Opinion
99-CV-0802E(Sr)
June 12, 2000
ATTORNEYS FOR THE APPELLANT, Garry M. Graber, Esq. and Stephen L. Yonaty, Esq., c/o Hodgson Russ Andrews Woods Goodyear, Buffalo, N Y 14203.
ATTORNEYS FOR THE APPELLEE, James D. Gauthier, Esq. and Ann E. Evanko, Esq., c/o Hurwitz Fine, Buffalo, N Y 14202.
MEMORANDUM and ORDER
The Debtor in this Chapter 7 bankruptcy action appeals from an August 26, 1999 Order ("Order") of the United States Bankruptcy Court, Western District of New York, granting, inter alia, a "money judgment" to the Chapter 7 Trustee and against the Debtor in an amount of $53,000. For the reasons hereinbelow stated, such appeal is interlocutory and will be dismissed.
The relevant facts are not in dispute and are briefly recited. The Order from which the Debtor desires relief originated out of a July 20, 1999 Order to Show Cause whereby the Trustee sought, inter alia, restitution for the conversion of a non-exempt Canadian Registered Retirement Savings Plan ("RRSP"), imposition of sanctions and attorney's fees associated therewith and holding the Debtor in contempt of Court for knowingly converting the funds in the RRSP. This Order to Show Cause issued after the Trustee discovered that, upon seeking an accounting and turnover of the funds in the RRSP, the RRSP had been liquidated with the participation of the Debtor and in violation of prior stipulations and court orders. After a hearing on the matter August 11, 1999 and during which the Debtor submitted no testimony or materials in support of his position, the Bankruptcy Court ruled that, because the Debtor had "participated in a conversion of . . . non-exempt assets," the Debtor must" make restitution of said assets to the estate . . ." Order, at 3. Such restitution was to be secured by granting the Trustee a "money judgment" — actually, a lien — in the amount of $53,000 on certain real property ("the Real Property Asset") that Debtor had recently acquired but "provided . . . that the Trustee shall not enforce the Judgment and Order against the Real Property Asset without further Order of this Court." Id. (emphasis added). The Bankruptcy Court also did not endeavor to delineate the precise contours of the judgment, merely stating that such amount "shall secure full and complete restitution to the debtor's estate, payment of the [T]rustee's legal fees, and other sanctions or damages as may be ordered by this Court." Id. The instant appeal by the Debtor followed.
The threshold question for this Court is whether this appeal is ripe for consideration, inasmuch as district courts only "have jurisdiction to hear appeals from final judgments, orders and decrees, and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges." 28 U.S.C. § 158 (a) (emphasis added). With respect to a claim for damages, a bankruptcy court order is considered to be final when "all of the issues pertaining to a discrete claim, including issues as to the proper relief," have been resolved. In re Fugazy Express, Inc., 982 F.2d 769, 776 (2d Cir. 1992). While the implementation of finality in bankruptcy proceedings is, by necessity, more flexible than in other types of civil litigation, "given the strong federal policy against piecemeal appeals," a final order must end litigation on the merits of particular claims within the larger bankruptcy case and leave nothing more for the court to do but execute the judgment on those decided claims. Id. at 775-776; In re Wicheff, 215 B.R. 839, 843 (B.A.P. 6th Cir. 1998). An appeal from an interlocutory order, in contrast, should only be granted by this Court under "exceptional" circumstances and where three statutory prerequisites are satisfied. 28 U.S.C. § 1292 (b); see also In re Bimco Indus., Inc., 124 B.R. 623, 625-626 (E.D.N Y 1991) ("In determining whether leave to appeal should be granted from interlocutory decisions of bankruptcy courts, district courts have consistently applied the standards provided by 28 U.S.C. § 1292 (b), which governs interlocutory appeals of district court order to the circuit courts."); In re Manville Forest Products Corp., 47 B.R. 955, 956 (S.D.N.Y. 1985). Firstly, a controlling question of law must be involved; secondly, the question must be one in which there is substantial ground for difference of opinion; thirdly, an immediate appeal must materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292 (b).
Turning to the instant matter, it is this Court's determination that, under any of the aforementioned criteria, plaintiff's appeal should be dismissed. However inartfully crafted, it is clear from the face of the Order that such "security" in the Real Property Asset is unenforceable unless and until directed otherwise by the Bankruptcy Court. In no uncertain terms, the Order declares that "judgment shall not be exercised and enforced against the Real Property Asset without further Order of this [Bankruptcy] Court." Order, at 3. Indeed, the "money judgment" is perhaps better described as a writ of attachment, inasmuch as the $53,000 acts merely as a ceiling beyond which the Trustee's grievances are unsecured. Such a construction is firmly grounded in the language of the Order. See id. at 2 ("a lien or other attachment . . . is appropriate to secure full and complete restitution"); id. at 3 ("the Real Property Asset [shall] act as security for, or payment of, the monies due or to become due the debtor's estate"). In short, no sum certain was ever awarded and all such calculations remain unrealized. That said, the Order simply can not be construed to be sufficiently final as to warrant an appeal as of right. See, e.g., Wicheff Merrimac v. Sved, 128 B.R. 874 (S.D.N.Y. 1991). An interlocutory appeal is also not warranted in this matter inasmuch as the Debtor has failed to show that an immediate appeal of the Order would materially advance the ultimate termination of the present litigation. Rather and as amply demonstrated by the Trustee, hearing such appeal will only "delay and disrupt the final adjudication of the issues" in this bankruptcy process. Trustee's Brief, at 14. The mere incantation that the Bankruptcy Court exceeded its powers under 11 U.S.C. § 105(a) — powers that provide, by statutory design, for the issuance of "any order, process, or judgment . . . necessary or appropriate to carry out the provisions of the Bankruptcy Code — and that constitutional rights were violated is not sufficient to initiate interlocutory appellate consideration where the effectuation of the interim Order remains incomplete, unresolved and unknown. Moreover, hearing an appeal of the Order, without "being able to address the Debtor's probable challenge to the appropriateness of any sanction levied, should any sanctions ever be levied in the future against the Debtor, will result in waste of judicial resources through needlessly duplicative proceedings . . . Wicheff, at 844 (emphasis added). In the absence of a "further Order" from the Bankruptcy Court, the undersigned declines the Debtor's invitation to rule on the propriety of the Order.
Accordingly, because no final order has issued and because an interlocutory appeal would not advance the underlying bankruptcy action, it is hereby ORDERED that the instant appeal is dismissed as premature but without prejudice.