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When Bankruptcy Appeals Attack: Refining the Flexible Approach to Finality in Bankruptcy Proceedings

Appellate Practice

Six years ago, an article in this Journal described bankruptcy appeals as the “ninjas of the appellate world.”[1] These appeals “sneak up on practitioners,” the article said, complete with different rules, different standards of review, and a different approach to finality.[2] And like a good ninja, the topic is back when you least expected it.

Since the 2014 article, the U.S. Supreme Court has weighed in, twice, on what types of orders are appealable in bankruptcy proceedings.[3] These decisions have shed considerable light on the topic; indeed, one federal appellate panel has gone so far as to suggest that the Supreme Court “reexamined the concept of finality in bankruptcy cases.”[4] While that characterization may be a bit of a stretch, as we explain in this article, these decisions undoubtedly impact how practitioners should evaluate and analyze the finality of orders entered in bankruptcy cases. After all, when the Supreme Court speaks, everyone listens.[5]

In this article, we examine what the Supreme Court has had to say on the concept of bankruptcy finality. We also discuss how some lower courts have interpreted and applied the Supreme Court’s recent decisions. We conclude by offering a few practical pointers, in light of these decisions, so you are ready next time a potential bankruptcy appeal strikes.

Surveying the Scene

No well-trained warrior heads into battle blind without first surveying the scene. So before diving into the nuts and bolts of Supreme Court jurisprudence on bankruptcy finality, a few reminders about the uniqueness of bankruptcy appeals are in order.[6]

Bankruptcy appeals present several challenges simply because they are different procedurally than other types of appeals. First, the courts with jurisdiction to hear bankruptcy appeals in the first instance are federal district courts, which typically operate as trial courts rather than in an appellate capacity.[7] This means practitioners are usually writing their briefs for one judge, rather than a panel of three, and this one judge is less accustomed to appellate arguments and appellate standards of review than judges who spend their entire days reading appellate briefs.[8]

Second, because appeals first proceed in the district court, they are subject to more local variance, meaning practitioners must pay particular attention to local rules and internal court operating procedures.[9] Speaking of rules, both the Federal Rules of Bankruptcy Procedure and the Federal Rules of Appellate Procedure are relevant to bankruptcy appeals. A recent case from the 11th Circuit Court of Appeals confirms that the Rules of Bankruptcy Procedure govern all actions arising under the bankruptcy statutes set forth in title 11 of the United States Code.[10] This impacts the timing of notices of appeal — which are due much quicker in an appeal from bankruptcy court to district court than in a more “traditional” civil appeal from district to circuit court — and the timing of post-trial motions.[11] In fact, the recent 11th Circuit case just referenced reversed an order granting a Rule 50(b) motion for judgment as a matter of law because the motion was filed within the deadline established by the civil rules, rather than the shorter deadline that applies in bankruptcy.[12] No small matter.[13]

Third, bankruptcies often involve multiple proceedings. A leading treatise describes a bankruptcy as “an aggregation of individual controversies,” many of which “would exist as stand-alone lawsuits but for the bankrupt status of the debtor.”[14] There is always the main bankruptcy, to be sure, but there might also be adversary proceedings — lawsuits within the broader bankruptcy, often filed by creditors or by the bankruptcy trustee to challenge the dischargeability of certain debts or to recover property for the benefit of the creditors — that operate more or less as standalone litigation matters.[15] Moreover, events in bankruptcy cases tend to build on each other and include subsequent milestones, such as confirmation of the debtor’s repayment plan, that rely heavily on the resolution of issues that came before.[16]

The presence of multiple proceedings, the lengthy amount of time bankruptcies last, and the building of events on top of each other can lead to interesting (and sometimes thorny) issues of finality. The most pressing and most difficult question from an appellate standpoint, therefore, routinely becomes: When can, and when must, orders entered during various stages or parts of a bankruptcy be appealed? It is this unique aspect of bankruptcy appeals that the Supreme Court has now addressed.

First Comes Bullard

In federal court generally, an order is appealable only if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”[17] Although riddled with exceptions,[18] this test is easy enough to apply in ordinary civil litigation, where every case culminates in a final decision “by which a district court disassociates itself” from the case.[19]

Not so in bankruptcy, where as we just recounted, and in the words of the Supreme Court, “[t]he rules are different.”[20] In this vein, the statute governing bankruptcy appeals provides for review of final judgments, orders, and decrees not only in cases but also in proceedings.[21] In Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015), the Supreme Court considered “how to define the immediately appealable ‘proceeding.’”

The case arose in the context of an order denying confirmation of a debtor’s proposed Ch. 13 repayment plan.[22] One of the debtor’s creditors had objected to the proposed plan, and the bankruptcy court declined to confirm it.[23] The debtor’s appeal was subsequently dismissed for lack of jurisdiction.[24] Noting that circuits were split on “whether a bankruptcy court’s denial of plan confirmation is a final order,” the Supreme Court granted certiorari to settle the issue.[25]

The Court began by noting that, in light of the distinct attributes of bankruptcies, “Congress has long provided that orders in bankruptcy cases may be immediately appealed if they finally dispose of discrete disputes within the larger case.”[26] Under this logic, federal courts, including the 11th Circuit, have traditionally employed a more flexible approach to finality in bankruptcy.[27] Bullard explored the limits of this flexibility, ultimately concluding that although finality concepts bend in bankruptcy, they do not wholly break. The Court unanimously held that the order denying confirmation was not final.[28]

Still, Bullard is important as much for what it said about bankruptcy finality more generally and for why it held the order nonfinal, as for its resolution of the particular finality question presented. Since Bullard, courts have routinely cited it to contrast bankruptcy finality with “regular” finality, suggesting that a different test applies.[29] As Bullard explained, ascertaining finality in bankruptcy requires defining the relevant proceeding, an inquiry that asks whether the order “alters the status quo and fixes the rights and obligations of the parties.”[30] Also important is whether the order completely resolves all substantive litigation within the proceeding.[31] Orders denying plan confirmation fail on both accounts: Only actual confirmation of the plan or dismissal of the case alters the status quo and fixes the parties’ rights, whereas denial of confirmation leaves much left to be done in the plan consideration process, including submission of a revised plan.[32]

Other orders, though, might pass muster under Bullard’s more expansive test of finality. The Supreme Court examined one such type of order earlier this year.

Then Comes Ritzen

Four years after Bullard, the Supreme Court once again tackled the issue of finality in bankruptcy cases. In Ritzen Group v. Jackson Masonry, 140 S. Ct. 582, 586 (2020), the Court addressed the finality of orders denying a creditor’s request for relief from the automatic stay imposed by a bankruptcy petition on debt-collection efforts outside the umbrella of the bankruptcy.

The Court’s analysis started by reciting the rule established by Bullard: “Orders in bankruptcy cases qualify as ‘final’ when they definitively dispose of discrete disputes within the overarching bankruptcy case.”[33] To decide whether the order at issue met this test, the Court reframed the question: Is a motion for relief from the stay a “distinct proceeding” within the bankruptcy? The answer: yes. Thus, the Court held, once again unanimously, that “the adjudication of a motion for relief from the automatic stay forms a discrete procedural unit within the embracive bankruptcy case,” yielding a final order “when the bankruptcy court unreservedly grants or denies relief.”[34]

Ritzen is significant for several reasons. From a practical perspective, it is important because its holding about the appealability of stay orders will allow creditors to seek relief from the appellate process much sooner than if they had to wait until the end of the bankruptcy — avoiding potential prejudice and a substantial drain on the debtor’s limited resources.[35] More broadly, though, Ritzen is important because it puts some meat on Bullard’s bones, firmly establishing the framework for evaluating the finality of an order entered in a bankruptcy case. Rather than vaguely apply a flexible approach to ordinary finality, practitioners must now ask two specific questions.

First, we must identify whether the order is part of a discrete procedural unit within the bankruptcy. Some factors to consider: Is the order separate from the remaining case? Does it have its own procedural sequence, including notice and a hearing? Does it alter the status quo and fix the parties’ rights? Does the order have major consequences on the way in which the rest of the bankruptcy will be litigated?

Second, we must assess whether the order definitively and conclusively resolves the discrete proceeding. Factors here: Does the order end the relevant procedural sequence? Is there anything left for the bankruptcy court to do in the proceeding from which the order originates? Do the parties have related substantive litigation still pending between them?

In light of the Supreme Court’s finality jurisprudence, the answers to these questions will now determine whether the order is sufficiently final to be appealed. And that determination is perhaps the most important determination an appellate practitioner must make in the bankruptcy context.[36]

What Comes Next?

As the questions delineated above make clear, and as Ritzen itself noted, the correct delineation of the dimensions of a bankruptcy proceeding is “a matter of considerable importance.”[37] Indeed it is. Appealing an order that is not sufficiently final will result in dismissal of the appeal and a waste of precious time and resources. Worse, failing to appeal an order that is final, under the analysis in Bullard and Ritzen, may forever waive the right to appeal.[38] Unsettling stuff for an appellate lawyer.

As one appellate panel has put it, “the bankruptcy finality standard is not without its downside.”[39] Although the flexible approach can be useful to clients and the court system as a whole, the uncertainty of applying it to orders that have not been squarely addressed is enough to give any practitioner a moment (or two or three) of pause.

So where do we go from here? Ritzen leaves the door open for litigants to argue about the finality of numerous other types of orders, starting with denials of stay relief without prejudice, which the Supreme Court explicitly declined to address.[40] There is not yet a lot of caselaw on which to draw, given the recency of the Supreme Court’s decision, but the few cases that have emerged since Ritzen do offer a few clues.

In one decision emanating from the Third Circuit, the court applied Ritzen to orders entered during an asbestos-related bankruptcy, finding the orders nonfinal and susceptible of review upon later appeal of the plan confirmation.[41] The court’s analysis was guided by the intertwined nature of the orders with other parts of the bankruptcy; it stated that the dispute leading to the challenged orders was “not anterior to and separate from, but instead was intertwined with and directly concerned,” related aspects of the plan confirmation process.[42]

Another post-Ritzen decision, this one out of the Ninth Circuit, extensively discussed Ritzen and Bullard in analyzing the finality of an order denying a motion to dismiss a Ch. 7 bankruptcy case.[43] This time, the panel held the order to be final, dismissing the appeal as untimely (and surely giving the appellate lawyer heartburn) because the denial of dismissal had “finally and conclusively resolved” the discrete issue of the debtor’s eligibility to file the Ch. 7 bankruptcy.[44] The court also focused on the “dramatic and irreversible changes” brought about by the order, as well as its impact on judicial efficiency and the operations of the bankruptcy trustee.[45]

These two decisions are instructive because they reveal both the complex analysis that is required, and the disparate results that can occur, when evaluating the finality of the myriad orders entered in bankruptcy cases. For its part, the 11th Circuit has not yet had occasion to address Ritzen, and it has issued only a couple of decisions referencing the standard from Bullard.[46] But with the governing framework for finality now in place, it is only a matter of time before the 11th Circuit is presented with tricky questions of finality like those addressed by the Third and Ninth circuits. As the decisions begin to mount, there will be fertile ground for circuit splits on applying Ritzen’s analysis to various categories of bankruptcy orders.

When that happens, the Supreme Court will undoubtedly be forced to step back into the fray, meaning Bullard and Ritzen are unlikely to be the last word on bankruptcy finality. Rest assured, we’ll provide an update the next time the Supreme Court weighs in. In the meantime, we must all remain vigilant, always on guard for potential arguments that the order just issued by the bankruptcy court in your case is final — proving, once again, that bankruptcy appeals really are the ninjas of the appellate world.

[1] Ceci Berman, Bankruptcy Appeals: A Stealthy and Different Kind of Appeal, 88 Fla. B. J. 35 (Apr. 2014).

[2] Id. (“[F]inality is treated in a more pragmatic and less technical way in bankruptcy cases than in other situations.”).

[3] Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020); Bullard v. Blue Hills Bank, 575 U.S. 496 (2015).

[4] In re Smith, No. 19-8021, 2019 WL 4271977, at *1 (B.A.P. 6th Cir. Sept. 10, 2019).

[5] See Bonidy v. U.S. Postal Serv., 790 F.3d 1121, 1125 (10th Cir. 2015) (noting that even dicta in Supreme Court opinions often binds lower courts).

[6] See note 1.

[7] 28 U.S.C. §158(a); Williams v. EMC Mortgage Corp. (In re Williams), 216 F.3d 1295, 1296 (11th Cir. 2000). Five circuits have established a bankruptcy appellate panel, pursuant to 28 U.S.C. §158(b), that consists of three bankruptcy judges who hear appeals directly from the bankruptcy court. See Court Insider: What Is a Bankruptcy Appellate Panel?, U.S. Courts (Nov. 26, 2012), The 11th Circuit does not employ bankruptcy appellate panels.

[8] This is not meant to suggest that district judges are any less capable of handling appeals than circuit judges. It is simply a reflection of their different roles in the process, calling to mind Justice Robert Jackson’s famous remark that appellate judges “are not final because [they] are infallible” but “are infallible only because [they] are final.” Brown v. Allen, 344 U.S. 443, 540 (1953) (Jackson, J., concurring in the result).

[9] For a more detailed discussion of the variance in local rules and how the Middle and Southern Districts of Florida apply some of those local rules to bankruptcy appeals, see the final section of Berman, Bankruptcy Appeals.

[10] Rosenberg v. DVI Receivables XIV, LLC, 818 F.3d 1283, 1284 (11th Cir. 2016).

[11] Fed. R. Bank. P. 8002(a), 9015(c).

[12] Rosenberg, 818 F.3d at 1287.

[13] It was a matter of almost $6 million, actually. The jury awarded $6,120,000, and the trial court reduced that award to $360,000 based on the post-trial motion. Id. at 1286. By holding the motion untimely, the 11th Circuit reinstated the jury verdict. Id. at 1293.

[14] Bullard, 135 S. Ct. at 1692 (quoting 1 Collier on Bankruptcy ¶5.08(1)(b) at 5-42 (16th ed. 2014)).

[15] See In re Morris, 950 F.2d 1531, 1534 (11th Cir. 1992).

[16] E.g., Ritzen, 140 S. Ct. at 587 (“[C]ontroversies adjudicated during the life of a bankruptcy case may be linked, one dependent on the outcome of another.”); In re Martin Bros. Toolmakers, Inc., 796 F.2d 1435, 1437 (11th Cir. 1986) (stating that “[e]ach claim represents a variable which must be quantified before a dividend is fixed or a workable reorganization plan adopted” and noting that reorganizations in particular “proceed most smoothly when at least some variables become fixed and operate as the basis for further negotiation”).

[17] W.R. Huff Asset Mgmt. Co., LLC v. Kohlberg, Kravis, Roberts & Co., L.P., 566 F.3d 979, 984 (11th Cir. 2009).

[18] These exceptions include the collateral order or Cohen doctrine, Cohen v. Beneficial Industrial Loan, 337 U.S. 541 (1949); the Forgay-Conrad rule, Forgay v. Conrad, 47 U.S. 201 (1847); and the marginal finality or Gillespie rule, Gillespie v. U.S. Steel Corp., 379 U.S. 148 (1964).

[19] Swint v. Chambers Cty. Comm’n, 514 U.S. 35, 42 (1995).

[20] Bullard, 135 S. Ct. at 1692.

[21] 28 U.S.C. §158(a).

[22] Bullard, 135 S. Ct. at 1690. “Chapter 13 of the Bankruptcy Code affords individuals receiving regular income an opportunity to obtain some relief from their debts while retaining their property.” Id.

[23] Id. at 1691.

[24] Id.

[25] Id. The First, Second, Sixth, Eighth, Ninth, and 10th circuits had held such orders nonfinal, while the Third, Fourth, and Fifth had reached the opposite conclusion. In re Bullard, 752 F.3d 483, 486 (1st Cir. 2014).

[26] Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651, 657 n.3 (2006).

[27] See Jove Engineering, Inc. v. I.R.S., 92 F.3d 1539, 1547-48 (11th Cir. 1996).

[28] Bullard, 135 S. Ct. at 1692.

[29] E.g., In re Gugliuzza, 852 F.3d 884 (9th Cir. 2017); In Matter of Ferguson, 834 F.3d 795 (7th Cir. 2016).

[30] Bullard, 135 S. Ct. at 1692.

[31] Ritzen Grp., Inc. v. Jackson Masonry, LLC (In re Jackson Masonry, LLC), 906 F.3d 494, 501 (6th Cir. 2018) (citing Bullard, 135 S. Ct. at 1692-93).

[32] Bullard, 135 S. Ct. at 1692-95.

[33] Ritzen, 140 S. Ct. at 586.

[34] Id.

[35] For a thorough discussion of Ritzen’s impact on the bankruptcy process, see Henry E. Hildebrand IV, When Is a Final Order “Final”?, 1 Norton Bankr. Law Adviser 2 (Jan. 2020).

[36] As a recent article in this Journal noted, an appellate practitioner’s “first and foremost determination” in any context is whether the order is final and appealable. Thomas A. Burns & Arda Goker, Is it Over Yet? A Primer on Federal and State Appellate Finality Doctrines, 94 Fla. B. J. 35 (Jan./Feb. 2020). But unlike the more straightforward test for federal-court finality described by that article, the finality determination in bankruptcy takes on heightened importance given the amount of nuance involved.

[37] Ritzen, 140 S. Ct. at 587.

[38] Id.

[39] In re Liu, 611 B.R. 864, 872 (B.A.P. 9th Cir. 2020).

[40] Ritzen, 140 S. Ct. at 592 n.4 (“We do not decide whether finality would attach to an order denying stay relief if the bankruptcy court enters it ‘without prejudice’ because further developments might change the stay calculus.”).

[41] In re Energy Future Holdings Corp., 949 F.3d 806, 817-18 (3d Cir. 2020).

[42] Id.

[43] In re Liu, 611 B.R. at 871-72.

[44] Id. at 878.

[45] Id. at 878-79.

[46] See In re Gamboa, 778 F. App’x 829, 834 n.3 (11th Cir. 2019) (holding that an order overruling the creditors’ objections finally disposed of a discrete dispute within the larger bankruptcy case and was, therefore, final under Bullard); In re PMF Enters., Inc., 653 F. App’x 903, 904 n.1 (11th Cir. 2016) (holding that an order overruling a debtor’s objection was final under Bullard because it allowed a proof of claim in the amount filed and “left no unresolved dispute about the merits” of the claim); see also Bennett v. Jefferson Cty., Ala., No. 19-13577, 2020 WL 3494302, at *2 (11th Cir. June 29, 2020) (citing Bullard for an unrelated point on the bankruptcy court’s jurisdiction to confirm a Ch. 9 plan).

Ceci C. BermanCeci C. Berman is a managing shareholder at Brannock Humphries & Berman in Tampa. Board certified in appellate practice, she is a past chair of the Appellate Practice Section and is currently chair of the Rules of Civil Procedure Committee. Berman is a graduate of Georgetown Law.



Joseph T. EagletonJoseph T. Eagleton is an appellate attorney at Brannock Humphries & Berman in Tampa. He has served on the Executive Council of the Appellate Practice Section and currently chairs the section’s Pro Bono Committee. Eagleton is a triple Gator, holding a B.A., M.A., and J.D. from the University of Florida.

This column is submitted on behalf of the Appellate Practice Section, Christopher Dale Donovan, chair, and Heather Kolinsky, editor.

Appellate Practice