Direct Appeals to Circuit Courts under BAPCPA - ABA YLD 101 Practice Series

By Johnathan C. Bolton

Under former practice, appeals from judgments, orders or decrees of the bankruptcy courts were either heard by the district court or a bankruptcy appellate panel ("BAP"). 1 The Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") enacted in 2005 allows judgments, orders and decrees from a lower court to be appealed directly to the circuit court of appeals under certain circumstances. See 28 U.S.C. § 158(d)(2). Here is what you need to know about direct appeals under BAPCPA:

Direct appeals to the circuit court are possible from three types of courts.
An order, judgment or decree from a bankruptcy court, district court 2 or a BAP can be appealed directly to a U.S. circuit court through a two-step certification process: (1) certification of a direct appeal by the lower court and (2) authorization for a direct appeal by the circuit court of appeals.

A direct appeal must be certified by the lower court.
Subparagraph (A) of Section 158(d)(2) provides that there are three (3) ways to obtain certification of a direct appeal from a final or interlocutory judgment of a lower court:

  1. the lower court may certify the direct appeal on its own motion -
  2. the lower court may certify the direct appeal on the request of a party to the judgment, order or decree; or -
  3. all appellants and all appellees may jointly certify the direct appeal (by filing the appropriate Official Form with the clerk of the court in which the matter is pending under Interim Bankruptcy Rule 8001(f)(2)(B)); 3-
- if the lower court determines, or the parties certify, that
  1. the judgment, order or decree involves a question of law as to which there is no controlling decision of the court of appeals for the circuit or the Supreme Court of the United States or involves a matter of public importance;
  2. the judgment, order or decree involves a question of law requiring resolution of conflicting decisions; or
  3. an immediate appeal from the judgment, order or decree may materially advance progress of the case or proceeding in which the appeal is taken.

Subparagraph (B) of 28 U.S.C. § 158(d)(2) provides a fourth way to obtain certification if fewer than all appellants and appellees agree to a certification under subparagraph (A) as follows:

  1. If the bankruptcy court, the district court, or bankruptcy appellate panel receives a request made by a majority of the appellants and a majority of the appellees (if any) to make the certification described in subparagraph (A), then the bankruptcy court, the district court, or bankruptcy appellate panel shall make the certification.

The certification request must be made in the Court where the case or appeal is pending.
Interim Federal Rule of Bankruptcy Procedure 8001(f)(2) provides that while a case is pending in the bankruptcy court, the certification request must be made in the bankruptcy court until the docketing of the appeal of a final judgment, order, or decree in accordance with Rule 8007(b) or the grant of leave to appeal an interlocutory judgment, order, or decree under 28 U.S.C. § 158(a). However, after an appeal has been docketed in the district court or the bankruptcy appellate panel, the certification request must be made in that respective court.

The request for certification must be timely made.
A request for certification of a direct appeal under subparagraph (B) must be made in the lower court within 60 days after the judgment, order or decree is entered. The appellant must have also have properly and timely perfected an appeal under Bankruptcy Rules 8001(f) and 8002 in order for the appeal to be effective.

The circuit court must grant permission for a direct appeal.
Once the lower court certifies a direct appeal, the parties then must file a petition with the circuit court requesting authorization to appeal. Jurisdiction in the circuit court of appeals only exists if the circuit court authorizes the direct appeal. See H.R. Rep. No. 109-31 at 1233, 109th Congress, 1st Sess. 109 (2005).

The certification request to the lower court and petition to the circuit court must contain enough information to allow the court to decide whether a direct appeal is proper under the circumstances.
Pursuant to Interim Bankruptcy Rule 8001(f)(3)(C), the request for certification and the petition to the circuit court must include (i) the facts necessary to understand the question presented; (ii) the question itself; (iii) the relief sought; (iv) the reasons why the appeal should be allowed and is authorized by statute or rule, including why a circumstance specified in 28 U.S.C. § 158(d)(2)(A)(i)-(iii) exists; and (v) an attached copy of the judgment, order, or decree complained of and any opinion or memorandum. Although there is no formal criteria to be met in order for a court to grant a request for certification, BAPCPA's legislative history provides that circuit courts are "encouraged to authorize direct appeals" when the factors are met. See Id. Under Interim Rule 8001(f)(3)(D), a party may file a response to a request for certification or a cross-request within 10 days after the notice of the request is served, or another time fixed by the court.

Direct appeal of both final and interlocutory orders is allowed.
A "final" order is an order that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945). Only final judgments, orders, and decrees are appealable as of right pursuant to 28 U.S.C. § 158(a)(1) and (a)(2) including orders extending or reducing the debtor's exclusivity period. Other interlocutory judgments, orders or decrees are only appealable with leave of court. See 28 U.S.C. § 158(a)(3).

Mootness principles still apply to direct appeals.
A direct appeal does not stay any proceeding of the bankruptcy court, the district court, or the bankruptcy appellate panel from which the appeal is taken unless the respective court, or the court of appeals, issues a stay pending appeal. See 28 U.S.C. § 158(d)(2)(D). Some appeals of bankruptcy orders can become "moot". For example, orders approving sales to a good faith purchaser that are not stayed pending appeal (11 U.S.C. 363(m)), orders approving post petition financing (11 U.S.C. 364(e)), and generally, the appeal of an order confirming a chapter 11 plan after the Effective Date has occurred. See, e.g., In re Information Dialogues, Inc., 662 F.2d 475, 476-77 (8th Cir. 1981).


1 In the First, Sixth, Eighth, Ninth and Tenth Circuits a three-judge Bankruptcy Appellate Panel (BAP) handles appeals from the Bankruptcy Courts unless the appellant timely makes an election to have an appeal heard by the district court under 28 U.S.C. §158(c)(1) and Bankruptcy Rule 4001(e). A Bankruptcy Appellate Panel includes judges that are not from the same district from which the appeal occurs. See 28 U.S.C. § 158(b)(5). An election by the appellant must be made at the time of filing the notice of appeal by filing a separate notice of election. See 28 U.S.C. § 158(c)(1)(A). An election by the appellee must be made within 30 days of the notice of appeal by filing a separate notice of election. See 28 U.S.C. § 158(c)(1)(B). There is some controversy about what effect a BAP opinion has. See eg, Farmland Industries, 397 F.3d 647, 653 (8th Cir. 2005); In re Zimmer, 313 F.3d 1220 (9t Cir. 2002); Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470 (9th Cir. 1990). BAPCPA's direct appeal procedure was "intended to be used to settle unresolved questions of law where there is a need to establish clear binding precedent at the court of appeals level." See H.R. Rep. No. 109-31 at 1233, 109th Congress, 1st Sess. 109 (2005).

2 The Bankruptcy Court is a unit of the District Court. See 28 U.S.C. § 151. In most cases, the District Court in the same district has jurisdiction and handles all appeals from the Bankruptcy Courts. See 28 U.S.C. § 158(a).

3 No court determination of the factors is necessary under this option. However, subsection (C) of 28 U.S.C. § 158(d)(2) provides that the parties may supplement the certification with a short statement of the basis for the certification.

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About the Author

Mr. Bolton is a senior associate with Fulbright & Jaworski L.L.P. in Houston, Texas. Mr. Bolton is Board Certified in Business Bankruptcy Law by the Texas Board of Legal Specialization and is the Chair of the Bankruptcy Section of the Young Lawyer's Division of the American Bar Association.

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