The Eleventh Circuit explained the procedural maneuvers that will or will not permit the parties to convert an interlocutory order into a “final” order establishing a right of appeal. A stipulation of dismissal under Federal Rule 41(a)(1)(A) won’t cut the mustard.
The chapter 11 debtors sued a bank to recover funds in an account that the bank had frozen to effect setoff. On cross motions for summary judgment, the bankruptcy court ruled in favor of the debtors on three of the four claims in the complaint. The motions did not resolve the fourth claim for unjust enrichment. The bankruptcy court scheduled the unjust enrichment claim for trial.
The bank appealed the order granting summary judgment on the three claims. When the district court affirmed, the bank appealed once more.
Sua sponte, the Eleventh Circuit directed the parties to address the court’s appellate jurisdiction, because a judgment in an adversary proceeding “must resolve all of the claims brought by all of the parties” to be final. The appeals court directed the parties to brief the question of whether the bankruptcy court’s order was final and therefore subject to appeal under 28 U.S.C. § 157(d)(1), which grants jurisdiction to the courts of appeals over “all final decisions, judgment, orders, and decrees . . . .”
Recognizing that the appeals court was on the cusp of dismissing but wanting the circuit to hear the appeal, the parties filed a stipulation with the bankruptcy court on the eve of oral argument purporting to dismiss the fourth claim under Federal Rule 41(a)(1)(A), made applicable by Bankruptcy Rule 7041.
The fourth claim having been dropped, the parties argued in the circuit that the order on the three other claims had become “final” and subject to appeal. In his February 16 opinion, Circuit Judge Stanley Marcus dismissed the appeal. He said that the procedural feint “comes up short.”
Rule 41(a)(1)(A) allows a plaintiff to dismiss “an action without a court order by filing . . . a stipulation of dismissal signed by all parties who have appeared.”
Judge Marcus said that his court and every other circuit to confront the question have decided that “the Rule does not authorize the voluntary dismissal of individual claims; rather, the Rule requires that a plaintiff dismiss the entire action.” Because the stipulation only dismissed one claim and not the entire action, he said it “was invalid upon filing.”
Because the stipulation was invalid and the fourth claim was still alive, the summary judgment on the other claims was not final and appealable.
The parties made several arguments to circumvent Judge Marcus’ strict notion of finality. They contended that Bullard v. Blue Hills Bank, 575 U.S. 496 (2015), and Ritzen Group, Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020), allow an appeal from an order of the bankruptcy court if it resolves “discrete disputes.”
Judge Marcus held that neither case was applicable because neither entailed an appeal from an adversary proceeding. He also declined to view the order as final under the collateral order doctrine, the practical finality doctrine and the marginal finality doctrine.
The parties’ best argument was based on the doctrine of cumulative finality, where “a subsequent final judgment can sometimes cure a premature notice of appeal,” Judge Marcus said. However, he said that the argument was to no avail because “there has been no entry of final judgment in the adversary proceeding.”
Judge Marcus ended his opinion by explaining how the parties could have brought the appeal to the circuit. First, the parties could have certified the case for appeal under Federal Rule 54(b). Another procedural alternative, he said, “is to move to amend the adversary complaint under Civil Rule 15(a) to eliminate the unjust enrichment claim.”
Judge Marcus dismissed the appeal for lack of appellate jurisdiction.
Recommendation
We recommend reading the opinion in full text for Judge Marcus’ discussion of the circumstances when the collateral order doctrine, the practical finality doctrine and the marginal finality doctrine might salvage an appeal from an otherwise interlocutory order.
The Eleventh Circuit explained the procedural maneuvers that will or will not permit the parties to convert an interlocutory order into a “final” order establishing a right of appeal. A stipulation of dismissal under Federal Rule 41(a)(1)(A) won’t cut the mustard.
The chapter 11 debtors sued a bank to recover funds in an account that the bank had frozen to effect setoff. On cross motions for summary judgment, the bankruptcy court ruled in favor of the debtors on three of the four claims in the complaint. The motions did not resolve the fourth claim for unjust enrichment. The bankruptcy court scheduled the unjust enrichment claim for trial.
The bank appealed the order granting summary judgment on the three claims. When the district court affirmed, the bank appealed once more.
Sua sponte, the Eleventh Circuit directed the parties to address the court’s appellate jurisdiction, because a judgment in an adversary proceeding “must resolve all of the claims brought by all of the parties” to be final. The appeals court directed the parties to brief the question of whether the bankruptcy court’s order was final and therefore subject to appeal under 28 U.S.C. § 157(d)(1), which grants jurisdiction to the courts of appeals over “all final decisions, judgment, orders, and decrees . . . .”