On Appeal From The United States District Court For The District Of New Jersey C.A. No. 81-03273 (Adversary Nos. 81-616 & 81-639).
Adams and Higginbotham, Circuit Judges, and Teitelbaum,*fn* District Judge
We are called upon in this appeal to determine whether a creditors' committee in a bankruptcy reorganization has the right to intervene in adversary proceedings instituted by a trustee. We first decide that we have jurisdiction under 28 U.S.C. § 1293(b) to address this issue at this stage of the litigation, and then proceed to ascertain that under the applicable section of the Bankruptcy Code, 11 U.S.C. § 1109(b), a creditors' committee has a right to intervene, a right that is not satisfied by participation as a mere amicus curiae. Accordingly we affirm the order of the district court granting intervention.
On April 21, 1981, Marin Motor Oil, Inc. filed a voluntary petition in the United States Bankruptcy Court for the District of New Jersey for reorganization under Chapter 11 of the Bankruptcy Code. All outstanding shares of Marin were owned by Nicholas Marin. Marin and his wife, Ilse Marin, also owned and controlled serveral related companies.
Two weeks after the petition was filed, the United States Trustee*fn1 appointed the Official Unsecured Creditors' Committee ("Committee") pursuant to 11 U.S.C. § 151102, and on May 11 the Committee moved for the appointment of a trustee of the estate. Before a trustee was appointed, the Committee filed a complaint seeking to have the various related companies included in the proceedings. Several days later, on May 19, the United States Trustee appointed a trustee of the estate (hereinafter referred to as "Trustee"). See 11 U.S.C. § 151104. Appointment of a trustee is the exception and not the rule in a Chapter 11 case, Weintraub & Resnick, Bankruptcy Law Manual para. 8.13 (1980), but appointment of a trustee was requested by the United States Trustee because the facts of this case indicated a need for a disinterested third party to investigate the situation, to take appropriate action, and to oversee and manage the business.
The Trustee entered into a stipulation on June 16 with the Marins and the various Marin companies, freezing their assets; the stipulation was to terminate in 45 days. On July 2, the Committee voluntarily withdrew its complaint with the understanding that an order freezing the assets of the Marins and the Marin companies would be sought and that the Trustee would vigorously pursue his own complaint.
The Trustee then instituted the two adversary proceedings in which the Committee ultimately sought to intervene, and which gave rise to this appeal. The first adversary proceeding, instituted July 14, 1981, sought to recover for the estate a home and furnishings in Tenafly, New Jersey. The home was purchased with money that Nicholas Marin had borrowed from Marin Motor Oil. Nominal title to the home was held by the Marin Holding Company, a company under the complete control of Nicholas Marin. The Trustee asked for the imposition of a constructive trust on the home and furnishings, and for a declaration that Marin Motor Oil was the beneficial owner. The second adversary proceeding, instituted July 17, 1981, sought to extend the pending Chapter 11 proceedings to include the Marins individually and the various Marin companies besides Marin Motor Oil. The Trustee's complaint alleged that the various companies had been operated as a single economic unit, without observance of the requisite formalities; that the Marins had "complete control" over the various companies; that the Marins' personal assets were inextricably intertwined with those of the companies; that Marin Motor Oil financed the other companies; and that the purpose and effect of forming the other companies was to delay and defraud creditors.
During the following months, the Committee became increasingly dissatisfied with the Trustee's performance. It was especially disturbed that the Trustee had allowed the stipulation freezing the assets to lapse, although another stipulation was eventually extended to September 14. In early October, the Committee sought, under 11 U.S.C. § 1109(b), to intervene in the two adversary proceedings brought by the Trustee. Although the Committee's supporting affidavit contained serious complaints about the Trustee's handling of the proceedings, the Committee based its motion almost entirely on the claim that section 1109(b) accorded it an absolute right to intervene regardless of the Trustee's performance.
Reading section 1109(b) as permissive rather than mandatory, the bankruptcy court refused to grant intervention. It did, however, afford the Committee amicus curiae status "limited to the submission of briefs on all factual and legal issues raised and considered." Appendix at 5. The Committee then filed a Notice of Appeal to the United States District Court for the District of New Jersey. The district judge reversed, holding that section 1109(b) was mandatory, and could not be satisfied by allowing the Committee to participate as an amicus curiae. The district court's order was appealed to this Court by the Trustee and by the Marins and the Marin companies.
Before we can reach the merits of this dispute, it is necessary for us to determine that we have appellate jurisdiction at this juncture of the proceedings. Although the question is not free from doubt, we conclude that there is jurisdiction.
The usual rule in this Circuit is that "when an absolute right to intervene in a lawsuit is claimed, and the claim is rejected, the order denying intervention is considered final and appealable." Commonwealth of Pennsylvania v. Rizzo, 530 F.2d 501, 504 (3d Cir.), cert. denied, 426 U.S. 921, 49 L. Ed. 2d 375, 96 S. Ct. 2628 (1976) (quoting Philadelphia Electric Co. v. Westinghouse Electric Corp., 308 F.2d 856, 859 (3d Cir. 1962), cert. denied, 372 U.S. 936, 9 L. Ed. 2d 767, 83 S. Ct. 883 (1963)). On the other hand, an order granting intervention is ordinarily not considered appealable. EEOC v. American Telephone & Telegraph Co., 506 F.2d 735, 742 (3d Cir. 1974). See also C. Wright and A. Miller, 7A Federal Practice and Procedure § 1923 (1972 & Supp. 1982): "An order granting leave to intervene is not final and is not appealable as of right" (footnote, citing cases, omitted).
These rules, however, were developed in appeals under 28 U.S.C. § 1291, not in the special context of appeals under 28 U.S.C. § 1293(b), "a comprehensive and exclusive schema for jurisdiction of bankruptcy appeals," Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101 n.3 (3d Cir. 1981). 28 U.S.C. § 1293(b) reads:
Notwithstanding section 1482 of this title, a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of an appellate panel created under section 160 or a District court of the United States or from a final judgment, order, or decree of a bankruptcy court of the United States if the parties to such appeal agree to a direct appeal to the court of appeals.
Section 1293(b) is, technically, not effective until April 1, 1984; but Universal Minerals, supra, 669 F.2d at 100 n.2, points out that by virtue of a "transition provision" we are currently vested with the same appellate authority that we would have under section 1293(b). Although section 1293(b), like section 1291, incorporates a "finality" requirement, it is not clear that this requirement must in all circumstances be given the same construction that it would have under section 1291. See Universal Minerals, 669 F.2d at 101 n.3.
There is no reason to doubt that the order of the bankruptcy court, denying a claimed absolute right of intervention, was final. Had the parties agreed to a direct appeal to this Court of that order, we would have had appellate jurisdiction under section 1293(b). The difficult question is whether we should apply the usual rule and hold that the district court's order granting intervention was interlocutory; or whether we should conclude that the district court, which was in essence an appellate tribunal reviewing a final judgment of a trial court, and whose order completely disposed of the appeal from the final judgment of the bankruptcy court, entered an appealable order.
As reluctant as we are to adopt an expansive interpretation of finality, see Bachowski v. Usery, 545 F.2d 363, 373-74 (3d Cir. 1976), we are persuaded both by the language of previous decisions of this Court and by a consideration of the policies underlying the general rule against interlocutory appeals that the district court's order should be considered final under section 1293(b).
In Universal Minerals, supra, 669 F.2d at 101, this Court observed that "once the district court's jurisdiction under § 1334(a) [governing appeals to district courts of final orders of bankruptcy courts] is established, our jurisdiction under § 1293(b) would seem to follow." If this statement is controlling, then clearly we have jurisdiction of the present appeal. It is true that Universal Minerals is distinguishable on its facts. In that case, the district court simply remanded to the bankruptcy court for an accounting. In this case, the bankruptcy court on remand from the district court must conduct, or continue to conduct, two full adversary proceedings. On the other hand, Universal Minerals apparently considered it significant that reversal of the district court's judgment in that case "would be preclusive of any further litigation on the relevant cause of action," id. at 101, quoting Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 482-83, 43 L. Ed. 2d 328, 95 S. Ct. 1029 (1975). A reversal of the district court's order in this case would preclude any further litigation on the part of the Committee in the bankruptcy court adversary proceedings (although the Committee could still participate as an amicus) and so could be considered final as to the Committee. Moreover, in the present case, as in Universal Minerals, "the judgment of the district court certainly was final in the sense that nothing remained for the district court to do." Id. at 101.
In re Bildisco, 682 F.2d 72 (3d Cir. 1982), is also pertinent here. In Bildisco, this Court specifically declined to discuss the rationale employed by the district court in affirming a bankruptcy court ruling. Citing Universal Minerals, supra, 669 F.2d at 101-02, we wrote that "the district court's analysis need not detain us . . . because our role as a court of review is identical to that of the district court." Id. at 81 n.14. The passage from Universal Minerals which Bildisco cites notes that this Court is in as good a position to review the bankruptcy court's findings as is the district court. Where, as in the present case, an appeal is taken from a district court order reversing the bankruptcy court, it may be necessary to examine the district court's analysis as well as that of the bankruptcy court. Even if this is so, Bildisco's point that there is an identity of roles between the court of appeals and the district court in bankruptcy appeals strongly ...