Jeffrey Klobucar, Bassford Remele, P.A.
Contributing Editor: Karl Johnson, Hellmuth & Johnson, PLLC
BAP___Frakes_v__Arch_Coal__Inc_.pdf
The BAP dismissed the appeal as premature because (1) the underlying order was not final and appealable, (2) appellants did not move for leave to appeal, and (3) the facts did not support leave to appeal an interlocutory order. The bankruptcy court had denied the appellants’ “Amended Motion for Determination that Confirmation Order Does Not Bar a State Court Action Relating to the Springfield, Illinois Coal Contract” without prejudice to the filing of a complaint because the motion sought declaratory relief, which requires an adversary proceeding under Rule 7001(9). On appeal, the appellants argued the merits of the underlying motion and stated that (i) the debt is excepted from discharge under § 1141(d)(6); (ii) the appellants are not bound by the discharge order because they were never served, and (iii) that the plan does not prevent a state court action to void the contract on public policy grounds.
The BAP questioned whether the order for determining is final and appealable and reiterated the standard: (1) [it] leaves the bankruptcy court nothing to do but execute the order, (2) delay in obtaining review would prevent the aggrieved party from obtaining effective relief, and (3) a later reversal on that issue would require recommencement of the entire proceeding. The BAP determined that denying the motion without prejudice to the filing of a complaint meant the parties and the court had more to do than just execute the order.
The BAP then acknowledged that the bankruptcy court issued rulings regarding notice and the effect of the assumption of the contract. But, rulings regarding some of the claims did not make the order final because the court did not direct entry of a final judgment or expressly determine that there was no just reason for delay in entering a final judgment. Fed. R. Civ. P. 54(b).
Finally, the BAP noted that the appellants did not file a motion for leave to appeal an interlocutory order. Under 28 U.S.C. § 1292(b), the court may grant leave to appeal a non-final order if (1) the question involved be one of law; (2) the question be controlling; (3) there exists a substantial ground for difference of opinion regarding the correctness of the bankruptcy court’s decision; and (4) a finding that an immediate appeal would materially advance the ultimate termination of the litigation. Under this standard, the BAP found that an appeal would not materially advance the ultimate termination of the action even if appellants could satisfy the first three requirements.