Sitka Enterprises, Inc. v. Segarra Miranda , 795 F.3d 288 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14-1562
IN RE: JOSÉ DE JESÚS GONZÁLEZ; NIXSA GARCÍA REYES,
Debtors
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SITKA ENTERPRISES, INC.; BERRIOS & LONGO LAW OFFICE, P.S.C.;
FERNANDO E. LONGO QUINONES,
Appellants,
v.
WILFREDO SEGARRA MIRANDA; MRS. JANE SEGARRA
and their conjugal partnership; V.B. RENTAL, INC.;
VDJ LIMITED PARTNERSHIP, S.E.; BANCO POPULAR DE
PUERTO RICO; JOSÉ DE JESÚS GONZÁLEZ; XYZ INSURANCE;
UNKNOWN COLLABORATORS; JOHN DOE COMPANY; JOHN DOE;
UNKNOWN INSURANCE COMPANY,
Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Howard, Chief Judge,
Lynch and Thompson, Circuit Judges.
Edilberto Berríos Pérez on brief for appellants.
Eldia M. Díaz-Olmo on brief for appellees.
July 31, 2015
LYNCH, Circuit Judge. Appellants purport to appeal in
order to reverse a bankruptcy court's denials of their motion for
a jury trial and motion to remand to state court. We conclude we
have no jurisdiction because the bankruptcy court's orders were
not final, as the district court also found, and so we dismiss the
appeal.
The bankruptcy case of which this proceeding is a part
began in 2002, when debtors José De Jesús González and Nixsa García
Reyes filed a petition under Chapter 13 of the Bankruptcy Code in
bankruptcy court in the District of Puerto Rico. The case was
later converted to a Chapter 7 proceeding. A decade later, in
2012, the appellants, to whom we will refer collectively as Sitka,
filed a complaint in Arecibo Superior Court in Puerto Rico against
the Trustee in bankruptcy, Wilfredo Segarra Miranda, and other
defendants. Segarra removed the state case to the bankruptcy court
on the ground that it was "a core proceeding that arises in" the
bankruptcy case for which he was Trustee. See 28 U.S.C.
§§ 157(b)(2), 1334(b), 1452(a).
Once in bankruptcy court, Sitka filed two motions
relevant here: a motion for a jury trial and a motion requesting
remand to Arecibo Superior Court. The bankruptcy court denied
both motions in two separate orders issued on February 20, 2013.
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Sitka separately appealed each of the February 20 denial
orders to the district court. The appeal from the denial of the
motion for a jury trial was assigned docket number 13-1288, and
the appeal from the denial of the request for remand was assigned
docket number 13-1289. The district court consolidated the two
cases, along with a third case, and directed that all filings be
made under No. 13-1288.
On March 31, 2014, the district court dismissed the
appeals in No. 13-1288 and No. 13-1289, holding that it lacked
jurisdiction because both of the underlying bankruptcy court
orders were non-final. Two days later, the court entered judgment
in each case.1
On May 1, 2014, Sitka filed a notice of appeal to this
court in No. 13-1288, but not in No. 13-1289. The notice purports
to appeal "from the Opinion and Order and Judgment . . . dated
March 31, 2014 . . . dismissing the appeal filed under Civil No.
13-1288 as the order denying remand and the request for jury trial
are allegedly interlocutory non-final order[s]."
Sitka's brief is nearly incomprehensible. Its primary
arguments appear to be (1) the bankruptcy court should have
1 Because judgment entered on April 2, 2014, Sitka's May
1, 2014, notice of appeal was filed on the 29th day of the 30-day
appeal period. See Fed. R. App. P. 4(a)(1)(A), 26(a)(1)(A).
Segarra's argument that we should dismiss these appeals as untimely
is without merit.
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remanded the case to the Arecibo Superior Court pursuant to the
mandatory abstention provision of 28 U.S.C. § 1334(c)(2), and (2)
the bankruptcy court erred in denying the motion for a jury trial.
Sitka makes no meaningful effort to address the jurisdictional
issues that prompted the district court to dismiss the appeal,
even though it has an obligation to do so. See United States v.
Gonzalez-Rodriguez, 777 F.3d 37, 39 (1st Cir. 2015) (citing
Calderón-Serra v. Wilmington Trust Co., 715 F.3d 14, 17 (1st Cir.
2013)). Segarra argues (1) our review must be limited to the
district court's decision as to the motion for a jury trial,2 and
(2) the district court lacked jurisdiction over Sitka's appeal
from the bankruptcy court's denial of that motion, so we
necessarily lack jurisdiction over the appeal from the district
court.
We move to the second issue. Even if we construe the
notice of appeal to properly raise both the denial of the motion
for a jury trial and the denial of the motion to remand to state
court, but cf. Biltcliffe v. CitiMortgage, Inc., 772 F.3d 925,
2 Segarra devoted a substantial portion of his brief to
the technical argument that Sitka did not appeal the denial of the
remand motion in No. 13-1289 because it only filed a notice of
appeal in No. 13-1288. Neither party acknowledged the existence
of the district court's post-consolidation requirement that all
filings be made in No. 13-1288, much less discussed that order's
impact, if any, on Sitka's perfection of its appeal.
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929-30 (1st Cir. 2014), the outcome of this case is the same. We
lack jurisdiction and so must dismiss the appeal.
Under 28 U.S.C. § 158(a), district courts "have
jurisdiction to hear appeals [] from final judgments, orders, and
decrees . . . of bankruptcy judges." Courts of Appeals, in turn,
"have jurisdiction of appeals from all final decisions, judgments,
orders, and decrees entered under" § 158(a). 28 U.S.C. § 158(d).
"'For purposes of § 158(d), a determination of the district court
is not final unless the underlying order of the bankruptcy court
is final.'" Lurie v. Blackwell (In re Popkin & Stern), 105 F.3d
1248, 1250 (8th Cir. 1997) (quoting Flor v. BOT Fin. Corp. (In re
Flor), 79 F.3d 281, 283 (2d Cir. 1996)); accord Watson v. Boyajian
(In re Watson), 403 F.3d 1, 4 (1st Cir. 2005); In re Am. Colonial
Broad. Corp., 758 F.2d 794, 800-01 (1st Cir. 1985).
The question for us, then, is whether the bankruptcy
court's denials of Sitka's motion for a jury trial and motion to
remand to state court were final orders which can be appealed to
this court. "'[F]or a bankruptcy court order to be final within
the meaning of § 158(d), the order need not resolve all the issues
raised by the bankruptcy; but it must completely resolve all of
the issues pertaining to a discrete claim, including issues as to
proper relief.'" 1 Collier on Bankruptcy ¶ 5.08[1][b] (16th ed.
2015) (quoting Official Comm. of Subordinated Bondholders v.
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Integrated Res., Inc. (In re Integrated Res., Inc.), 3 F.3d 49, 53
(2d Cir. 1993)); see also In re Am. Colonial, 758 F.2d at 801. In
other words, within each discrete adversary proceeding in a
bankruptcy, "ordinary concepts of finality apply," meaning that
"orders in which the merits are not determined" are generally not
final. See 1 Collier on Bankruptcy ¶ 5.08[1][b], [5].
Under this standard, it is clear that "[t]he bankruptcy
court order denying [Sitka's] demand for a jury trial is not a
final order." In re Popkin, 105 F.3d at 1250. That order did not
resolve the merits of the adversary proceeding between Sitka and
Segarra. Indeed, the Supreme Court has squarely held that "an
order denying a demand for trial by jury in a federal court" is
not a final order and hence is not immediately appealable. City
of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 255-59
(1949).
The bankruptcy court's order refusing to remand the case
to state court was likewise not final. Under the general federal
removal statute, this circuit treats an order refusing remand to
state court in a diversity case as a non-final interlocutory order
which is not immediately appealable. BIW Deceived v. Local S6,
Indus. Union of Marine & Shipbuilding Workers, 132 F.3d 824, 829
(1st Cir. 1997). Other courts have reached the same conclusion in
bankruptcy as to a refusal to abstain under § 1334(c)(2), noting
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that such a refusal "d[oes] not 'end[] the litigation on the merits
and leave [] nothing for the court to do but execute the
judgment.'" Beightol v. UBS Painewebber, Inc., 354 F.3d 187, 189
(2d Cir. 2004) (Sotomayor, J.) (second and third alterations in
original) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467
(1978)); accord Schuster v. Mims (Matter of Rupp & Bowman Co.),
109 F.3d 237, 240-41 (5th Cir. 1997); see also Krasnoff v. Marshack
(In re Gen. Carriers Corp.), 258 B.R. 181, 187 (B.A.P. 9th Cir.
2001) (collecting cases). We agree. A refusal to abstain "merely
determine[s] where the case w[ill] be adjudicated; it d[oes] not
resolve any of the substantive issues raised in the lawsuit."
Beightol, 354 F.3d at 189; see also 1 Collier on Bankruptcy
¶ 5.08[5] (noting that "orders in which the merits are not
determined" are generally not final).3
3 One tersely-reasoned decision of a Tenth Circuit
bankruptcy appellate panel has concluded that a bankruptcy court's
refusal to abstain and remand represents an immediately appealable
collateral order. See Personette v. Kennedy (In re Midgard Corp.),
204 B.R. 764, 768-69 (B.A.P. 10th Cir. 1997). Here, Sitka does
not even cite that case, which is against the clear weight of
authority among circuit courts. Sitka has failed to sufficiently
develop an argument for why the district court's order at this
interlocutory stage is immediately appealable. In its brief, Sitka
almost exclusively attacks the merits of the district court's
abstention decision. On the jurisdictional question, the brief
merely asserts that a bankruptcy court's decision not to abstain
is "immediately appealable" and incomprehensibly cites to an array
of cases without making any effort to explain how those cases would
apply to allow an immediate appeal. Accordingly, any contrary
argument here is waived. See United States v. Zannino, 895 F.2d
1, 17 (1st Cir. 1990).
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We therefore lack jurisdiction over the district court's
dismissal of Sitka's appeal of the bankruptcy court orders. See
In re Popkin, 105 F.3d at 1250; In re Am. Colonial, 758 F.2d at
803.
We comment, however, that the district court's
conclusion that it lacked jurisdiction over the appeal because the
bankruptcy court's orders themselves were not final was plainly
correct.
We also note that the district court held in No. 10-1847
(one of Sitka's many bankruptcy appeals related to this action),
that pursuant to the Supreme Court's decision in Stern v. Marshall,
131 S. Ct. 2594 (2011), the bankruptcy court could not adjudicate
the Trustee's fraudulent conveyance claim against Sitka. Sitka
appears to argue that, in doing so, the district court held that
the court lacks "jurisdiction" over the fraudulent conveyance
action and that it must be dismissed, barring removal of Sitka's
lawsuit at issue in this case challenging the Trustee's actions in
pursuing that fraudulent conveyance claim. Without expressing any
view as to the merits of the district court's Stern analysis, we
emphasize that we read the district court to have held only that
the underlying fraudulent conveyance claim must be heard by the
district court (an Article III court), and not that there is a
lack of federal jurisdiction here. Despite the district court's
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urging, it is not clear from the record whether any party has filed
a motion for withdrawal of the reference to the bankruptcy court.
See Fed. R. Bankr. P. 5011. It may be that the bankruptcy court
is proceeding to consider the claim and issue proposed findings of
fact and conclusions of law, which the district court would review
de novo. That course would be permissible. See Exec. Benefits
Ins. Agency v. Arkinson, 134 S. Ct. 2165, 2170 (2014).
Alternatively, the parties could consent to have the claim decided
by the bankruptcy court. See Wellness Int'l Network, Ltd. v.
Sharif, 135 S. Ct. 1932, 1939 (2015). In the course of considering
this removed action on remand, the bankruptcy court, in
consultation with the parties, is of course free to clarify the
posture of the Trustee's fraudulent conveyance claim.
We warn appellants about taking frivolous appeals and
filing briefs which are nearly incomprehensible and fail to
meaningfully address the pertinent issues. Should such conduct
continue, it will be sanctioned. Costs are awarded to the Trustee.
Dismissed.
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