Opinion
00 Civ. 7883 (MBM)
August 28, 2001
RICHARD T. WALSH, ESQ., Rosen Livingston (Attorney for Appellant), New York, NY.
MICHAEL STEVAN SCHREIBER, ESQ., Robinson Brog Leinwand et al. (Attorney for Appelle CSM Realty Corp.), New York, NY.
JEROME LEE DAVIDSON, ESQ., (Attorney for Appellee L.M.N.I., Inc.), New York, NY.
OPINION AND ORDER
Collect Pond House, Inc. appeals from an order of the Bankruptcy Court dated July 28, 2000 confirming CSM Realty Corp.'s Amended Plan of Reorganization (the "Reorganization Plan"). CSM moves to dismiss the appeal as untimely and moot. For the reasons set forth below, CSM's motion is granted in part and denied in part.
I.
CSM, a real estate holding company, filed a voluntary petition for bankruptcy on June 22, 1999. (See App, at 1) At that time, CSM was the lessee of real property located at 366 Broadway, New York, N Y (the "Leased Premises"). Id. at 7) Appellant, Collect Pond, was and is the lessor of the Leased Premises. (Id. at 15)
On July 26, 1999, CSM moved for an order authorizing CSM to assign its lease of the Leased Premises (the "Lease") to Henry Ishay. (Id. at 29) Over Collect Pond's objections(id. at 70), the Bankruptcy Court issued an order on October 26, 1999, granting CSM's motion to assign the Lease (the "Assignment Order"). (Id. at 172) On December 9, 1999, a closing was held to complete the assignment contemplated by the October 26, 1999 order, effective as of January 1, 2000, and the Lease was assigned to L.M.N.I., Inc., Ishay's designee. (Id. at 332)
Several months later, on July 28, 2000, the Bankruptcy Court entered an order confirming CSM's Reorganization Plan (the "Confirmation Order"). (Id. at 503) In the Confirmation Order, the Bankruptcy Court retained jurisdiction over matters provided for in the Reorganization Plan. (Id. at 518) Collect Pond did not seek a stay of execution of the Plan.
On or about August 4, 2000, Collect Pond filed a notice of appeal of the Confirmation Order. (Id. at 521) Specifically, Collect Pond appeals:
(1) Whether the Bankruptcy Court gave proper consideration of Appellant's proof that the Debtor filed its petition for reorganization under Chapter 11 of Title 11, United States Code, in bad faith, solely for the purposes of evading restrictions on assigning the Debtor's lease, and not for any legitimate need for reorganization under Chapter 11, Title 11, United States Code,
(2) Whether the Bankruptcy Court's procedure in connection with the Debtor's Motion to Assume and Assign the Debtor's Lease inadequate [sic] notice under the Bankruptcy Code.
(3) Whether the Bankruptcy Court's treatment of the Debtor's request for permission to assume and assign the Debtor's lease resulted in an impermissibly short time period for Appellant to marshal its evidence against the proposed assumption and assignment of the Debtor's lease or to obtain competing bids therefore;
(4) Whether the Bankruptcy Court improperly ignored or gave short shrift to Appellant's objections to the proposed assumption and assignment of the Debtor's lease;
(5)Whether the Bankruptcy Court improperly zefused to enforce the lease restrictions on alterations and improvements to the property subject to the leasehold, signage, and use of the lease premises when the court approved the assumption and assignment of the Debtor's lease with Appellant to a third party and permitted the assignee to perform certain alterations and improvements without regard to whether the proposed alterations and improvements constituted waste or whether the actual alterations conformed to the approved alterations;
(6) Whether the Bankruptcy Court's procedure for dealing with lease defaults by the assignee after the assumption and assignment of the Debtor's lease to the assignee was adequate to protect the rights of the Appellant under the lease in question;
(7) Whether the Bankruptcy Court improperly retained jurisdiction over the Debtor's lease and all issues relating to that lease and the performance of obligations under the lease after the assumption and assignment of that lease to a third party and a release of the Debtor from further liability under the lease prior to the date of entry of an order confirming the Debtor's Plan of Reorganization;
(8) Whether the October 26, 1999 order of the Bankruptcy Court permitting assumption and assignment of the Debtor's lease should have provided to the assignee protections afforded to a purchaser of the Debtor's assets under 11 u.s.C. § 363(m); and
(9) Whether the Bankruptcy Court improperly retained jurisdiction over the Debtor's lease and all issues relating to that lease and the performance by the assignee of obligations under the lease after the assumption and assignment of that lease to the assignee and a release of the Debtor from further liability under the Lease after the date of the entry of the order confirming the Debtor's Plan of Reorganization.
(Appellant's Statement of Issues at 14-16)
II.
CSM moves to dismiss Collect Pond's appeal as untimely. Bankruptcy Rule 8001 provides that an appeal from a bankruptcy court order "shall be taken by filing a notice of appeal with the clerk within the time allowed by Rule 8002." Fed.R.Bankr.P. 8001. Rule 8002 directs that "the notice of appeal shall be filed with the clerk within 10 days of the date of the entry of the judgment, order, or decree appealed from." Fed.R.Bankr.P. 8002(a). The 10-day limit is "jurisdictional in nature." Minhlong Enterprises, Inc. v. New York Int'l Hostel. Inc. (In re New York Int'l Hostel, Inc.), 194 B.R. 313, 316 (S.D.N.Y. 1996) (citing Twins Roller Corp. v. Roxy Roller Rink Joint Venture, 70 B.R. 308, 310 (S.D.N.Y. 1987)). A failure to file a timely notice of appeal bars appellate review, for such a failure "deprives the District Court of jurisdiction to review the Bankruptcy Court's order." Vega v. GMAC Mortgage Corp. (In re Vega), No. 93 Civ. 0083, 1995 WL 254368 at *1 (S.D.N.Y. May 1, 1995) (quoting Sellitti v. R.H. Macy Co. (In re R.H. Macy Co.), 173 B.R. 301, 301 (S.D.N.Y. 1994) (internal quotations omitted)).
Here, Collect Pond filed its notice of appeal on August 4, 2000, less than 10 days after entry of the Bankruptcy Court's Confirmation Order. However, most of the issues Collect Pond raises on appeal relate not to the Confirmation Order, but to the Bankruptcy Court's October 26, 1999 Assignment Order granting CSM authorization to assign the Lease. (See Appellant's Statement of Issues at 14-16) Accordingly, Collect Pond's appeal with respect to these issues is untimely.
Collect Pond argues that the Bankruptcy Court's October 26, 1999 Assignment Order was interlocutory, and that Bankruptcy Rule 8002's 10-day period therefore did not begin to run until the entry of the Confirmation Order. I disagree. For a bankruptcy court order to be final and appealable, the order must fully resolve all issues pertaining to a discrete claim. See Shimer v. Fugazy (In re Fugazy Express, Inc.), 982 F.2d 769, 776 (2d Cir. 1992); 28 U.S.C. § 158(a) (1994). Here, the assignment of the Lease was a discrete issue that was fully resolved by the Assignment Order. See In re Kids Creek Partners, 200 F.3d 1070, 1074 (7th Cir. 2000) (holding that order approving sale of assets from estate in bankruptcy is final for purposes of appeal); In re Gould, 977 F.2d 1038, 1041 (7th Cir. 1992) (holding that order vacating sale of debtors' property and directing rebidding was "final" decision subject to appeal). Although the Bankruptcy Court retained jurisdiction over the implementation and enforcement of the Assignment Order, such retention of jurisdiction did not render the Assignment Order in all respects interlocutory. To the contrary, the Assignment Order completely determined the rights of the parties with respect to the assignment of the Lease. The Assignment Order therefore was final under 28 U.S.C. § 158 (a). Accordingly, Collect Pond's failure to appeal the Assignment Order within 10 days deprives this court of jurisdiction to hear claims relating to the assignment of the Lease.
Collect Pond's reliance on Elliot v. Four Seasons Properties (In re Frontier Properties), 979 F.2d 1358 (9th Cir. 1992) is misplaced. In that case, the Ninth Circuit held that an order granting the trustee authority to assume a contract was interlocutory because it failed to resolve "key issues of liability and damages" relating to that contract. Id. at 1362. Unlike the order in Elliot, the Assignment Order in this case resolved all issues relating to the assignment of the Lease.
Nonetheless, Collect Pond raises two other issues on appeal that do not relate directly to the assignment of the Lease. Specifically, Collect Pond argues (a) that CSM filed its petition in bad faith and (b) that the Bankruptcy Court impermissibly retained jurisdiction over enforcement and implementation of the Assignment Order after entry of the Confirmation Order. (See Appellant's Statement of Issues at 14- 16).
A. Bad Faith
The Bankruptcy Court denied Collect Pond's motion to dismiss the petition for bad faith filing during a hearing on August 4, 1999. (See Appellant Mem., Ex. A) However, a bankruptcy Court's denial of a motion to dismiss a petition for bad faith filing is not a final order. See Dunkley v. Rega Properties, Ltd., 894 F.2d 1136, 1138-39 (9th Cir. 1990). Accordingly, Collect Pond's appeal of the August 4, 1999 denial, filed within 10 days of the Confirmation Order, is timely.
Although Collect Pond's appeal of the bad faith issue is not time-barred, CSM argues that it is nonetheless moot. In a bankruptcy case, an appeal is moot when, "even though effective relief could conceivably be fashioned, implementation of that relief would be inequitable." Bartel v. Bar Harbor Airways, Inc., 196 B.R. 268, 272 (S.D.N.Y. 1996) (citing In re Best Products Co., Inc., 68 F.3d 26, 29-30 (2d Cir. 1995))
Collect Pond cites In re Gucci, 126 F.3d 380 (2d. Cir. 1997) for the proposition that an appeal is not moot under 11 U.S.C. § 363 (m) to the extent it raises good faith as an issue. However, the Second Circuit's holding in In re Gucci was limited to appeals involving the good faith of a purchaser in a bankruptcy sale. See Id. at 389-90. Here, Collect Pond does not seek to appeal the question of whether CSM's assignee was a good faith purchaser, but rather whether CSM filed its petition in good faith. (See Appellant's Statement of Issues at 14-16) In re Gucci therefore is inapposite.
Here, even if Collect Pond could show that CSM's bankruptcy filing was made in bad faith, dismissing the petition now would be inequitable as to the assignee of the Lease. Dismissal also would be impermissible under the Bankruptcy Code. Section 363(m) of the Bankruptcy Code provides:
The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale were stayed pending appeal.11 U.S.C. § 363 (m).
Here, the assignment of the Lease was authorized under § 363(b) of the Bankruptcy Code. (See App. at 172) In addition, the Bankruptcy Court found that the assignee of the Lease was acting in good faith and would be "entitled to the protection of section 363(m) of the Bankruptcy Code . . . ." (Id.) Moreover, Collect Pond failed to obtain a stay pending appeal. Therefore, dismissal of the petition at this time' is prohibited by § 363 (in), and Collect Pond's appeal of CSM's alleged bad faith filing is dismissed as moot.
To the extent they are not time-barred, Collect Pond's claims on appeal relating to the Assignment Order are moot for substantially similar reasons.
B. Retention of Jurisdiction
Collect Pond also appeals the Bankruptcy Court's retention of jurisdiction in the Confirmation Order. CSM argues that this claim also is moot. However, unlike the good faith issue, consideration of this issue on appeal does not threaten to undermine the assignment of the lease in violation of § 363 (in), nor would the implementation of relief, if any, be inequitable to CSM or the assignee of the Lease. Accordingly, CSM's motion to dismiss is denied as to the post-confirmation retention issue.
* * *
For the reasons set forth above, CSM's motion to dismiss Collect Pond's appeal is granted, except as to Collect Pond's appeal of the Bankruptcy Court's retention of jurisdiction in the Confirmation Order.
SO ORDERED: