- Case Type:
- Case Status:
- 19-3223, 19-3225 (6th Circuit, Nov 18,2020) Not Published
- The Panel dismissed the appeal, of Jennifer Skurko (Skurko) and Leslie Gentile (Gentile, and with Skurko, Defendants), of an order of the Bankruptcy Appellate Panel (BAP), which reversed the bankruptcy court, vacated its decision that no violation of the automatic stay took place, and remanded for further proceedings, because its lack of finality, determined in accordance with extant Sixth Circuit precedent, left it without jurisdiction. The Hon. Alice Batchelder (Batchelder) concurred in the judgment, even as she advocated a revision of the circuit’s finality standard in a separate opinion.
- Procedural context:
- At the conclusion of the case-in-chief of Lawrence Wohleber (Wohleber or Debtor) against Skurko, his ex-spouse, and Gentile, her attorney, over whether their attempted post-petition enforcement of the state court’s contempt order violated the automatic stay, the United States Bankruptcy Court for the Northern District of Ohio (Bankruptcy Court)B granted Gentile’s motion, made pursuant to Rule 52(c) of the Federal Rules of Civil Procedure (Rule 52(c)), made applicable to an adversary proceeding under the Code pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure, for judgment on partial findings that Wohleber failed to demonstrate any violation of the automatic stay. His complaint was promptly dismissed. Wohleber appealed this order to the Sixth Circuit’s BAP. On appeal, the BAP held that the “sentencing hearing was a continuation of a judicial proceeding against the debtor to recover a pre-petition debt of the debtor” and therefore a violation of the automatic stay. Along with this conclusion, it decided that Defendants had a duty to take action to prevent the sentencing hearing and Wohleber’s confinement from occurring. Because the Bankruptcy Court had granted the motion for judgment on partial findings before Gentile and Skurko had a chance to present their cases, however, the BAP remanded to the Bankruptcy Court for the “completion of the liability portion of the trial.” Despite their violation, Gentile and Skurko would therefore to present evidence on whether they took any affirmative steps to prevent the sentencing hearing or Wohleber’s confinement from occurring. The BAP’s decision directed that if the bankruptcy court determines on remand that Gentile and Skurko failed to meet their duty to prevent the stay violation, it should also determine damages under 11 U.S.C. § 362(k). Gentile and Skurko appealed from this BAP order. In their initial briefs, Gentile and Skurko asserted that the Sixth Circuit possessed jurisdiction to review this order under 28 U.S.C. § 158(d)(1), which gives courts of appeals jurisdiction of "appeals from all final decisions, judgments, orders, and decrees" entered by a BAP. Following oral argument, however, the Panel directed the parties to brief whether it has jurisdiction under this section where the order being appealed remanded to the bankruptcy court for further proceedings. Though Gentile and Skurko raised a bevy of arguments, the Panel ultimately concluded that preexisting precedent—that "a decision by the [BAP] on appeal remanding the bankruptcy court's decision for further proceedings in the bankruptcy court is not final, and so is not appealable to this court, unless the further proceedings contemplated are of a purely ministerial character"—compelled a rejection of their every riposte. Concurring in this judgment as "a proper application of Sixth Circuit precedent," Batchelder nonetheless expressed her disagreement with this precedent and the result it impelled in this case. As she explained, she thought that the Bankruptcy Court was "correct" in both its determination that Defendants owed no duty to the Debtor and its decision to end the action on that basis, and the BAP was "clearly wrong." Assuming as much, the forthcoming proceedings would burn time and money, as a future circuit panel would surely hold that Defendants did not owe the Debtor any duty and will end the action on that basis, thus ignoring—and rendering worthless—all such additional proceedings. She ultimately proposed and defended a new rule: appellate jurisdiction should be said to exist "if either the bankruptcy court's judgment or the intermediate appellate judgment is final."
- For a seemingly interminable number of years, Wohleber and Skurko have been involved in a protracted domestic relations proceeding in the Domestic Relations Division of the Court of Common Pleas of Lorain County, Ohio (Common Pleas Court), also known as the Lorain County Domestic Relations Court. That tribunal granted their divorce and entered a property settlement in Skurko’s favor in 2006; after appeals had been exhausted, the Common Pleas Court finally ordered Wohleber to pay Skurko $36,459.33 within twenty-one days (Settlement). For the next nine months, the parties litigated and appealed several issues related to this Settlement, effectively stalling its enforcement. Contempt and bankruptcy marked the summer and fall of 2013. On July 2, 2013, acting on her client's behalf, Gentile sought a show-cause order, for Wohleber had failed to pay the Settlement. On July 22, 2013, the Honorable Debra L. Boros (Judge Boros) found Wohleber in contempt on this very basis. The Order both offered Wohleber the chance to purge the contempt by paying the Settlement in full by October 1, 2013, as civil contempt orders typically allow, and scheduled a sentencing hearing for October 8, 2013, in case he failed to do so as a precautionary matter. October 1, 2013, passed without payment. Instead, four days before the scheduled hearing, Wohleber responded by filing a bankruptcy petition (First Petition) pursuant to Chapter 13 of Title 11 of the U.S. Code (Code or Bankruptcy Code) in the Bankruptcy Court—and having his bankruptcy attorney file a suggestion of bankruptcy in the Common Pleas Court. On October 8, 2013, Judge Boros met with counsel in her chambers before the sentencing hearing, so to give both “parties the opportunity to explain why the sentencing hearing was stayed by the bankruptcy petition, despite her research concluding otherwise.” During the subsequent contempt hearing, Skurko and her counsel readily confirmed that Wohleber failed to pay the Settlement, but otherwise remained silent. At this hearing’s end, Judge Boros sentenced Wohleber to thirty days in the county jail. Wohleber remained incarcerated for ten days before the Common Pleas Court, “by agreement of the parties,” held the remainder of his sentence in abeyance pending resolution of Wohleber’s bankruptcy case. Wohleber subsequently dismissed his First Petition. Rather than leading to an amicable resolution, two rancorous events followed this dismissal. First, Gentile filed a motion on Skurko’s behalf to re-impose the contempt sentence. Thereafter, Wohleber countered with a familiar tactic: a day before a hearing on this motion, Wohleber filed a second bankruptcy petition (Second Petition) and thus initiated his second Chapter 13 bankruptcy case (Second Bankruptcy Case). This time, the Common Pleas Court simply stayed all proceedings pending resolution of Wohleber’s latest invocation of the Code’s protection. Two years into this Second Bankruptcy Case, Wohleber initiated the adversary proceeding against Skurko, Gentile, and Judge Boros, alleging that their actions violated the automatic stay, as encoded in 11 U.S.C. § 362, and seeking monetary damages. While all three defendants moved to dismiss this proceeding, the Bankruptcy Court dismissed Judge Boros from the case on immunity grounds and denied the same requests from Gentile and Skurko. Later, the Bankruptcy Court denied summary judgment motions brought by all parties and conducted a trial on Wohleber’s adversary proceeding. At the conclusion of Wohleber’s case-in-chief, Gentile moved for judgment on partial findings under Rule 52(c). The Bankruptcy Court granted the motion, concluding that Wohleber failed to demonstrate a violation of the automatic stay. Wohleber appealed to the BAP. The BAP’s resulting decision became the subject of the Panel’s review.
- Helene N. White; Alice M. Batchelder; and Eric E. Murphy
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