Goldstein v. Colombobank F.S.B. (In Re Maryland Property Associates, Inc.) , 116 F. App'x 442 ( 2004 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-2163
In Re: MARYLAND PROPERTY ASSOCIATES,
INCORPORATED; MARYLAND PROPERTY MANAGEMENT,
INCORPORATED; MARYLAND PROPERTY GROUP,
INCORPORATED; MARYLAND GROUP MANAGEMENT,
INCORPORATED; MARYLAND PROPERTY SYSTEMS,
INCORPORATED; MARYLAND PROPERTY SERVICES,
INCORPORATED,
Debtors.
--------------------
CHARLES R. GOLDSTEIN, Trustee of the Estate of Maryland
Property Associates, Incorporated, et al.,
Plaintiff - Appellee,
versus
COLOMBOBANK F.S.B.,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District Judge.
(CA-02-4010-WDQ; BK-98-53783; AP-00-5578)
Argued: September 30, 2004 Decided: November 19, 2004
Before WILLIAMS, TRAXLER, and KING, Circuit Judges.
Dismissed by unpublished per curiam opinion.
ARGUED: Christopher Paul Spera, DECKELBAUM, OGENS & RAFTERY,
CHARTERED, Bethesda, Maryland, for Appellant. Charles Michael
Campisi, VENABLE, L.L.P., Baltimore, Maryland, for Appellee. ON
BRIEF: Nelson Deckelbaum, Stephen W. Nichols, DECKELBAUM, OGENS &
RAFTERY, CHARTERED, Bethesda, Maryland, for Appellant. John A.
Roberts, VENABLE, L.L.P., Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
2
PER CURIAM:
The Chapter 7 Trustee of Maryland Property Associates, Inc.
(MPA) brought an adversarial action in the bankruptcy court against
ColomboBank (the Bank) to avoid as preferences and fraudulent
transfers certain payments MPA made to the Bank. The bankruptcy
court tried the action without a jury and voided the payments. The
Bank appealed the bankruptcy court’s decision to the district
court. The district court affirmed in part and vacated and
remanded in part, with instructions for the bankruptcy court to
make certain factual findings. The Bank appealed the district
court’s decision to us. Because the district court remanded to the
bankruptcy court for further fact-finding, we lack jurisdiction
over the appeal.
I.
MPA was a real property management company principally owned
and operated by Monte Greenbaum.1 MPA’s main clients were certain
limited partnerships, which owned low-income apartment complexes
(properties) in Maryland. The U.S. Department of Housing and Urban
Development (HUD) insured the properties and subsidized their
tenants’ rents. In exchange, HUD required the partnerships to
keep their tenants’ security deposits in accounts (security
1
This recitation of the facts is gleaned from the bankruptcy
court’s order, supplemented for clarity by undisputed and clear
portions of the record.
3
accounts) for the tenants’ benefit. The partnerships kept the
security accounts at the Bank.
In violation of HUD’s regulations, Greenbaum began taking
money from the security accounts, putting it into a separate
account (operating account) controlled by MPA, where MPA also kept
its validly-acquired money, and then using the money in the
operating account for his own purposes. In order to conceal his
acts from HUD and the partnerships, Greenbaum arranged for the Bank
to make loans (share loans) to the partnerships to cover the amount
he had misappropriated. Greenbaum structured the share loans,
which were deposited into dummy security accounts, such that the
loan proceeds themselves secured the loans. With the share-loan
money in the dummy security accounts, the total balance on deposit
in the security accounts did not reflect the fact that Greenbaum
had been taking money therefrom. By filling out false disclosure
forms, Greenbaum and the Bank’s president hid from HUD and the
partnerships the fact that the funds in the dummy security accounts
were encumbered.2
Greenbaum later decided to end the share loan scheme. He
wrote several checks to the Bank on MPA’s operating account to pay
off the share loans. When the Bank received these checks, it
released its security interest on the funds in the dummy security
2
Based on his role in the fraud scheme, the bankruptcy court
found that the Bank’s president “knew or should have known of the
fraud.” (J.A. at 1248.)
4
accounts, leaving those accounts unencumbered. Although it is
unclear from the record exactly what happened to the money at that
point, (J.A. at 1566-70, 1588), the parties agree that it
ultimately ended up in the partnerships. (Appellant’s Br. at 13;
Appellee’s Br. at 12-13.)
In addition to the share loans, Greenbaum personally took out
two other loans and unofficially borrowed other money from the Bank
(non-share loans, collectively).3 He paid off these personal loans
on checks written on MPA’s operating account.
II.
On March 17, 1998, the partnerships and other creditors filed
an involuntary Chapter 7 bankruptcy petition against MPA.4 On
March 17, 2000, the Trustee, acting on the creditors’ behalf, filed
this adversarial action against the Bank in the bankruptcy court.
The complaint sought to avoid as preferences and fraudulent
transfers the checks Greenbaum wrote to the Bank on MPA’s operating
account to pay off the loans.
3
The record establishes that Greenbaum took out the non-share
loans before he started the share loan scheme and that his activity
with respect to the non-share loans overlapped with his activity
with respect to the share loans. For clarity’s sake, we describe
the two separately.
4
It is unclear from the record whether the other creditors
joined the partnerships in filing the original petition or later
joined in the bankruptcy proceedings. This factual issue is not
relevant for purposes of this appeal.
5
On May 14, 2001, the bankruptcy court heard the Trustee’s
case. On October 16, 2002, the bankruptcy court entered judgment
awarding the Trustee the full value of the checks plus interest.
The Bank appealed to the district court. On August 29, 2003, the
district court affirmed in part and vacated and remanded in part.
The district court affirmed the bankruptcy court’s ruling that the
share-loan checks were avoidable.5 The district court vacated the
bankruptcy court’s ruling that the non-share-loan checks were
avoidable because it found that the bankruptcy court had not made
specific factual findings as to whether MPA received consideration
for its payments on the non-share loans. The district court
therefore remanded for the bankruptcy court to make specific
findings of fact on that issue.
The Bank timely noticed an appeal. After oral argument, we
requested, and the parties submitted, supplemental briefing on
whether we have jurisdiction over the appeal. We have reviewed
that briefing and now conclude that we lack jurisdiction to hear
the Bank’s appeal.
5
In an order dated July 16, 2003, the district court reversed
that portion of the bankruptcy court’s judgment avoiding the share-
loan checks because it found that the Bank had returned the money
to the partnerships, and that the Trustee, as the partnerships’
representative, had therefore suffered no harm by the share-loan
scheme. The Trustee moved for reconsideration, arguing that MPA
had creditors other than the partnerships, and that by paying the
partnerships’ debt with MPA’s money, the share-loan scheme harmed
MPA’s non-partnership creditors. The district court agreed,
vacated its earlier order as to the share-loan payments, and
affirmed the bankruptcy court’s decision to avoid the share-loan
checks.
6
III.
We have jurisdiction under 28 U.S.C.A. § 158(d) (West 1993) to
hear appeals from cases originating in the bankruptcy court. See
Capitol Credit Plan of Tenn., Inc. v. Shaffer, 912 F.2d 749, 754
(4th Cir. 1990) (holding that section 158(d) alone provides for
appellate jurisdiction for cases originating in the bankruptcy
court). Section 158(d), however, does not grant us authority to
hear all such appeals. Rather, under that section we may only
review “final decisions, judgments, orders, and decrees” entered by
the district court. 28 U.S.C.A. § 158(d). We have held that a
district court’s order is not “final” under section 158(d) if it
remands the case with an instruction for the bankruptcy court to
conduct further fact-finding. Shaffer, 912 F.2d at 750 (holding
that district court order remanding to the bankruptcy court to make
additional factual findings was not “final” under section 158(d));
Legal Representative for Future Claimants v. Aetna Cas. & Sur. Co.
(In re The Wallace & Gale Co.), 72 F.3d 21, 24 (4th Cir. 1995)
(LRFC) (same).6
6
A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986)
and Cooper v. Delaware Valley Shippers (In re Carolina Motor
Express Inc.), 949 F.2d 107 (4th Cir. 1991), rev’d on other grounds
sub nom. Reiter v. Cooper, 507 U.S. 258 (1993) are not to the
contrary. In Piccinin, we asserted jurisdiction under 28 U.S.C. §
1291, which, like section 158(d), has a finality requirement, over
an appeal from the district court’s order fixing venue in all tort
suits against the debtor. 788 F.2d at 1009. In Cooper we asserted
jurisdiction under section 158(d) over an appeal from the district
court’s order referring certain legal questions to the Interstate
Commerce Commission. Id. at 108 n. 1. These holdings do not
conflict with Shaffer and LRFC, which hold that a district court
7
A majority of our sister circuits also follow this approach.
See In re Lopez, 116 F.3d 1191, 1192 (7th Cir. 1997) (cataloguing
cases and observing that the D.C., First, Second, Fourth, Fifth,
Seventh, Eighth, Tenth, and Eleventh Circuits so hold) (citations
omitted). The minority view is that the finality of district court
orders should be determined by an approach that weighs several
factors to determine whether the appeal would further the goals of
bankruptcy. See id. at 1193 (noting that the Third, Ninth, and
possibly the Sixth Circuits apply such an approach) (citations
omitted). Under the minority view, whether the district court
remands to the bankruptcy court with instructions to conduct
additional fact-finding is a relevant, but not dispositive, factor.
See, e.g., Buncher Co. v. Official Comm. of Unsecured Creditors of
GenFarm Ltd. P’ship IV, 229 F.3d 245, 250 (3d Cir. 2000) (in
determining whether a district court’s decision is “final” under
section 158(d) applying four-factor test that examines: (1) the
impact the case has on the assets of the bankruptcy estate; (2) the
necessity of further fact-finding on remand; (3) the preclusive
order remanding to the bankruptcy court to make findings of fact is
not a final order under section 158(d).
To be sure, the Piccinin and Cooper courts did note that we
generally apply a more “relaxed” definition of finality in the
bankruptcy context. 788 F.2d at 1009; 949 F.2d at 108 n. 1. We do
not disagree with that statement. To resolve the case before us,
however, it is enough to say that whatever it might mean to apply
a “relaxed” definition of finality, it cannot mean that we have
jurisdiction under section 158(d) over a district court order
remanding to the bankruptcy court to make additional findings of
fact. See Shaffer, 912 F.2d at 750; LRFC, 72 F.3d at 24.
8
effect of the decision on the merits of further litigation, and (4)
the interest of judicial economy).
Ignoring Shaffer and LRFC on this point, the Trustee7 simply
asserts that we must follow Buncher, 229 F.3d at 250.8 Buncher’s
approach, however, is irreconcilable with Shaffer’s and LRFC’s
categorical rule, and we, as a panel, lack the authority to
overrule prior circuit precedent. See McMellon v. United States,
2004 WL 2303487, *2 (4th Cir. Oct. 14, 2004) (“one panel cannot
overrule a decision issued by a prior panel”). Moreover, the
7
The Bank concedes that we lack jurisdiction over its appeal.
It nevertheless asks us to declare that the Trustee may not execute
the district court’s judgment as to the share-loan transfers. The
Bank does not explain how, if we lack jurisdiction over the appeal,
we have jurisdiction to make such a declaration. We therefore deny
its request.
8
The Trustee also argues that we have jurisdiction over the
district court’s judgment insofar as it applies to the share-loan
transactions because the judgment was final as to those
transactions. This argument reveals a fundamental misunderstanding
of the concept of finality. A judgment is not final simply because
the district court has resolved some aspects of the appeal;
instead, the very fact that other aspects remain unresolved is
precisely what makes this appeal interlocutory.
To the extent that we can construe the Trustee’s argument to
be an implied assertion that we have jurisdiction under the
collateral order doctrine, we would still reject the argument. “To
be reviewable under that doctrine, an order must conclusively
determine the disputed question, resolve an important issue
completely separate from the merits of the action and be
effectively unreviewable on appeal from a final judgment.” LRFC,
72 F.3d at 24 (quotation marks omitted). Far from being separate
from the merits of the action, the share-loan transactions go to
the very heart of the Trustee’s adversarial complaint. Moreover,
the Trustee has not suggested that, and we can decipher no reason
why, the district court’s conclusion regarding the share-loan
payments will not be appealable when the district court enters a
final judgment.
9
approach pressed by the Trustee is “terribly woolly,” when
“[j]urisdictional rules ought to be simple and precise.” In re
Lopez, 116 F.3d at 1194 (emphasis in original). In short, the
approach we adopted in Shaffer and LRFC is the “sounder rule” in
this context. Id.IV.
Under the Shaffer/LRFC rule, we lack jurisdiction over the
Bank’s appeal because the district court remanded to the bankruptcy
court to make additional findings of fact. Accordingly, we dismiss
the appeal.
DISMISSED
10