- Category: Judge Karlin
- Published: 29 May 2009
- Written by Judge Karlin
U.S. Bankruptcy Appellate Panel
of the Tenth Circuit
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 1 of 6
May 22, 2009
Barbara A. Schermerhorn
NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE TENTH CIRCUIT
IN RE CHEYENA HOUSTON
KLEINHANS, also known as CheyenaHouston,
DANIEL A. HEPNER,
Plaintiff – Counter-
Defendant – Appellant,
ROBERT LAWRENCE PERRY,
Defendant – Counter-
Plaintiff – Appellee.
BAP No. CO-08-056
Bankr. No. 07-19376-SBB
Adv. No. 08-01067-SBB
Appeal from the United States Bankruptcy Courtfor the District of Colorado
Before NUGENT, THURMAN, and KARLIN, Bankruptcy Judges.
KARLIN, Bankruptcy Judge.
This appeal arises out of an adversary proceeding filed by the Chapter 7
trustee (“Trustee”), wherein he seeks to avoid the debtor’s post-petition transfer
of title to a mobile home. Defendant/counter-claimant, Robert Perry (“Perry”),
appeals the bankruptcy court’s judgment dismissing his counterclaims. Because
the order sought to be appealed is not final, this Court is without appellate
* This unpublished opinion is not binding precedent, except under thedoctrines of law of the case, res judicata, and collateral estoppel. 10th Cir. BAP
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 2 of 6
jurisdiction and the appeal must be DISMISSED.
Debtor, Cheyena Kleinhans1 (“Debtor”), purchased a mobile home in
Colorado in August 2007. Perry contends that he and Debtor purchased the
mobile home together, but that he gave Debtor his half interest to offset costs she
had incurred for their wedding. He also contends that he and Debtor had agreed
that he would regain his ownership interest by making repairs to the mobile home,
and that he had begun those repairs when Debtor filed her Chapter 7 petition on
August 23, 2007.
Debtor then attempted to convey the mobile home to Perry on or about
October 18, 2007. Trustee filed an adversary proceeding against Perry in January
2008, seeking to avoid that post-petition transfer of title to the mobile home.
Perry filed several counterclaims in the adversary proceeding, all of which were
in the nature of misconduct allegations against Trustee.
Trustee filed a motion to dismiss the counterclaims, to which Perry did not
respond. However, on June 5, 2008, the bankruptcy court conducted a hearing on
the motion to dismiss, and allowed Perry to argue in opposition to that dismissal
motion. On June 6, 2008, the bankruptcy court entered both an order granting the
motion to dismiss and a judgment denying it. Perry filed a notice of appeal from
the judgment dismissing his counterclaims on June 16, 2008.2
Trustee’s claims had not been adjudicated when the notice of appeal was
filed. Although the bankruptcy court’s docket sheet reflects that the matter was
1 Due to an apparent computer database error at case opening, debtor’s lastname was incorrectly spelled as “Kleinhaus.” From papers filed in this Court, ithas become apparent that the debtor’s last name is “Kleinhans.” The caption inthis appeal has been amended accordingly.
2 A corrected judgment, granting the motion to dismiss, was signed on June12, 2008, “nunc pro tunc, June 5, 2008,” and entered on June 13, 2008. The
notice of appeal was filed within ten days of the judgment appealed, whether thejudgment is treated as having been entered on June 5, 6, 12, or 13th.
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 3 of 6
tried on January 14-15, 2009, no final order had been entered resolving those
claims as of the date this appeal was argued.
II. APPELLATE JURISDICTION
This Court has jurisdiction to hear timely filed appeals from “final”
judgments of bankruptcy courts within the Tenth Circuit, unless one of the parties
elects to have the district court hear the appeal.3 Since neither party elected to
have this appeal heard by the United States District Court for the District of
Colorado, the parties have consented to appellate review by this Court.
Neither party to this appeal raises the issue of this Court’s appellate
jurisdiction. In fact, when questioned during oral argument, Trustee suggested
that the dismissal judgment should be considered final pursuant to Federal Rule of
Civil Procedure 54(b) (“Rule 54(b)”), contending that was the implicit intent of
the parties and the bankruptcy court.4 However, an appellate court has “an
independent duty to inquire into its jurisdiction over a dispute, even where neither
party contests it and the parties are prepared to concede it.”5
A decision is considered final “if it ‘ends the litigation on the merits and
leaves nothing for the court to do but execute the judgment.’”6 The bankruptcy
court’s judgment dismissing Perry’s counterclaims did not end the litigation
between these parties, however, which continued to trial long after Perry had filed
3 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8002.
4 Rule 54(b) is made applicable to bankruptcy proceedings by Federal Ruleof Bankruptcy Procedure 7054. Although the bankruptcy court’s use of ajudgment, rather than an order, to dismiss the counterclaims may be suggestive offinality, none of the orders or judgments that were entered on the counterclaimsactually contain a Rule 54(b) certification.
5 In re Am. Ready Mix, Inc., 14 F.3d 1497, 1499 (10th Cir. 1994).
6 Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996) (quoting Catlin
v. United States, 324 U.S. 229, 233 (1945)).
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 4 of 6
his notice of appeal.7 Therefore, the judgment sought to be appealed is not final
for the purposes of an appeal.
There are limited exceptions to the final judgment rule, one of which is
Rule 54(b), the rule upon which the parties orally rely for finality of the judgment
at issue in this appeal. However, Rule 54(b) does not provide finality in all cases:
Significantly, Rule 54(b) does not eliminate the need for finality.
Rather, it simply allows a trial court to find that its judgment either
(1) fully and finally disposes of one or more, but less than all, of the“claims” in the action, or (2) resolves all claims against one or more,
but less than all, of the parties, and that it is appropriate forimmediate appeal (i.e., that “there is no just reason for delay”). Thus,
under Rule 54(b), a trial court must determine, first, whether its orderis “final” and, if so, whether the relief granted is sufficientlyseparable that an immediate appeal of the order makes sense withinthe context of the entire case.8
In applying Rule 54(b), the court must weigh the “policy of preventing piecemeal
appeals against the inequities that could result from delaying an appeal.”9
In order to fit within the Rule 54(b) exception to the final order rule, an
order sought to be appealed must, therefore: 1) satisfy one of the definitions of
finality in Rule 54(b); 2) contain an express certification that “there is no just
reason for delay”; and 3) have resulted from the bankruptcy court’s “consideration
and determination” of the no just reason for delay standard.”10 The appealed
judgment contains no such certification and, in fact, does not even mention Rule
7 See DeLuca v. Mountain States Financial Resources Corp., 827 P.2d 171
(Okla. 1992) (holding order dismissing counterclaim was not “final appealable
order” because it left parties in court on claims against counter-claimant); Cf.
Bohn v. Park City Group, Inc., 94 F.3d 1457, 1459 (10th Cir. 1996) (holding that
an order dismissing plaintiff's complaint was not a final appealable order because
the order did not dispose of a counterclaim).
8 In re Sukut, 380 B.R. 577, 583 (10th Cir. BAP 2007).
9 Stockman's Water Co., LLC v. Vaca Partners, L.P., 425 F.3d 1263, 1265
(10th Cir. 2005) (also finding that “certification is appropriate only when the
district court ‘adheres strictly to the rule’s requirement that a court make two
express determinations,’” quoting Okla. Tpk. Auth. v. Bruner, 259 F.3d 1236,
1242 (10th Cir. 2001)).
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 5 of 6
“The purpose of the express determination and direction requirement is to
ensure that the parties can judge the effect of the order entered, including the right
of, or obligation to appeal.”11 Failure to clearly signify to the potential appellant
that the order is being deemed final could either result in that party losing his or
her appeal rights, or in encouraging protective, premature appeals from orders that
were not final.12 Accordingly, because the order from which appellant appealed
did not clearly certify the order as final under Rule 54(b), this Court does not have
appellate jurisdiction over this appeal.
This Court also considered whether it could exercise its discretion to treat
Perry’s timely filed notice of appeal as a motion for leave to appeal an
interlocutory order.13 However, “[l]eave to hear appeals from interlocutory orders
should be granted with discrimination and reserved for cases of exceptional
circumstances. Appealable interlocutory orders must involve a controlling
question of law as to which there is substantial ground for difference of opinion,
and the immediate resolution of the order may materially advance the ultimate
11 Smith, F.M., Moore’s Federal Practice - Civil § 54.21 (2009), citing Sears,
Roebuck & Co. v. Mackey, 351 U.S. 427, 435-436 (1956) (purpose of expressdetermination and direction requirement is to make appealability of order clear sothat party adversely affected knows that time to appeal does not begin to run untilcertification has been made); and Dickinson v. Petroleum Conversion Corp., 338
U.S. 507, 512 (1950) ("obvious purpose" is to provide "opportunity for litigants toobtain from the District Court a clear statement of what that court is intendingwith reference to finality, and if such a direction is denied, the litigant can at leastprotect himself accordingly").
12 Id., noting that, “Rule 54(b), as originally drafted, did not require anexpress determination and direction for entry of judgment; instead, if the courtmade an order finally disposing of one claim in a multi-claim action, the orderwas appealable under Rule 54(b) without the necessity of any further action bythe court. That original version of the rule proved problematic, because it causedsome parties to file protective, premature appeals from orders that were not final.
It also resulted in some parties losing the right of appeal because of their failureto realize that the order was appealable under the rule as then drafted. To address
these concerns, the rule was amended in 1946 to require the express determinationand direction of entry of judgment.”
13 28 U.S.C. § 158(a)(3); Fed. R. Bankr. P. 8003(c).
BAP Appeal No. 08-56 Docket No. 62830 Filed: 05/22/2009 Page: 6 of 6
termination of the litigation.”14 Not only has there been no request for permission
to appeal a non-final order, but this case is simply not an appropriate one for the
granting of such relief.
Since the judgment sought to be appealed did not fully resolve all issues in
the adversary proceeding, as Trustee’s claims against Perry remained to be
adjudicated, it lacks finality and may not be appealed at this time. Because this
Court may not exceed its jurisdictional grant, which requires finality of
judgments, this appeal is dismissed.
Personette v. Kennedy (In re Midgard Corp.), 204 B.R. 764, 769 (10th Cir.
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