Port Jefferson Station Auto Collision Corp. v. Bimco Industries, Inc. (In Re Bimco Industries, Inc.)

124 B.R. 623, 1991 U.S. Dist. LEXIS 7577, 1991 WL 34793
CourtDistrict Court, E.D. New York
DecidedMarch 14, 1991
DocketCV 90-2337
StatusPublished
Cited by5 cases

This text of 124 B.R. 623 (Port Jefferson Station Auto Collision Corp. v. Bimco Industries, Inc. (In Re Bimco Industries, Inc.)) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Port Jefferson Station Auto Collision Corp. v. Bimco Industries, Inc. (In Re Bimco Industries, Inc.), 124 B.R. 623, 1991 U.S. Dist. LEXIS 7577, 1991 WL 34793 (E.D.N.Y. 1991).

Opinion

MEMORANDUM AND ORDER

WEXLER, District Judge.

Port Jefferson Station Auto Collision Corp. (“PJS”), a New York corporation, seeks leave to appeal from an order of the Honorable Cecelia H. Goetz, United States Bankruptcy Judge, dated May 17, 1990, which enjoined PJS from proceeding with an action for declaratory relief in state court. That state action arose out of a dispute regarding a lease for real property executed between PJS and Bimco Industries, Inc. (“Bimco” or “debtor”), a New York corporation which has filed a petition in bankruptcy for Chapter 11 reorganization. Bimco opposes PJS’ motion for leave to appeal on the grounds that an order enjoining PJS from bringing an action in state court is an interlocutory order, and further argues that in this case the Court should deny leave to appeal such an order. For the reasons stated below, leave to appeal is denied.

BACKGROUND

During the period May through July of 1989, PJS negotiated with Bimco for a lease of real property owned by Bimco which would be used by PJS as an auto body shop. Under the terms of the lease, Bimco had 30 days in which to obtain approval of the lease by the bankruptcy court. Although Bimco’s attorney submitted the lease to the Court on July 27, 1989, thereafter the matter was marked off the calendar, subject to restoration. The matter was eventually restored, and on October 17, 1989, the bankruptcy court approved the lease subject to the execution of a rider containing various modifications. PJS claims that no rider was ever submitted to it for signature, nor was any lease executed by Bimco delivered to PJS.

While the parties waited for the bankruptcy court to approve the lease, the Town of Brookhaven amended its zoning ordinance, and consequently the previously permitted use of a body shop on Bimco’s property became unlawful. PJS claims that Bimco’s attorney refused to modify the lease so as to take into consideration the change in the law.

DISCUSSION

A. Jurisdiction

As a preliminary matter, PJS contends that the bankruptcy court failed to obtain jurisdiction over it, since a proceed^ ing to obtain an injunction is an adversary proceeding and “[n]o complaint was ever filed with the Bankruptcy Court, nor was any summons issued ... or served on the Appellant” pursuant to Bankruptcy Rules 7003 and 7004. See Appellant’s Response at 3. The Second Circuit has held, however, that a bankruptcy court may have jurisdiction to issue an injunction enjoining a party from suing in state court. See In *625 re Johns-Manville Corp., 801 F.2d 60, 63-64 (2d Cir.1986). More particularly, where the request for the injunction may be characterized as a core proceeding, and therefore by definition concern the administration of the estate, it appears that the bankruptcy court’s power to do so is clear. See id. (quoting In re Johns-Manville Corp., 52 B.R. 879, 890 (Bankr.S.D.N.Y.1985)).

In this case, an action in state court contesting the validity of the lease would undoubtedly affect the administration of the estate. Moreover, it has been noted that a motion to enjoin an action in another court is a core proceeding for bankruptcy purposes. See 1 Collier on Bankruptcy para. 3.01[2][b][iii] at 3-39 (15th Ed.1990). Based on these principles, this Court holds that the bankruptcy court possessed sufficient jurisdiction so as to issue the injunction.

B. Finality of the Judgment

As a general rule, a final judgment is “one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’’ Catlin v. United States, 324 U.S. 229, 65 S.Ct. 631, 89 L.Ed. 911 (1945) (citations omitted). In contrast, an interlocutory order is “one which does not finally determine a cause of action but only decides some intervening matter pertaining to the cause, and which requires further steps to be taken in order to enable the court to adjudicate the cause on the merits.” 1 Collier on Bankruptcy, para. 3.03[6][b] at 3-182 (15th Ed.1990).

Considering these general principles, it is obvious that the Bankruptcy Court order did not end the litigation on the merits, since the merits of the case pertain to the validity of the lease. Clearly, the bankruptcy court order merely enjoined PJS from contesting the validity of the lease in state court, and inasmuch as an ultimate determination was never made as to the validity of the lease, the merits were never reached. PJS nevertheless contends that since the only issue before the Court was the injunction barring it from continuing its state court action, “there remained nothing for the Court to do but execute its judgment.” See Appellant’s Response at 4.

This same type of argument was rejected in In re Tidewater Group, Inc., 22 B.R. 500 (N.D.Ga.1982), appeal dismissed, 734 F.2d 794 (11th Cir.1984). In that case, the district court determined that a bankruptcy court’s order denying confirmation of a settlement agreement was not a final order because, although the order finally determined the settlement issue, “it [did] not end the litigation, it [did] not decide the merits, it [did] not determine the rights of the parties in the disputed contract, it settle^] no liability, and established] no damages.” Id. at 504 (citations omitted); see also In re Lady Madonna Industries, Inc., 76 B.R. 281, 284-85 (S.D.N.Y.1987).

A number of courts have held, however, that a bankruptcy court order need not fully and finally resolve a case to be deemed a final order. See, e.g., In re Beker Industries Corp., 89 B.R. 336, 340 (S.D. N.Y.1988); In re Chateaugay Corp., 64 B.R. 990, 996 (S.D.N.Y.1986). Nonetheless, applying either a relaxed standard of finality, or applying a more stringent approach, this Court holds that the bankruptcy court order herein is interlocutory and non-final. Accordingly, it is within the discretion of this Court to grant or deny leave to appeal. See 28 U.S.C. § 158(a) (1990).

C. Appealability

Pursuant 28 U.S.C. § 158(a), appeals from interlocutory orders in bankruptcy cases are available only if leave to appeal is granted by the district court. Generally, courts have denied appeals from interlocutory orders in bankruptcy cases on the ground that appeals of preliminary, non-final orders “would contravene the well-established judicial policy of discouraging interlocutory appeals and avoiding the delay and disruption which results from such piecemeal litigation.” In re Casco Bay Lines, Inc., 8 B.R. 784, 786 (Bankr. 1st Cir.1981) (citation omitted); see also In re Manville Forest Products Corp., 47 B.R. 955, 957 (S.D.N.Y.1985).

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124 B.R. 623, 1991 U.S. Dist. LEXIS 7577, 1991 WL 34793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/port-jefferson-station-auto-collision-corp-v-bimco-industries-inc-in-nyed-1991.