Aegis Specialty Mktg. Inc. v. Ferlita

United States Court of Appeals,

Fifth Circuit.

No. 95-10400

Summary Calendar.

In the Matter of AEGIS SPECIALTY MARKETING INC. OF ALABAMA; Wood
Agency Inc.; Aegis Specialty Marketing Inc. of Delaware; Aegis
Specialty Marketing Inc. of Nevada, Debtors.

AEGIS SPECIALTY MKTG. INC., et al. Appellants,

v.

Donald N. FERLITA, Appellee.

Nov. 9, 1995.

Appeal from the United States District Court for the Northern
District of Texas.

Before GARWOOD, WIENER and PARKER, Circuit Judges.

PER CURIAM:

Debtors-Appellants Aegis Specialty Marketing Inc. of Alabama,

et al., appeal from a district court decision reversing the

bankruptcy court's confirmation of a reorganization plan filed

pursuant to Chapter 11 of the Bankruptcy Code. We find that the

decision of the district court is not a "final order"1, and we

therefore dismiss this appeal for want of jurisdiction.

PROCEEDINGS BELOW

On November 17, 1992, Aegis Specialty Marketing Inc. of

Alabama, et al. ("the Debtors"), filed for relief under Chapter 11

of the Bankruptcy Code. Donald L. Ferlita ("Ferlita"), a creditor

in the bankruptcy proceedings, timely filed a Proof of Claim in the

1
See 28 U.S.C. § 158(d)

1
bankruptcy court. This claim was classified as a general unsecured

claim pursuant to Class 6 of the Debtor's Plan of Reorganization.

On June 10, 1993, the Debtors filed their Chapter 11 Plan of

Reorganization. After determining that the Debtor's proposed plan

complied with the requirements of 11 U.S.C. § 1129(a), the

bankruptcy court confirmed the plan. The bankruptcy court later

entered findings of facts and conclusions of law to support its

decision to confirm. Ferlita appealed the confirmation to the

federal district court for the Northern District of Texas.

On appeal to the district court, Ferlita argued that the

Debtors had failed to present the bankruptcy court with any

evidence that would support a finding that the plan complied with

the requirements of 11 U.S.C. § 1129(a). Specifically, Ferlita

argued that the "good faith" requirement of § 1129(a)(3)2 was not

met.

The district court concluded that, under the law of this

circuit, the bankruptcy court is to hold an evidentiary hearing on

the confirmability of a plan of reorganization, with the burden on

the plan's proponents to present evidence supporting a finding of

compliance with the requirements of § 1129(a).3 The district court

held that, because the bankruptcy court incorrectly based its

2
11 U.S.C. § 1129(a)(3) provides:

(a) The court shall confirm a plan only if all of the
following requirements are met:

(3) The plan has been proposed in good faith and not by
any means forbidden by law.
3
Memorandum Opinion and Order, at 4 (March 29, 1995).

2
ruling confirming the plan on the erroneous assumption that Ferlita

had the burden of proving the plan unconfirmable, the bankruptcy

court's ruling was invalid and had to be reversed and remanded to

the bankruptcy court for further proceedings to determine whether

the plan met the requirements of § 1129(a).

The Debtors filed the present appeal urging us to reverse the

district court on the basis that the district court erred when it

disregarded the bankruptcy court's factual findings and reversed

the order confirming the reorganization plan. The issue of

jurisdiction was raised by this court, and we requested

supplemental briefs from the parties on this issue. After

reviewing the parties' briefs and the applicable case law, we have

determined that we are without jurisdiction to reach the merits of

this appeal.

JURISDICTION UNDER 28 U.S.C. § 158(d)

This court has jurisdiction to hear "appeals from all final

decisions, judgments, orders, and decrees." 28 U.S.C. § 158(d).

The jurisdictional question we are presented with in the instant

case is whether, under the facts presented, the district court's

order reversing and remanding "for further proceedings to determine

whether such [reorganization] plan meets the requirements of 11

U.S.C. § 1129"4 is a "final order" for purposes of appeal.

This court has stated "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

4
Supra note 4, at 5-6.

3
"final' and therefore not appealable under § 158(d)." In re

Nichols, 21 F.3d 690, 692 (5th Cir.1994) (citing In re Bowman, 821

F.2d 245 (5th Cir.1987)). Therefore, where 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.5

We hold that the district court's order reversing and

remanding for further proceedings is not final under § 158(d).

Consequently, we are without jurisdiction to reach the merits of

the Debtors' appeal.

We are not to be understood as holding that a reversal of a

confirmation order can never be considered final. In fact, we have

previously implicitly recognized circumstances in which a district

court's order reversing a confirmation order is final for purposes

of appeal. See In re Briscoe Enter., Ltd., II., 994 F.2d 1160 (5th

Cir.1993) (addressing the merits of an appeal from a district

court's reversal of the bankruptcy court's confirmation order

without discussing jurisdictional issues). Consequently, the

finality of an order for purposes of appeal pursuant to § 158(d)

must be made on a case-by-case basis.

JURISDICTION UNDER THE COLLATERAL ORDER EXCEPTION

5
See Bowman, 821 F.2d at 247 (final order is one in which
all that remains to be done is the mechanical entry of judgment).

4
 In the alternative, the Debtors contend that if we do not

have jurisdiction under § 158(d), we may still find jurisdiction

under the collateral order exception. In order to establish

jurisdiction under this exception, three requirements must be

satisfied. The order appealed from must: "(1) "conclusively

determine the disputed question,' (2) "resolve an important issue

completely separate from the merits of the action,' and (3) "be

effectively unreviewable on appeal from a final judgment.' " In re

Aucoin, 35 F.3d 167, 170 (5th Cir.1994) (quoting Richardson-Merrel,

Inc. v. Koller, 472 U.S. 424, 431, 105 S.Ct. 2757, 2761, 86 L.Ed.2d

340 (1985)). "These conditions are conjunctive: failure of any

one results in the failure of jurisdiction." Id. (citing In re

Delta Servs. Indus., Etc., 782 F.2d 1267, 1272 (5th Cir.1986)).

While the order appealed from in the instant case might

arguably satisfy the first two requirements of the collateral order

exception, it clearly does not satisfy the third. Assuming,

arguendo, that the district court improperly placed the burden of

proving that the reorganization plan complied with the requirements

of § 1129(a) on the proponents of the plan, such ruling would still

be reviewable on appeal from a final judgment. Consequently, the

order appealed from does not satisfy the third requirement of the

collateral order exception and we are therefore without

jurisdiction to hear this appeal.

CONCLUSION

Because we lack jurisdiction in the instant case, we do not

address the issue of whether the district court was correct when it

5
held that the the burden of proving the confirmability of a plan of

reorganization is upon the proponent of the plan. We also express

no opinion as to whether the confirmation hearing conducted by the

bankruptcy judge on October 28, 1993, amounted to a sufficient

evidentiary hearing.6 The appeal is therefore DISMISSED.

6
See Williams v. Hibernia Nat'l Bank, 850 F.2d 250, 253 (5th
Cir.1988) (bankruptcy court must hold an evidentiary hearing in
ruling on confirmation).

6