This is an appeal from an order entered by the Honorable Emil J. Goldhaber, Bankruptcy Judge, in which attorneys fees were awarded to the debtor, as prevailing party, after a final dismissal of a petition for an involuntary bankruptcy.
On November 10, 1971, Falls Equipment Corporation, Francis Pinciotti, Jr. and American Equipment Rentals, Inc. (Petitioning Creditors), filed an involuntary petition in bankruptcy against Eastern Erectors, Inc. (Eastern). The petition alleged that Eastern, while insolvent, committed the second act of bankruptcy -- a preferential transfer.
Eastern answered on November 29, 1971 and admitted the transfer, but denied insolvency at the time of transfer. The sole issue before the Bankruptcy Court was whether on October 16, 1971, the date of the transfer, Eastern was insolvent. In an opinion and order on April 7, 1972, Judge Goldhaber held that Eastern was not insolvent on the date in question and dismissed the involuntary petition. This was affirmed by the District Court in an opinion and order by the Honorable Thomas A. Masterson on August 3, 1970 and by the Court of Appeals for the Third Circuit on September 14, 1973.
On October 1, 1973, Rule 115(e) of the Rules of Bankruptcy Procedure became effective. On October 15, 1973, Eastern filed a petition with the Bankruptcy Court seeking attorneys fees under Rule 115(e) as a prevailing party. The issue was fully briefed and argued. On October 22, 1974, Judge Goldhaber found that Rule 115(e) was inapplicable, but granted attorneys fees under the statutory authority of § 2(a)(18) of the Bankruptcy Act, 11 U.S.C. § 11(a)(18). Although attorneys fees were allowed, no specific amount was awarded. The creditors have appealed that order to this court. On June 10, 1975 oral argument was held as required by Bankruptcy Rule 809.
A threshold inquiry is whether an appeal from the award of attorneys fees is proper. At oral argument, counsel for both sides conceded that because no specific amount was ordered as attorneys fees, they were unsure as to whether the order was final and appealable as that term is generally understood in civil litigation, and further whether finality before appeal to the district court is required under the Bankruptcy Rules.
I believe that this appeal is properly before the court for two independent reasons. Rule 803 states:
Unless a notice of appeal is filed as prescribed in Rules 801 and 802, the judgment or order of the referee shall become final.
Thus the Bankruptcy Rule concerning appeals is written in the converse of 28 U.S.C. § 1291 which states that:
The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts of the United States . . . .
While the general rule in civil cases is that only final orders of a district court are appealable, the language of the rule indicates that an order or judgment from a Bankruptcy Court becomes final if not appealed. This view is reinforced by Bankruptcy Rule 801.
An appeal from a judgment or order of a referee to a district court shall be taken by filing a notice of appeal . . . .
The second ground is that while an award of attorneys fees without a specific amount may not normally be appealable, the mere allowance of fees would be appealable if, as here, the power of the court to assess costs, in the first instance, is challenged. United States v. 2,186.63 Acres of Land, Wasatch Cty., Utah, 464 F.2d 676 (10th Cir. 1972).
The petitioning creditors contend that the Bankruptcy Court was without jurisdiction to award attorneys fees because once an appeal was taken "exclusive jurisdiction was transferred . . . and the Bankruptcy Court was divested of authority to deal further with the case." (Brief for Appellants, p. 4). In support of this proposition the petitioning creditors cite 9 J. Moore, Federal Practice, P 203.11, p. 734. This section states that jurisdiction of a lower court is divested with respect to the matters involved in the appeal. Eastern properly points out that Professor Moore restricts this divestiture of jurisdiction to only those matters reviewed on appeal. 9 Moore supra at p. 738. Thus Eastern argues that the Bankruptcy Court was left with jurisdiction over all issues other than Eastern's insolvency. In reality the sole substantive ...