Clark v. First State Bank ex rel. Merger Merchants Bank (In re White Beauty View Inc.)

841 F.2d 524
CourtCourt of Appeals for the Third Circuit
DecidedMarch 15, 1988
DocketNos. 87-5473, 87-5474
StatusPublished
Cited by1 cases

This text of 841 F.2d 524 (Clark v. First State Bank ex rel. Merger Merchants Bank (In re White Beauty View Inc.)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. First State Bank ex rel. Merger Merchants Bank (In re White Beauty View Inc.), 841 F.2d 524 (3d Cir. 1988).

Opinion

OPINION OF THE COURT

WEIS, Circuit Judge.

This appeal challenges the district court’s affirmance of a bankruptcy judge’s order in an adversary proceeding. The order did not adjudicate all the claims in the adversary proceeding, the parties did not obtain certification under Bankruptcy Rule 7054, and the district court did not grant leave to appeal the interlocutory order. Consequently, the district court lacked jurisdiction as do we. The appeal will be dismissed.

The district court affirmed the bankruptcy judge’s order allowing the debtor’s estate to recover from the Merchants’ Bank sums paid on a mortgage and note. The bank and a third-party defendant have appealed.

The debtor, White Beauty View, Inc., operated a vacation resort on the shores of Lake Wallenpaupack, Pennsylvania. As part of its business, White Beauty View rented to its patrons two guest units known as the V.I.Ps. These units, located on property adjacent to that of the company, were owned by Leroy Guccini, his brother Richard, and their wives. The Guc-[525]*525cinis were also the principal stockholders of White Beauty View, a family business for fifty-nine years.

The V.I.P. suites were subject to a mortgage held by the Merchants’ Bank. Payments on the mortgage were made by White Beauty View in return for use of the units. These payments continued even after White Beauty filed for reorganization under Chapter 11 in October 1983, and conducted business as a debtor-in-possession.

In addition, the debtor paid $2,356.90 on its note to the Merchants’ Bank, given in September 1983, one month before bankruptcy.

In December 1985, the bankruptcy court converted the proceedings to a Chapter 7 liquidation and appointed George E. Clark, Jr. as trustee. Upon discovering the payments made to the bank on behalf of the Guccini mortgage and on the note, the trustee filed an adversary proceeding to recover from the bank $29,994.73 paid on the mortgage as well as $2,356.90 paid on the note.

On motion of the bank and with approval of the bankruptcy court, the Guccinis were joined as codefendants in the adversary action. The bank cross-claimed against them for indemnity; in turn, the Guccinis counterclaimed against the bank.

The trustee moved for summary judgment against the bank, asserting that “disposition of this motion will not conclude any issues concerning liability of the additional defendants.” The bankruptcy judge entered summary judgment against the bank in the amounts paid on the mortgage and the note.

The Guccinis, however, were not served with a copy of the motion for summary judgment, remaining unaware of it until after the judgment had been entered. Furthermore, the bankruptcy judge did not enter any order disposing of the claims by the trustee and the bank against the Guc-cinis.

Both the bank and the Guccinis appealed the summary judgment to the district court. Finding that the payments of $2,356.90 on the note were not authorized since it was a pre-petition debt, the district court concluded that the trustee was entitled to recovery. No appeal has been taken from that phase of the district court’s order.

The district judge also affirmed the order directing the bank to reimburse the trustee for the amounts received on the Guccini mortgage. Noting that although “it was an unintended oversight that the Guccinis were not served with a copy” of the summary judgment motion, the district court found that they had demonstrated no prejudice from their lack of opportunity to respond. The court ruled that the mortgage installments could not be considered a proper lease payment between White Beauty View and the Guccinis because no approval had been obtained from the bankruptcy court. The bank and the Guccinis then appealed to this court.

The parties cite the pertinent statute governing appellate jurisdiction in bankruptcy cases, 28 U.S.C. § 158 (Supp. Ill 1985). Section 158(a) authorizes district courts to hear appeals from “final judgments, orders, and decrees, and with leave of the court, from interlocutory orders and decrees of bankruptcy judges.” The court of appeals has jurisdiction to entertain appeals from the district court “from all final decisions, judgments, orders, and decrees entered under subsection (a)_” Notwithstanding the parties’ use of the correct provision, they miss several factors which bar us from entertaining this appeal.

As we observed in In re Jeannette Corp., 832 F.2d 43, 45 (3d Cir.1987), although the district court may grant leave to appeal from interlocutory orders, no such power is granted to the court of appeals — our jurisdiction is limited to final orders and judgments of the bankruptcy courts and district courts. See also In re Looney, 823 F.2d 788, 791 n. 3 (4th Cir.), cert. denied, — U.S. -, 108 S.Ct. 488, 98 L.Ed.2d 486 (1987); In re Brown, 803 F.2d 120, 122 (3d Cir.1986); In re The Charter Co., 778 F.2d 617, 621 (11th Cir.1985); In re Fox, 762 F.2d 54, 55 (7th Cir.1985); Four Seas Center Ltd, 754 F.2d 1416, 1418 (9th Cir.1985); In re Adiron[526]*526dack Ry., 726 F.2d 60, 64 (2d Cir.1984); In re Comer, 716 F.2d 168, 172, (3d Cir.1983).

Initially, we must address the question whether the order of the bankruptcy judge here is “final.” Considerations unique to bankruptcy appeals have led us to construe the factor of finality somewhat more broadly in this context than under 28 U.S.C. § 1291. In re Amatex Corp., 755 F.2d 1034, 1039 (3d Cir.1985); Comer, 716 F.2d at 171. The finality issue must be resolved with respect to the decisions of both the bankruptcy judge and the district court. In re Meyertech Corp., 831 F.2d 410, 413-14 (3d Cir.1987). Walsh Trucking Co., Inc. v. Insurance Co. of North Amer-ica, 838 F.2d 698, (3d Cir.1988); Brown, 803 F.2d at 123 (finality of district court order); Comer, 716 F.2d at 173 (finality of bankruptcy court order). See also In re Johns-Manville Corp. (Dubin), 824 F.2d 176 (2d Cir.1987).

We interpret finality pragmatically in bankruptcy cases because these proceedings often are protracted and involve numerous parties with different claims. To delay resolution of discrete claims until after final approval of a reorganization plan, for example, would waste time and resources, particularly if the appeal resulted in reversal of a bankruptcy court order necessitating re-appraisal of the entire plan. See Walsh, 838 F.2d at 701; Brown, 803 F.2d at 123; Comer,

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