Whitaker v. Arthur Anderson, L.L.P. (In Re Doerner, Saunders, Daniel & Anderson, L.L.P.) , 99 F. App'x 179 ( 2004 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
MAY 13 2004
TENTH CIRCUIT
PATRICK FISHER
Clerk
In re: DOERNER, SAUNDERS,
DANIEL & ANDERSON, L.L.P.;
COMMERCIAL FINANCIAL
SERVICES, INC., and the CFS No. 03-5082
Liquidating Trustee, (D.C. No. 02-CV-483-K)
(N.D. Okla.)
Debtors.
________________
LLOYD S. WHITAKER, Trustee of
the ABS Liquidating Trust; THE
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF
COMMERCIAL FINANCIAL
SERVICES, INC.; OFFICIAL
COMMITTEE OF ASSET-BACKED
SECURITYHOLDERS,
Plaintiffs,
and
UNSECURED CREDITORS
LIQUIDATING TRUST, and its
Liquidating Trustee,
Plaintiff - Appellant,
v.
ARTHUR ANDERSON, L.L.P.,
Defendant - Appellee,
and
DOERNER, SAUNDERS, DANIEL &
ANDERSON, L.L.P.; COMMERCIAL
FINANCIAL SERVICES, INC., and
the CFS Liquidating Trustee,
Appellees.
________________
ABS LIQUIDATING TRUST;
BRADLEY D. SHARP, Liquidating
Trustee,
Trustees.
ORDER
Before EBEL, BARRETT, and KELLY, Circuit Judges. *
This matter comes on for consideration of Appellee Doerner, Saunders,
Daniel & Anderson, L.L.P.’s (“DSDA’s”) Motion to Dismiss for Lack of
Appellate Jurisdiction. Upon consideration thereof,
(1) Appellant, the Unsecured Creditors Liquidating Trustee, on behalf of
the Unsecured Creditors Liquidating Trust (referred to as “UCLT”), seeks to
appeal from the district court’s order determining that the DSDA law firm would
not be disqualified from certain proceedings. The district court held that UCLT
*
After examining the briefs and the appellate record, this three-judge panel
has determined unanimously that oral argument would not be of material
assistance in the determination of this appeal. See Fed. R. App. P. 34(a); 10th
Cir. R. 34.1(G). The cause is therefore ordered submitted without oral argument.
-2-
lacked standing to disqualify DSDA and then decided the merits of the
disqualification issue. UCLT does not appeal from the district court’s holding
that UCLT lacked standing. Aplt. Response to Aplee. Motion to Dismiss at 17.
(2) DSDA represented the Debtor, Commercial Financial Services, Inc.
(“CFS”), in labor and employment matters prior to and during the bankruptcy
proceedings. See 11 U.S.C. § 327(e) (special purpose representation). That
representation has ended. UCLT sought to disqualify DSDA from representing
CFS’s former auditor/accountant, Arthur Andersen, L.L.P. (“AA”), in a federal
securities fraud action brought against AA by CFS bondholders. Neither CFS nor
UCLT are parties to the federal securities action. CFS has filed suit against AA,
but in state court. Although DSDA represents AA in the federal securities action,
DSDA does not represent AA in the state court action.
(3) UCLT sought a variety of remedies (including disqualification) against
DSDA based upon conflict. Concluding that it lacked jurisdiction to afford
DSDA complete relief, the bankruptcy court asked the district court to withdraw
the reference to bankruptcy court. The district court withdrew the reference
solely as to the remedy of disqualification. No court has addressed the other
remedies sought by UCLT.
(4) The district court held that UCLT lacked standing in the bankruptcy
proceeding to pursue disqualification of DSDA in the federal securities matter
-3-
without having first sought an order requiring CFS to intervene and to seek
disqualification in those other proceedings. Relying upon an unpublished order
and judgment, Wind River Multiple Use Advocates v. Espy, No. 94-8031, 1996
WL 223925, at *1 n.2 (10th Cir. May 3, 1996), that approved of making a merits
determination even if a plaintiff lacks standing, the district court then decided
that disqualification was not warranted. 1 The district court declined to remand the
disqualification issue to the bankruptcy court for findings and conclusions
because it would not affect the outcome given the district court’s conclusion that
any rule which might require disqualification would be a new rule that should not
be applied retroactively. Although declaring its order final, the district court
remanded the matter to the bankruptcy court, presumably to consider the balance
of the relief sought by UCLT.
(5) We lack jurisdiction over this matter. At the outset, it should be noted
that where a district court’s decision is supported on alternate independent
grounds (here, standing and the merits), the failure to appeal both of those
grounds dooms the appeal. Berna v. Chater, 101 F.3d 631, 633 (10th Cir. 1996);
Murrell v. Shalala, 43 F.3d 1388, 1389-90 (10th Cir. 1994); Atwood v. Union
Carbide Corp., 847 F.2d 278, 280 (5th Cir. 1988). In this case, any opinion on the
1
Wind River was decided before more recent Supreme Court authority
which disapproved of the use of “hypothetical jurisdiction” and resultant advisory
opinions. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998).
-4-
merits of the conflict of interest question would be wholly advisory and would not
alter the outcome (no disqualification) of the order from which UCLT appeals.
See Hall v. U.S. Fiber & Plastics Corp., 476 F.2d 418, 420-21 (3rd Cir. 1973) (per
curiam) (dismissing as moot an appeal where plaintiff only appealed district
court’s finding of patent invalidity and not its finding of defendant’s non-
infringement). Although UCLT is concerned about the preclusive effect of the
district court’s order insofar as obtaining other relief in the bankruptcy court, the
district court’s opinion on the merits of the conflict question was by its own
admission advisory and made without consideration of all relevant factual and
legal issues. In the alternative, the bankruptcy court has yet to rule on those
issues in the context of other relief, let alone have its ruling appealed. See 28
U.S.C. § 158(a); cf. Hall, 476 F.2d at 420-21 (noting any preclusive effect of a
ruling would have to be determined by court where preclusion is asserted; such
preclusive effect, if any, would not overcome the necessity of a case or
controversy and the prohibition on advisory opinions).
We GRANT DSDA’s motion to dismiss and DISMISS this appeal.
Entered for the Court
Paul J. Kelly, Jr.
Circuit Judge
-5-