The opinion of the court was delivered by: Murphy, District Judge
This matter is before the Court on appeal from the United States Bankruptcy Court for the Southern District of Illinois. Appellant Centrue Bank (Centrue) appeals from the Bankruptcy Court's April 12, 2010 Order denying Centrue's Motion for Leave to Require Sale of Estate Asset and denying Centrue's Motion to Vacate Order Authorizing Employment of Counsel & Objection to Trustee's Application to Employ.
In June 2006, Kerry and Cherri Thompson (Debtors) executed a mortgage and promissory note with Centrue to finance the purchase of two rental properties in East St. Louis, Illinois.
Pursuant to that mortgage and promissory note, Debtors borrowed $90,400. Debtors defaulted, and on July 2008, Centrue brought a foreclosure action against Debtors in St. Clair County Circuit Court. In September 2008, Debtors filed a Chapter 7 bankruptcy in the Southern District of Illinois. At the date of filing, Debtors owed $84,351 to Centrue on the promissory note. In February 2009, Debtors received a discharge. A foreclosure sale was held in May 2009, and on October 1, 2009, the St. Clair County Circuit Court entered an order approving report of sale, confirming sale and order of possession. The sale of the property did not cover the balance of Debtors' pre-petition debt to Centrue. Had it not been for Debtors' intervening discharge, Debtors would have owed a $78,334.32 deficiency to Centrue. On October 30, 2009, Debtors filed a motion in St. Clair County Circuit Court seeking leave to file a class action counterclaim in the foreclosure case. The counterclaim would allege breach of contract as well as violations of the Illinois Interest Act and the Illinois Consumer Fraud Act. At present, the motion for leave is still pending.
On January 15, 2010, Centrue filed a motion in court for leave to require scheduling and sale of the putative counterclaim. Centrue offered $5,000 cash in the proposed sale and submitted that other creditors could enter higher bids. Debtors amended their schedules on February 3, 2010 to include the putative counterclaim.
On February 2, 2010, Chapter 7 Trustee Donald Samson (Trustee) filed an application to employ the same counsel Debtors had retained to file the motion for leave to file the class action counterclaim in St. Clair County Circuit Court. The Bankruptcy Court approved Trustee's application to employ counsel on February 3, 2010. On February 5, 2010, Centrue filed a motion to vacate the order authorizing the employment of counsel and an objection to Trustee's application to employ counsel.
Oral arguments were held on the motion to sell and the motion to vacate on February 8, 2010 and March 8, 2010. At the March oral argument, the Bankruptcy Court stated that it would deny both motions. The Bankruptcy Court entered an order to that effect on April 12, 2010. On April 26, 2010, Centrue filed a Notice of Appeal, and this appeal followed.
Centrue asks the Court to hear this appeal both under its plenary jurisdiction, under 28 U.S.C. § 158(a)(1), and under its jurisdiction to hear interlocutory appeals, under 28 U.S.C. § 158(a)(3). Section 158(a)(1) gives the Court jurisdiction to hear appeals from "final judgments, orders, and decrees." There is a split of authority on whether an order approving the employment of counsel is a final judgment from which an appeal lies. The Seventh Circuit has not spoken on the issue. The First, Fifth and Ninth Circuits apply a per se rule that such orders are not appealable. Sec. Pac. Bank v. Steinberg (In re Westwood Shake & Shingle, Inc.), 971 F.2d 387, 389-90 (9th Cir. 1992); Foster Sec., Inc. v. Sandoz (In re Delta Servs. Indus., Inc.), 782 F.2d 1267, 1272 (5th Cir. 1986); In re Cont'l Inv. Corp., 637 F.2d 1, 4 (1st Cir. 1980). The Second and Third Circuits and the Eighth Circuit BAP look to the facts and circumstances of the case to determine whether the order is final. Bank Brussels Lambert v. Coan (In re AroChem Corp.), 176 F.3d 610, 620 (2d Cir. 1999); F/S Airlease II, Inc. v. Simon (In re F/S Airlease II, Inc.), 844 F.2d 99, 104 (3d Cir. 1988); FL Receivables Trust v. Gilbertson Rests., LLC (In re Gilbertson Rests., LLC), 315 B. R. 845, 848 (B.A.P. 8th Cir. 2004).
Even if an order authorizing the employment of counsel is not a final judgment, the Court has jurisdiction to hear interlocutory appeals. 28 U.S.C. § 158(a)(3). To the extent that the Court does not have plenary jurisdiction to hear this appeal, the Court chooses to exercise its jurisdiction to hear interlocutory appeals.
District courts, like the Circuit Courts of Appeals, "review a bankruptcy court's determinations of law de novo and findings of fact for clear error." Wiese v. Comm. Bank of Cent. Wis., 552 F.3d ...