(2) and Federal Rule of Bankruptcy Procedure 8002(a), time to appeal expired 14 days after the Bankruptcy Court's entry of the order denying relief from the automatic stay. Turning to the appeal from the Bankruptcy Court's rejection of Ritzen's breach-of-contract claim, the District Court ruled against Ritzen on the merits.

On further appeal, the Court of Appeals for the Sixth Circuit affirmed the District Court's dispositions. As to the timeliness of the first notice of appeal, the Court of Appeals rendered this determination: Adjudication of Ritzen's motion for relief from the automatic stay qualified as a discrete "proceeding," commencing with the filing of the motion, followed by procedural steps, and culminating in a "[dispositive] decision based on the application of a legal standard." In re Jackson Masonry, LLC , 906 F.3d 494, 499–500 (2018).¹ The 14-day appeal clock, the Court of Appeals therefore concluded, ran from the order denying the motion to lift the stay, a disposition "(1) entered in a proceeding and (2) final[ly] terminating that proceeding." Id., at 499 (alterations omitted).

We granted certiorari to resolve whether orders denying relief from bankruptcy's automatic stay are final, therefore immediately appealable under § 158(a)(1). 587 U.S. ––––, 139 S.Ct. 2614, 204 L.Ed.2d 263 (2019).

III

A

This Court's opinion in Bullard v. Blue Hills Bank , 575 U.S. 496, 135 S.Ct. 1686, 191 L.Ed.2d 621, guides our application of § 158(a) ’s finality...