Appeal Deadline is Mandatory but Not Jurisdictional; 8th Cir. Adopts Doctrine of Equitable Mootness

By Alexander Beeby posted 22 days ago

  
BANKRUPTCY BULLETIN
Contributing Editor: Karl J. Johnson, Taft

In FishDish, LLP v VeroBlue Farms USA, Inc. and Broadmoore Financial, L.P. (In re VeroBlue Farms USA, Inc.), 6 F.4th 880 (8th Cir. Aug. 5, 2021), on issues of first impression, the Eighth Circuit held that (1) the 14-day deadline to appeal under Rule 8002 is mandatory, but not jurisdictional, and (2) dismissal of an appeal of plan confirmation because the requested relief would be inequitable requires at least a preliminary review of the merits of the appeal, the amount of time that would likely be required to resolve the appeal, and the equitable remedies that may be available to avoid undermining the confirmed plan and harming third parties. Because the 14-day deadline is mandatory, the Eighth Circuit affirmed dismissal of an appeal of various pre-confirmation orders as untimely. Regarding a timely appeal of plan confirmation, the Eighth Circuit held that the district court erred by not conducting an inquiry into the merits and possible remedies when the district court dismissed the appeal based on equitable mootness. 

The appellant, a member of an ad hoc committee of equity security holders, objected to the DIP lender’s claim, moved for leave to initiate discovery, and objected to the amended disclosure statement. The bankruptcy court denied the motions and objections. Exactly fourteen days after the court entered an order confirming the plan, the appellant filed a notice of appeal to appeal not only plan confirmation but also the denial of the ad hoc committee’s various pre-confirmation motions and objections. Without reaching the merits, the district held that (1) the appellant was a “person aggrieved” with standing to appeal plan confirmation, (2) the 14-day deadline of Rule 8002 did not apply to an order denying the objection to the DIP lender’s claim because it was not a final judgment or order, and (3) the appeal of plan confirmation was “equitably moot” because the plan had been substantially consummated. The appellant appealed equitable mootness and the DIP lender cross-appealed the timing issue.

Because the plain language of 28 U.S.C. § 158 provides that the 14-day deadline of Rule 8002 applies to all appeals, including those “from other interlocutory orders and decrees,” the Eighth Circuit held that the district court erred by finding that the appeal of the DIP lender’s claim was timely. In addition to holding that the 14-day deadline applies regardless of whether the order is final, the Eighth Circuit disagreed with its sister circuits that have held the 14-day deadline to be jurisdictional. The Eighth Circuit specifically noted that the Constitution confers only upon Congress the power to change the scope of federal subject matter jurisdiction; the rules committee does not have such power.

As an issue of first impression, the Eighth Circuit held that there are situations where an appeal may not be actually moot because a confirmed plan can be reversed and yet a court may be unwilling to do so for equitable reasons.  Although the Eighth Circuit declined to establish a test for equitable mootness, the court stated that “[t]he most important factors are whether the confirmed plan has been substantially consummated and, if so, what effects reversal of the plan would likely have on third parties.” Because the bankruptcy court did not consider the latter factor, the Eighth Circuit reversed and remanded for reconsideration.

Co-Editors in Chief
Alexander J. Beeby, Larkin Hoffman
Kesha Tanabe, Tanabe Law

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