Vylene Enterprises, Inc., In re

• Decision Date: 29 June 1992
• Docket Number: No. 91-55087,91-55087
• Citation: 968 F.2d 887
• Parties: 27 Collier Bankr.Cas.2d 771, 23 Bankr.Ct.Dec. 236, Bankr. L. Rep. P 74,737 In re VYLENE ENTERPRISES, INC., Debtor. VYLENE ENTERPRISES, INC., Plaintiff-Appellant, v. NAUGLES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 887

968 F.2d 887

27 Collier Bankr.Cas.2d 771, 23 Bankr.Ct.Dec. 236,

Bankr. L. Rep. P 74,737

In re VYLENE ENTERPRISES, INC., Debtor VYLENE ENTERPRISES, INC., Plaintiff-Appellant, v. NAUGLES, INC., Defendant-Appellee.

No. 91-55087.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 4, 1992.

Decided June 29, 1992.

Phillip K. Fife, Seal Beach, Cal., for plaintiff-appellant.

William T. Rintala and Suzanne Criley, Rintala, Smoot, Jaenicke & Brunswick, Los Angeles, Cal., for defendant-appellee.

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

Before: ALARCON, BEEZER and RYMER, Circuit Judges.

BEEZER, Circuit Judge:

We consider court of appeals jurisdiction over an adversary proceeding that began in the bankruptcy court and was appealed to the district court. The district court vacated the bankruptcy court's final judgment in favor of Vylene Enterprises, Inc. (Vylene) and remanded to the bankruptcy court for submission of proposed findings of fact and conclusions of law. Because the district court's order is not final, we dismiss Vylene's appeal for lack of jurisdiction.

I FACTS AND PROCEDURAL HISTORY

Naugles, Inc. (Naugles) franchised one of its Mexican fast food restaurants to Vylene. The parties' dispute centers on whether Naugles breached its duty to negotiate in good faith with Vylene for an extension of the franchise agreement.

Vylene's adversary filing in bankruptcy has produced a number of published dispositions. ¹

Vylene filed the pending action in the bankruptcy court when it was the debtor in possession in Chapter 11 proceedings. Naugles consistently objected to the bankruptcy court's assertion of core jurisdiction over the case. ² Pursuant to its claimed core jurisdiction, the bankruptcy court rendered a final money judgment in Vylene's favor. Vylene Enters. v. Naugles, Inc. (In re Vylene Enters.), 105 B.R. 42 (Bankr.C.D.Cal.1989) (opinion re liability) and Adv. No. LA-85-4983-SB (Bankr. No. LA-84-14659-SB) (Bankr.C.D.Cal. July 5, 1990) (ruling on damages). The district court vacated the bankruptcy court's judgment and remanded the case to the bankruptcy court for disposition as an otherwise related proceeding. Vylene Enters., 122 B.R. 747 (C.D.Cal.1990), vacating and remanding 105 B.R. 42 and Adv. No. LA-85-4983-SB.

Vylene appeals the district court's order, relying on 28 U.S.C. § 1291 as the basis for court of appeals jurisdiction.

We have jurisdiction over an appeal only if authorized by statute. We "determine sua sponte [our] proper jurisdiction." Pizza of Hawaii, Inc. v. Shakey's Inc. (In re Pizza of Hawaii, Inc.), 761 F.2d 1374, 1377 (9th Cir.1985). We must dismiss an appeal when we lack jurisdiction.

II ORIGINAL JURISDICTION IN BANKRUPTCY--STATUTORY FRAMEWORK

District courts have original, but not exclusive, jurisdiction over bankruptcy cases. 28 U.S.C. § 1334. Such cases are automatically referred to the bankruptcy court. 28 U.S.C. § 157(a). Bankruptcy courts may enter final orders and judgments in cases under title 11 (the Bankruptcy Code) and in core proceedings. 28 U.S.C. § 157(b)(1); see 28 U.S.C. § 157(b)(2) (defining core proceedings). The bankruptcy court has jurisdiction to submit proposed findings of fact and conclusions of law in proceedings that are otherwise related to a case under title 11, but it may not issue final orders or judgments. 28 U.S.C. § 157(c)(1). The bankruptcy court makes the initial determination whether a case is a core or otherwise related proceeding. 28 U.S.C. § 157(b)(3). For cause shown, the district court may withdraw, in whole or in part, any case or proceeding referred to the bankruptcy court. 28 U.S.C. § 157(d).

The district courts have bankruptcy appellate jurisdiction.

The district courts ... have jurisdiction to hear appeals from final judgments, orders, and decrees, and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title.

28 U.S.C. § 158(a).

The bankruptcy appellate panel has similar appellate jurisdiction. 28 U.S.C. § 158(b) (parties must consent).

In otherwise related proceedings the district court acts as the trial court and enters any final order or judgment "after reviewing de novo those matters [ (found or concluded by the bankruptcy court) ] to which any party has timely and specifically objected." § 157(c)(1).

III COURT OF APPEALS JURISDICTION IN BANKRUPTCY--STATUTORY FRAMEWORK

The statutory framework governing original bankruptcy jurisdiction precedes an appeal to the court of appeals, and it controls which statutes confer jurisdiction on appeal.

In limited circumstances we hear interlocutory appeals.

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order....

28 U.S.C. § 1292(b). ³

We have jurisdiction over final decisions of district courts.

The courts of appeals ... shall have jurisdiction of appeals from all final decisions of the district courts ... except where a direct review may be had in the Supreme Court.

28 U.S.C. § 1291.

We also have jurisdiction over

appeals from all final decisions, judgments, orders, and decrees entered under [28 U.S.C. § 158(a), (b).]

28 U.S.C. § 158(d).

We now proceed to consider whether any of these statutes permit us to exercise jurisdiction over Vylene's appeal.

IV

28 U.S.C. § 1292

(b) INTERLOCUTORY APPEAL

Interlocutory orders of the district court, sitting as a bankruptcy trial or bankruptcy appellate court, ⁴ are reviewable by the court of appeals in limited circumstances. Connecticut Nat'l Bank v. Germain, --- U.S. ----, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). The district court's order vacating the bankruptcy court judgment favorable to Vylene does not state that it resolved "a controlling question of law," the immediate appeal of which "may materially advance the ultimate termination of the litigation." § 1292(b); see Vylene Enters., 122 B.R. 747. We do not have jurisdiction under § 1292(b).

V

FINALITY STANDARDS UNDER 28 U.S.C. §§ 158

(d), 1291

The interplay between §§ 158(d) and 1291 presents us with a more complex question whether we have jurisdiction. Whether the district court acted in its bankruptcy trial or bankruptcy appellate capacity, § 1291 affords a basis for our jurisdictional inquiry. Section 158(d) affords a basis for our jurisdiction only if the district court acted in its § 158(a) bankruptcy appellate capacity. To determine whether only § 1291 or both §§ 158(d) and 1291 afford a basis for our jurisdiction would require us to answer the substantive issue If we determined finality under §§ 158(d) and 1291 using the same standards, the nature of the proceeding, which determines the statute or statutes that afford a basis for our jurisdiction, would not matter. Existing Ninth Circuit precedent holds, however, that the finality standards differ. A recent Supreme Court opinion suggests otherwise. Because we must examine Ninth Circuit precedent in light of decisions of the Supreme Court, we perceive three possible approaches to our jurisdictional inquiry.

on appeal: Is this a core or an otherwise related proceeding?

First, we could determine the nature of this proceeding and the finality standards for the applicable jurisdictional statute(s). We reject this approach because it results in a jurisdictional inquiry that requires us to decide the merits of the appeal. Further, if we decided that Vylene's claim gives rise to an otherwise related proceeding, we would have to reconcile Ninth Circuit precedent with a recent Supreme Court opinion to determine whether, in the bankruptcy context, § 1291 has the same finality standards as § 158(d).

Second, we could determine the finality standards for each statute and apply both statutes. This approach does not require us to determine the nature of the proceeding. It does, however, require the reconciliation of Supreme Court and Ninth Circuit precedent, with respect to finality standards, that the first approach requires in the event that Vylene's claim gives rise to an otherwise related proceeding.

Third, we could determine which statute's finality standards are more liberal under our existing precedent and analyze our jurisdiction under those standards. This approach is available only if we do not have jurisdiction under the more liberal finality standards. It affords the advantages that we neither have to decide the merits of the case nor prematurely examine the status of existing Ninth Circuit precedent regarding finality standards under §§ 158(d) and 1291. We choose this approach because we conclude, infra Part VI, that we lack jurisdiction even under the more liberal finality standards of § 158(d).

A Uncertainty as to the Nature of the Proceeding Results in Uncertainty as to the Statute That Affords Court of Appeals Jurisdiction

Section 1291 affords us jurisdiction over final orders of the district court, whether the district court rendered the order in its bankruptcy trial or bankruptcy appellate capacity. Section 158(d) affords us jurisdiction over final orders of the district court rendered in its bankruptcy appellate capacity. Although the overlap between the two statutes is substantial, § 158(d) also affords us jurisdiction over final orders of the bankruptcy appellate panel. Because § 1291 does not afford us jurisdiction over final orders of the bankruptcy appellate panel, the substantial overlap does not render § 158...