Piperi v. First Heights Bank

• Court: Court of Appeals for the Fifth Circuit
• Decided: February 4, 1997
• Docket: 96-20262
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 96-20262 Summary Calendar

In the Matter of: RONALD A. PIPERI,

Debtor.

RONALD A. PIPERI,

Appellant,

versus

FIRST HEIGHTS BANK,

Appellee.

Appeal from the United States District Court for the Southern District of Texas (CA-H-92-385)

January 27, 1997 Before GARWOOD, JOLLY and DENNIS, Circuit Judges.*

GARWOOD, Circuit Judge:

Debtor Ronald A. Piperi (Piperi) appeals the denial of his

Motion for Stay or Abatement of Proceeding or Abstention under 11

U.S.C. § 305. Piperi filed his motion for stay, abatement, or

* Pursuant to Local Rule 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4. abstention because of his belief that a pending federal criminal

investigation would impede his ability to assert various defenses

in his bankruptcy proceedings. After a hearing, the bankruptcy

court denied the motion. Piperi appealed the bankruptcy court’s

order to the district court. Before the district court issued a

decision, Piperi was convicted as a result of the criminal

investigation he complained of to the bankruptcy court. The

district court subsequently dismissed his appeal as moot. Piperi

appeals. We hold the bankruptcy court’s denial of his motion is

not appealable to the Court of Appeals under 28 U.S.C. §§ 158(d),

1291, or 1292 and therefore dismiss his appeal.

Facts and Proceedings Below

Piperi is a former officer and director of First Savings

Association of Orange (First Savings), which later became Champion

Savings Association. In September 1988, First Heights Bank, FSB

(First Heights) entered into a purchase and assumption transaction,

acquiring substantially all of First Savings’ assets and assuming

its deposit liabilities and secured debt.

Piperi contends that, beginning in September 1988, he became

the target of a criminal investigation conducted by the United

States Department of Justice, the United States Attorney’s office,

and the Federal Bureau of Investigation. According to Piperi, the

criminal investigation’s scope included both his affiliation with

First Savings and his personal finances.

2 Piperi filed a voluntary petition for bankruptcy under Chapter

11 on November 12, 1990, in the United States Bankruptcy Court for

the Southern District of Texas, Houston Division. The bankruptcy

court later granted his motion to convert his bankruptcy to a

Chapter 7 proceeding and appointed a trustee.

On July 24, 1991, Piperi filed a motion styled “First Amended

Motion for Stay or Abatement of Proceeding or Abstention under 11

U.S.C. § 305.” The motion sought suspension of his main bankruptcy

action and certain adversary proceedings. Piperi contends that he

filed this motion because he feared that the pending federal

criminal investigation would preclude him from asserting various

claims and defenses in his bankruptcy proceedings (as the

assertions would constitute a waiver of his Fifth Amendment

rights).

On August 7, 1991, First Heights filed a response in

opposition. Ray C. Wilson (Wilson), Creditors’ Trustee for

Mortgage Investment Company of El Paso and Associates Investment

Company of El Paso also opposed Piperi’s motion. The bankruptcy

court conducted a hearing on August 28, 1991. At the hearing, the

bankruptcy court “carried forward” evidence presented at an earlier

hearing on July 24, 1991, and heard additional testimony. The

bankruptcy court judge, finding that Piperi “put on no evidence as

to the status of an investigation of the Debtor, and was unable to

produce any evidence showing affirmatively that the Debtor is the

target of an investigation, other than the testimony of the

3 Debtor’s attorney that he was involved in ‘conversations’ with

officers of the Department of Justice,” held that Piperi had not

met his burden to demonstrate “reasonable cause to apprehend a real

danger of incrimination” and denied his motion as to both his main

bankruptcy action and the adversary proceedings.1

Piperi filed a notice of appeal to the United States District

Court for the Southern District of Texas on January 6, 1992.

Piperi’s appeals of the denial of his motion for stay, abatement,

or abstention in the First Heights and Wilson adversary proceedings

were consolidated by the district court.

In November 1994, Piperi was convicted for certain of his

activities involving First Savings and First Heights. The

conviction came about as a result of the same criminal

investigation and indictment that he complained of to the

bankruptcy court.

In light of Piperi’s conviction, on August 17, 1995, the

district court dismissed the consolidated appeal as moot. Piperi

filed a timely notice of appeal. We dismiss his appeal.

Discussion

Though neither Wilson nor First Heights object to the

1 Piperi does not dispute the bankruptcy court’s characterization of the evidence presented at the two hearings. Rather, he argues that the testimony presented “constituted sufficient evidence for the Bankruptcy Court to reasonably infer or to use its judicial imagination to determine that Piperi had a sound basis for a reasonable fear of prosecution.” The subsequent indictment (filed in federal district court on February 5, 1992) was not before the bankruptcy court at either hearing.

4 jurisdiction of this Court to hear this appeal for want of an

appealable order,2 we have the obligation to question subject

matter jurisdiction sua sponte. In re Greene County Hosp., 835

F.2d 589, 591 (5th Cir.), cert. denied, 109 S.Ct. 64 (1988); In re

Bowman, 821 F.2d 245, 246 (5th Cir. 1987). Piperi, without

elaboration, contends that we have jurisdiction under 28 U.S.C. §

158(d) because the bankruptcy court’s denial of his motion seeking

a stay, abatement, or abstention under 11 U.S.C. § 305 was a “final

order.” Piperi is wrong on both counts: First, the plain language

of 11 U.S.C. § 305(c) provides that a bankruptcy court’s denial of

such a motion is not appealable to the court of appeals; second, a

bankruptcy court’s refusal to stay its own proceedings is not an

appealable order under 28 U.S.C. §§ 158(d), 1291, or 1292.

Section 158(d) governs the jurisdiction of this Court over

bankruptcy appeals. Section 158(d) provides that “[t]he courts of

appeals shall have jurisdiction of appeals from all final

2 On July 30, 1996, First Heights filed with this Court a Motion To Dismiss Appeal as Moot. A motions panel of this Court entered an order denying the motion on August 28, 1996, and granted First Heights’ alternative motion to extend the date for submission of its brief. The interlocutory action of the motions panel does not preclude our jurisdictional inquiry. See United States v. Bear Marine Servs., 696 F.2d 1117, 1119-20 & n.6 (5th Cir. 1983) (holding that a motions panel’s refusal to dismiss an appeal does not preclude the merits panel from reconsidering the existence of appellate jurisdiction). On October 28, 1996, First Heights filed a Notice of Intent Not To File a Brief, stating that “First Heights has been unable to discern any practical result that would follow from a decision on this appeal.” Wilson, the remaining party to this appeal, has not filed a brief.

5 decisions, judgments, orders, and decrees entered under subsections

(a) and (b) of this section.” 28 U.S.C. § 158(d). Unlike the

district courts, which have discretionary jurisdiction to hear

interlocutory appeals from bankruptcy matters, 28 U.S.C. § 158(a),

the courts of appeals have no jurisdiction over interlocutory

bankruptcy appeals under section 158(d). The courts of appeal may

hear interlocutory bankruptcy appeals only if the appeal meets the

conditions of 28 U.S.C. § 1292. Connecticut Nat’l Bank v. Germain,

112 S.Ct. 1146, 1149-50 (1992).3 Piperi’s ability to bring this

appeal of the bankruptcy court’s denial of his motion depends on

his ability to meet the requirements of either section 158(d) or

section 1292.

I. 11 U.S.C. § 305

Piperi’s “First Amended Motion for Stay or Abatement of

Proceedings or Abstention under 11 U.S.C. § 305” prayed for

statutory relief provided by section 305(a)(1). Section 305(a)(1)

states:

“(a) The court, after notice and a hearing, may dismiss

3 Prior to Germain, this Circuit, and many others, held that section 158(d) provided the exclusive jurisdictional basis for bankruptcy appeals. Therefore, under prior law, an appeal could be taken “only if the underlying bankruptcy court order was final.” In re Delta Servs. Indus., 782 F.2d 1267, 1268 (5th Cir. 1986); see also In re Barrier, 776 F.2d 1298, 1299 (5th Cir. 1985) (citing In re Teleport Oil Co., 759 F.2d 1376, 1378 (9th Cir. 1985) (noting that “the availability of mandamus jurisdiction . . . and the less stringent definition of finality applied under § 158 limit any potential hardship caused by denying bankruptcy appellants access to this court through § 1292”)).

6 a case under this title, or may suspend all proceedings in a case under this title, at any time if—— (1) the interests of creditors and the debtor would be better served by such dismissal or suspension . . .” 11 U.S.C. § 305(a).

The bankruptcy court declined to grant the relief sought under

section 305(a) and denied Piperi’s motion for the reasons set forth

above. Piperi now appeals the bankruptcy court’s denial. Piperi’s

appeal, however, is barred by the plain language of section 305(c),

a subsection strikingly absent from Piperi’s brief. Section 305(c)

provides:

“(c) An order under subsection (a) of this section dismissing a case or suspending all proceedings in a case, or a decision not so to dismiss or suspend, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of title 28 or by the Supreme Court of the United States under section 1254 of title 28.” 11 U.S.C. § 305(c) (emphasis added).

We find the bankruptcy court’s denial of Piperi’s motion brought

under section 305 to be unappealable to this Court for a very

persuasive reason——Congress told us so. See In re Covey, 650 F.2d

877, 879-80 (7th Cir. 1981) (finding the “statutory prohibition [of

section 305(c)] against appellate review is clear and, therefore,

conclusive”); see also In re Rimsat, 98 F.3d 956, 962 (7th Cir.

1996); In re Goerg, 930 F.2d 1563, 1565-66 (11th Cir. 1991); In re

Axona Int’l Credit & Commerce Ltd., 924 F.2d 31, 35 (2d Cir. 1991);

In re Taylor, 913 F.2d 102, 104 n.1 (3d Cir. 1991). As section

305(c) precludes Piperi from pursuing his appeal to this Court

either under section 158(d), 1291, or 1292, we dismiss his appeal.

7 II. Other Bases of Jurisdiction

Even were we to assume that Piperi did not rely solely on the

statutory authority provided by section 305(a)4 in his motion for

the bankruptcy court to suspend its proceedings in his main

bankruptcy case and in the two adversary proceedings, and relied

instead on the inherent authority possessed by the bankruptcy court

to control its docket, we would nevertheless conclude that its

refusal to suspend its own proceedings was neither a final order

within the meaning of section 158(d) or 1291 nor appealable under

First, section 1292 is plainly inapplicable. The district

court’s dismissal of Piperi’s motion as moot was not an order

“granting, continuing, modifying, refusing or dissolving [an]

injunction[]” as set forth in section 1292(a)(1).5 An injunction

is qualitatively different from the stay/abatement/abstention

sought by Piperi. “An order by a federal court that relates only

to the conduct or progress of litigation before that court

4 There is absolutely no evidence in the record to suggest that Piperi relied on any other ground. Piperi’s motion was captioned as a prayer for relief pursuant to section 305. The hearings conducted by the bankruptcy court judge were silent as to the statutory basis for Piperi’s motion. The only basis cited in Piperi’s brief on appeal to the district court was section 305. Piperi’s brief before this Court similarly relies exclusively on section 305. 5 Section 1292(a)(1) is the only subsection even potentially applicable to Piperi’s appeal. The remaining subsections——dealing with receiverships (section 1292(a)(2)) and admiralty cases (section 1292(a)(3))——are inapposite. There has been no section 1292(b) certification by the district court.

8 ordinarily is not considered an injunction and therefore is not

appealable under § 1292(a)(1).” Gulfstream Aerospace Corp. v.

Mayacamas Corp., 108 S.Ct. 1133, 1138 (1988). The Supreme Court in

Gulfstream abandoned the Enelow-Ettelson doctrine——the only possible

ground that Piperi might have (but did not) asserted as supporting

jurisdiction.6 Although the Supreme Court acknowledged that

section 1292(a)(1) “will, of course, continue to provide appellate

jurisdiction over . . . orders that have the practical effect of

granting or denying injunctions,” id. at 1143, we have stated that

“[t]he question is not whether a stay can have the same result as

an injunction, but whether the stay has the effect of denying an

injunction——such as when a court stays proceedings in which one

party seeks a preliminary injunction,” Birenbaum, 860 F.2d at 171.

No such circumstances are present here. See In re Nichols, 21 F.3d

690, 693 (5th Cir.), cert. denied, 115 S.Ct. 422 (1994).

Second, the denial of a stay is not a final order. We have

held that “bankruptcy court orders that conclusively determine

substantive rights of parties [are] final and appealable,” Delta

6 Under the Enelow-Ettelson doctrine, an order by a federal court staying or refusing to stay its own proceedings was appealable under section 1292(a)(1) if (1) the action in which the order was entered was by its nature an action at law, and (2) the order either arose from or was based upon an equitable defense or counterclaim. Gulfstream, 108 S.Ct. at 1139; see Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169, 170-71 (5th Cir. 1988) (discussing the effect of Gulfstream on the Enelow-Ettelson doctrine); Tenneco Resins, Inc. v. Davy Int’l, AG, 770 F.2d 416, 418 (5th Cir. 1985).

9 Servs., 782 F.2d at 1270, and that “orders that constitute only a

preliminary step in some phase of the bankruptcy proceeding and

that do not directly affect the disposition of the estate’s assets

[are] interlocutory and not appealable,” id. at 1270-71. Examples

of “final” orders include orders granting a defendant’s summary

judgment motion and dismissing a complaint, In re County

Management, Inc., 788 F.2d 311, 312 (5th Cir. 1986), recognizing a

creditor’s security interest, In re Lift & Equip. Serv., Inc., 816

F.2d 1013, 1015 (5th Cir. 1987), disallowing an exemption, Delta

Servs., 782 F.2d at 1270, dismissing an objection to discharge,

id., and granting relief from the automatic stay, id.; see also

Greene County, 835 F.2d at 595 & n.22. Examples of interlocutory

orders include orders winding up a partnership prior to the final

turnover, In re Moody, 825 F.2d 81 (5th Cir. 1987), overruling

certain objections to a disclosure statement in anticipation of

confirmation of a Chapter 11 reorganization plan, In re First Fin.

Dev. Corp., 960 F.2d 23, 25-26 (5th Cir. 1992), appointing an

interim trustee, Delta Servs., 782 F.2d at 1271, authorizing a

special master to negotiate a sale of assets, id., denying

confirmation of Chapter 13 plan, id., and denying trustee’s

conversion motion, id.; see also Greene County, 835 F.2d at 595 &

n.23.

In similar contexts we have determined that a bankruptcy

court’s denial of a request for a stay——and a district court’s

10 subsequent decision to deny a stay pending appeal——were not “final

orders.” See In re Hester, 899 F.2d 361, 365 (5th Cir. 1990); In

re First South Savings Assoc., 820 F.2d 700, 708 (5th Cir. 1987);

In re Barrier, 776 F.2d 1298, 1299 (5th Cir. 1988) (citing In re

Emerald Oil Co., 694 F.2d 88 (5th Cir. 1982)).7

The present appeal is no less interlocutory. The bankruptcy

court’s order denying Piperi’s motion was not “‘one in which

nothing remain[ed] to be done but the mechanical entry of judgment

by the trial court.’” In re Nichols, 21 F.3d at 692 (quoting In re

Bowman, 821 F.2d 245, 247 (5th Cir. 1987)); see also In re County

Management, 788 F.2d at 313 (requiring “a ‘final determination of

the rights of the parties to secure the relief they seek in this

suit’ for an order to be considered final”). To the contrary, the

order (and the district court’s order dismissing Piperi’s appeal as

moot) had the opposite effect of allowing the main bankruptcy case

7 We recognize that Hester, First South, and Barrier were decided prior to the Supreme Court’s decision in Germain and reflect the former view of this Circuit that section 158(d) superseded sections 1291 and 1292 for bankruptcy appeals. See In re El Paso Elec. Co., 77 F.3d 793, 794-95 (5th Cir. 1996) (discussing Germain’s impact on Hester’s articulation of bankruptcy appellate jurisdiction). Nevertheless, their reasoning in this regard remains sound. As discussed above, a request for a stay is not the same as a request for an “injunction” for the purposes of section 1292. And as section 1291 employs, if anything, a stricter standard for finality than section 158(d), see In re Nichols, 21 F.3d 690, 692 & n.8 (5th Cir. 1994) (discussing the stricter standard of finality under section 1291 and the effect of Germain, if any, on the distinction); In re Wood & Locker, Inc., 868 F.2d 139, 144 (5th Cir. 1989), the availability of section 1291 as an avenue for appeal is of no help to Piperi.

11 and the adversary proceedings to continue.8 As “significant

further proceedings” on the merits were the natural result of the

bankruptcy court’s order, we hold that it was not a final order and

therefore is not appealable to this Court pursuant to either

section 158(d) or 1291.9 Piperi must contest the propriety of the

denial of his motion to stay, if at all, on an appeal of a final

order entered in his main bankruptcy case or in either of the

adversary proceedings.10

8 And continue they did. Piperi acknowledges that judgments have been entered in the main bankruptcy case and both adversary proceedings. 9 Nor do we believe that Piperi can find solace in the collateral order doctrine (or “Forgay-Conrad rule”). The collateral order doctrine, with its genesis in Cohen v. Beneficial Indus. Loan Corp., 69 S.Ct. 1221 (1949), and Forgay v. Conrad, 46 U.S. (6 How.) 201 (1848), provides a “narrow exception” for prejudgment orders that “finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen, 69 S.Ct. at 1225. To come within the collateral order doctrine, “‘an order must at a minimum satisfy three conditions: [1] it must conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, [3] be effectively unreviewable on appeal from a final judgment.’” In re Delta Servs., 782 F.2d at 1272 (quoting Richardson-Merrell, Inc. v. Koller, 105 S.Ct. 2757, 2761 (1985) (internal quotations omitted)). The requirements are conjunctive. Id. At a minimum, Piperi fails under the third prong. 10 We observe that a different panel of this Court dismissed Piperi’s appeal of the bankruptcy court’s denial of his motion to stay his main bankruptcy proceeding as moot. In re Piperi, No. 96- 20114 (5th Cir. Sep. 12, 1996). As the parallel proceedings that Piperi complained of to the lower courts have indeed concluded, we agree that it appears as though his appeal of the denial of his motion for a stay of those proceedings is moot.

12 Conclusion

Because Piperi’s appeal of the denial of his motion brought

under 11 U.S.C. § 305 is barred by statute, and because the

bankruptcy court’s order was an interlocutory order not appealable

under 28 U.S.C. §§ 158(d), 1291, or 1292, we DISMISS his appeal.

DISMISSED

As we have determined that Piperi must appeal the bankruptcy court’s action, if at all, on appeal of a final order in the main bankruptcy or in the adversary proceedings, his only alternative is the “extraordinary remedy” of a writ of mandamus (which Piperi has not requested). As the writ of mandamus “is not a means of correcting the district court’s unappealable orders,” Hester, 899 F.2d at 367, but rather an extraordinary and discretionary remedy to be reserved for “clear abuse[s] of discretion amounting to a judicial usurpation of power,” First South, 820 F.2d at 707, we have very considerable doubt as to whether Piperi’s situation now meets the requirements for its issuance, particularly as there is nothing to suggest that the main bankruptcy or either adversary proceeding remains pending.