UNITED STATES COURT OF APPEALS
For the Fifth Circuit
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No. 98-10380
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IN THE MATTER OF: CADDO PARISH-VILLAS SOUTH, LTD.,
Debtor.
BEAL BANK, S.S.B.,
Appellee,
VERSUS
CADDO PARISH-VILLAS SOUTH, LTD.,
Appellant.
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Appeal from the United States District Court
for the Northern District of Texas
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May 10, 1999
Before DAVIS, STEWART, and PARKER, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Debtor-Appellant Caddo Parish-Villas South, Ltd. ("Caddo")
seeks review of a district court order reversing and remanding a
bankruptcy court order disallowing a claim by Creditor-Appellee
Beal Bank, S.S.B. ("Beal"). We need not reach the merits of this
appeal, because we find appellate jurisdiction to be lacking under
the long-established principle that a district court order is not
final within the meaning of 28 U.S.C. § 158(d) where that order
reverses an order of the bankruptcy court and remands the case to
the bankruptcy court for significant further proceedings. The
appeal is therefore dismissed.
I.
This appeal arises out of a bankruptcy proceeding initiated by
Caddo in November 1996. Beal filed a Proof of Claim in connection
with that proceeding asserting a secured claim in the amount of
$3,286,869.63. The Proof of Claim is based on a Mortgage Note
("Note") secured by an Act of Mortgage ("Mortgage") that encumbers
an apartment complex in Shreveport, Louisiana ("Property) belonging
to Caddo. The Property is Caddo’s sole asset, and the Note is non-
recourse.
The Note and Mortgage were originally executed in favor of
Housing America Mortgage Company, Inc. ("HAMC") in August 1971. Two
years later, HAMC endorsed the Note and Mortgage to Federal
National Mortgage Association ("FNMA"). FNMA was the owner and
holder of the Note and Mortgage for just over one year, at which
time the Note went into default. FNMA then endorsed the Note and
Mortgage to the Department of Housing and Urban Development
("HUD"). HUD was the owner and holder of the Note and Mortgage for
the next twenty-one years, during which time HUD and Caddo entered
into a Provisional Workout Arrangement ("PWA"). When efforts by
Caddo to obtain a second PWA failed, HUD began preparations to
foreclose its lien against the Property.
HUD did not ultimately foreclose on the Mortgage, but instead
sold the Note and Mortgage to Beal in October 1995. HUD did not
transfer the Note to Beal at the time of sale. Instead, HUD filed
an Act of Notarial Endorsement and Assignment of Mortgage Note and
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Mortgage, evidencing HUD’s endorsement of the Note to Beal, and an
Assignment of Lost Note Affidavit, evidencing that the Note was
endorsed in 1973 pursuant to the National Housing Act, that it was
subsequently transferred to HUD, and that, at the time of Beal’s
purchase of the Note, HUD could not locate it despite diligent
efforts to do so.
The Note was in default at the time Beal purchased it. Beal
sent several letters to Caddo demanding payment, and ultimately
accelerated the Note. In August 1996, Beal filed an action in
Louisiana state court to foreclose the Mortgage and to obtain
appointment of a keeper. The Louisiana state court issued an order
of sequestration for the Property and directed the Sheriff of Caddo
Parish to appoint Barron Builders and Management Co. as keeper.
Caddo initiated the present bankruptcy proceeding soon after.
In March 1997, Caddo filed an Objection to Beal’s Proof of
Claim, arguing that Beal is not the holder of the Note and
therefore is prohibited from enforcing the Note and Mortgage. The
bankruptcy court first heard the Objection in April 1997, and
determined that Caddo had rebutted the prima facie validity of
Beal’s claim and had shifted the burden to Beal to prove its claim.
At a second hearing in June 1997, the bankruptcy court denied
Beal’s Motion for Judgment on the Pleadings, held that Beal had not
met its burden of establishing its claim, sustained Caddo’s
Objection and disallowed Beal’s claim. Beal then filed a Motion for
Reconsideration and submitted an Act of Assignment, executed by
HUD, purporting to transfer to Beal HUD’s rights to enforce the
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Note. The bankruptcy court refused to consider this assignment and
denied the Motion for Reconsideration. Beal appealed to the
district court, which reversed the bankruptcy court’s order and
remanded to the bankruptcy court for further proceedings on the
issue of indemnification. This appeal followed.
II.
Caddo contends that this court has jurisdiction to review the
district court’s order pursuant to 28 U.S.C. § 158(d), which
provides that "[t]he courts of appeals shall have jurisdiction of
appeals from all final decisions, judgments, orders, and decrees
entered under subsections (a) and (b) of this section." (emphasis
added). We disagree. Although Caddo accurately identifies the basic
principle recognized in In re Eagle Bus Mfg., Inc., 62 F.3d 730,
733 (5th Cir. 1995)--that this court views finality in bankruptcy
proceedings in a practical and less technical light in order to
preserve judicial and other resources--that principle is
insufficient to confer jurisdiction in the present case.1 A long,
unbroken line of cases establishes the general rule in this circuit
that a district court order is not a final order under section
158(d) where that order reverses an order of the bankruptcy court
1
The Supreme Court's decision in Connecticut National Bank v.
Germain, 503 U.S. 249, 112 S. Ct. 1146 (1992), undercuts the notion
that a broad standard of liberality for bankruptcy cases is
supportable under 28 U.S.C. § 158(d). In light of this fact, we
decline to read Eagle Bus as establishing such a standard. Rather,
Eagle Bus recognizes the narrower proposition that appellate
jurisdiction over a bankruptcy case vests at the conclusion of a
discrete judicial unit within the bankruptcy case, and need not
wait until the conclusion of the entire litigation. 62 F.3d at 733.
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and remands the case to the bankruptcy court for significant
further proceedings. Despite Caddo’s valiant efforts to
characterize the remand in this case as "essentially ministerial,"
we find no reason to treat the present case differently from those
that have preceded it.
In In the Matter of Ben Hyman & Co., Inc., 577 F.2d 966 (5th
Cir. 1977), a debtor appealed a district court order that remanded
the case to the bankruptcy court to determine whether one creditor
was entitled to exercise a right of set-off in the pending
bankruptcy proceedings. This court concluded that it did not have
jurisdiction because the district court’s order was an
interlocutory order. The court noted: "A final order is one in
which nothing remains to be done but the mechanical entry of
judgment by the trial court. The district court’s remand merely
requires the bankruptcy court to determine whether the bank has a
right of set-off in the straight bankruptcy proceedings; it,
therefore, is not final." Id. at 968.
In In the Matter of Cross, 666 F.2d 873 (5th Cir. 1982), a
debtor appealed a district court order that upheld the bankruptcy
court’s determination that a debt was nondischargeable but remanded
the case to the bankruptcy court to redetermine the amount of the
debt. Although this court ultimately found that it had jurisdiction
under a provision of the Bankruptcy Act permitting interlocutory
appeals, it first determined that the district court’s order was
interlocutory rather than final because the district court decided
the nondischargeability issue but remanded the issue of the amount
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of the debt. Id. at 877.2
In In re Emerald Oil Company, 694 F.2d 88 (5th Cir. 1982), a
creditor appealed a district court order that reversed the
bankruptcy court’s grant of summary judgment in favor of the
creditor on the bankruptcy trustee’s claim of preferential
transfer. Dismissing the appeal for lack of jurisdiction, this
court stated that the district court’s order was not final because
"there was no final determination of the rights of the parties to
secure the relief they seek." Id. at 89. The court concluded: "The
case thus awaits further proceedings in the bankruptcy and district
courts before there is an appealable final judgment." Id.
In In re County Management, Inc., 788 F.2d 311 (5th Cir.
1986), defendants in a state partition proceeding that had been
removed to bankruptcy court appealed a district court order that
reversed the bankruptcy court’s grant of summary judgment in favor
of the defendants and remanded the case to the bankruptcy court for
an accounting and other proceedings. Citing Hyman and Emerald Oil,
this court dismissed the appeal for lack of jurisdiction.
Recognizing that a bankruptcy case "need not be appealed as a
‘single judicial unit’ at the termination of the proceeding as a
whole," the court nonetheless observed that "even in a bankruptcy
case, there must be a ‘final determination of the rights of the
2
While both Hyman and Cross arose under the Bankruptcy Act,
this court has since relied on them in interpreting the meaning of
"final order" under the jurisdictional provisions relating to the
Bankruptcy Code of 1978. In re Bowman, 821 F.2d 245, 247 (5th Cir.
1987).
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parties to secure the relief they seek in this suit’ for an order
to be considered final." Id. at 313 (citations omitted). The court
further observed that a "remand for further factual findings simply
is not a final order," because it requires further determination of
the rights and liabilities of the parties. Id.
These piecemeal decisions were finally assembled into a single
coherent rule in In re Bowman, 821 F.2d 245 (5th Cir. 1987). That
case involved the appeal of a district court order that reversed
the bankruptcy court’s dismissal of a complaint objecting to
dischargeability and remanded the case to the bankruptcy court for
determination of the merits of the complaint. Characterizing the
question at issue, this court observed: "The issue more generally
stated is whether a district court order is a final order under 28
U.S.C. § 158(d), where that order reverses an order of the
bankruptcy court and remands the case to the bankruptcy court for
significant further proceedings." Id. at 246. Addressing that
issue, the court concluded: "This circuit has consistently held
that such orders are not final orders under 28 U.S.C. § 158(d) and
its predecessors." Id. In support of this conclusion, the court
cited extensively from both the history and the language of Hyman,
Cross, Emerald Oil, and County Management.
Nothing in the case law following Bowman suggests that this
circuit has ever deviated from the general rule that a district
court order is not final where it reverses an order of the
bankruptcy court and remands the case to the bankruptcy court for
significant further proceedings. That rule has in fact been
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reasserted by this court on several occasions. See, e.g., Matter of
Nichols, 21 F.3d 690, 692 (5th Cir. 1994). Eagle Bus, the principal
case cited by Caddo, involved the appeal of a district court order
affirming the decision of the bankruptcy court. That situation,
obviously, is very distinct from a reversal and remand by the
district court. Indeed, in Matter of Aegis Specialty Marketing Inc.
of Alabama, 68 F.3d 919 (5th Cir. 1995), decided after Eagle Bus,
this court reaffirmed that "when a district court sitting as a
court of appeals in bankruptcy remands a case to the bankruptcy
court for significant further proceedings, the remand order is not
‘final’ and therefore not appealable under § 158(d)." Id. at 921.
In the present case, the district court reversed the
bankruptcy court’s order disallowing Beal’s claim, and remanded the
case to the bankruptcy court "for a determination of whether Beal
Bank should be required to indemnify Caddo Parish from future
claims on the Note in accordance with La. UCC § 3-309(b)." The
crucial question for jurisdictional purposes is whether this remand
for a determination of indemnification requires "significant
further proceedings" on the part of the bankruptcy court. If so,
then this court lacks jurisdiction under the Bowman rule and its
progeny.
Whether a remand order requires "significant further
proceedings" within the meaning of Bowman turns on whether the
order calls on the bankruptcy court to perform a judicial function
or a purely ministerial function. Judicial functions entail
significant further proceedings; ministerial functions do not. In
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County Management, the court observed in dicta that "[t]he salutary
purpose of the rule set forth in § 158 is to avoid piecemeal
appeals." 788 F.2d at 314 (citation omitted). Accordingly, the
court stated, "if we were satisfied that the remand order required
the bankruptcy court to fulfill a purely ministerial, rather than
judicial, function so that no further appeal would be taken, we
might be inclined to treat the district court order as final." Id.
Clarifying what it meant by "purely ministerial," the court cited
the Seventh Circuit’s opinion in In re Fox, 762 F.2d 54, 55 (7th
Cir.1985), in which our sister circuit determined that an order is
final if "all that remains to do on remand is a purely mechanical,
computational, or in short ‘ministerial’ task, whose performance is
unlikely to generate a new appeal or to affect the issue that the
disappointed party wants to raise on appeal from the order of
remand." This court further explained the distinction between
ministerial and judicial functions in Aegis Specialty Marketing:
"[W]here a district court’s remand entails significant further
proceedings, such as additional fact-finding, then the order should
not be considered final. However, if the remand involves only
ministerial proceedings, such as the entry of an order by the
bankruptcy court in accordance with the district court’s decision,
then the order should be considered final." 68 F.3d at 921.
The remand order in the present case plainly requires more
than "purely mechanical" or "computational" proceedings, or mere
entry of an order in accordance with the district court’s decision.
Caddo nonetheless argues that the district court’s order does not
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entail significant further proceedings. First, Caddo contends that
the indemnification determination is "essentially ministerial,"
because La. UCC § 3-309(b) requires that the debtor be "adequately
protected against loss that might occur by reason of a claim by
another person to enforce the instrument." We disagree. The fact
that a legal determination may be relatively easy to make because
it is governed by a clear rule of law does not transform a judicial
function into a ministerial function. The bankruptcy court must
still determine whether a threat of third-party enforcement of the
Note exists, and if so what constitutes adequate protection against
loss that might occur by reason of such enforcement. These
functions require the district court to make findings of fact and
to apply existing law to those facts. In short, they are judicial
functions that may give rise to further appeal. Thus, our interest
in avoiding piecemeal appeals militates against hearing the present
appeal prior to determination of the indemnification issue.
Second, Caddo argues that where the further proceedings
required by a district court’s remand to the bankruptcy court will
neither enhance nor alter this court’s resolution of the issues
currently before it, and could prove futile in any event, the order
is final for purposes of appeal. In support of this proposition,
Caddo cites Cullen Ctr. Bank & Trust v. Hensley, 102 F.3d 1411,
1413 n. 3 (5th Cir. 1997). In that case, the bankruptcy court found
that the creditor’s filing of a judicial lien constituted an
avoidable preference under 11 U.S.C. § 547(b) and granted summary
judgment against the creditor. The district court affirmed the
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finding that the lien constituted an avoidable preference, but
reversed the grant of summary judgment, holding that the creditor
was entitled to assert the good faith transferee for value defense
under 11 U.S.C. § 550(b). The district court then remanded the case
to the bankruptcy court for proceedings consistent with its
opinion. Both parties appealed, and both argued on appeal that the
district court’s order was final "because the limited and
essentially ‘ministerial’ further proceedings" required by the
remand to the bankruptcy court would "neither enhance nor alter"
this court’s resolution of the issues before it, and "could well
prove futile." Id. The Hensley panel agreed in a short footnote.
Id.
We do not read Hensley, as Caddo does, for the broad
proposition that a remand is ministerial any time it neither
enhances nor alters this court’s resolution of the issues currently
before it, or any time it may prove futile following appeal. Such
a reading would be plainly inconsistent with this court’s prior
holdings in Cross, Emerald Oil, and County Management. Each of
those cases involved a situation in which the issues to be resolved
on remand neither enhanced nor altered the issues raised on appeal,
and each involved a situation in which immediate resolution of the
issues on appeal may well have nullified the need for a remand. Yet
in each case this court determined that the contested orders were
not final and that jurisdiction was therefore lacking.
This court adheres strictly to the maxim that one panel of the
court cannot overturn another, even if it disagrees with the prior
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panel’s holding. See Texas Refrigerator Supply v. FDIC, 953 F.2d
975, 983 (5th Cir. 1992). Lacking the authority to overturn the
Cross, Emerald Oil, and County Management panels explicitly, we
will not read the Hensley decision to do so implicitly. Such a
result would be neither proper nor desirable. As the County
Management court observed, the purpose of section 158(d)’s finality
requirement "is to avoid piecemeal appeals." 788 F.2d at 314. Even
where a remand neither enhances nor alters this court’s resolution
of the issues before it, and even where immediate resolution of an
appeal might render the remand futile, we must be wary of accepting
jurisdiction where doing so may result in future piecemeal appeals.
In the present case, were we to accept immediate jurisdiction and
to uphold the district court’s order, the bankruptcy court would
still have to resolve the indemnification issue on remand. Were
either party to disagree with the bankruptcy court’s resolution of
that issue, the result would be a piecemeal appeal, the very waste
of judicial resources that the Bowman rule is designed to avoid.
Our basic interest in preserving judicial and other resources
therefore obliges us to wait until the bankruptcy court has
resolved the issue put to it on remand.
III.
We find that the district court’s order in the present case
requires the bankruptcy court to exercise its judicial functions on
remand. The order thus entails significant further proceedings and
falls outside of the finality requirement of section 158(d) under
the Bowman rule. The appeal is therefore DISMISSED.
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