November 4, 2016
from the United States District Court for the Eastern
District of Wisconsin. Nos. 15-CV-0849 and 15-CV-0851 - Lynn
Flaum and Kanne, Circuit Judges, and MAGNUS-Stinson, District
Karen Smith filed for bankruptcy. During the course of the
bankruptcy proceedings, defendant-appellee Capital One Bank
USA, N.A. ("Capital One"), represented by
defendant-appellee Kohn Law Firm S.C. ("Kohn"),
filed suit against Smith's husband to collect on a credit
card debt he owed. Appellant Smith initiated an adversary
proceeding in the bankruptcy court, alleging that appellees
had violated the co-debtor stay of 11 U.S.C. § 1301. The
bankruptcy court granted summary judgment for appellant
Smith, holding that Capital One's lawsuit against
Smith's husband had violated the co-debtor stay due to
the operation of Wisconsin marital law, Wis.Stat. §
766.55, which makes marital property available to satisfy
certain kinds of debts. On interlocutory appeal, the district
court reversed the bankruptcy court, holding that the
co-debtor stay did not apply despite the application of
Wisconsin marital law. We affirm.
Smith filed for bankruptcy under Chapter 13 in July 2011.
Prior to that, Smith's husband had obtained a Capital One
credit card that he used for consumer debts for the Smith
family. Smith's husband did not join Smith's
bankruptcy petition and Smith did not list him (or anyone
else) as a co-debtor. In December 2011, the bankruptcy court
confirmed Smith's Chapter 13 plan.
2014, during Smith's repayment period under her
bankruptcy plan, Capital One, through Kohn, sued Smith's
husband in Wisconsin state court over amounts owed on his
credit card account. Capital One received judgment in its
favor in August 2014, but has not attempted to enforce the
February 2015, Smith initiated an adversary proceeding in
bankruptcy court against appellees. She brought six causes of
action, alleging violations of the co-debtor stay, 11 U.S.C.
§ 1301(a); the Wisconsin Consumer Act, Wis.Stat.
§427.104; and the Fair Debt Collection Practices Act, 15
U.S.C. § 1692(d)-(e). All of Smith's claims rested
on the theory that Smith's husband's credit card debt
was covered by the co-debtor stay due to the operation of
Wisconsin marital law, Wis.Stat. § 766.55, and that
Capital One and Kohn had violated the co-debtor stay by suing
April 2015, Smith moved for summary judgment. The bankruptcy
court granted Smith's motion, holding that "the
Capital One debt is a debt of the Debtor [appellant Smith]
subject to the co-debtor stay."
One and Kohn sought and obtained leave for an interlocutory
appeal to the district court. The district court held that
the husband's credit card debt was not Smith's
consumer debt, reversed the bankruptcy court, and remanded
the case back to the bankruptcy court to enter judgment in
appellees' favor. The court concluded that "consumer
debt of the debtor, " as used in § 1301(a), does
not include a debt for which the debtor is not personally
liable but that may be satisfied from the debtor's
interest in marital property. Though the district court's
order remanded the case to the bankruptcy court, the
former's decision effectively ended Smith's action,
since all of her claims depended on the application of the
co-debtor stay rule. Smith now appeals that decision.
Court has jurisdiction over appeals from final district court
decisions. 28 U.S.C. § 158(d)(1). In the bankruptcy
context, both the bankruptcy court decision and the district
court decision must be final. In re Behrens, 900
F.2d 97, 99 (7th Cir. 1990). Though "a district
court's decision on appeal from a bankruptcy court's
interlocutory order is generally not regarded as final and
appealable'' id., a "district
court's decision on a bankruptcy court's
interlocutory order may leave nothing for the bankruptcy
court to do, and thus transform the bankruptcy court's
interlocutory order into a final appealable order, "
id. n.1 (citing In re Cash Currency Exch.,
Inc., 762 F.2d 542, 545 n.3 (7th Cir. 1985)); see
also In re Jartran, 886 F.2d 859, 861 (7th Cir. 1989)
("[A] district court order remanding the case to the
bankruptcy court may qualify as final if all that remains to
do on remand is a purely ... ministerial task ... .").
In this case, the district court's reversal of the
bankruptcy court's grant of summary judgment foreclosed
all of Smith's causes of action and left nothing for the
bankruptcy court to do except enter judgment in
appellees' favor. Therefore, we may review the district
review a summary judgment decision de novo, with factual
inferences construed in favor of the non-moving party.
Chi. Reg'l Council of Carpenters Pension Fund v.