FILED DEC 08 2014 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 2 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-14-1028-KiTaD ) 6 JAMES L. GERARD, Jr. and ) Bk. No. 10-13508-GM JULIE S. GERARD, ) 7 ) Adv. No. 1:10-1261 Debtors. ) 8 ) ) 9 DIANE GOLDMAN, ) ) 10 Appellant, ) ) 11 v. ) M E M O R A N D U M1 ) 12 JULIE S. GERARD, ) ) 13 Appellee. ) ______________________________) 14 Argued and Submitted on October 23, 2014, 15 at Malibu, California 16 Filed - December 8, 2014 17 Appeal from the United States Bankruptcy Court for the Central District of California 18 Honorable Geraldine Mund, Bankruptcy Judge, Presiding 19 20 Appearances: Diane Goldman, appellant, argued pro se; Anthony Daniel Zinnanti argued for appellee, Julie S. 21 Gerard. 22 Before: KIRSCHER, TAYLOR and DUNN, Bankruptcy Judges. 23 24 25 26 1 This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th 28 Cir. BAP Rule 8013-1. 1 Creditor Diane Goldman ("Goldman") appeals an order granting 2 the motion of debtor Julie S. Gerard ("Debtor") to reopen an 3 adversary proceeding and determining that Debtor did not breach a 4 settlement agreement related to a nondischargeability judgment 5 entered previously in Goldman's favor. Two other issues raised in 6 Debtor's motion were not (and still have not been) decided in the 7 instant order. Because the order on appeal is not final, we 8 DISMISS for lack of jurisdiction. 9 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 10 Goldman and Debtor were law partners until November 2007. 11 After termination of their partnership, Goldman sued Debtor in 12 state court for breach of fiduciary duty, breach of written 13 contract and other claims. In short, Goldman contended Debtor had 14 taken funds in excess of her one-half share allowed under the 15 partnership agreement. 16 After trial, the state court entered a judgment in favor of 17 Goldman for $93,354.46 plus interest, costs and attorney's fees. 18 The amount of attorney's fees was to be determined at a later 19 hearing, but that matter was taken off calendar once Debtor and 20 her husband filed their chapter 72 bankruptcy case. Goldman 21 incurred approximately $147,000 in attorney's fees in the state 22 court litigation. 23 A. The adversary proceeding 24 Goldman timely filed a nondischargeability complaint seeking 25 to except her debt of approximately $240,000 ($93,354.64 plus an 26 2 Unless specified otherwise, all chapter, code and rule 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The 28 Federal Rules of Civil Procedure are referred to as “Civil Rules.”
-2- 1 estimated $147,000 in fees and costs) from Debtor's discharge 2 under § 523(a)(2)(A), (a)(4) and (a)(6).3 The parties settled the 3 matter at mediation. 4 A Settlement and Release Agreement ("Settlement Agreement") 5 was executed in connection with the nondischargeability action. 6 According to the Settlement Agreement, Debtor agreed to pay 7 Goldman $25,000 on or before March 1, 2011. She also agreed to 8 assign to Goldman a beneficial interest of $125,000 in her 9 existing $500,000 whole life insurance policy, as Debtor had just 10 been diagnosed with Stage IV colon cancer. In lieu of the 11 insurance interest, Debtor could also satisfy her obligation to 12 Goldman if she paid Goldman $85,000 or before March 1, 2016. 13 Goldman would receive a nondischargeability judgment for $240,000, 14 reduced to $215,000 upon Debtor's timely payment of $25,000, which 15 Goldman agreed not to enforce unless Debtor defaulted under the 16 terms of the Settlement Agreement. Debtor could default by: 17 (1) failing to "make any payment when the same shall become due;" 18 (2) failing to "make any premium payment when due;" (3) the lapse 19 of any coverage provided under the life insurance policy; or 20 (4) breaching any other terms or conditions. 21 In Paragraph 3 of the Settlement Agreement, the parties 22 agreed the bankruptcy court "would retain jurisdiction over the 23 terms of the [Settlement Agreement] and its enforcement," and 24 further agreed in Paragraph 17 that all actions or proceedings 25 arising in connection with the Settlement Agreement would be 26 "tried and litigated only in the Bankruptcy Court of the Central 27 3 Goldman also plead § 727 claims against Debtor, but these 28 claims were later dismissed.
-3- 1 District of California." 2 The bankruptcy court entered the parties' signed Stipulation 3 for Judgment of Nondischargeability of Debt (the "Stipulation") 4 and the Judgment for Nondischargeability of Indebtedness (the 5 "Judgment") in February 2011. The Stipulation referenced the 6 Settlement Agreement and set forth its essential terms. The 7 parties agreed that Goldman was entitled to a nondischargeability 8 judgment of $240,000 under § 523(a)(2)(A), (a)(2)(B) and (a)(6), 9 which was enforceable only if Debtor failed to comply with the 10 terms of the Settlement Agreement. The Judgment stated that the 11 court had approved the terms and content of the Stipulation. 12 Debtor made the initial $25,000 payment to Goldman. She also 13 executed an assignment of the beneficial interest in her life 14 insurance policy to Goldman. 15 Debtor received a discharge, and the bankruptcy case was 16 closed on March 1, 2011. The adversary proceeding was dismissed 17 by a clerk's entry on November 19, 2012. 18 B. Events leading to the motion to reopen the adversary proceeding 19 20 On or about December 4, 2012, Goldman received a notice from 21 New York Life that Debtor had failed to pay the policy premium due 22 on November 3, 2012. To "keep the coverage in force," Debtor was 23 to make the premium payment by no later than January 3, 2013. If 24 payment was received by that date, New York Life would "promptly 25 reinstate [Debtor's] coverage, provided all persons covered under 26 the policy are living when payment is received." In addition to 27 paying by cash, Debtor could also pay the premium via the 28 company's Automatic Premium Loan ("APL") option (take out a loan
-4- 1 against the policy to make the payment) or the Default Premium 2 Payment option, where the company would apply Debtor's dividend 3 credits to pay the "overdue premium." 4 Counsel for Goldman, Susan L. Vaage ("Vaage"), sent a letter 5 to Debtor's counsel concerning the nonpayment of the premium and 6 advised counsel that Debtor was in default of the Settlement 7 Agreement. Vaage claimed she heard nothing further from Debtor's 8 counsel. Debtor eventually paid the premium on December 20, 2012, 9 using the APL option. 10 Believing that Debtor had breached the Settlement Agreement, 11 Goldman filed an abstract of judgment for $240,000 ("Abstract"), 12 which was recorded on January 17, 2013. The Abstract listed 13 Debtor's home address incorrectly in both places on the form. 14 Debtor claimed she never received notice of the Abstract. 15 Goldman received similar notices of Debtor's failure to pay 16 the insurance premiums when due on July 3 and August 3 of 2013. 17 The notices referenced a grace period and stated that failure to 18 pay the premiums within 62 days "may result in your policy 19 lapsing." The notices further explained that allowing the policy 20 to lapse would result in no payment of death benefits. In 21 response to the July notice, Vaage sent a letter to Debtor's 22 counsel stating that Debtor's nonpayment of the premium was a 23 default under the Settlement Agreement and entitled Goldman to the 24 entire $240,000 Judgment, less the $25,000 received. Notably, 25 Vaage made no mention of the Abstract recorded in January 2013. 26 The July 3 premium was eventually paid by check on August 1, 2013, 27 and the August 3 premium was paid on October 9, 2013, by the APL 28 option. Both premiums appear to have been paid within the 62-day
-5- 1 grace period. 2 In December 2013, Debtor's counsel sent a letter to Vaage 3 inquiring why the Abstract was recorded in January 2013, since 4 Debtor's insurance premiums had always been maintained and were 5 current. Apparently, Debtor was trying to sell her current home 6 in Calabasas and purchase another one in Ojai and Goldman's lien 7 was hindering that process. In reply, Vaage explained that Debtor 8 had defaulted "when she allowed the premium payments to lapse" and 9 Debtor only later reinstated the policy. Vaage explained that 10 when she did not hear anything from Debtor or Debtor's counsel in 11 response to her default notice letter in December 2012, she 12 applied for the writ of execution and Abstract. 13 C. Motion to reopen the adversary proceeding and related relief 14 On January 9, 2014, Debtor filed her Ex Parte Motion to 15 Reopen Adversary Proceeding to Interpret Court's Judgment and 16 Settlement Agreement Incorporated Therein, To Rescind Unauthorized 17 Issuance of Abstract of Judgment, and to Hold Diane Goldman in 18 Contempt of Court (the "Motion"). Debtor requested that the 19 Motion be heard on shortened notice because the escrows for the 20 home sale and purchase were scheduled to close on January 20. 21 Debtor denied defaulting under the Settlement Agreement. She 22 contended that the language "when due" with respect to premium 23 payments was not defined and never specified that payment must be 24 made when first due. She further denied the policy ever lapsed. 25 Debtor also disputed whether taking loans against the policy 26 constituted a default. Debtor contended the Abstract should be 27 rescinded because: (1) she did not breach the Settlement 28 Agreement; (2) the dollar amount was wrong and should be $215,000
-6- 1 instead of $240,000 due to her $25,000 payment; and (3) it failed 2 to state Debtor's correct address as required by California law. 3 Finally, Debtor contended that Goldman should be held in contempt 4 for secretly enforcing a judgment to which she was not entitled. 5 The bankruptcy court granted the order shortening time and 6 set the Motion for hearing on January 14, 2014. Goldman could 7 oppose the Motion orally at the hearing. 8 In her written opposition to the Motion, Goldman contended 9 the bankruptcy court lacked jurisdiction to determine whether 10 Debtor defaulted under the Settlement Agreement. She further 11 argued that Debtor had breached the Settlement Agreement by: 12 (1) taking out loans against the insurance policy that impaired 13 Goldman from being paid first on the policy as the parties agreed; 14 (2) allowing the policy to lapse in December 2012 for nonpayment 15 of premium; and (3) failing to pay the premiums "when due" on at 16 least three occasions. Even though Debtor eventually paid the 17 premium after the December 2012 default and the policy was 18 reinstated, Goldman argued that the Settlement Agreement did not 19 contemplate such cures. Further, no benefits would have been paid 20 to Goldman had Debtor died while the policy was not in effect. 21 Thus, Goldman believed she was entitled to the nondischargeability 22 judgment of $240,000 because of Debtor's multiple defaults. 23 On the evening before the hearing, Debtor filed a declaration 24 from her insurance agent, Cary Richman ("Richman"). Richman 25 testified that Debtor's life insurance policy could not have 26 lapsed because sufficient cash existed in December 2012 to make 27 the payment via the APL option. 28 At the start of the hearing, the bankruptcy court expressed
-7- 1 its reluctance to decide anything other than how to get the 2 escrows to close on time. Debtor's alleged breach of the 3 Settlement Agreement, the propriety of the recorded Abstract or 4 Goldman's alleged contempt could be decided at a later date. When 5 counsel for the parties expressed a desire to have all matters 6 raised in the Motion decided that day, the bankruptcy court agreed 7 and accommodated them. 8 After hearing argument from the parties, the bankruptcy court 9 ruled on the Motion. It granted relief to reopen the adversary 10 proceeding and to interpret the Settlement Agreement and Judgment. 11 The court found that the type of borrowing that occurred against 12 the insurance policy — i.e., to pay premiums — was not the type of 13 borrowing contemplated by the Settlement Agreement, so Debtor's 14 loans to pay premiums were not a violation. 15 The court then considered whether Debtor allowed the policy 16 to lapse. After carefully reviewing the evidence, the bankruptcy 17 court stated that it could not make that determination based on 18 what was before it; additional evidence was needed. Hr'g Tr. 19 (Jan. 14, 2014) 40:24-47:16. It then went on to conclude that use 20 of the term "reinstate" in the late payment notices could mean the 21 policy lapsed, but that it could also mean the policy was only 22 suspended unless the premium was paid by January 3, 2013, which it 23 was. Id. at 47:18-48:14. 24 Ultimately, the bankruptcy court did not rule on whether or 25 not the insurance policy lapsed. Vaage then reiterated that 26 failure to make premium payments "when due" was also a default 27 under the Settlement Agreement. On that issue, the court ruled: 28 THE COURT: Okay. All right. I'm just going to rule.
-8- 1 I'm going to rule that she has not breached the agreement and you're entitled to your $85,000 and it's to be paid 2 out of this escrow and it's over with. And if it's not paid out of the escrow, then we're going to go back and 3 retool all of this to make sure that it gets -- that actually, I'm going to say if it's not paid out of the 4 escrow, then you get your judgment for the . . . whole thing. 5 6 Id. at 49:8-16. 7 The bankruptcy court entered an order granting the Motion on 8 January 16, 2014 ("Order"), which Goldman timely appealed. The 9 Order included a finding that Debtor "did not breach the 10 Settlement Agreement incorporated into this Court's Judgment 11 entered in this adversary proceeding on February 8, 2011[.]" The 12 Order directed that payment of $85,000 to Goldman from the escrow 13 would fully satisfy the Judgment. If the $85,000 was not paid, 14 Goldman was entitled to $215,000, the $240,000 Judgment minus the 15 $25,000 already paid. 16 D. Events after entry of the Order and notice of appeal 17 In her motion for stay pending appeal, Goldman contended that 18 the alleged $400,000 equity in Debtor's Calabasas home, which was 19 being sold, was the only source of recovery to satisfy the 20 Judgment should she prevail on appeal. Thus, a stay was needed to 21 preserve the funds, particularly the $130,000 balance that would 22 be owed to her if she succeeded in reversing the Order. 23 Debtor responded within twenty-four hours with her emergency 24 motion to: (1) issue an OSC for why Goldman should not be held in 25 contempt for new actions which violated the Order; (2) enjoin 26 Goldman to comply with the Order; (3) authorize others to act on 27 Goldman's behalf to effectuate the home sale; (4) order the clerk 28 to issue a certificate of satisfaction of the Judgment; and
-9- 1 (5) relieve Debtor of the Judgment under Civil Rule 60(b). Debtor 2 contended that Goldman had violated the Order by recording a new 3 abstract of judgment for $215,000 and making a demand upon escrow 4 for just over $215,000, instead of the $85,000 directed in the 5 Order. Debtor simultaneously filed an adversary complaint seeking 6 the same relief as in the emergency motion. 7 The bankruptcy court granted both parties' requests for a 8 hearing on shortened time. At the January 24, 2014 hearing, 9 Goldman agreed to withdraw her motion for stay pending appeal 10 based on the following relief stipulated by the parties: 11 (1) Goldman would receive the $85,000 cash payment from escrow; 12 (2) Goldman would remove the new abstract of judgment for $215,000 13 on Debtor's Calabasas home to facilitate the sale; and (3) Goldman 14 could then file a new abstract of judgment for $130,000 on 15 Debtor's new home in Ojai once the sale closed. The court entered 16 an order approving the parties' stipulated relief that same day. 17 II. JURISDICTION 18 Goldman contends the bankruptcy court lacked jurisdiction to 19 reopen the adversary proceeding and interpret the Judgment and 20 Settlement Agreement. Debtor contends we lack jurisdiction to 21 review the Order because the appeal is moot. We independently 22 question whether the Order on appeal is final. These 23 jurisdictional issues are addressed below. 24 III. ISSUES 25 1. Did the bankruptcy court have jurisdiction to reopen the 26 adversary proceeding and interpret the Judgment and Settlement 27 Agreement? 28 2. Is the Order final and appealable?
-10- 1 IV. STANDARDS OF REVIEW 2 We review de novo questions of subject matter jurisdiction. 3 Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire 4 Courtyard), 729 F.3d 1279, 1284 (9th Cir. 2013). 5 We review our own jurisdiction, including questions of 6 finality, de novo. Silver Sage Partners, Ltd. v. City of Desert 7 Hot Springs (In re City of Desert Hot Springs), 339 F.3d 782, 787 8 (9th Cir. 2003). 9 V. DISCUSSION 10 A. The bankruptcy court had jurisdiction to reopen the adversary proceeding and interpret the Judgment and Settlement 11 Agreement. 12 The bankruptcy court had exclusive jurisdiction over the 13 particular nondischargeability claims at issue here. Rein v. 14 Providian Fin. Corp., 270 F.3d 895, 904 (9th Cir. 2001)(bankruptcy 15 courts have exclusive jurisdiction over nondischargeability 16 actions brought under § 523(a)(2), (4) and (6)); § 523(c). 17 Goldman disputes whether the bankruptcy court had subject matter 18 jurisdiction to consider the Motion, which sought to reopen the 19 adversary proceeding and to interpret the Judgment and Settlement 20 Agreement. The bankruptcy court never addressed Goldman's 21 concerns on this issue, but we can presume based on the record 22 that the court believed it had jurisdiction. We must satisfy 23 ourselves of the bankruptcy court's subject matter jurisdiction. 24 Huse v. Huse-Sporsem, A.S. (In re Birting Fisheries, Inc.), 25 300 B.R. 489, 497 (9th Cir. BAP 2003)(citing Arizonans For 26 Official English v. Ariz., 520 U.S. 43, 73 (1997)). 27 Debtor contends that subject matter jurisdiction was 28 conferred pursuant to § 105(a). However, § 105(a) does not confer
-11- 1 subject matter jurisdiction on the bankruptcy court. 2 In re Birting Fisheries, Inc., 300 B.R. at 497. "'Subject matter 3 jurisdiction and power are separate prerequisites to the court's 4 capacity to act. Subject matter jurisdiction is the court's 5 authority to entertain an action between the parties before it. 6 Power under section 105 is the scope and forms of relief the court 7 may order in an action in which it has jurisdiction.'" Id. 8 (quoting Am. Hardwoods, Inc. v. Deutsche Credit Corp. (In re Am. 9 Hardwoods, Inc.), 885 F.2d 621, 624 (9th Cir. 1989)). 10 We conclude, nonetheless, that the bankruptcy court had 11 subject matter jurisdiction on the basis of statutory ("arising 12 under") jurisdiction and/or ancillary jurisdiction. 13 The adversary proceeding involves the dischargeability of a 14 debt. Such a proceeding "arises under" the Bankruptcy Code, 15 because it is a cause of action created by § 523 and is a "core" 16 proceeding the bankruptcy court may hear and determine. McCowan 17 v. Fraley (In re McCowan), 296 B.R. 1, 3 (9th Cir. BAP 2003); 18 28 U.S.C. § 157(b)(1), (b)(2)(I). The bankruptcy court also has 19 jurisdiction to enter a money judgment that fixes the amount of 20 the nondischargeable debt. In re McCowan, 296 B.R. at 3 (citing 21 Cowen v. Kennedy (In re Kennedy), 108 F.3d 1015, 1017 (9th Cir. 22 1997)). 23 It has been long settled that process in aid of and to effectuate an adjudication and order entered by a federal 24 court may be enforced by that court "irrespective of whether the court would have jurisdiction if the 25 proceeding were an original one" and that these principles apply in bankruptcy. Local Loan Co. v. Hunt, 26 292 U.S. 234, 239–40 (1934); accord Thomas, Head & Greisen Emps. Trust v. Buster, 95 F.3d 1449, 1453–54 (9th 27 Cir. 1996). 28 The rationale is that a federal court has "ancillary
-12- 1 enforcement jurisdiction" that is automatically available for use "in subsequent proceedings for the exercise of a 2 federal court's inherent power to enforce its judgments." Peacock v. Thomas, 516 U.S. 349, 356 (1996). Accord 3 Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 379–81 (1994); Riggs v. Johnson Cnty., 73 U.S. (6 Wall.) 166, 4 187 (1867). Such ancillary enforcement jurisdiction is regarded as fundamentally a creature of necessity. 5 Peacock, 516 U.S. at 359; Kokkonen, 511 U.S. at 380; Riggs, 73 U.S. at 187. 6 7 Id. (holding that bankruptcy court does not lack jurisdiction to 8 enforce its own money judgments after bankruptcy case is closed). 9 Accordingly, actions brought to effectuate a judgment entered 10 in the prior suit are ancillary to the original action; they are 11 in essence a continuation of the original suit. Id. at 4 (citing 12 Lawson v. Tilem (In re Lawson), 156 B.R. 43, 46 (9th Cir. BAP 13 1993); Jones v. Nat'l Bank of Commerce of El Dorado, 157 F.2d 214, 14 215 (8th Cir. 1946)). Thus, where a proceeding is brought to 15 effectuate a judgment entered by the bankruptcy court, the 16 proceeding is a continuation of the original proceeding, and 17 jurisdiction depends on whether the original proceeding was within 18 the bankruptcy court's jurisdiction. Id. (citing Peacock, 19 516 U.S. at 356). 20 The original proceeding to determine the dischargeability of 21 a debt under § 523(a)(2) and (a)(6) was within the exclusive 22 jurisdiction of the bankruptcy court, as was the Stipulation and 23 Judgment entered regarding the debt. Therefore, Debtor's Motion, 24 which sought to reopen the adversary proceeding and interpret the 25 Judgment and related Settlement Agreement, continued to be a 26 matter that "arises under" the Bankruptcy Code, and the bankruptcy 27 court had jurisdiction to hear it. Id. at 5; In re Birting 28 Fisheries, Inc., 300 B.R. at 499 (bankruptcy court's "core"
-13- 1 jurisdiction continues in order for it to enforce its orders, even 2 after the case has been closed). 3 Two recent Ninth Circuit cases may arguably have impacted the 4 holding of In re McCowan, the case upon which we rely heavily for 5 our decision. In Sea Hawk Seafoods, Inc. v. Alaska (In re Valdez 6 Fisheries Dev. Ass'n, Inc.), 439 F.3d 545 (9th Cir. 2006), the 7 Ninth Circuit held that the bankruptcy court lacked jurisdiction 8 to interpret a settlement agreement it had approved while the 9 chapter 11 case was pending. The original adversary proceeding 10 and settlement agreement was between debtor and one of its 11 creditors. Id. at 547. After the chapter 11 case was dismissed, 12 the creditor moved to reopen the bankruptcy case and filed an 13 adversary proceeding against a third party, the State of Alaska, 14 to have the bankruptcy court determine whether the settlement 15 agreement released its fraudulent conveyance claim against Alaska. 16 Id. The bankruptcy court determined it had jurisdiction over the 17 second adversary proceeding as one "related to" the bankruptcy. 18 The Ninth Circuit disagreed. 19 Valdez Fisheries is distinguishable on several important 20 facts. First, the claim at issue was not one "arising under" the 21 Bankruptcy Code but rather a state-law fraudulent conveyance claim 22 between two creditors. Thus, "arising under" jurisdiction was not 23 at issue. Further, the second adversary proceeding, unlike here, 24 was not filed while the debtor's chapter 11 case was pending and 25 did not have any direct impact on the debtor or the administration 26 of debtor’s estate. The Ninth Circuit indicated that had it been, 27 the outcome would have been different. Id. at 548-49. 28 We further conclude that Battle Ground Plaza, LLC v. Ray
-14- 1 (In re Ray), 624 F.3d 1124 (9th Cir. 2010), which did address 2 "arising under" jurisdiction, has not overruled In re McCowan. 3 The Ninth Circuit reversed the BAP's ruling that the bankruptcy 4 court had "arising under" jurisdiction over a breach of contract 5 claim the BAP believed impacted the court's prior sale order. Id. 6 at 1132-33. There, after the chapter 11 debtor's plan had been 7 confirmed and the case closed, a lawsuit arose over the sale of 8 real property that had been sold with the bankruptcy court's 9 approval to a third party. A would-be purchaser brought suit in 10 state court seeking damages for breach of contract against the 11 debtor, the co-owner and the successful third-party purchaser. 12 The state court thought it appropriate to "remand" the contract 13 action to the bankruptcy court for it to determine whether it had 14 jurisdiction over the matter. The bankruptcy court reopened the 15 case, determined that it had jurisdiction over plaintiff's claims 16 and granted summary judgment in favor of the debtor and co-owner 17 dismissing the suit. Id. at 1129. 18 The Ninth Circuit overruled the BAP, holding that a state-law 19 breach of contract action brought post-confirmation and 20 post-closing arising out of the debtor's and co-owner's alleged 21 failure to comply with the purchaser's right of first refusal was 22 not a suit "arising under" the Bankruptcy Code for jurisdictional 23 purposes. The court did not, however, hold that In re McCowan, 24 which the BAP relied upon for its contrary holding, was no longer 25 good law. In fact, the Ninth Circuit reaffirmed and distinguished 26 In re McCowan, stating that "[t]he action in In re McCowan was for 27 the direct enforcement of the bankruptcy court's order, a very 28 different posture from the case before us." In re Ray, 624 F.3d
-15- 1 at 1132. 2 Arguably, the instant action could be characterized as an 3 action for breach of contract. However, we conclude it is more 4 like the action at issue in In re McCowan than in In re Ray; it 5 was for the interpretation of, and, effectively, the direct 6 enforcement of, the bankruptcy court's order regarding the 7 dischargeability of a debt over which it had exclusive 8 jurisdiction. Accordingly, the bankruptcy court had "arising 9 under" jurisdiction. 10 Alternatively, the bankruptcy court had ancillary 11 jurisdiction to interpret and enforce its prior Judgment and the 12 related Settlement Agreement. "Ancillary jurisdiction may rest on 13 one of two bases: (1) to permit disposition by a single court of 14 factually interdependent claims, and (2) to enable a court to 15 vindicate its authority and effectuate its decrees." In re Ray, 16 624 F.3d at 1135 (quoting In re Valdez Fisheries, 439 F.3d at 17 549)(citing Kokkonen, 511 U.S. at 379–80). 18 Goldman cites Kokkonen to support her argument that the 19 bankruptcy court did not have ancillary jurisdiction over the 20 Settlement Agreement because it failed to reserve jurisdiction 21 over it. In Kokkonen, the Supreme Court held that a federal 22 district court lacked jurisdiction to enforce a settlement 23 agreement reached in conjunction with dismissal of a lawsuit under 24 Civil Rule 41, where the district court neither reserved 25 jurisdiction nor had independent jurisdiction to enforce the 26 agreement. 511 U.S. at 375. The stipulation and dismissal order 27 did not reserve jurisdiction over the settlement agreement or make 28 any reference to the settlement agreement. The Supreme Court
-16- 1 noted: 2 The situation would be quite different if the parties' obligation to comply with the terms of the settlement 3 agreement had been made part of the dismissal — either by separate provision (such as a provision "retaining 4 jurisdiction" over the settlement agreement) or by incorporating the terms of the settlement agreement in 5 the order. In that event, a breach of the agreement would be a violation of the order, and ancillary 6 jurisdiction to enforce the agreement would therefore exist. That, however, was not the case here. The 7 judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of 8 his order. 9 Id. at 381. Thus, if the court's judgment incorporates the terms 10 of a stipulated settlement or expressly retains jurisdiction over 11 such a settlement, the court has ancillary jurisdiction to enforce 12 the agreed judgment. Otherwise, enforcement of settlement 13 agreements is for state courts. Id. at 382. 14 We distinguish Kokkonen on one critical fact. In that case, 15 no "judgment" was ever entered by the district court. The parties 16 agreed to settle their dispute and voluntarily dismissed the case 17 pursuant to Civil Rule 41. Thus, the district court was never 18 interpreting or enforcing its own order or judgment. Here, the 19 bankruptcy court entered a judgment of nondischargeability of a 20 debt against Debtor. As we have already stated, the bankruptcy 21 court had jurisdiction to interpret and enforce its own judgment. 22 In re McCowan, 296 B.R. at 4-5; In re Birting Fisheries, Inc., 23 300 B.R. at 499. 24 Further, as prescribed in Kokkonen and contrary to Goldman's 25 contention, the bankruptcy court did reserve jurisdiction over the 26 Settlement Agreement. The Judgment incorporated the Stipulation. 27 The Stipulation incorporated the key terms of the Settlement 28 Agreement. The Judgment also expressly incorporated the
-17- 1 Settlement Agreement: 2 IT IS FURTHER ORDERED that this Judgment shall not be enforceable so long as [Debtor] performs under the terms 3 of the Settlement Agreement entered into between the Parties, but that in the event of a default, [Goldman] 4 may enforce this Judgment. 5 Goldman incorrectly asserts that the Settlement Agreement does not 6 contain a provision requiring or allowing the bankruptcy court to 7 determine if Debtor was in default of the Settlement Agreement. 8 Paragraph 3 expressly reserved jurisdiction to the bankruptcy 9 court, stating that it "would retain jurisdiction over the terms 10 of the [Settlement Agreement] and its enforcement." 11 Accordingly, the bankruptcy court had jurisdiction under 12 28 U.S.C. §§ 1334(b) and 157(b)(2)(I). We now address our 13 jurisdiction. 14 B. The Order is not a final appealable order.4 15 Our jurisdiction requires that the order to be reviewed be 16 final. 28 U.S.C. § 158. We generally lack jurisdiction to hear 17 appeals from interlocutory orders. See Giesbrecht v. Fitzgerald 18 (In re Giesbrecht), 429 B.R. 682, 687 (9th Cir. BAP 2010). 19 A disposition is final "if it contains 'a complete act of 20 adjudication,' that is, a full adjudication of the issues at bar, 21 and clearly evidences the judge's intention that it be the court's 22 final act in the matter." Slimick v. Silva (In re Slimick), 23 928 F.2d 304, 307 (9th Cir. 1990)(citation omitted)(emphasis in 24 original). In bankruptcy, a complete act of adjudication does not 25 26 4 Debtor contends the Order is not a final order because the appeal is moot. We disagree. The jurisdictional concepts of 27 finality and mootness are mutually exclusive. An interlocutory order does not equate to an appeal being moot, and a moot appeal 28 does not necessarily mean that the order on appeal is not final.
-18- 1 need to end the entire case, but must "end any of the interim 2 disputes from which appeal would lie." Id. at 307 n.1. The Order 3 determined that Debtor did not breach the Settlement Agreement, 4 and that a payment to Goldman of $85,000 out of the escrow would 5 satisfy the nondischargeability Judgment. It did not, however, 6 adjudicate the remaining two issues of whether Goldman properly 7 filed her Abstract or whether she should be held in contempt of 8 court. 9 Because Debtor was found not to have breached the Settlement 10 Agreement, one could argue that the bankruptcy court did 11 implicitly decide Goldman's filing of the Abstract was improper 12 and that she was not entitled to enforce the $240,000 Judgment. 13 An order can be considered final if the court's ruling as a 14 practical matter effectively "rendered moot" all claims not 15 explicitly disposed of. U.S. v. $5,644,540.00 in U.S. Currency, 16 799 F.2d 1357, 1361 (9th Cir. 1986). Even so, this still leaves 17 the contempt issue, which does not appear to be "rendered moot" by 18 anything decided in the Order. In any event, the bankruptcy court 19 clearly anticipated further proceedings on these issues. If 20 further proceedings in the bankruptcy court will affect the scope 21 of the order, the order is not subject to review under 28 U.S.C. 22 § 158. See Dunkley v. Rega Props., Ltd. (In re Rega Props., 23 Ltd.), 894 F.2d 1136, 1138 (9th Cir. 1990). 24 The record evidences that this was not the bankruptcy court's 25 final act in the matter. Evidence of intent consists not only of 26 the order's content, but also of the judge's and parties' conduct. 27 In re Slimick, 928 F.2d at 308. Statements by the bankruptcy 28 court at the January 24, 2014 hearing on Goldman's motion for stay
-19- 1 pending appeal indicate that further proceedings are contemplated 2 with respect to the Motion that led to the Order on appeal. 3 Specifically, the bankruptcy court stated that it had not 4 determined whether the Abstract should have been recorded or 5 whether Goldman should be held in contempt, and that those matters 6 would be decided at a later date. Hr'g Tr. (Jan. 24, 2014) 7 18:2-10; 33:5-12; 34:8-12; 47:1-5; 52:2-7. The court also 8 indicated that it had not decided the breach issue conclusively 9 or, at minimum, that it was questioning its prior determination 10 that Debtor had not breached the Settlement Agreement. Precisely, 11 the court stated that the evidence so far was not dispositive and 12 that discovery and more evidence were needed to decide the matter. 13 Id. at 12:3-16; 18:10-19:5; 20:15-21:10; 29:8-30:4; 47:25-48:21; 14 50:21-23; 52:13-16. At one point, Goldman offered to withdraw her 15 appeal if the parties were going to be allowed to relitigate the 16 issue. Id. at 49:5-16; 51:1-5. The court responded that 17 modification of the Order might be appropriate, but the pendency 18 of the appeal likely barred it from making such a modification. 19 Id. at 51:6-10. Goldman again offered to withdraw her appeal if 20 the court was willing to modify the Order. Id. at 51:11-17. The 21 court declined and instead set dates for future status conferences 22 on the original contempt claim and the new contempt claim. Id. at 23 51:18-52:23. Based on the record, we conclude the Order is not a 24 final appealable order. 25 We lack jurisdiction over interlocutory orders unless we 26 grant leave to appeal. In re Giesbrecht, 429 B.R. at 687. 27 Although Goldman has not filed a motion for leave to appeal, we 28 may treat her timely notice of appeal as a motion for leave to
-20- 1 appeal. Rule 8003(c); Kashani v. Fulton (In re Kashani), 190 B.R. 2 875, 882 (9th Cir. BAP 1995). Granting leave is appropriate if 3 the order "involves a controlling question of law as to which 4 there is substantial ground for difference of opinion" and where 5 "an immediate appeal may materially advance the ultimate 6 termination of the litigation." 28 U.S.C. § 1292(b); 7 In re Kashani, 190 B.R. at 882. A substantial ground for 8 difference of opinion exists "when novel legal issues are 9 presented, on which fair-minded jurists might reach contradictory 10 conclusions . . . ." Reese v. BP Exploration (Alaska) Inc., 11 643 F.3d 681, 688 (9th Cir. 2011). 12 The Order at issue does not meet any of the requirements for 13 granting leave to appeal. Whether Debtor breached the Settlement 14 Agreement is not a controlling question of law which presents a 15 novel issue over which fair-minded jurists might reach 16 contradictory conclusions. Further, deciding the appeal will not 17 materially advance the ultimate termination of the litigation. 18 The issues regarding the Abstract and Goldman's purported contempt 19 still remain to be decided. Once they are, the parties could 20 appeal any subsequent order, which will lead only to piecemeal 21 litigation based on the same facts and conduct. Therefore, we 22 decline to grant leave to appeal. 23 VI. CONCLUSION 24 Because the Order is not a final appealable order and we 25 decline to grant leave to appeal, we lack jurisdiction over this 26 appeal. Accordingly, we DISMISS. 27 28
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