Wade, Matter of
| Decision Date | 21 May 1993 |
| Docket Number | No. 91-2536,91-2536 |
| Citation | 991 F.2d 402 |
| Parties | 28 Collier Bankr.Cas.2d 1253, 24 Bankr.Ct.Dec. 210, Bankr. L. Rep. P 75,216 In the Matter of Ulyssus George WADE, Joyce Wade, and U.G. Wade Trucking, Inc., Debtors-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Leonard Opperman, Bose, McKinney & Evans, Indianapolis, IN, for appellee.
Neil E. Shook, pro se.
Mark Garringer, Indianapolis, IN, for debtors-appellants.
Before CUMMINGS and CUDAHY, Circuit Judges, and WOOD, Jr., Senior Circuit Judge.
Ulyssus George Wade and Joyce Wade owned U.G. Wade Trucking, Inc. In 1985, they filed for Chapter 7 bankruptcy protection, 11 U.S.C. § 701 et seq., for both their personal and corporate holdings. They appeal from an order entered in those proceedings.
The Wades' bankruptcy litigation has been long and rife with allegations of wrongdoing: the Wades have sued two judges, two trustees and their own attorney. Those lawsuits have spawned more than a dozen appeals to this court from both core and noncore proceedings. Although originally assigned to the bankruptcy court, the present case was later transferred to the United States District Court. On January 4 and 5, 1990, the district court held hearings with respect, inter alia, to whether the bankruptcy estate was ready to be closed. The debtors raised four objections, although only one actually related to the closing. That objection involved whether the court would make a finding stating that the trustee had "faithfully discharged" his duties and whether such a finding would collaterally estop future litigation against both the original and the successor trustee. The district court assured counsel that it would make no factual findings with respect to the trustees' performance. The debtors had no further objection to the closing. The parties agreed that the estate had been fully administered.
At the hearings on January 4 and 5, the debtors stated that the notice of a "request to close" had never been mailed, and that the question of the request to close had never been resolved at a hearing. In their appellate brief, however, the debtors state that the request to close and their objections to it had been discussed on January 4, 1990. The debtor-appellants argue, on the other hand, that at no time did the district judge ask them whether they were ready to proceed to close and whether they had any objections to the request to close.
The trustee's signed request to close was filed on November 6, 1989. The name of Mark Garringer, the debtors' attorney, appears on the distribution list. The district court docket reflects that notice to submit applications for fees and notice of the trustee's application to abandon, of the application for approval of agreed entry on distribution of proceeds and of the hearing set for January 4, 1990 was sent. A review of the transcripts of the January 4 hearing reveals the following:
I thought we would begin right with the application to abandon and the request to close and let the Trustee begin and then hear your objections and proceed down the list.
* * * * * *
So, let's proceed with your application to abandon and your request to close.
The hearing consumed the remainder of the day and part of the following day. At the end of the hearing, Garringer discussed closing. Garringer stated that if the court did not use the "faithfully discharged" language with respect to the trustees' duties, then "[i]f tomorrow the court enters an order ... saying the estate is fully administered and this case is closed, we have no problem with that." Shortly after, he stated that, "we would have no objection to an order closing this case."
On January 17, 1990, the district court issued an order resolving a number of key issues: 1) the distribution of proceeds from the account receivable held by the estate; 2) the payment of the statutory trustee fee to the original trustee, Edward Hopper, II; 3) the statutory trustee fee to the successor trustee, Neil Shook; 4) the payment of attorneys fees and expenses to a law firm; 5) the denial of fees of the debtors' attorney; and 6) the motions for sanctions against the debtors. The order unequivocally stated that the bankruptcy estate was closed.
The Wades were then tardy in filing their notice of appeal. The case was returned to the district court to determine if the late filing was excusable. The district court found no excuse for the late filing, and this court dismissed the appeal for lack of jurisdiction. During this period, we issued an order conveying our displeasure with the manner in which the Wades had conducted the litigation. Sometime following that order, Garringer was dropped as attorney, leaving the debtors to proceed pro se. Their continuing attempts to appeal were unsuccessful. The Wades filed a motion to reopen within three months of the January 17 order. This motion was later withdrawn. On April 4, 1990, Trustee Shook filed a motion submitting his supplemental final report and asking to be discharged from his bond. In March 1991, the Wades filed a second motion to reopen because they entered into a dispute with the Internal Revenue Service. As is apparent from their requests to reopen and attempt to appeal, the Wades considered the order of January 17 to be final. On May 30, 1991, the district court entered an order denying the Wades' motion to reopen, and granting the trustee's motion to be released from bond and discharged of his duties. The question of sanctions was deferred to the close of other, noncore, proceedings. The Wades, through the attorney they had "fired" and apparently "rehired", appealed the order of May 30 within the prescribed time period. This appeal is now before us.
In their brief, the Wades do not challenge the substance of the two matters covered in the May order from which they are appealing. Instead, the Wades challenge the resolution of the issues in the core proceedings, alleging judicial error and errors in administration of the estate. The trustee argues that the Wades cannot attack the resolution of the core bankruptcy proceedings but only the decisions contained in the May order. For this reason, the trustee does not respond to the appellants' substantive arguments. Not until their reply brief do the Wades contend that the bankruptcy was not finally closed until the trustee was discharged by the May order, and that therefore their appeal of the May order brings up for review the core proceedings.
To support their argument that the bankruptcy was not closed and that therefore the January order was not final, the Wades rely on a letter that the trustee mailed to them after the hearing. In a letter dated January 16, 1990, the trustee asked for the Wades' signatures on some documents, and commented about trying quickly to close the estate. The letter said: "As you have indicated, you wish this estate to be closed as quickly as possible, and the filing of these returns is a necessary step towards that end." The Wades interpret this statement as evidence that the January hearings did not close the estate. The letter, however, was written one day prior to the January order that pronounced the estate closed. The appellants also contend that because the supplemental final report had not been approved by the district court, the estate was not finally closed on January 17. If the estate was still open after January 17, the Wades argue, the core bankruptcy issues are brought up for appeal by the filing of a notice of appeal from the May order.
This court considers three sorts of bankruptcy appeals: those arising from final orders, from interlocutory orders and from collateral orders. In re Klein, 940 F.2d 1075, 1077 (7th Cir.1991). "[C]ertain bankruptcy orders may be deemed final before the estate is entirely closed." In re Official Comm. of Unsecured Creditors, 943 F.2d 752, 755 (7th Cir.1991). That species of finality is linked to our decision in this case.
A final order in a bankruptcy case, is one that resolves all contested issues on the merits and leaves only the distribution of the estate assets to be completed. In re Wagner, 808 F.2d 542, 544-45 (7th Cir.1986). This is a less stringent interpretation of finality than that employed in most civil lawsuits and is often applied to adversarial proceedings which are related to the core bankruptcy proceedings. See, e.g., In re Kilgus, 811 F.2d 1112, 1116 (7th Cir.1987). Several types of bankruptcy orders are final and appealable, for example, orders allowing or denying claims; orders denying relief from a stay; decisions involving property ownership; exemptions; sanctions; appointments of trustees; judicial sales orders; and confirmation of a bankruptcy plan. See e.g., Ginsberg, Bankruptcy: Text, Statutes, Rules, § 1.04(b) (2nd Ed.1991 Supp.).
Our duty is to determine whether the January order was final and appealable. If the January order was appealable, the Wades filed their notice of appeal too late and are barred from challenging the core bankruptcy issues. If the January order was not final and appealable, we did not have jurisdiction over the first appeal, and the Wades may presumably raise the core bankruptcy issues at this juncture.
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