A Ninth Circuit Primer on Appealing Bankruptcy Remands

In In re Marino, the Ninth Circuit held that it lacked jurisdiction to review a Bankruptcy Appellate Panel decision that remanded the dispute back to the bankruptcy court. The opinion provides a nice summary of the Ninth Circuit’s law on appealing bankruptcy remands. These remands mean further proceedings in the bankruptcy court. And the parties might want to appeal the outcome of those proceedings. So it’s normally better to delay any appeals until after the bankruptcy court resolves the dispute. The court of appeals can then decide all issues that the action presents in a single appeal. Only when the proceedings on remand will be ministerial or technical—and thus highly unlikely to produce another appeal—is the remand order deemed final and appealable.

The bankruptcy proceedings

The debtors in Marino had fallen behind on their home mortgage payments. They eventually abandoned their house, and their loan servicer foreclosed on it. The debtors then filed for bankruptcy and obtained a discharge of the remaining mortgage debt. Despite the discharge and the bankruptcy court’s injunction against further efforts to collect on the debt, the loan servicer continued contacting the debtors. It ultimately sent letters or called them 119 times. This conduct violated the bankruptcy court’s discharge injunction, and the bankruptcy court held the loan servicer in contempt. The bankruptcy court awarded $1,000 per violation—$119,000 in total. But the bankruptcy court declined to award punitive damages, concluding that it lacked the authority to do so.

Both parties appealed to the Ninth Circuit’s Bankruptcy Appellate Panel. The Panel affirmed the contempt sanction. But it remanded the case to the bankruptcy court on the punitive-damages issue, instructing the court consider whether punitive damages were appropriate. The Panel noted that the bankruptcy court could issue proposed findings and send a recommendation on punitive damages to the district court. Or the bankruptcy court could refer the matter to the district court for criminal contempt proceedings. (The Panel decided some other issues that are irrelevant to the present discussion, which I ignore.)

The loan servicer then appealed to the Ninth Circuit, challenging the contempt sanction and the remand on punitive damages.

The Ninth Circuit on appeals from a Bankruptcy Appellate Panel

The Ninth Circuit held that it lacked jurisdiction over the loan servicer’s appeal. Appeals from bankruptcy court decisions first go to either a district court or the circuit’s Bankruptcy Appellate Panel. The courts of appeals then have jurisdiction over “appeals from all final decisions, judgments, orders, and decrees” entered by the district court or the Panel. The Ninth Circuit has held that a district court or Panel decision is not final when the it remands a case for “factual determinations on a central issue.” The court reasoned that delaying appeals in these circumstances is ultimately more efficient; the court of appeals can review all issues—including those decided on remand—in a single appeal. To do otherwise risks piecemeal appeals from the same bankruptcy dispute.

Granted, some Panel remands are final and appealable. The court of appeals will hear an appeal from a remand for a ministerial or technical task that is unlikely to produce another appeal. (This appears to be a specific application of the more general ministerial/technical exception to the final-judgment rule. See pages 400–402 of this article for more on that exception.) To determine whether a remand is final, the Ninth Circuit considers four factors:

• The need to avoid piecemeal litigation;
• Judicial efficiency;
• The systemic interest in preserving the bankruptcy court’s role as the finder of fact; and
• Whether delaying review would cause either party irreparable harm.

In Marino, every factor weighed in favor of delaying the appeal. The punitive-damages issue that the Panel had remanded to the bankruptcy court was almost certain to be appealed after the bankruptcy court’s decision, regardless of who won. Further, the Panel’s remand expressly provided that the bankruptcy court might engage in further fact finding. And other than the normal costs of litigation, no party would be irreparably harmed by delaying the appeal. The dispute could eventually make its way back to the Ninth Circuit for that court to review all of the issues in a single appeal.

The Ninth Circuit accordingly dismissed the loan servicer’s appeal.

In re Marino, 2020 WL 612816 (9th Cir. Feb. 10, 2020), available at the Ninth Circuit and Westlaw.