United States District Court, E.D. Pennsylvania
ROBERT H. HOLBER et al., Plaintiffs,
BARRY PORTNOY et al., Defendants.
E.K. PRATTER UNITED STATES DISTRICT JUDGE
1996, debtor Barry Portnoy opened an insurance policy on his
life and named his wife Danielle as its beneficiary. When the
Portnoys separated in 2011, Ms. Portnoy became the owner of
the policy. Mr. Portnoy filed for bankruptcy in 2014, and the
bankruptcy trustee started this adversary proceeding against
several members of the Portnoy family in 2016.
December 2017, the trustee notified Ms. Portnoy that he would
subpoena the insurer that had issued the life insurance
policy. Less than a week later, Ms. Portnoy sent the insurer
a surrender request, seeking to cancel the policy and recover
its cash value.
January 2018, the trustee instructed the insurer not to
process Ms. Portnoy's surrender request, and the insurer
obliged. The trustee then moved for an order enjoining Ms.
Portnoy from using the insurance funds. After briefing and a
hearing, the bankruptcy court granted the trustee's
motion on February 15. The injunction order still allows Ms.
Portnoy to access funds for living expenses, college tuition
for her children, and litigation costs, all based on a
showing of need. Ms. Portnoy filed a motion for leave to
appeal to this Court.
Court dismisses Ms. Portnoy's appeal for lack of
jurisdiction. The two claimed sources of jurisdiction in this
case are (1) mandatory jurisdiction over “final
judgments, orders, and decrees” of the bankruptcy
court, 28 U.S.C. § 158(a)(1), and (2) discretionary
jurisdiction over “other interlocutory orders and
decrees, ” id. § 158(a)(3). Neither
source provides the Court with jurisdiction here.
bankruptcy court's order is not “final”
within the meaning of § 158(a)(1). In general, courts
“interpret finality pragmatically in bankruptcy cases
because these proceedings often are protracted and involve
numerous parties with different claims.” In re
Truong, 513 F.3d 91, 93- 94 (3d Cir. 2008) (quoting
In re Natale, 295 F.3d 375, 378 (3d Cir. 2002)). But
in adversary proceedings such as this one, that
“relaxed view of finality” gives way to the
judicial system's usual “antipathy toward piecemeal
appeals.” Id. at 94 (quoting Natale,
295 F.3d at 378-79). “Orders that do not fully
adjudicate a specific adversary proceeding . . . are governed
by the ordinary finality precepts of routine civil
litigation.” United States v. Nicolet, Inc.,
857 F.2d 202, 206-07 (3d Cir. 1988). An order in an adversary
proceeding is only final when it “ends the litigation
on the merits and leaves nothing more for the court to do but
execute the judgment.” Truong, 513 F.3d at 94
(quoting Bethel v. McAllister Bros., Inc.,
81 F.3d 376, 381 (3d Cir. 1996)).
case, the bankruptcy court's preliminary injunction does
not end the litigation on the merits. By its own terms, the
order allows Ms. Portnoy to apply to the bankruptcy court for
funds for college tuition, living expenses, and litigation
costs upon a showing of “need.” Such an issue
could well be subject to dispute. Thus, the injunction order
is not final.
analyzed under the more “pragmatic” rubric of
general bankruptcy appeals, this order is not final. Under
that analysis, courts consider “the impact of the order
on the assets of the estate, the preclusive effect of a
decision on the merits, the need for additional fact-finding
on remand, and whether the interests of judicial economy will
be furthered.” In re Marvel Entertainment Grp.,
Inc., 209 B.R. 832, 836 (D. Del. 1997).
least three reasons, the Court concludes that the preliminary
injunction order in this case is not final. First, balancing
the fact-intensive preliminary injunction factors does not
present a discrete legal issue. Cf. Id. (holding
that the question of whether the automatic bankruptcy stay
blocked creditors from voting to replace a Chapter 11
debtor's board of directors was a “discrete legal
issue” that “would involve no additional
fact-finding on remand”). Second, reviewing this order
would not save the bankruptcy court from having to hold any
impending or future hearing. Cf. Id. (holding that
reviewing the scope of the automatic bankruptcy stay would
“promote judicial economy” by saving the
bankruptcy court from conducting “a fact-intensive
hearing” on whether to lift the automatic stay).
Indeed, it appears that Ms. Portnoy has not even yet
attempted to show why some of the funds should be disbursed
for college tuition. Third, the order's impact on the
assets of the estate is relatively insignificant. Cf.
Id. (holding that an order blocking creditors from
voting to replace the debtor's board of directors had a
“significant impact on the assets of the estate”
because the debtor's “financial well-being [was]
dependent upon the composition of its board”). Even
under a relaxed notion of finality, then, the order is not
explained above, district courts have discretionary
jurisdiction over appeals from “other interlocutory
orders and decrees” of the bankruptcy court. 28 U.S.C.
§ 158(a)(3). To decide whether to accept a discretionary
bankruptcy appeal, a court applies the usual discretionary
factors found in 28 U.S.C. § 1292(b). See United
States v. Dershaw (In re Rosen), 560 B.R. 415,
421 (E.D. Pa. 2016); see also Marvel, 209 B.R. at
837. To qualify for a discretionary appeal, an order must
involve a controlling question of law over which there exists
substantial ground for difference of opinion, and immediate
appeal must materially advance the litigation. E.g.,
Marvel, 209 B.R. at 837; 28 U.S.C. § 1292(b);
Here, the putative appeal presents no controlling question of
law. Ms. Portnoy finds fault with the bankruptcy court's
weighing of the preliminary injunction factors. See
Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158
(3d Cir. 1999) (setting out the factors). But ...