Judges on the Tenth Circuit Bankruptcy Appellate Panel debated when and whether contempt orders and sanctions are appealable. Must the trial court always quantify the amount of contempt sanctions before the contemnor can appeal the decision to award attorneys’ fees?

The bankruptcy court had ordered the debtor to vacate a home, remove her possessions and surrender possession. When the debtor did not comply, the bankruptcy court held the debtor in contempt, which we will refer to as the contempt order.

The contempt order also decided that the trustee was entitled to recover attorneys’ fees, but the bankruptcy court called for a later hearing to determine the amount of the award. The debtor appealed the contempt order when no monetary sanctions had yet been awarded.

After entry of the contempt order but before the determination of the amount of monetary sanctions, the debtor cured her contempt by vacating the property and surrendering possession. Later, the bankruptcy court fixed the amount of sanctions.

The debtor-contemnor appealed the contempt order before the bankruptcy court determined the amount of attorneys’ fees. Sua sponte, the BAP issued an order to show cause why the appeal should not be dismissed as interlocutory.

The BAP issued an order on April 22 finding appellate jurisdiction to review the contempt order. The time for the debtor to appeal the amount of sanctions had not expired before the BAP entered the April 22 order.

The BAP’s Order

In an unsigned order resolving the question of appealability, the BAP explained that there are two types of civil contempt orders, coercive and compensatory. A contemnor can purge contempt of a coercive order, but cannot purge himself or herself from a compensatory order until paying the sanction.

Citing Budinich v. Becton Dickinson & Co., 486 U.S. 196, 196–97 (1988), the BAP said “that orders imposing sanctions can be final even without a quantifiable sanction.” The BAP therefore ruled that the contempt order was final and appealable.

However, the BAP also said that “an order may be final in part and interlocutory in part.” The panel went on to say that the debtor’s time to appeal the order fixing the amount of attorneys’ fees had not run and no appeal had yet been filed.

The BAP said that the order fixing the amount of attorneys’ fees “is not part of the appeal of” the contempt order. The panel ordered the debtor to file her brief on appeal within 30 days.

The Concurrence and Dissent

Bankruptcy Judge Robert H. Jacobvitz concurred in part and dissented in part. He concurred “in the result that this appeal may proceed on the issue of the award of attorney’s fees,” but he “disagree[d] that the award of attorney’s fees in the Contempt Ruling was a final appealable ruling at the time this appeal was filed.”

Judge Jacobvitz said that he concurred that the contempt order was final because, “while this appeal was pending[,] the Bankruptcy Court entered an order quantifying the amount of the attorney’s fee award, which ripened the interlocutory ruling on the award of attorney’s fees into a final ruling.”

Judge Jacobvitz saw the contempt order as having two parts: the decision that the debtor was in contempt, and the decision to award attorneys’ fees. For the purposes of appeal, he saw them as “separate litigation units.”

By having purged herself of contempt by surrendering the property, Judge Jacobvitz said that the debtor had mooted the appeal from the finding of contempt “as a standalone appeal.” Consequently, he said, “we do not have jurisdiction over an appeal of the Merits Determination as a standalone appeal.”

With regard to the portion of the contempt order saying that the trustee was entitled to recovery of attorneys’ fees, Judge Jacobvitz said,

[T]he Attorney Fee Award was interlocutory when this appeal was filed because the amount of the fee award had not been quantified. But the premature appeal ripened when the Bankruptcy Court entered the Fee Order quantifying the fees, resulting in the interlocutory ruling becoming final. So, we may exercise jurisdiction over this appeal of the Attorney Fee Award.

At length, Judge Jacobvitz explained why Budinich did not support the panel’s conclusion that the entire contempt order was appealable without fixing the amount of attorneys’ fees. “In my view,” he said, “Budinich requires the conclusion that the Merits Determination portion of the Contempt Ruling is final and supports the conclusion that the Attorney Fee Award portion was interlocutory when this appeal was taken.”

Judge Jacobvitz described Budinich as holding that “a judgment deciding the merits is a final and appealable order even if the court has not made a final decision on awarding attorney’s fees,” because attorneys’ fees were collateral to the merits. Thus, the appeal in Budinich was untimely as to the merits when the appellant waited to file an appeal until after the amount of attorneys’ fees had been fixed.

From Budinich, Judge Jacobvitz saw the merits of the contemnor’s appeal as being final, but “the finality of the decision on the merits does not make the Contempt Ruling final as it relates to the Attorney Fee Award without fixing the amount.”

Judge Jacobvitz buttressed his conclusion by alluding to the “general rule” in the Tenth Circuit that an award of attorneys’ fees is not appealable until the amount “is reduced to a sum certain.” In his view, the facet of the contempt order giving the trustee the right to recover attorneys’ fees was not final when the appeal was taken.

“While Budinich does not directly address the question at issue,” he said, “its reasoning supports the conclusion that the Attorney Fee Award was interlocutory at the time the appeal was filed.” He read Budinich as meaning that an award of attorneys’ fees was collateral to the merits, meaning there is “a separate appeal period from the decision on the merits.”

Circumstances changed, though, when the bankruptcy court fixed the amount of attorneys’ fees. Judge Jacobvitz saw no need for the contemnor to file a second or amended notice of appeal, in view of Harbert v. Healthcare Services Group, Inc., 391 F.3d 1140 (10th Cir. 2004). There, the appellant filed a premature notice of appeal.

When the district court fixed the damages, Judge Jacobvitz read Harbert to mean that “the nonfinal decision on liability became final so that the notice of appeal was effective to confer appellate jurisdiction over the appeal from the determination of liability.”

Under Harbert, Judge Jacobvitz saw the order fixing the amount of attorneys’ fees as “confer[ring] appellate jurisdiction over the decision to award attorney’s fees.” Nonetheless, he said that “the contemnor must file a timely notice of appeal to confer jurisdiction over the amount of the fees.”