Beal Bank, S.S.B. v. Caddo Parish-Villas South, Ltd.

                 UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit

                   ___________________________

                           No. 98-10380
                   ___________________________


       IN THE MATTER OF: CADDO PARISH-VILLAS SOUTH, LTD.,

                                                             Debtor.


                       BEAL BANK, S.S.B.,

                                                        Appellee,

                             VERSUS


                CADDO PARISH-VILLAS SOUTH, LTD.,

                                                       Appellant.

       ___________________________________________________

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

                                         2
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

                                     3
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.

                                       4
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

                                        5
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).

                                            6
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

                                      7
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

                                             8
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

                                9
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

                                      10
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

                                         11
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.

                                        12