United States District Court, N.D. Illinois, Eastern Division
August 5, 2004.
DAVID SCOT LYND, Appellant,
OUTBOARD MARINE CORPORATION, Appellee.
The opinion of the court was delivered by: RONALD GUZMAN, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court is Debtor Outboard Marine Corporation's
("OMC") Motion to Dismiss David Scot Lynd's ("Mr. Lynd")
bankruptcy appeal. For the reasons provided below, the appeal is
dismissed for lack of jurisdiction.
On August 29, 1998, Mr. Lynd received a default judgment in the
amount of $597,682.44 in a third-party insurance claim for
property damage against OMC. Subsequent to the judgment, OMC
filed for bankruptcy protection.
Seeking immediate payment of the money, Mr. Lynd filed a pro
se Motion to Compel in the bankruptcy court on November 3, 2002.
In that motion, Mr. Lynd argued that because OMC was
self-insured, OMC was required by the Texas Property and Casualty
Insurance Guaranty Act, TEX. INS. CODE ANN. art. 21.28-C § 1 et
seq. (Vernon 2000), to have a guarantee fund with the Texas
State Board of Insurance, which in the event of bankruptcy, he
argues, would guarantee payment of any claims. (Appellee's Mot.
Dismiss, Ex. A at 1-2.) He further argued that because OMC did
not establish such a fund, OMC was acting criminally and OMC's trustee's use of the
money owed to Mr. Lynd in the bankruptcy estate was illegal, and
thus he averred that the money owed "MUST BE RETURNED OUT OF THE
LIQUIDATED FUNDS FIRTS, [sic] BEFORE ANY OTHER BANKRUPTCY
CLAIMS OR FULFILLED." Id.
On November 4, 2003, the bankruptcy court ordered Mr. Lynd's
motion "stricken for failure to provide notice and present in the
time prescribed by Local Bankruptcy Rules 402(B) and 402(E)(1)."
(Bankruptcy Ct.'s Order of 11/4/03.) Mr. Lynd timely appealed to
this Court on November 14, 2003.
"District courts sit as appellate courts when hearing appeals
from bankruptcy courts and, `[l]ike any federal appellate court,
this court has a special obligation to satisfy itself that there
is federal jurisdiction to hear the appeal.'" In re Circle Fine
Art Corp., Nos. 97 C 1155 & 96 B 3334, 1997 WL 534323, at *1
(N.D. Ill. Aug. 26, 1997) (quoting In re Bowers-Siemon Chem.,
123 B.R. 821, 822 (N.D. Ill. 1991)). 28 U.S.C. § 158(a) provides
in pertinent part that district courts "shall have jurisdiction
to hear appeals . . . from final judgments, orders, and decrees"
and "with leave of the court, from other interlocutory orders and
decrees. . . ." 28 U.S.C. § 158(a)(1), (3). Accordingly, this
Court must determine whether the bankruptcy court's striking of
appellant's motion to compel is a final judgment, order, or
decree, and if it is not, whether this is a proper interlocutory
"In the bankruptcy context . . . finality does not require a
final order concluding the entire bankruptcy proceeding; certain
orders entered prior to the conclusion of the bankruptcy proceeding will be deemed final." In re Rimsat,
Ltd., 212 F.3d 1039, 1044 (7th Cir. 2000). As a result, final
orders under section 158(a)(1) are (1) "those orders that
ultimately determine a creditor's position in the bankruptcy
proceeding, even though administration of the debtor's estate
continues," In re Forty-Eight Insulations, Inc., 115 F.3d 1294,
1299 (7th Cir. 1997), (2) orders resolving "all contested issues
on the merits . . . leav[ing] only the distribution of the estate
assets to be completed, In re Wade, 991 F.2d 402, 406 (7th Cir.
1993), as well as (3) orders terminating "what, but for
bankruptcy, would be a stand-alone suit by or against the
trustee," In re Szekely, 936 F.2d 897, 899-900 (7th Cir. 1991).
In the present case, the bankruptcy court's order striking Mr.
Lynd's motion to compel for failure to meet Local Bankruptcy
Rules 402(B) and 402(E)(1) does not constitute a final order,
even under the broader concept of "finality" in the bankruptcy
context. The order did not "ultimately determine" Mr. Lynd's
position in the bankruptcy proceeding, it did not resolve all
contested issues on the merits nor did it terminate what would be
a stand-alone suit by or against the trustee. See, e.g., In re
Marina City Assocs., 89 C 3453, 1989 WL 206465, at *4 (N.D. Ill.
June 7, 1989) (holding that bankruptcy court's denial of motion
for turnover order is not a final order because denial did not
conclusively resolve the adversary proceeding); In re Wieboldt
Stores, Inc., 68 B.R. 578, 580 (N.D. Ill. 1986) (holding that
bankruptcy court's striking of application for stay was not a
final order because merits of adversarial proceeding had not yet
been decided); see In re Jartran, Inc., 886 F.2d 859, 864 (7th
Cir. 1989) (noting that "denials of motions to dismiss are
generally not final orders, even in the bankruptcy context").
Instead, the bankruptcy court's order striking Mr. Lynd's motion
to compel simply highlighted that Mr. Lynd did not comply with the applicable local rules by his
failing to provide notice and timely present his motion.
Consequently, Mr. Lynd's appeal is not from a final order.
Next, the Court must determine whether to grant leave to appeal
the bankruptcy court's order as an interlocutory appeal. As
discussed above, 28 U.S.C. § 158(a)(3) permits the Court, in its
discretion, to hear an appeal "with leave of the court . . . from
other interlocutory orders and decrees." While section 158(a)(3)
does not provide "substantive criteria for permitting this kind
of appeal . . . courts in this district generally use the
standards set forth in 28 U.S.C. § 1292(b) as a guide." In re
Weinschneider, No. 99 C 6312, 2000 WL 28269, at *2 (N.D. Ill.
Jan. 10, 2000). Section 1292(b) "permits appeals of interlocutory
orders that `involve a controlling question of law as to which
there is substantial ground for difference of opinion' if
`immediate appeal from the order may materially advance the
ultimate termination of the litigation.'" Id. (quoting
28 U.S.C. § 1292(b)).
Mr. Lynd has not shown, nor has he argued, that the present
appeal involves a disputed and possibly controlling question of
law, the resolution of which would help end the present
litigation. As such, this Court is not justified in exercising
its discretion. See Coopers & Lybrand v. Livesay, 437 U.S. 463,
475 (1978) ("[T]he appellant . . . has the burden of persuading
the court . . . that exceptional circumstances justify a
departure from the basic policy of postponing appellate review
until after the entry of a final judgment.") (internal quotations
omitted). Instead, he focuses his argument on the merits of his
motion to compel. Accordingly, because the bankruptcy court's
order was not a final order and because Mr. Lynd has failed to
show that the present appeal will "materially advance the ultimate termination of the litigation"
thereby justifying this Court's exercise of discretion, this
Court lacks jurisdiction under 28 U.S.C. § 158(a) to hear the
present matter and declines to grant leave to appeal the
bankruptcy court's order as an interlocutory appeal.
To the extent that Mr. Lynd wishes to raise the substantive
issues involving his motion to compel, he must do so in his other
appeal, case number 04 C 1912. In reviewing the official record,
the Court determines that this appeal solely concerns the
bankruptcy court's November 3, 2003 order striking Mr. Lynd's
motion to compel. It does not concern whether the bankruptcy
court properly denied that motion on December 2, 2003. His appeal
from that denial is before Judge David. H. Coar.
For the reasons discussed above, David Scot Lynd's appeal from
the order of the U.S. Bankruptcy Court for the Northern District
of Illinois is dismissed for lack of jurisdiction. This case is
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