Piperi v. First Heights Bank ( 1997 )

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this opinion should not be published and is not precedent except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. § 305Piperi’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
section 1292.
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.
13