Sambo's Restaurants, Inc., In re

• Decision Date: 13 February 1985
• Docket Number: No. 83-6420,83-6420
• Citation: 754 F.2d 811,12 C.B.C.2d 173
• Parties: 12 Collier Bankr.Cas.2d 173, 12 Bankr.Ct.Dec. 1177, Bankr. L. Rep. P 70,260 In re SAMBO'S RESTAURANTS, INC., a California corporation, Debtor. SAMBO'S RESTAURANTS, INC., a California corporation, Appellant, v. Peggy WHEELER, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 811

754 F.2d 811

12 Collier Bankr.Cas.2d 173, 12 Bankr.Ct.Dec. 1177,

Bankr. L. Rep. P 70,260

In re SAMBO'S RESTAURANTS, INC., a California corporation, Debtor.

SAMBO'S RESTAURANTS, INC., a California corporation, Appellant, v. Peggy WHEELER, Appellee.

No. 83-6420.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 7, 1984.

Decided Feb. 13, 1985.

Isaac C. Pachulski, Stutman, Treister & Glatt, Los Angeles, Cal., for appellant.

Gregory Scott Spencer, Cotchett, Dyer & Illston, San Mateo, Cal., for appellee.

Appeal from the United States District Court for the Central District of California.

Before WALLACE and BOOCHEVER, Circuit Judges, and JAMESON, ^* District Judge.

WALLACE, Circuit Judge:

Sambo's Restaurants, Inc. (Sambo's) appeals the district court's order reversing a bankruptcy court's denial of Wheeler's motion to amend her purported informal proof of claim. We affirm the district court.

I

Sambo's filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Secs. 1101-1174, on November 27, 1981, in the Central District of California. As of that date, the automatic stay of 11 U.S.C. Sec. 362(a) enjoined any of Sambo's creditors whose claims arose prior to the filing date from filing suit against Sambo's. The bankruptcy court set July 12, 1982, as the last day for filing proofs of claim.

On February 19, 1982, while the automatic stay was in effect, Wheeler filed a wrongful death suit against Sambo's in the United States District Court for the Northern District of Alabama. Wheeler's claim arose out of the death of her husband on August 4, 1981, before Sambo's filed in the bankruptcy court, and thus her suit was filed in violation of the automatic stay. On March 4, 1982, Sambo's house counsel wrote to Wheeler's attorney, informed him of the bankruptcy proceedings and stay, and demanded that he dismiss his suit. The letter stated that Sambo's would seek sanctions from the district court against Wheeler's violation of the stay if Wheeler did not dismiss.

Wheeler's attorney asked for two weeks in which to research his options before Sambo's sought any sanctions. Wheeler's attorney was also in contact with Sambo's local counsel in Alabama, and they exchanged letters in the last week in March agreeing that no sanctions would be sought for the moment. At no time was there any mention of the claim bar date of July 12th or any indication by Sambo's that it did not intend to hold Wheeler to that date.

On June 25, 1982, Sambo's filed a motion to stay and to transfer the Alabama complaint to the Central District of California bankruptcy court. Wheeler joined in the motion to transfer. The district court did not grant this motion, but instead entered an order of dismissal on June 30, 1982, and amended the dismissal on July 6 to provide that it was without prejudice to Wheeler to petition to reinstate the action to pursue any matter unresolved by the bankruptcy court after the stay was dissolved. Wheeler never filed before the bar date. Rather, in December 1982 she moved the bankruptcy court for leave to amend what she characterized as an informal proof of claim established within the filing period.

The bankruptcy court denied the motion on grounds that the wrongful death complaint could not be construed to be a proof of claim because it was filed in violation of the automatic stay, that no other documents set forth the nature and amount of the claim against the estate, and that denial was the correct course as a matter of discretion. The district court reversed the bankruptcy court, granted Wheeler fifteen days in which to file what in effect was an amended proof of claim, and stated that the document would relate back to the date on which the wrongful death action had been filed. Sambo's then appealed.

II

An initial problem concerns what law applies due to the recent changes in the bankruptcy law. Although 28 U.S.C. Secs. 1293 and 1334 did not go into effect until April 1, 1984, for cases such as the one before us the appellate jurisdiction of the district courts and the courts of appeals is the same as their jurisdiction under these new provisions. 28 U.S.C. Sec. 1471 note; In re Mason, 709 F.2d 1313, 1315 n. 1 (9th Cir.1983). Thus, the pre-1984 cases we will cite construed and applied the same jurisdictional provisions applicable to this case. In addition, this is a pre-Marathon Pipe Line case, and thus we need not address the limits it placed on the Bankruptcy Reform Act's grant of jurisdiction to bankruptcy courts. See Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 87-89, 102 S.Ct. 2858, 2880-2881, 73 L.Ed.2d 598 (1982).

Jurisdiction over this appeal is governed by 28 U.S.C. Sec. 1293(b), which states:

Notwithstanding section 1482 of this title [jurisdiction of Bankruptcy Appeals Panels], a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of an appellate panel created under section 160 or a District court of the United States or from a final judgment, order, or decree of a bankruptcy court of the United States if the parties to such appeal agree to a direct appeal to the court of appeals.

Our jurisdiction thus hinges on whether the district court's order was final. This determination "generally is guided by the principles of 28 U.S.C. Sec. 1291, even though section 1293 frees us to develop new principles to fit the special problems of bankruptcy administration." In re Exennium, Inc., 715 F.2d 1401, 1402 (9th Cir.1983) (Exennium ); see also In re Mason, 709 F.2d 1313, 1316 (9th Cir.1983); In re White, 727 F.2d 884, 885 (9th Cir.1984).

The bankruptcy court's order denying Wheeler's motion to amend her purported informal proof of claim was a final judgment because it resulted in dismissal of her claim from the bankruptcy proceeding. It was appealable either to the district court under 28 U.S.C. Sec. 1334(a) or directly to us under section 1293(b). Wheeler chose to appeal first to the district court. But the district court's order reversing the bankruptcy court granted leave to amend, which would ordinarily be considered an interlocutory rather than final order under section 1291 principles. We must decide whether the special area of bankruptcy requires a deviation from this ordinary rule, given that the district court was itself acting as an appellate court. We considered, but avoided, this issue with respect to an arguably nonfinal reversal of an interlocutory bankruptcy court order in Exennium. 715 F.2d at 1403 n. 1. That case, however, helps focus our analysis.

In Exennium, the bankruptcy court had allowed the trustee to sell real estate leases to a nonparty. One of the creditors took an interlocutory appeal from this ruling to the Bankruptcy Appellate Panel (BAP). The BAP voided the sale, and the trustee appealed to us. The finality of the BAP's order was in doubt because it only prevented a nonparty from purchasing the estate property and did "not settle the dispute between [the creditor] and the trustee." 715 F.2d at 1402. We stated that a final judgment is "said to be one that 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Id., quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). Although we did not decide whether the BAP's order was final for purposes of section 1293(b), we nevertheless allowed the appeal under the doctrine of Gillespie v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964).

The Gillespie doctrine permits courts of appeal to decide the merits of cases in which finality is marginal "where the course of litigation would be impeded, rather than advanced, by dismissing the appeal." Exennium, 715 F.2d at 1402-03. See Gillespie, 379 U.S. at 152-54, 85 S.Ct. at 310-12. In applying this doctrine in Exennium, we expressed our view "that, in general, bankruptcy proceedings differ significantly from others and that, in this case specifically, a ruling on the propriety of the sales to [the nonparty] will advance, and not impede, the bankruptcy proceedings." 715 F.2d at 1403.

Although we allowed the appeal in Exennium, and did not reach the issue of finality, we did observe in dictum that "nothing in the structure of the Bankruptcy Reform Act ... requires all decisions appealable to the district courts or BAPs to be automatically appealable to the courts of appeals." Id. at 1403 n. 1. We also pointed out that the BAP and district courts have a jurisdiction over interlocutory decisions denied the courts of appeals. Id. We expressed the view that we were free to apply the policies behind Gillespie "more broadly under section 1293" than under section 1291, and suggested that we could examine the costs of litigation on a case-by-case basis to determine whether the Gillespie doctrine is appropriate in particular cases. Id.

Although the case-by-case approach may make sense when the original appeal from the bankruptcy court is interlocutory, here we have a final bankruptcy court order which resulted in a non-final district court order on review. Under these circumstances, we embrace the views of the Third and Eighth Circuits which hold that "when the bankruptcy court issues what is indisputably a final order, and the district court issues an order affirming or reversing, the district court's order is also a final order for purposes of section 1293(b)." In re Marin Motor Oil, Inc., 689 F.2d 445, 449 (3d Cir.1982), cert. denied, 459 U.S. 1206, 103 S.Ct. 1196, 75 L.Ed.2d 440 (1983) (Marin ); accord In re Bestmann, 720 F.2d 484, 485-86 (8th Cir.1983); compare with In re Rubin, 693 F.2d 73, 76 (9th Cir.1982) (appeal from bankruptcy court interlocutory, so no appellate jurisdiction from BAP). The Third Circuit in Marin also expressed its reluctance to depart from section 1291's finality principles, but felt compelled to do so by the special...