There must be a final order on every claim in an adversary proceeding before the circuit court has jurisdiction, even if the order on appeal is final, the Tenth Circuit said in an opinion on Aug. 19.
A trustee sued a debtor to declare a debt nondischargeable under subsections (2), (4) and (6) of Section 523(a). The bankruptcy court sustained the objection under one subsection but rejected the claim under the other two. The debtor appealed, and the trustee cross-appealed.
The debtor’s appeal went to the district court, where the judge upheld the finding of nondischargeability. The debtor appealed to the Tenth Circuit.
Meanwhile, the trustee had wanted his cross-appeal heard in district court, but the Bankruptcy Appellate Panel heard the appeal instead, having found that the trustee’s election was defective. On the merits, the BAP ruled in favor of the trustee on one subsection under Section 523(a). On the other, the BAP remanded to the bankruptcy court for additional findings.
On the appeal from the district court’s order, the Tenth Circuit raised the issue of its jurisdiction sua sponte. The debtor and the trustee both argued that the order from the district court was final under 28 U.S.C. Section 158(d)(1) because the district court had finally disposed of the issue before it.
In a non-precedential opinion by Circuit Judge Nancy L. Moritz, the appeals court dismissed the appeal for lack of jurisdiction.
Tenth Circuit precedent regarding bankruptcy appeals says that finality occurs when the lower court has “resolved all of the matters” in an adversary proceeding.
Even though the appeals were in different intermediate appellate courts, the district court’s order “didn’t resolve all of the matters” originally raised in bankruptcy court and therefore was not final, Judge Moritz said. She said the case would be ripe for appeal to the circuit court once the bankruptcy court and the BAP were to resolve the remaining issue.
Presumably also, the trustee could abandon the claim that had been remanded to the bankruptcy court, thus resolving all issues in the adversary proceeding and bestowing appellate jurisdiction on the Tenth Circuit.