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Scarff Bros., Inc v. Acnb Bank

November 1, 2011

SCARFF BROS., INC.,
APPELLANT
v.
ACNB BANK, ET AL., APPELLEES



The opinion of the court was delivered by: (Chief Judge Kane)

Bankruptcy Appeal

MEMORANDUM ORDER

Presently pending before the Court is Appellant Scarff Bros., Inc.'s appeal of the decision of the Bankruptcy Court valuing Debtors Thomas H. McElwee, Jr. and Becky S. McElwee's property (Doc. No. 2-11) as well as Appellee AgChoice Farm Credit, ACA's motion to dismiss Appellant's appeal (Doc. No. 7). Appellant argues that the Bankruptcy Court erred as a matter of law in determining the fair market value of Debtors' property located at 2807 Wayne Road, Chambersburg, Pennsylvania ("Wayne Road Property"). (Doc No. 9.) Appellee contends that the decision of the Bankruptcy Court is not a final order and, therefore, appellate review is inappropriate at this time. (Doc. No. 8 at 11.) For the reasons stated below, the Court will grant Appellee's motion to dismiss Appellant's appeal. (Doc. No. 7.)

I. BACKGROUND

On March 30, 2010, Debtors filed a Voluntary Chapter 12 Petition in the United States Bankruptcy Court for the Middle District of Pennsylvania. (Doc. No. 2-11 at 2.) At that time, Debtors owned three pieces of real property, including the Wayne Road Property.*fn1 (Id.)

On June 25, 2010, Debtors filed their Original Chapter 12 Plan ("Original Plan"). (Id.) After several objections to the Original Plan were filed, Debtors filed an Amended Chapter 12 Plan ("Amended Plan") on December 7, 2010. (Id.) Both Appellant and Appellee filed objections to the confirmation of the Amended Plan. (Id.)

On October 13, 2010, prior to the filing of the Amended Plan, Debtors filed a motion under Federal Rule of Bankruptcy Procedure 3012 to determine the value of the collateral securing at least a portion of Appellants' claims against Debtors' real property. (Id.) An evidentiary hearing on the motion was held on January 13, 2011. (Id.) Expert testimony was heard from three real estate appraisers concerning the value of the Wayne Road Property: (1) Thomas R. Donahue, on behalf of Debtors; (2) David Coletta, on behalf of Appellee; and (3) Don Paul Shearer, on behalf of Appellant. (Id. at 6-12.) Mr. Donahue and Mr. Shearer testified only as to the fair market value of the Wayne Road Property, valuing the property at $350,000.00 and $400,000.00, respectively. (Id. at 6-7, 10-12.) Mr. Coletta testified only as to the liquidation value of the Wayne Road Property, valuing the property at $220,000.00. (Id. at 7-10.)

On June 6, 2011, the Bankruptcy Court issued its opinion and order setting forth valuations for Debtors' properties. (Doc. Nos. 2-11, 2-12.) The Bankruptcy Court found that the liquidation value of Debtors' Wayne Road Property, if surrendered to a secured creditor, was $239,680.00 and that the value of the property, if retained by Debtors, was $299,600.00. (Doc. No. 2-12 at 1.)

On June 17, 2011, Appellant filed a notice of appeal (Doc. No. 1), contending that the Bankruptcy Court erred as a matter of law in determining the fair market value of the Wayne Road Property (Doc No. 9 at 4). Appellee filed a motion to dismiss the appeal on July 22, 2011, arguing that the Bankruptcy Court's order is interlocutory in nature and that appellate review of the order is, therefore, inappropriate at this time. (Doc No. 7.)

II. JURISDICTION

Pursuant to 28 U.S.C. § 158(a)(1), district courts have appellate jurisdiction over final judgments, orders, and decrees of the bankruptcy court. With leave of court, district courts also have jurisdiction over interlocutory orders and decrees. 28 U.S.C. § 158(a)(3). The parties dispute whether the order at issue here constitutes a final order. (Doc Nos. 8, 10.) Thus, the Court will first consider whether it may properly exercise jurisdiction over the appeal.

The United States Court of Appeals for the Third Circuit has recognized that finality must be interpreted "pragmatically in bankruptcy cases because these proceedings often are protracted and involve numerous parties with different claims." In re Natale, 295 F.3d 375, 378 (3d Cir. 2002); see also In re Amatex Corp., 755 F.2d 1034, 1039 (3d Cir. 1985) ("[W]e have consistently considered finality in a more pragmatic and less technical way in bankruptcy cases than in other situations."). In order to avoid the inefficiency that would result from insisting upon the approval of a plan prior to any appeal, the Third Circuit has "permitted appellate review of orders that in other contexts might be considered interlocutory." Amatex Corp., 755 F.2d at 1039.

In spite of the "relaxed view of finality in the bankruptcy setting as a whole," not every order of a bankruptcy court is appealable as a final order. Natale, 295 F.3d at 378; see also United States v. Nicolet, Inc., 857 F.2d 202, 206 (3d Cir. 1988) ("[E]ven in bankruptcy appeals the concept of finality is not open-ended."). Rather, only orders of a bankruptcy court that "finally dispose of discrete disputes within the larger case are considered final for purposes of a bankruptcy appeal." In re Travelers Motor Inn, Inc., 181 B.R. 6, 7 (N.D.N.Y. 1995) (citation and quotation marks omitted); see also In re Sullivan, No. 91-5501, 1992 WL 68613 at *3 (E.D. Pa. Mar. 31, 1992) ("[Bankruptcy court] orders that do not fully adjudicate a specific adversary proceeding or that require further factual development are governed by the ordinary finality precepts of routine civil litigation."). The Third Circuit has identified three factors to consider in making a decision on ...


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