The Bankruptcy Appellate Panel of the Sixth Circuit recently held that a post-confirmation motion to dismiss a bankruptcy case is not a final order that is immediately appealable.
In this case, the appellants filed a judgment lien against debtor, who subsequently filed for Chapter 13 bankruptcy. Debtor sought to avoid the judgment lien, and appellants filed an objection to the confirmation plan. Appellants and debtor resolved the majority of appellants’ objections. The court confirmed the debtor’s plan, and appellants did not appeal from the confirmation order. Instead, they filed a motion to dismiss, seeking dismissal of the bankruptcy case.
The Panel acknowledged that Six Circuit’s recently prescribed two-step approach to determining whether an order of a bankruptcy court is immediately appealable under 28 U.S.C. § 158(a)(1), which provides that a bankruptcy court’s order may be immediately appealed if it is (1) entered in a proceeding, and (2) final — i.e., terminating that proceeding.” The Panel also acknowledged the Cyberco factors, which the Sixth Circuit endorsed as useful determinants of the meaning of finality in the bankruptcy context: (1) the impact on the assets of the bankrupt estate; (2) the necessity for further fact-finding on remand; (3) the preclusive effect of [its] decision on the merits of further litigation; and (4) the interest of judicial economy.
Applying the Sixth Circuit’s approach, the Panel held:
[T]he order denying the Deans’ motion to dismiss resolved the contested matter, it is true, but it did not resolve the relevant judicial unit and certainly did not change the rights of the parties as they existed when the Deans filed their motion. . . . The order has no impact on assets or the status quo. Because the decision does not affect anyone’s substantive rights or the status quo, the remaining three Cyberco factors also suggest that the denial of the motion should not be subject to immediate appeal. . . . The order denying the Deans’ dismissal motion is not itself preclusive on any issues because it simply enforced the preclusive effect of the confirmation order, which was no longer appealable given the passage of time. And, for similar reasons, judicial economy is not served by allowing what amounts to an untimely appeal of the confirmation order by disappointed unsecured creditors.
Therefore, when the Bankruptcy Court entered its confirmation order, it fixed the rights and obligations of the Debtor and her creditors and altered the status quo and the legal relationships among the parties. This was the final order from which the Deans should have appealed. But when the court denied the Deans’ motion to dismiss, the relevant “judicial unit” remained pending, and the status quo and the legal relationships of the parties, established at confirmation, remained unchanged. Although this way of looking at finality may seem unsatisfying because intuitively litigants and courts tend to prefer the tidiness of symmetry (e.g., any decision on a motion to dismiss is appealable) to asymmetry (e.g., the finality of an order is dependent on the outcome), and we assume that every order may be reviewed on appeal, the Supreme Court sees finality differently. That said, asymmetrical or outcome-dependent appellate rights already exist in ordinary civil litigation, such as the asymmetrical review of rulings under Rule 56.
Read the full opinion here.