UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk
December 2, 1999
TO: ALL RECIPIENTS OF THE OPINION
RE: No. 98-6276, Payne v. Claredon Nat’l Ins. Co. (In re: Sunset Sales, Inc.)
Filed on October 26, 1999
The court’s slip opinion contains a typographical error on page one. The
bankruptcy court case number is corrected to read: “Bankr. No. 92-16745-BH.”
A corrected copy of page one is attached.
Sincerely,
Patrick Fisher, Clerk of Court
By: Keith Nelson
Deputy Clerk
encl.
F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH OCT 26 1999
UNITED STATES COURT OF APPEALS PATRICK FISHER
Clerk
TENTH CIRCUIT
In re:
SUNSET SALES, INC., doing
business as K&R Coal Company, No. 98-6276
doing business as Sans Bois Coal
Company,
Debtor.
DAVID PAYNE,
Plaintiff-Appellee,
v.
CLARENDON NATIONAL
INSURANCE COMPANY; U.S.
CAPITAL INSURANCE, COMPANY;
VAN AMERICAN INSURANCE CO.,
INC.,
Defendants-Appellants.
APPEAL FROM THE UNITED STATES BANKRUPTCY APPELLATE PANEL
FOR THE TENTH CIRCUIT
(BAP No. WO-97-100)
(Bankr. No. 92-16745-BH)
(Adv. No. 95-1012-BH)
Submitted on the briefs:
G. Patrick Garrett, Oklahoma City, Oklahoma, for Defendants-Appellants.
Lyle S. Vaughn, Karen Eby of Lyle S. Vaughn, P.C., Oklahoma City, Oklahoma,
for Plaintiff-Appellee.
Before BALDOCK , BARRETT , and BRORBY , Circuit Judges.
BALDOCK , Circuit Judge.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
This appeal arises out of the efforts of the liquidating trustee in the
Chapter 11 bankruptcy of Sunset Sales, Inc., to avoid as preferential transfers
various payments made to Clarendon National Insurance Co., U.S. Capital
Insurance Co., and Van-American Insurance Co. (collectively, “the Bonding
Companies”) by Sunset’s predecessor in interest, K&R Coal Co. The bankruptcy
court determined that the transfers at issue were avoidable under 11 U.S.C.
§ 547(b), and entered judgment in favor of the trustee and against the Bonding
Companies. The Bonding Companies appealed the bankruptcy court’s judgment
to the Tenth Circuit Bankruptcy Appellate Panel (“the BAP”), which affirmed.
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See Payne v. Clarendon Nat’l Ins. Co. (In re Sunset Sales, Inc.) , 220 B.R. 1005,
1022 (B.A.P. 10th Cir. 1998). The Bonding Companies now appeal to this court,
arguing that the bankruptcy court erred in finding that the transfers were
preferential and avoidable.
The Motion for Stay
Before considering the merits of the Bonding Companies’ appeal, we must
first address their request for a stay pending appeal. On February 18, 1998, while
their appeal of the bankruptcy court’s judgment was pending with the BAP, the
Bonding Companies posted a supersedeas bond with the bankruptcy court and
received a stay of that court’s judgment. Although the conditions of the bond
contemplated an appeal to both the BAP and to this court, the bankruptcy court’s
stay order apparently did not stay its judgment beyond an appeal to the BAP.
The BAP issued its opinion affirming the bankruptcy court on June 4, 1998,
and issued its mandate on June 22, which the bankruptcy court received on
June 25. On June 26, the Bonding Companies filed with the BAP an “Emergency
Motion for Stay of Judgment Pending Appeal Combined with Motion for Recall
or Stay of Mandate Pending Appeal,” in which they sought a stay of the BAP’s
judgment and its mandate pending appeal to this court. The Bonding Companies
argued that the BAP had jurisdiction to grant the stay under Fed. R. Bankr. P.
8017 even though it had already issued its mandate and that the supersedeas bond
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previously posted in the bankruptcy court was sufficient to protect the trustee’s
interests during an appeal to this court. The Bonding Companies asked that the
BAP also recall or stay its mandate.
On July 8, 1998, the BAP entered an order denying the motions. See Payne
v. Clarendon Nat’l Ins. Co. (In re Sunset Sales, Inc.) , 222 B.R. 914, 918 (B.A.P.
10th Cir. 1998). The BAP concluded that it did not have jurisdiction to enter
a stay pursuant to Bankruptcy Rule 8017 unless it first recalled its mandate.
Id. at 917. The BAP considered the standards for recalling a mandate expressed
by this and other circuit courts, and concluded that the facts of the case before it
did not justify recalling the mandate. Id. at 917-18. Therefore, the BAP denied
the motions to recall the mandate and to enter a stay, and noted that the Bonding
Companies could seek a stay pending appeal from the Tenth Circuit. Id. at 918.
On July 13, 1998, the Bonding Companies filed a motion with this court
seeking a stay pending appeal and approval of a supersedeas bond. They argued
that the BAP erred in concluding that it had no jurisdiction to enter a stay unless
it first recalled its mandate. The Bonding Companies asked that we so rule and
then permit them to renew their stay motion before the BAP. In the event we
agreed with the BAP that it had no jurisdiction to enter a stay, the Bonding
Companies asked that we grant them a stay under Fed. R. App. P. 8(a).
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On August 19, 1998, we entered an order granting the Bonding Companies
a temporary stay and directing the parties to submit supplemental briefs
addressing the BAP’s authority to grant a stay pending appeal after it had issued
its mandate. Based upon our review of the parties’ supplemental briefs and the
pertinent law, we conclude that the BAP correctly determined it had no
jurisdiction to enter the stay unless it first recalled its mandate.
The Bonding Companies contend that the BAP should be treated like
a district court and imbued with the same power to enter a stay pending appeal to
a higher court as a district court has under Fed. R. Civ. P. 62. Although a district
court and a BAP serve some similar functions, they have distinct differences, the
chief of them being that a district court is also a court of original jurisdiction.
The BAP is exclusively an appellate court, however, and is therefore more
analogous to a circuit court.
While the Bonding Companies are correct that the Bankruptcy Rules
incorporate Fed. R. Civ. P. 62, they do so in Part VII of the rules, which relates
solely to adversary proceedings at the trial level (i.e., the bankruptcy court or the
district court acting in its trial capacity). See Fed. R. Bankr. P. 7062. Thus, when
the Bonding Companies posted their supersedeas bond and secured a stay pending
appeal from the bankruptcy court, they did so under Fed. R. Bankr. P. 7062.
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The rules governing appeals to and from intermediate tribunals (i.e., the
BAP or the district court acting in its appellate capacity) are contained in Part
VIII of the Bankruptcy Rules. Bankruptcy Rule 8005 governs stays pending
appeal to an intermediate appellate tribunal. Like Fed. R. App. P. 8, relating to
stays pending appeal to a circuit court, Bankruptcy Rule 8005 contemplates that
the trial court will be the primary court to stay a matter pending appeal.
Bankruptcy Rule 8005 expressly recognizes the trial court’s power to enter
a stay pursuant to Bankruptcy Rule 7062, and it gives the intermediate appellate
tribunal power to enter a stay or to terminate or modify one entered by the
bankruptcy court.
Stays pending appeal from an intermediate appellate tribunal are governed
by Bankruptcy Rule 8017. It provides that the judgment of the intermediate
appellate tribunal shall automatically be stayed for ten days after entry, unless
otherwise ordered by the court. Fed. R. Bankr. P. 8017(a). This gives a party
time in which to decide whether to pursue an appeal, akin to Fed. R. Civ. P. 62(a),
which automatically stays enforcement of district court judgments in civil cases
for ten days, and Fed. R. App. P. 41(a), which provides that the mandate of the
circuit court shall not issue for a certain period of time. See Fed. R. Bankr. P.
8017 advisory committee’s note. Bankruptcy Rule 8017(b) empowers the
intermediate appellate tribunal to enter a further stay of its judgment pending
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appeal to a higher court. The advisory committee note explains that
subdivision (b) gives the district courts and the BAPs the same authority that
Fed. R. App. P. 41(b) gives the circuit courts to stay their judgments pending
appeal, thereby indicating that the stay provisions of Bankruptcy Rule 8017(b)
are modeled after those governing circuit courts, rather than those governing
district courts.
Indeed, the rules governing the BAP’s issuance of the mandate and entry
of a stay pending further appeal parallel those governing similar acts of a circuit
court. The Tenth Circuit’s BAP must issue its mandate seven days after the
expiration of the time for filing a motion for rehearing. 10th Cir. BAP L.R.
8016-3(a). 1
A party has ten days from the entry of judgment to file a motion for
rehearing, see Fed. R. Bankr. P. 8015, so if no petition for rehearing is filed, the
BAP’s mandate must issue seventeen days after entry of judgment. “Issuance of
the mandate formally marks the end of appellate jurisdiction. Jurisdiction returns
to the tribunal to which the mandate is directed, for such proceedings as may be
appropriate . . . .” Johnson v. Bechtel Assocs. Professional Corp. , 801 F.2d 412,
415 (D.C. Cir. 1986). A party has thirty days in which to file a notice of appeal
to the circuit court, however. See Fed. R. App. P. 4(a)(1) and 6(b)(1). Therefore,
1
The Bankruptcy Rules do not specifically address the issuance of the BAP’s
mandate. Therefore, the subject is governed by local rule. See Fed. R. Bankr. P.
8018(b).
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unless the party obtains a stay of the BAP’s mandate, the mandate could issue and
the bankruptcy court could act on it before the party has an opportunity to file
a timely appeal. 2
Bankruptcy Rule 8017(b) permits a party to obtain a stay of the
BAP’s judgment pending appeal to the circuit court, but it limits the length of the
stay, unless a timely appeal is filed during the pendency of the stay. If the BAP
refuses to enter a stay, the party may seek a stay from the circuit court pursuant
to Bankruptcy Rule 8017(c) and Fed. R. App. P. 8.
Similarly, a circuit court must issue its mandate seven days after the time
to file a petition for rehearing has expired or within seven days after a timely
petition for rehearing is denied. See Fed. R. App. P. 41(b). Therefore, if no
petition for rehearing is filed, the court’s mandate must issue either twenty-one
or fifty-two days after entry of judgment, depending on whether the U.S. is
a party in the case. See Fed. R. App. P. 40(a)(1) and 41(b). A party has
ninety days from the entry of judgment to file a petition for certiorari, see
Sup. Ct. R. 13, so unless the party obtains a stay of the circuit court’s mandate,
the mandate could issue and the lower court could act on it before the party has
an opportunity to file a timely petition for certiorari. A party may move for a stay
2
Of course, if the mandate required the bankruptcy court to take further
significant proceedings in the case, the BAP’s judgment would not be appealable
to the circuit court anyway. See, e.g., Cascade Energy & Metals Corp. v. Banks
(In re Cascade Energy & Metals Corp.) , 956 F.2d 935, 937 (10th Cir. 1992).
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of the circuit court’s mandate pending the filing of a petition for certiorari to the
Supreme Court under Fed. R. App. P. 41(d)(2). As in Bankruptcy Rule 8017(b),
the length of the stay is limited unless the party files a timely petition for
certiorari during the pendency of the stay. See Fed. R. App. P. 41(d)(2) . If the
circuit court refuses to enter a stay, the party may seek a stay from the Supreme
Court. See, e.g., John Doe Agency v. John Doe Corp. , 488 U.S. 1306, 1310
(Marshall, Circuit Justice 1989) (granting Solicitor General’s motion to recall and
stay Second Circuit’s mandate and to stay order of district court enforcing that
mandate pending certiorari); Cities Serv. Gas Co. v. Mobil Oil Corp. , 486 U.S.
1051, 1051 (1988) (granting application to recall and stay Tenth Circuit’s
mandate pending Court’s action on petition for certiorari).
Thus, both sets of rules create a gap between the time the court’s mandate
must issue and the time the party must seek redress from a higher court, and both
sets of rules permit a party to obtain a stay pending appeal to a higher court. Both
sets of rules are silent, however, as to what happens if the party does not seek the
stay until the gap period. Cases addressing a party’s attempt to secure a stay from
a circuit court after it has issued its mandate establish that the circuit court must
first recall its mandate before it can enter the stay. See, e.g., United States v.
Holland , 1 F.3d 454, 455 (7th Cir. 1993) (Ripple, J.) (holding that party who
sought stay after mandate had issued first had to show that mandate ought to be
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recalled and then had to show that recalled mandate should be stayed); Faulkner
v. Jones , 66 F.3d 661, 662 (4th Cir. 1995) (denying motion to recall and stay
mandate). The parties have not cited any cases addressing a party’s attempt to
obtain a stay from the BAP after it has issued its mandate, and our research has
revealed none. Nonetheless, the parallelism between the rules relating to the two
courts counsels that the BAP also must recall its mandate before it can issue a
stay.
The Bonding Companies contend that the BAP did not need to recall its
mandate before entering a stay because (1) Bankruptcy Rule 8017(b) does not
contain a time limit in which a stay motion must be filed; and (2) courts retain the
power to grant injunctive relief to maintain the status quo during the pendency of
an appeal. We are not persuaded by either of these arguments. As to the first,
although Bankruptcy Rule 8017(b) does not provide a time limit within which
a party must seek a stay pending appeal, the same is true of Fed. R. App. P. 41, on
which Rule 8017(b) is based. Nonetheless, as we discussed above, when a party
seeks a stay under Fed. R. App. P. 41 after the circuit court has already issued its
mandate, the circuit court must recall its mandate before it can grant the stay. As
to the second argument, even if we assume the BAP has the same power as a
circuit court to enter orders necessary to preserve the status quo pending appeal to
a higher court, that power simply provides the authority for the BAP (or circuit
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court) to recall its mandate once issued. See Hawaii Housing Auth. v. Midkiff ,
463 U.S. 1323, 1324 (Rehnquist, Circuit Justice 1983) (concluding that because
“a court retains the power to grant injunctive relief to a party to preserve the
status quo during the pendency of an appeal,” circuit court had authority to recall
its mandate and stay proceedings pending further clarification even after appeal
filed with Supreme Court). Recalling the mandate is still a prerequisite
to entering a stay.
We conclude that the BAP, like a circuit court, must possess the mandate
before it can act. Therefore, the BAP properly concluded that it had to recall its
mandate before it could issue a stay pending appeal to this court. The Bonding
Companies do not challenge the BAP’s determination that the circumstances of
this case did not warrant recalling its mandate. The only issue still before us,
then, is whether to grant a stay pending appeal pursuant to Fed. R. App. P. 8.
We have already entered a temporary stay until further order of the court, and
we are now prepared to rule on the merits of the appeal, below. Therefore,
no further stay is necessary, and the motion for stay pending appeal is moot.
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The Merits
The Bonding Companies raise six challenges to the bankruptcy court’s
judgment. They assert that the payments at issue were not avoidable as
preferential transfers under 11 U.S.C. § 547(b) because the trustee failed to prove:
(1) that the transfers were of an interest of the debtor in property; (2) that the
transfers were for or on account of an antecedent debt owed by the debtor before
the transfers were made; (3) that the transfers were made while the debtor was
insolvent; or (4) that the transfers made more than ninety days but less than one
year before the filing of the bankruptcy petition benefitted an insider creditor.
The Bonding Companies further argue that, even if the transfers were avoidable
under § 547(b), they had a defense to avoidability under § 547(c)(1) and (c)(4),
because the transfers were contemporaneous exchanges for new value and they
were exceeded by subsequent advances of new value.
The BAP considered and rejected each of these arguments in a detailed and
well-reasoned opinion. Based upon our review of the record, the parties’ briefs,
and our independent research, we conclude the BAP properly rejected the
Bonding Companies’ arguments. Therefore, we affirm the judgment of the
bankruptcy court for substantially the same reasons set forth by the BAP in its
opinion in Payne v. Clarendon National Insurance Co. (In re Sunset Sales, Inc.) ,
220 B.R. 1005 (B.A.P. 10th Cir. 1998).
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The judgment of the Tenth Circuit Bankruptcy Appellate Panel is
AFFIRMED, and appellants’ Application for Stay of Judgment Pending Appeal
is DENIED as moot.
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